Updated: Mar 14
In this leading case, the Supreme Court of India had judiciously delineated the limits of exercise of power by the Competition Commission of India and Competition Appellate Tribunal (now replaced by NCLAT) so that they both do not muddle each other in their proceedings.
Jindal Steel & Powers Ltd submitted an information before the Competition Commission of India alleging that the Steel Authority of India Limited had an exclusive supply agreement with Indian railways for the supply of rails and thereby leading to anti-competitive practices and abuse of dominant position. After finding that a prima facie case prevailed, the CCI (without giving an opportunity to SAIL to file a detailed reply) referred the matter to the Director General for investigation. SAIL challenged the order before COMPAT whereby COMPAT stayed the investigation proceedings by the Director General and refused to prosecute CCI as a party before it. Discontented by the decision of the COMPAT, the CCI approached the Apex Court which while giving its decision formulated the following issues:
1. Whether the dictums passed by the CCI in exertion of its power under Section 26(1) of the Act establishing a prima facie opinion would be appealable in terms of Section 53(A) of the Act?
The Apex Court held that the Section 53A(1) of the Act certainly provides directions/decisions/orders may be appealed before COMPAT, and this does not include a direction/dictum of CCI under Section 26(1) of the Act. The Court contemplated that the right to appeal is a statutory right and if the law doesn’t provide for an appeal, the Court cannot surmise such right.
2. Whether the affected parties (as a matter of right) are entitled to notice or hearing at the prefatory stage or forming an opinion as to the existence of the prima facie case and whether it is mandatory on the part of the commission to record reasons whilst formulating prima facie opinion?
The Court held that it is not obligatory on the part of the CCI to issue notice or grant hearing to the opposite parties prior to the issuance of direction to the Director General to commence investigation on an complaint under section 26(1) of the Act , still the Commission may hold preliminary conference to seek assistance with the concerned parties before framing a prima facie opinion under Section 26(1) of the Act, with regards to the General Regulations, however, no party can assert it as a matter of right.
3.Whether the CCI would be a requisite or at least a proper party in the proceeding before the Tribunal in an appeal brought by any party?
It was held that in cases where the Commission commences a proceeding on its own motion then CCI shall be the dominus litis (the master of the proceedings or the necessary party) whilst in other proceedings, it shall be a proper party.
4.In which phase and what manner, the CCI can exert powers vested under Section 33 of the Act to issue temporary restraint orders?
The Court ratified the power of the Commission to pass an interim restraint order until the conclusion of the inquiry, without giving notice to the party but this power must be exerted sparingly and under exceptional cases.
5. Whether it is mandatory on the part of the Commission to record reasons for shaping prima facie opinion in terms of Section 26(1) of the Act?
It was held that the Commission must record least reasons to corroborate the prima facie view in no uncertain terms.
6. What directions are required to be issued by the Court to ensure proper compliance of the procedural requirements whilst keeping in mind the scheme of the Act and the legislative intent?
It was directed that all the proceedings (including investigation and inquiry) be discharged by the CCI/ Director General expeditiously and wherever in the course of an enquiry the Commission issues an interim order, it should issue the final order in that behalf as expeditiously as possible (in any case not later than 60 days).
The Director General should present the report in terms of Section 26(2) of the Act within the stipulated time frame as directed by Commission, but in other cases not later than 45 days from the date of the directions issued under section 26(1) of the Act.
** Hence, the Apex Court had effectively put forward in detail the rationale behind the enforcement of the Competition Act, 2002 by giving autonomy to the Competition Commission of India to carry out its functions bluntly.
Author - Riya Gulati
Paralegal at Law Offices of Caro Kinsella & Youth Ambassador for the ONE Campaign, Ireland.