Unfair trade practice.

Unfair Trade Practice:

Definition, Object & Scope:

The object in prohibiting unfair trade practice is to bring honesty and truth in the relationship between the manufacturer and the consumer. When a problem arises as to whether a particular act can be condemned as an unfair trade practice or not, the key to the solution would be to examine whether it contains a false statement and is misleading and further what is the effect of such a representation made by the manufacturer on the common man? Does it lead a reasonable person in the position of a buyer to a wrong conclusion?

Facts constituting Unfair Trade Practice:

The appellant company was manufacturing ‘Novino’ Batteries in collaboration with M/s Mitsushita Electric Industrial Co. Ltd. and not with National Panasonic of Japan, it was issuing advertisements announcing that ‘Novino’ Batteries were manufactured in collaboration with National Panasonic of Japan using National Panasonic techniques, and that the said representation was false and misleading and thereby causing loss or injury to the consumers.

Truth if relevant to determine Unfair Trade Practice:

A representation containing a statement apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly a statement, which may be inaccurate in the technical literal sense can convey the truth and sometimes more effectively than a literally correct statement. It is, therefore, necessary to examine whether the representation, complained of, contains the element of misleading the buyer. Does a reasonable man on reading the advertisement form a belief different from what the truth is? The position will have to be viewed with objectivity, in an impersonal manner.

An advertisement mentioning merely Mitsushita Ltd. may, therefore, fail to convey anything to an ordinary buyer unless he is also told that it is the same Company which manufactures products known to him by the names “National” and “Panasonic”. If such were the position there would not have been any scope for objection. However, the same effect is produced by the impugned advertisements. There is no other company with the name of ‘National’ and ‘Panasonic’, and there is no scope for any confusion on that score.

Test for determining Unfair Trade Practice:

The definition of ‘unfair trade practice’ in s. 36-A is not inclusive or flexible, but specific and limited in its contents. The object is to bring honesty and truth in relationship between the manufacturer and consumer. When a problem arises as to whether a particular act can be condemned as an unfair trade practice or not, the key to the solution would be to examine whether it contains a false statement and is misleading and further what is the effect of such a representation made by the manufacturer on the common man? Does it lead a reasonable person in the position of a buyer to a wrong conclusion? The issue cannot be resolved by merely examining whether the representation is correct or incorrect in the literal sense. The position will have to be viewed with objectivity in an impersonal manner.

The erroneous description of the manufacturing Company in the advertisements in question does not attract s. 36-A of the M.R.T.P. Act. 

Source: Lakhanpal National Ltd vs M.R.T.P. Commission,  AIR 1989 SC 1692: 1989 SCR (2) 979; Colgate Palmolive (India) Ltd. Vs. Hindustan Lever Ltd. [1999] INSC 281
Advertisements