1. Briefly stated the facts of the case are that the respondent, Natural Agro Products Ltd. issued an advertisement in the Hindustan Times on 8.11.1992 inviting the public to invest in its "Kalpavriksha Yojna" which envisaged plantation of one crore coconut trees over an area of 160 acres of land in Distt. Puri, Orissa. Under the aforesaid scheme the investor was required to buy minimum of two coconut trees @ 300/-per tree and was promised a return of the originally invested amount on completion of six years to be paid through Cash Certificates issued by the Central Bank of India and thereafter, the investor was assured a return of the same amount year after year for 20 years. The scheme also envisaged setting up of a 100% export oriented unit for processing coconuts, in technical collaboration with an internationally reputed collaborator, at an estimated cost of Rs. 150 crores. Besides, the respondent also promised insurance cover of the trees and guaranteed absolute security of investment as well as facility of holiday resorts near the plantations for the use by the investors. The advertisement in question was examined in the Commission as growth of coconut trees depends on natural factors and as it appeared that the respondent was per se trying to lure gullible investors by giving them a false and misleading picture of yield from trees and return on their investments, it was decided to ask the Director General (Investigation and Registration) (DG) to investigate and submit a Preliminary Investigation Report (PIR).
2. Accordingly, the Commission ordered the DG to carry out investigation and submit his PIR within 30 days, The DG, after investigation, submitted the PIR on 12.5.1993. On the basis of the PIR, a Notice of Enquiry dated 2.12.1993 was issued by the Commission charging the respondent with adoption of the indulgence in unfair trade practices within the meaning of Section 36A(1)(ii)(iii), (iv) of the MRTP Act, 1969 (the Act for brief).
3. In reply to the Notice of Enquiry, it has been stated on behalf of the respondent that the aforesaid scheme was floated and investors were invited to invest in a minimum of two coconut trees @ Rs. 300/- per tree. While denying the charge of unfair trade practices, it has been further stated that the invested amount was to be repaid after a period of six years through Cash Certificates to be issued by the Central Bank of India. It was further mentioned that arrangements for acquiring 600 acres of land in Distt. Puri, Orissa were being made for raising plantations and for setting up a processing plant with foreign collaboration.
(a) Whether the respondent has been or is indulging in unfair trade practices as indicated in the Notice of Enquiry? (b) If the answer to the foregoing issue is in the affirmative, whether the unfair trade practices are prejudicial to public interest or to the interest of the consumer or consumers generally ?
4. On behalf of the DG, only documentary evidence has been led, whereas the respondent tendered an affidavit of evidence of Shri Y.C. Bhandari, its Managing Director. The DG's evidence consists of the advertisement which appeared in the Hindustan Times on 8.11.1992 as also the highlights of the scheme contained in the brochure. It transpires from the affidavit and other documentary evidence brought on record, on behalf of the respondent, that the impugned scheme envisaged that out of the amount of Rs. 300/- per tree deposited with the respondent, 50% of that amount i.e., 150/- would be kept in fixed deposit with the Central Bank of India, and on maturity, after six years, it would become Rs. 300/- and the same would be refunded, through Cash Certificates, issued by the Central Bank of India, to the investors. It has been, further stated that the trees would start yielding fruit from 6th year onwards and there will be no difficulty for the respondent to pay an amount of Rs. 300/- per tree, per annum, to the investors as the Company would be earning between Rs. 2,000/- to Rs. 3,000/- per tree per annum in addition, to the income generated by cultivating fruits and seasonal vegetables like pineapple, coco, papaya on the land located between two rows of the trees, by intercropping. It has been further stated that so far while the respondent has received deposits for 2,900 trees from the investors, more than 3,000 trees have been planted already on the land purchased by it, and further it was proposed to plant 1,12,000 more trees on about 160 acres of land. It has also been added that the respondent has received deposits to the tune of Rs. 8,70,000/- from about 340 investors and 50% of the deposited amount has been kept as fixed deposit with the Central Bank of India for issuing Cash Certificates as envisaged under the impugned scheme.
5. We gave adequate opportunity to the learned Advocates for the DG as well as the respondent for making oral submissions. We have already observed in our order of 27.3.2001 that both of them failed to provide any assistance to us at the time of final hearing. However, on the basis of the PIR, the pleadings, reply to interrogatories, the affidavit of evidence of Shri Y.C. Bhandari, Managing Director of the respondent and other documentary evidence on record it appears that the respondent did make tall promises of raising coconut plantation and giving a return of Rs. 300/- per tree from the 6th year onwards for 20 years, besides, refunding 50% of the investment made by the investors through Cash Certificates on completion of six years. It also transpires from the evidence brought on record that the respondent was incapable of fulfilling the promises made by it as while its authorised share capital is 2.5 crores, its subscribed and paid up capital is Rs. 14,17,900/- only. Further even according to the respondent's own admission, it has been able to get only about 30 acres of land and it has received deposits from 340 investors and has planted about 3,000 trees. It is thus abundantly clear that the respondent has led the gullible investors up the garden path by making false, deceptive and misleading representation about its "Kalpavriksha Yojna". Although it is true that it also has an ambitious plan of setting up a plant, for processing coconuts, at an estimated cost of Rs. 150 crores, it is unlikely that the respondent will be able to muster financial resources for its implementation or that it will be able to acquire 1,600 acres of land, on lease, for planting 1,12,000 coconut trees. Moreover, that fact that there was in fighting amongst the Directors of the respondent can't be lost sight of. Apart from the doubts about the managerial and financial capability of the respondent, the fact that the plantations have an element of risk, the tall promises made by the respondent in the impugned advertisement, are not likely to be fulfilled, and it appears that in the end the investors will be left high and dry and would rue the day when lured by the advertisement, they decided to invest in the "Kalpavriksha Yojna" of the respondent. In view of the aforesaid discussion, we are of the view that the respondent has adopted unfair method an
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d trade practices to lure and induce gullible investors to invest their hard earned money in their coconut plantations which have not been raised and which are not likely to give the yield and return, promised by the respondent, to the investors, because of the high risk involved in such a venture. Thus the "Kalpavriksha Yojna" of the respondent attracts the provisions of Section 36A(1)(i), (ii) and (iv) of the Act and we hold the respondent guilty of unfair trade practices and accordingly, direct the respondent to cease the same forthwith and also order the respondent not to indulge in same or similar trade practices, in future. We also direct the respondent to refund the amounts collected from the investors under this scheme and file an affidavit by way of compliance, within six weeks.