Case No. 33/2011. Case: Automobiles Dealers Association, Hathras, U.P. through Advocate Mr. Sanjeev Kumar Dubey & Mr. Rahul Trivedi Vs Global Automobiles Limited and Pooja Expo India Private Limited through Advocate Punit Jain. Competition Commision of India

Case NumberCase No. 33/2011
JudgesAshok Chawla, Chairperson, H.C. Gupta, Member (G), R. Prasad, Member (R), P.N. Parashar, Member (P), Geeta Gouri, Member (GG), Anurag Goel, Member (AG), M.L. Tayal, Member (T) and Shiv Narayan Dhingra, Member (D)
IssueCompetition Act, 2002 - Sections 19 (1) (a), 19(3), 19(4), 2 (r), 2(b), 26(1), 3, 3(1), 3(4), 4
Citation2012 CompLR 827 (CCI)
Judgement DateJuly 03, 2012
CourtCompetition Commision of India


  1. The Commission has received the present information from M/s. Automobile Dealers Association, Uttar Pradesh (hereinafter referred to as the "Informant") on 28.06.2011 under the provisions of Section 19 (1) (a) of the Competition Act, 2002 (hereinafter referred to as "the Act"), against M/s. Global Automobiles Limited (GAL or Opposite Party No. 1) and Pooja Expo India Private Limited (Opposite Party No. 2 or Pooja Expo) for their alleged contravention of the provisions of Section 3 and Section 4 of the Competition Act, 2002. A brief profile of the parties is given below:-

    1.1 The Informant is an Association of Automobile Dealers at Hathras, Uttar Pradesh formed by M/s R.K. Motors, Banda, Uttar Pradesh; M/s Patliputra Agro Pvt. Ltd, Patna, Bihar and Kashish Automobile, Gorakhpur, Uttar Pradesh and registered under Society Registration Act, 1860.

    1.2 The Opposite Party No. 1 is a company incorporated under the provisions of Companies Act, 1956 having its registered office at Hooghly, West Bengal engaged in the business of manufacturing, marketing and sale of two wheelers i.e. Motor Cycles and Scooters in the name of M/s Global Automobiles. Xenitis Group is the erstwhile shareholder of the Opposite Party No. 1. Xenitis Group of Companies consists of Companies namely Xenitis Infotech (Electronics) Private Limited; Xenitis Cycles Private Limited; Aamar PC Computer Private Limited; Xenitis Group Services Private Limited; Xenitis Telecommunications Private Limited & Xenitis Atuomobiles Private Limited duly incorporated under the Companies Act, 1956 and having its registered office at Kolkata. Opposite Party No. 2 is a Carrying and Forwarding Agent(C&F) of the Opposite Party No. 1 for the state of Haryana and some part of Uttar Pradesh.

  2. The facts as stated in the information, in brief, are as under:

    2.1 It has been stated that GAL floated an advertisement in the open market to appoint dealers for the two wheelers (motorcycles and scooters) manufactured by the Company. Following the advertisement the members of the Automobile Dealers Association were appointed dealers of GAL for marketing and selling of the two wheelers manufactured by it. Subsequently, a Letter of Intent (Lol) was signed between the GAL and each of the dealers across the country.

    2.2 As per the Informant, the conditions of Lol are one sided and heavily loaded in favour of the Opposite Party No. 1. Lol included restrictive clauses such as not to deal with the products of its competitors, restricting the areas of operation etc. It has been pointed out that especially Clauses Nos. 6-17 of the Lol are anti-competitive which run as follows:-

  3. You will establish and maintain a service station of approx 1000 sq. ft. covered area with your proposed showroom exclusively for rendering service to the customers of GLOBAL products. This service station will be as per company specifications and layout and will carry equipment, tool, fixtures etc, as specified by the company and will be completed by 20th, February, 2008. This will include as area of 300 sq. ft. which will be used to stock, display & sell spare parts.

  4. You shall also provide close to your showroom adequate covered area to be used for stocking two wheelers, as indicated to you from time to time.

  5. You will provide necessary computer hardware and software at your dealership for automation of your entire operations which would include sales, service, spares, inventory etc.

  6. Your remuneration for free service to customers as per company's warranty policy will be according to the schedule of labor charges of the company for free service which is application to all dealers. For paid service you will charge as per and not more than the standard labor charge schedule made available to you by us from time to time.

  7. After Sales Services as an important element in our business and we attach great importance to the quality of service rendered. Continuous poor after sales service will constitute a breach of the terms and conditions of our agreement.

  8. To achieve total consumer satisfaction through excellent after sales service, you will source all your spare parts directly from us.

  9. From time to time you will be required to carry out local sales promotional activities such as publicity, hoarding, wall painting, mechanic meets etc. to promote sale of GLOBAL products in your territory.

  10. At all times you will be required to provide adequate color model mix to your customers to choose from and for this you will maintain a minimum physical paid stock of approximately 21(Twenty One) days sale of each category of two wheelers viz. Motorbikes, Scooters and Scooterettes. In addition you will maintain spare parts inventory of Approx. 1.0 lacs to be able to service the two wheelers reporting to your workshop. For this you should provide adequate working capital as discussed and agreed upon by you. The working capital may increase from time to time subject to introduction of new models and in life with requirement of the new business.

  11. It is important that to provide service to the customers, qualified manpower both for sales and service shall be employed by you. You will make available such manpower for training.

  12. Your appointment at Authorized Dealer will commence after your showroom and service centre are established in conformity with the company specifications to our satisfaction This should be done at not later that 10th February 2008. The formal inauguration of dealership will take place minimum 7 days after your showroom and workshop are certified to be ready by our certified personnel, so that necessary product & spare part kits con be lined up.

  13. This LOl is being issued with the understanding that your authorized signatory as mentioned in clause 5(iii)above shall be fully involved and available as our full time showroom contact person for the dealership with full authority on all matters including financial authority for all transactions. Should it ever happen that in our considered opinion (which opinion shall neither be constables nor be open to any arbitration before any outside authority your said representative's availability for this dealership seems to fall below our expectations, or there seems to be change in your dealership, we want you to understand this very clearly and endorse your signature here in acknowledgement of an in assent to this condition. This condition is being laid down because in our business, the person involved is as important as the showroom and finance.

  14. That company shall be entitled to terminate your appointment as Authorized Dealer for any breach of the terms and conditions. The appointment can also be terminated by either party giving two months' notice to the other without assigning any reason.

    2.3 The Informant has alleged that in terms of the conditions of the agreement, the members of the Informant made huge investments and have established and maintained show rooms and service stations as per GAL's specifications. Furthermore, equipments, tools and fixtures as specified were made available within the premises of the...

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