Case No. 34/2011. Case: Kshitij Ranjan Vs Indian Newspaper Society. Competition Commision of India
| Case Number | Case No. 34/2011 |
| Judges | Ashok Chawla (Chairperson), R. Prasad, Member, Geeta Gouri, Anurag Goel and M.L. Tayal, Members |
| Issue | Competition Act, 2002 - Sections 3, 3(1), 3(3), 3(4), 4, 19(1), 19(3), 26(2) and 33; Companies Act, 1957 - Section 25; Constitution of India |
| Judgement Date | October 11, 2011 |
| Court | Competition Commision of India |
Judgment:
P.N. Parashar, Member
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The case under consideration relates to information filed on 30.06.2011 under Section 19(1)(a) of the Competition Act, 2002 (hereinafter referred to as "the Act") by Shri Kshitij Ranjan, Proprietor of Vistar Add. Com (hereinafter referred to as "informant") against the India Newspaper Society - INS (hereinafter referred to as "Opposite Party" or OP).
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The facts, in brief, as contained in the information are as under:
2.1 The Informant is proprietor of Vistar Add. Com., which is an INS accredited advertisement agency, having its office at Dr. Mukherjee Nagar, Delhi. The Informant offers advertisement services and books space in various newspapers for the publication of advertisements as per the requirements of his clients.
2.2 As per the Informant, the OP is a society registered within the meaning of Section 25 of the Companies Act, 1957 which has various publications (Newspapers) as its members. The OP also grants accreditation to the advertising agencies.
2.3 The informant has submitted that in the month of October 2010 the OP granted him provisional accreditation. He complied with the requisite formalities and supplied all the documents required by the OP in that regard. He also deposited a bank guarantee amounting to Rs 25 lac (Rupees Twenty Five Lac only) issued by the Bank of India with the (sic) as furnished the list of assets for the purpose of executing the personal (sic)
2.4 According to the Informant, the OP sought his personal guarantee, although it was not authorized to do so as per its rules and regulations. As per the Informant, the policy of the OP as regards the amount required under the personal guarantee is unclear and inexact.
2.5 The Informant has submitted that the office of the OP informed him that a personal guarantee equal to Rs. 25 Lac (Rupees Twenty Five Lac only) was required for which only his immovable asset would be considered. Thereafter, he furnished the details of the 'under-construction' flat at TDI, Kundli, Sonipat along with his other movable assets to the OP. However, the OP declined to consider his immovable property situated at TDI, Kundli Sonipat since the sale deed was not executed. The OP also did not consider his movable properties such as shares, jewellery and FDs for the purposes of personal guarantee, an act, which was discriminatory and unfair, as the OP had considered it favorably in other cases. As per the Informant, he submitted the details and documents of another property belonging to him at 'A' Block, Sant Nagar, Village Burari, Delhi, which too was not considered by the OP.
2.6 According to the Informant, since there was no relief in sight, he approached Mr. H.N Cama, Chairman, Advertisement Committee of INS via e-mail and explained all the difficulties he had been facing in getting the accreditation from the OP. Mr. Cama considered the said e- mail, though he also persisted that the personal guarantee was necessary. On his intervention, finally the OP agreed to consider the 'under construction' flat at TDI, Kundli, Sonipat in lieu of personal guarantee. Subsequently, the OP granted the provisional accreditation to the Informant and the Informant also executed an agreement. The OP granted a time of six months to the Informant to submit the sale deed of the property at TDI, Kundli, and Sonipat.
2.7 The Informant has further submitted that on 03.05.2011, the OP sent a letter to the Informant to submit the sale deed to respect of the property at TDI, Kundli, Sonipat. In reply to the said letter, the (sic) requested the OP to grant some more time for the submission of the sale deed as the developer had, not completed the construction.
Thereafter, the OP vide letter dated 20.06.2011 requested him to provide an additional bank guarantee of Rs. 25 lac (Rupees twenty five lakh) in lieu of the personal guarantee.
2.8 The Informant has alleged that the said letter is unfair, discriminatory and unsustainable in the eyes of law as the OP has no right to ask for personal guarantee from the Informant even as per its articles of association. The Informant has mentioned the INS Press Handbook 2010-11 containing the principles governing the policy of the OP relation to personal guarantee, which is as under:
INS will have the right to ask for personal guarantee from defaulting agencies and from agencies, which have collected advertisement dues but not paid to member publications within the credit period.
2.9 According to the Informant, it does not fail into any of the category mentioned in the above quoted provision. The Informant has also stated that the Monthly Review and Verification (MRV) report maintained and circulated by the OP shows that he has never defaulted in making the payments to the members of the OP.
2.10 The Informant has alleged that the action of the OP in seeking personal guarantee from the informant is arbitrary and discriminatory. Further, deed of guarantee in lieu of the personal guarantee executed between the informant and the OP is non est and has no validity in the eyes of law. The informant has also alleged that the agreement (deed of guarantee in lieu of personal guarantee) is illegal and is like to cause an appreciable adverse effect on competition (AAEC) within India. Further, the demand of the OP in asking to furnish the bank guarantee in lieu of the personal guarantee is restrictive of the freedom of trade and profession as enshrined in the Constitution of India.
3 The Commission considered the information in its meeting held on 12.07.2011 and decided to call the Informant (sic) or through authorised representative to explain the case on (sic) 2011 Accordingly, Mr. Naveen Kurnar Raheja, Advocate appeared along with the Informant on 03.08.2011 and made oral submissions.
4 The Informant later on also filed written submissions dated 16.08.2011 in order to substantiate his case. In his written submissions, the Informant has inter-alia alleged the following:
4.1 That the OP has abused its dominant position in the relevant market pertaining to the Print Media. The OP enjoys position of dominance in Print Media as approximately 100% of the recognized/leading daily, weekly, fortnightly and monthly newspapers and magazines are its members. The business practices between the different advertisement agencies and the members of the OP are regulated and controlled by the OP in India.
4.2 That different advertisement agencies including the Informant, carry out business transactions on commission basis with the members of the OP. The advertisement agencies book space for their clients for publishing the advertisement in the different newspapers i.e. members of the OP. The member newspapers grant certain benefits in their business transactions to those advertisement agencies which have been granted accreditation by the OP. For example, INS accredited advertisement agencies are entitled for a benefit of a credit period by the member newspapers in lieu of the services availed by the advertisement agencies on behalf of their clients. As per the credit period, the advertisement agencies book the space and get the advertisement published in the newspapers and thereafter get another 50 days to make the payment to the newspapers in lieu of the same. Further,,government organisations engage only those advertisement agencies for the purpose of publication of their advertisement which are accredited by the OP i.e. the INS.
4.3 That due to the above facts, only those advertisement agencies that are granted accreditation by the OP can survive competition in the market in India pertaining to Print Media.
5 In his written submissions, the informant...
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