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2025 (2) TMI 145 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Law of Competition

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ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment were:

1. Whether the Respondent No. 1, Ghaziabad Development Authority (GDA), abused its dominant position by delaying the possession of flats and increasing the cost from Rs. 2,00,000 to Rs. 7,00,000, thereby violating Section 4(2)(a)(i) read with Section 4(1) of the Competition Act, 2002.

2. Whether the Appellants are entitled to compensation under Section 42A and Section 53N(1) of the Competition Act for the alleged losses and mental agony suffered due to the delay and increased cost.

3. Whether the penalty imposed by the Competition Commission of India (CCI) on Respondent No. 1 should be recovered and paid to the Appellants as compensation.

4. Whether the Appellants' consent to the increased cost of flats affects their claim for compensation.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Abuse of Dominant Position

The relevant legal framework involves Section 4 of the Competition Act, which prohibits abuse of dominant position. The CCI had found that GDA abused its dominant position by delaying possession and increasing the cost of flats, and directed GDA to cease such conduct and imposed a penalty.

The Tribunal noted that GDA had complied with the CCI's 'cease and desist' order and deposited 10% of the penalty, which led to a stay on the penalty payment. There was no violation of the CCI's order, thus no basis for further compensation claims at this stage.

Issue 2: Entitlement to Compensation

Under Sections 42A and 53N(1) of the Competition Act, compensation can be sought if there is a contravention of CCI orders. The Tribunal observed that since GDA complied with the CCI's orders, the claim for compensation was premature and lacked merit.

The Appellants claimed compensation for rental losses, mental agony, and other damages, but failed to provide supporting documentation or evidence. The Tribunal found the claims unsubstantiated and inconsistent with the Appellants' financial status, given their eligibility for EWS flats.

Issue 3: Recovery of Penalty as Compensation

The Tribunal emphasized that penalties imposed by the CCI are to be credited to the Consolidated Fund of India, as per Section 47 of the Competition Act. Therefore, the Appellants' request to recover the penalty amount as compensation was not supported by the legal framework.

Issue 4: Impact of Consent to Increased Cost

The Tribunal noted that the Appellants had consented to the increased cost of the flats. This consent undermined their position in challenging the revised terms. Despite the CCI's finding of abusive conduct, the Appellants' consent weakened their claim for compensation.

SIGNIFICANT HOLDINGS

The Tribunal held that:

"The compensation is due only if CCI orders have been violated by the Respondent No. 1, which is not the case here. As such, we do not find any merit in the appeal before us."

Key principles established include the necessity of demonstrating a violation of CCI orders to claim compensation under Sections 42A and 53N(1) and the non-transferability of penalties imposed by the CCI to individual claimants.

The Tribunal concluded that the appeal lacked merit and was rejected without costs, affirming that the Appellants could seek other legal remedies if available.

NCLAT rejects compensation claims under Section 42A against real estate developer for delayed possession and cost increases
NCLAT dismissed appeals seeking compensation under Section 42A of Competition Act, 2002. Appellants claimed Rs. 42,42,000 each for delayed flat possession and cost increases by dominant real estate developer. Tribunal held compensation only payable for violation of CCI orders, not mere anti-competitive conduct findings. Appellants' consent to cost enhancement precluded challenge. Despite CCI finding abuse of dominant position, no CCI order violation occurred, making compensation claims unmeritorious.

Anti-competitive practices - abuse of dominant position - delaying the possession of flats and increasing the cost - violation of Section 4(2)(a)(i) read with Section 4(1) of the Competition Act, 2002 - entitlement to compensation under Section 42A and Section 53N(1) of the Competition Act - HELD THAT:- The compensation is payable in case of contravention of order of CCI. Section 42 A provides that any person may make an application to the Appellate Authority for an order of recovery of compensation from any enterprises for any loss or damage shown to have been suffered by such person as a result of said enterprise violating directions issued by CCI. It is noted that every Appellant has claimed the monthly rental @10,000 per month amounting to Rs. 10,20,000/- for the period from 01.01.2010 to 30.06.2018 which continue till payments. Similarly, the Appellants have claimed the damage for inconvenience, mental, physical loss, expectancy loss amounting to Rs. 25,50,000/- each. Another claim has been made regarding interest on payment deposited amounting to Rs. 1,70,000/- each and finally litigation and out of pocket expenses of Rs. 5,00,000/- each. Thus, the total compensation by each is Rs. 42,42,000/- which continues till payment is made by the Appellants - the eligibility criteria for the applicant to apply for EWS flats was annual earnings ceilings of Rs. 25,000 each. The claims, on face of it do not seems to be convincing. Be that as it may, it is already noted in earlier that that the compensation is due only if CCI orders have been violated by the Respondent No. 1 which is not the case here. As such, there are no merit in the appeal. It is observed that after giving consent for enhancement of cost of flats, it does not lie in the mount of the Appellants to challenge the same. This does not help the cause of the Appellants, despite CCI holding that Respondent No. 1 was involved in abusive conduct as dominant player in relevant geographic market. Conclusion - i) The compensation is due only if CCI orders have been violated by the Respondent No. 1, which is not the case here. ii) After giving consent for enhancement of cost of flats, it does not lie in the mount of the Appellants to challenge the same. Appeal dismissed.

2024 (10) TMI 1467 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Law of Competition

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Second information on identical facts dismissed under res judicata after first declined by CCI
NCLAT dismissed appeal applying res judicata principle. Appellant filed second information against same parties on identical facts after first information was declined by CCI. Previous proceedings established that Department of Expenditure is not an enterprise under Section 2(h) of Competition Act, 2002, and Office Memorandum is not an agreement under Section 3. SC precedent confirmed DOE cannot be considered enterprise regarding OM dated 24.03.2006. Court held legal maxim nemo debet lis vexari pro una et eadem causa applies, preventing vexation twice for same adjudicated cause.

Enterprise - agreement - appreciable adverse effect on competition - refusal to deal - closure under Section 26(2) - res judicata - abuse of process - costsEnterprise - economic activity - Whether the Department of Expenditure (DOE) is an "enterprise" within the meaning of Section 2(h) of the Competition Act, 2002 in relation to the impugned Office Memoranda. - HELD THAT: - The Tribunal accepted the Commission's assessment that DOE's functions, as reflected on the Ministry of Finance website and in the impugned circulars, are predominantly policy-making and administrative rather than commercial. The Commission had observed that the circulars represent government policy manifested as internal administrative directions concerning the government's choice as a consumer and are not economic activities of the kind contemplated by Section 2(h). The Tribunal noted that the Supreme Court has held similarly in earlier authority, and endorsed the conclusion that DOE cannot be regarded as an enterprise for the purposes of the impugned memoranda. [Paras 27, 29]DOE is not an "enterprise" within the meaning of Section 2(h) of the Act in relation to the impugned Office Memoranda.Agreement - Section 3(1) - Section 3(4) - appreciable adverse effect on competition - refusal to deal - Whether the Office Memoranda constitute an "agreement" and/or cause an appreciable adverse effect on competition under Sections 3(1) and 3(4) of the Act. - HELD THAT: - The Tribunal recorded the Commission's finding that the impugned Office Memoranda and subsequent circulars are internal administrative decisions and government policy directed to the government's procurement choices, not agreements entered into in the context of an economic activity. The Commission found no vertical relationship placing DOE at a level of the production chain with Balmer Lawrie and Ashok Travels; accordingly, no case under Section 3(4) (including refusal to deal) was made out. Having concluded that the memoranda are not agreements contemplated by Section 3(1), the Commission found no prima facie case to refer the matter for investigation and lawfully closed the information under Section 26(2). The Tribunal endorsed these conclusions. [Paras 28, 29, 30]The impugned Office Memoranda are not "agreements" within the meaning of the Act and do not prima facie establish contravention of Sections 3(1) or 3(4); the Commission rightly closed the information under Section 26(2).Res judicata - abuse of process - closure under Section 26(2) - Whether the second information (Case No. 4 of 2020) filed by the appellant is maintainable or is barred by the principle of res judicata / amounts to abuse of process because the same issues were earlier decided. - HELD THAT: - The Tribunal noted the prior adjudication: CCI's closure of the first information (Case No. 39 of 2010) on 15.09.2010 and the dismissal of the appellant's appeal by the erstwhile COMPAT on 26.09.2012, neither of which was further challenged. The Tribunal held that the present challenge repeats the same facts, same parties and same legal questions already finally decided, invoking the salutary maxim nemo debet lis vexari pro una et eadem causa. Although markets may be dynamic, the Tribunal observed that the core legal questions-whether DOE is an enterprise and whether the OM is an agreement-had been finally determined, and therefore the second information could not be re-agitated and was rightly closed. The Tribunal treated the filing as an abuse of process. [Paras 17, 32, 33]The second information is barred by res judicata and constitutes an abuse of process; the Commission's closure was justified.Costs - Whether costs should be imposed on the appellant for pursuing the second information and appeal. - HELD THAT: - Having found the appeal without merit because it re-litigated issues already finally decided, the Tribunal exercised its discretion to impose costs. It directed the appellant to deposit the amount ordered in the Prime Minister's Relief Fund within the specified period. [Paras 33]Costs of Rs. 5 lakhs imposed on the appellant to be deposited in the Prime Minister's Relief Fund within 15 days.Final Conclusion: The appeal is dismissed. The Tribunal upheld the Commission's closure of the information under Section 26(2) on the grounds that DOE is not an enterprise in relation to the impugned memoranda, the memoranda are not agreements attracting Sections 3(1)/3(4), and the second information is barred by res judicata as an abuse of process; costs were imposed on the appellant.

2024 (10) TMI 836 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Law of Competition

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NCLAT upholds CCI's 1% turnover penalty for bid rigging, rejects segmental turnover argument under Section 27
The NCLAT upheld CCI's penalty of 1% of average turnover for bid rigging and cartelisation in a tender process. The appellant challenged penalty proportionality citing Excel Crop Care Ltd. vs CCI, arguing for segmental turnover consideration. The NCLAT rejected this, noting signages constitute varieties of same product, not multiple products. CCI's lenient approach was acknowledged, imposing only 1% penalty instead of maximum 10% under Section 27, considering most parties were MSMEs. The tribunal found the penalty proportionate and well-considered, dismissing the appeal as meritless.

Penalty proportionality - relevant turnover - imposition of penalty under Section 27 - lesser penalty and cooperation under Regulations - bid rigging and cartelisation - judicial review of penaltyPenalty proportionality - relevant turnover - imposition of penalty under Section 27 - Whether the penalty imposed on the appellant should be reduced by adopting 'relevant turnover' limited to the tender/illuminated products instead of the average total turnover used by CCI - HELD THAT: - The Tribunal confined the appeal to the limited prayer for reduction of penalty and did not re-hear merits. It examined CCI's reasoning that (a) the alleged infringing activity concerned various types of signage which constitute varieties of the same product and not distinct products for applying the Excel Crop Care principle; (b) limiting turnover to the specific tender would permit regulatory arbitrage and allow parties with nil turnover from that tender to evade penalties; and (c) CCI had applied the doctrine of proportionality by adopting a lenient 1% rate on the average relevant turnover for FY 2015-16 to FY 2017-18 after considering mitigating factors (MSME status, cooperation of some parties, pandemic). The Tribunal compared facts with Excel Crop Care (where clear segmental reporting and distinct single-product turnover existed) and concluded that Excel's ratio favouring a narrow 'relevant turnover' does not squarely apply where the business is primarily signage and other turnover items represent the same business activity. The Tribunal noted that the impugned CCI order had been upheld in earlier appeals and attained finality in related proceedings, and that interference with penalties is permissible only in exceptional cases where punishment shocks judicial conscience. On the record, the Tribunal found no such disproportionality and observed that CCI had exercised its discretion within the statutory framework and in a lenient manner. [Paras 23, 24, 25, 26, 27]Prayer for reduction of penalty is rejected; CCI's computation of penalty (1% of average turnover for FY 2015-16 to FY 2017-18) and its approach to relevant turnover are upheldLesser penalty and cooperation under Regulations - judicial review of penalty - Whether the appellants were entitled to reduction under the lesser penalty regime or to review of quantum on grounds of non-cooperation and proportionality - HELD THAT: - The Tribunal recorded the respondent's contention that the appellants did not satisfy conditions for lesser penalty (full, true, vital disclosure and continuous cooperation) under the Regulations, and that the stage of proceedings was inappropriate to seek lesser penalty. The Tribunal noted precedent that interference with penalty quantum is rare and permissible only where the penalty is grossly disproportionate. Having regard to CCI's findings on involvement, the lack of cooperation, and the lenient 1% imposition, the Tribunal found no basis to disturb CCI's exercise of discretion or to grant relief under the lesser penalty regime. [Paras 16, 17, 18, 25, 26]No reduction under lesser penalty or judicial interference in the quantum; appellants not entitled to relief on these groundsFinal Conclusion: Appeal dismissed; the Tribunal upholds the CCI's finding of bid rigging and cartelisation and affirms the penalty imposed on the appellant as 1% of the average turnover for FY 2015-16 to FY 2017-18, finding no justification to invoke Excel Crop Care's narrower application of 'relevant turnover' or to reduce the quantum.

2024 (8) TMI 1715 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Law of Competition

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Issues: (i) Whether the appellants had rigged and manipulated the soil testing tenders by indulging in bid rigging, collusive bidding and market sharing in contravention of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Competition Act, 2002. (ii) Whether the individuals identified by the Commission were liable under Section 48 of the Competition Act, 2002. (iii) Whether the penalty of 5% of average turnover and income was warranted.

Issue (i): Whether the appellants had rigged and manipulated the soil testing tenders by indulging in bid rigging, collusive bidding and market sharing in contravention of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Competition Act, 2002.

Analysis: The record showed coordinated conduct across the 2017 and 2018 tenders, including submission of cover bids, use of fake invoices and false experience documents, common IP addresses, common or linked login credentials, and consistent bid patterns between group and rival entities. The statements of the concerned persons, including admissions regarding supporting bids and pre-decided bid prices, corroborated the documentary material and the DG's findings. As the conduct fell within the categories covered by Section 3(3), a presumption of appreciable adverse effect on competition operated, and the material on record was sufficient to establish cartelisation and bid rigging.

Conclusion: The contravention was proved and the finding was against the appellants.

Issue (ii): Whether the individuals identified by the Commission were liable under Section 48 of the Competition Act, 2002.

Analysis: The evidence showed active participation by the concerned proprietors and directors in organising, directing, and facilitating the impugned bidding conduct. They controlled the affairs of their respective enterprises, arranged or accepted false documents, enabled submission of cover bids, and participated in the decision-making that produced the anti-competitive conduct. Their liability followed from their direct role and responsibility in the business conduct of the enterprises.

Conclusion: The individuals were rightly held liable under Section 48, and the finding was against the appellants.

Issue (iii): Whether the penalty of 5% of average turnover and income was warranted.

Analysis: The contention that only tender-specific or relevant turnover should be taken as nil was rejected because that approach would defeat deterrence in a bid-rigging case where the parties had no direct revenue from the impugned work but had nevertheless distorted the tender process. The Tribunal held that the Commission's approach was justified on the facts, especially where the appellants were first-time participants in the relevant business and the cartel conduct was deliberate and extensive. The penalty on the individuals was also sustained on the basis of their proven role and responsibility.

Conclusion: The penalty was upheld and the finding was against the appellants.

Final Conclusion: The appeal failed on merits, the Commission's findings of bid rigging and individual liability were sustained, and the monetary penalties were not interfered with.

Ratio Decidendi: In a proven bid-rigging case falling within Section 3(3), liability may be established on the basis of a rebuttable presumption reinforced by circumstantial evidence and admissions, and penalty need not be confined to a nil tender-specific turnover where such an approach would neutralise deterrence.

Bid rigging and cartelisation in tendering were sustained on circumstantial evidence, admissions, and deterrence-based penalties.
Bid rigging in soil testing tenders was established on coordinated conduct such as cover bids, fake invoices, false experience documents, common IP addresses, linked login credentials, and consistent bidding patterns, with admissions supporting cartelisation. Conduct falling within Section 3(3) attracted a presumption of appreciable adverse effect on competition, and the material was sufficient to sustain the finding of contravention. Proprietors and directors were also held liable because they actively organised, directed, and facilitated the anti-competitive bidding and controlled the affairs of their enterprises. The penalty based on average turnover and income was sustained, as a nil tender-specific turnover approach would undermine deterrence in a deliberate bid-rigging case.

Competition Commission of India - rigged and manipulated the soil testing tenders by indulging in bid rigging, collusive bidding and market sharing - contravention of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Competition Act, 2002 - Geographical market allocation - Liability of persons in charge - individuals identified by the Commission - Relevant turnover for penalty - Presumption Of Appreciable Adverse Effect On Competition. Bid rigging - Collusive bidding - Cover bidding - HELD THAT: - The Tribunal upheld the Commission's finding that the material on record established concerted conduct and not independent bidding. It relied on the admissions of the persons in control of the enterprises, the use of false undertakings and fake eligibility documents, the issuance by Yash Solutions of false work orders and experience certificates to rival bidders, the role of employees of Yash Solutions in submitting bids on behalf of rival concerns, and the use of the same IP address and Yash Solutions' login credentials for uploading bids. The explanation that such acts were without the knowledge of Yash Solutions was rejected, as the evidence showed that the cover bids were arranged to ensure sufficient participation and to support Yash Solutions in the tender process. The plea that common participation by related entities was permissible under the tender terms did not displace the evidence of collusion. The Tribunal also held that, in a case falling under Section 3(3), appreciable adverse effect on competition is presumed and need not be independently established once bid rigging is proved. [Paras 79, 86, 87, 88, 89] The finding of contravention under Section 3(1) read with Section 3(3)(d), in relation to the Set I conduct including the role of Chaitanya Business Outsourcing as a cover bidder, was affirmed. Geographical market allocation - Supporting bids - Bid rigging - HELD THAT: - The Tribunal accepted the Commission's conclusion that the conduct of Yash Solutions and Austere Systems could not be explained as independent commercial decision-making. Austere Systems either abstained from or was not keen on certain divisions without satisfactory explanation, while Yash Solutions admitted to quoting deliberately high prices in Meerut and Saharanpur because it was not interested in securing those contracts. The Tribunal treated these admissions, read with the pattern of participation and the limited number of bidders in those tenders, as establishing an understanding to divide territories and submit supporting bids. The contention that the higher prices were due to logistics and connectivity was rejected as inconsistent with the evidence and as not displacing the inference of collusion. [Paras 85] The finding that Yash Solutions and Austere Systems geographically allocated tender areas and rigged the bidding process was upheld. Liability of persons in charge - Section 48 liability - HELD THAT: - The Tribunal found that the evidence showed direct involvement of Praveen Kumar Agarwal and Nitish Agarwal in the conduct constituting bid rigging. Praveen Kumar Agarwal was found to have controlled Yash Solutions, to have been connected with the issuance of false certificates and the arrangement of supporting bids, and to have failed to justify the coordinated conduct attributed to the enterprise. Nitish Agarwal, being Director of Chaitanya Business Outsourcing and also CEO of Yash Solutions, admitted the participation of Chaitanya Business Outsourcing as a non-competitive bidder to prevent cancellation of the tender for want of bids. On this material, their liability as persons responsible for and actively involved in the conduct of business was sustained. [Paras 80, 81] The personal liability imposed on Praveen Kumar Agarwal and Nitish Agarwal under Section 48 was affirmed. Common IP address - Circumstantial evidence - Presumption under Section 3(3) - HELD THAT:- The Tribunal held that the appellants could not isolate the common IP address issue from the rest of the evidentiary record. It distinguished the reliance placed on S K Translines Pvt. Ltd. [2016 (7) TMI 1720 - BOMBAY HIGH COURT] by observing that, in the present case, common IP usage was only one among several circumstances establishing collusion. The Tribunal further found against the appellants on the login ID issue, holding that the email address used by Siddhi Vinayak was shown by the record itself to belong to Yash Solutions. It reiterated that in cartel matters direct proof of a formal agreement is not necessary and that practical cooperation may be inferred from circumstantial evidence and conduct. [Paras 86, 88, 89] The evidentiary challenge based on IP address, email ID and absence of direct proof of agreement was rejected. Relevant turnover for penalty - Doctrine of proportionality - Penalty in cartel cases - HELD THAT:- The Tribunal examined the principle in Excel Crop Care Limited vs. Competition Commission of India and Others [2017 (5) TMI 542 - SUPREME COURT] and held that it did not compel adoption of nil or tender-specific turnover in the peculiar facts of the present case. It noted that all the bidders were first-time bidders in soil testing and that, if the appellants' interpretation were accepted, the relevant turnover from the cartelised activity would be nil, resulting in no monetary penalty and defeating the deterrent purpose of the Act. Distinguishing the Excel Crop Care situation, where segment-wise turnover of the infringing product could be segregated, the Tribunal agreed with the Commission's approach of using total turnover for computation. It also declined to reduce the rate of penalty, observing that unlike the cover bidders in connected appeals, Yash Solutions was the leader of the cartel and a successful bidder in multiple tenders, and that the Commission had given reasons for fixing the rate at 5 percent. [Paras 92, 93, 94, 95, 96] The penalty computation based on total turnover and the rate of 5 percent imposed on the appellants were sustained. Final Conclusion: The Tribunal dismissed the appeal and upheld the Commission's findings of bid rigging, collusive bidding and geographical allocation against the appellants, along with the personal liability of the concerned individuals. It also affirmed the penalty imposed, holding that, in the facts of the case, computation based on total turnover and the rate applied by the Commission called for no interference.

2024 (8) TMI 998 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Stock exchanges' NOC under Regulation 37(1)(2) LODR not required for revival schemes under Insolvency and Bankruptcy Code
NCLAT held that prior NOC from stock exchanges under Regulation 37(1)(2) of LODR is not required for schemes of arrangement for revival of companies undergoing liquidation under the Insolvency and Bankruptcy Code. The tribunal reasoned that SEBI's 2018 amendment exempting NOC requirements for resolution plans under Section 31 of the Code should extend to revival schemes, as these schemes are akin to resolution plans and serve similar purposes. The court emphasized that revival efforts benefit all stakeholders and that stock exchanges retain the right to object during NCLT proceedings. The appeal was allowed and the impugned order was set aside.

Scheme of arrangement - prior No-objection letter / NoC from stock exchanges - applicability of Regulation 37(1) and 37(2) of the LODR to schemes filed by a liquidator - exemption under Regulation 37(7) of the LODR for restructuring proposals approved under section 31 of the IBC - scheme for revival under Section 230 of the Companies Act read with Regulation 2-B of the Liquidation Process Regulations - harmonious construction of IBC and Companies Act in liquidation - priority of the Insolvency and Bankruptcy Code by virtue of Section 238Applicability of Regulation 37(1) and 37(2) of the LODR to schemes filed by a liquidator - prior No-objection letter / NoC from stock exchanges - scheme of arrangement - Regulation 37(1) and 37(2) of the LODR do not mandate a prior NoC from stock exchanges for a scheme of arrangement filed by a liquidator under Section 230 read with Regulation 2 B. - HELD THAT: - Regulation 37(1) and (2) impose the obligation in terms of a 'listed entity' and prohibit a listed entity from filing a scheme without obtaining a No objection letter. Section 230(1) expressly contemplates that, in the case of a company being wound up, the liquidator may apply to the Tribunal, and treats the liquidator as a distinct category from the company. Therefore the procedural rigours cast upon the 'listed entity' under Regulation 37(1) and (2) cannot be read to automatically bind a liquidator who files a scheme in liquidation. Further, Section 230(5) requires notice to stock exchanges after filing with the Tribunal and does not prescribe a prior NoC. The Liquidator in the present case complied with the notice requirement. Reading Regulation 37(1)/(2) to require a prior NoC in liquidation would import an obligation not found in Section 230 and would be inconsistent with the distinct role of the liquidator under the Companies Act and the Code. [Paras 13, 14, 15, 16, 40]Prior NoC under Regulation 37(1) and (2) of the LODR is not required for schemes for revival of companies undergoing liquidation under the Code.Exemption under Regulation 37(7) of the LODR for restructuring proposals approved under section 31 of the IBC - scheme for revival under Section 230 of the Companies Act read with Regulation 2-B of the Liquidation Process Regulations - harmonious construction of IBC and Companies Act in liquidation - purposive interpretation - The clarification in Regulation 37(7) exempting restructuring proposals approved as part of a resolution plan under section 31 of the IBC equally applies, alternatively, to a scheme of arrangement for revival filed by a liquidator under Section 230 read with Regulation 2 B. - HELD THAT: - A scheme for revival in liquidation and a resolution plan under section 31 both operate in the same continuum of reviving the corporate debtor. The Supreme Court and this Tribunal have recognised Section 230 as a permissible mode of revival in liquidation, and legislative/regulatory amendments (including Regulation 2 B and SEBI's 2018 amendments) post date and must be read in that context. Regulation 37(7) was introduced to facilitate time bound CIRP processes by exempting resolution plans from prior NOC requirements; a strict literal construction excluding schemes in liquidation would frustrate the objective of the Code and lead to an anomalous result where substantially identical modes of revival are treated differently. Accordingly, a purposive and harmonious construction supports extending the benefit of Regulation 37(7) to schemes in liquidation. [Paras 33, 34, 35, 36, 40]The exemption in Regulation 37(7) applies to schemes submitted by a liquidator under Section 230 read with Regulation 2 B, alternatively reinforcing that prior NOC is not required.Scheme of arrangement - prior No-objection letter / NoC from stock exchanges - procedural finality of earlier NCLT directions - The impugned order directing the Liquidator to obtain prior NOC from the stock exchange effectively re-opened an earlier NCLT direction and was set aside; the NCLT is directed to proceed to hear the scheme on merits without insisting on prior NOC. - HELD THAT: - The NCLT had earlier directed that the scheme proceed (order dated 02.05.2023) and no appeal was filed against that order by the stock exchange despite receiving notice. The subsequent order dated 04.04.2024 which stayed proceedings by mandating prior NOC amounted in effect to a review of the earlier direction and was not justified at that stage. Absent any merits objections from the stock exchange to date, and having regard to the statutory scheme that contemplates notice to regulators after filing, the appellate tribunal set aside the impugned order and directed the NCLT to proceed expeditiously with hearing the scheme without insisting on a prior NoC. [Paras 37, 38, 39, 40]Impugned order dated 04.04.2024 is set aside; NCLT directed to hear and decide the scheme on merits without requiring prior NOC, expeditiously.Final Conclusion: The appeal is allowed: the NCLT order requiring prior NoC from the stock exchange is set aside; prior NoC under Regulation 37(1)/(2) of the LODR is not required for schemes for revival in liquidation and, alternatively, the exemption in Regulation 37(7) applies to such schemes; the matter is remitted to the NCLT to proceed on merits without insisting on prior NOC and to dispose of the scheme expeditiously.

2024 (7) TMI 321 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB Law of Competition

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Company penalized for bid rigging in soil testing tenders, penalty reduced from 5% to 3% under Section 3(3)(d)
NCLAT Principal Bench upheld Competition Commission's finding that appellant company colluded with other bidders to rig soil testing tenders for UP Agriculture Department in 2017, violating Section 3(1) read with Section 3(3)(d) of Competition Act 2022. Appellant provided cover bids to prevent tender cancellation due to insufficient participation in Meerut and Jhansi divisions. NCLAT confirmed cease-and-desist order but reduced penalty from 5% to 3% of average annual turnover for last three years, considering appellant's supporting role rather than main role in the cartel. Application disposed.

Cartelisation - bid-rigging - cover bidding - cease and desist order - liability of persons in charge under Section 48 of the Competition Act - penalty under Section 27(b) of the Competition Act - relevant turnover principle for penalty computationCartelisation - bid-rigging - cover bidding - Whether M/s Toyfort participated in concerted anti-competitive conduct in the 2017 soil testing tenders and thereby contravened Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Act - HELD THAT: - The Tribunal examined the DG's findings and the statements of key individuals, including the proprietor of M/s Toyfort and the director of Austere Systems. Documentary and testimonial evidence showed that Toyfort had no experience in soil testing, that bids and EMDs were submitted in ways inconsistent with independent competitive participation (e.g., EMDs prepared from accounts of related persons, bid documents of Austere signed/submitted by Toyfort's proprietor), and that Toyfort's bids functioned as cover bids to ensure sufficient participation so the tender would not be cancelled. The Tribunal accepted the Commission's conclusion that Toyfort, together with Austere Systems and Fimo Info Solutions, colluded to rig the 2017 Meerut and Jhansi tenders and that Toyfort's participation was not intended to win but to create a fac ade of competition. [Paras 24, 61, 62, 63, 64]Toyfort was held to have contravened Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Act; the Commission's finding of liability is upheld.Liability of persons in charge under Section 48 of the Competition Act - Whether the proprietor of M/s Toyfort is liable as a person in charge under Section 48 of the Act - HELD THAT: - The Commission identified individuals responsible under Section 48 and assessed their conduct. The proprietor of Toyfort admitted lack of soil-testing experience, could not explain why bids/EMDs were submitted on behalf of related entities, and gave evasive or inconsistent answers regarding shareholding and submission of rival bids. The Tribunal accepted the Commission's finding that the proprietor played an active role in manipulating the bid process and that the evidence was not credibly rebutted. [Paras 20, 21, 26, 27, 29]The proprietor of M/s Toyfort is liable as a person in charge under Section 48 of the Act; the Commission's identification of the individual is upheld.Penalty under Section 27(b) of the Competition Act - relevant turnover principle for penalty computation - Whether penalty should be computed on 'relevant turnover' limited to turnover from the tendered activity or on overall turnover, and the quantum of penalty to be imposed on Toyfort - HELD THAT: - The Tribunal considered the parties' reliance on the Excel Crop Care decision concerning calculation of relevant turnover where segment-wise turnover could be ascertained. It found that the present case involves first-time bidders with nil or negligible turnover from soil-testing activity; applying a narrow 'relevant turnover' approach would produce nil penalties and defeat the deterrent object of Section 27(b). Given Toyfort's supporting/cover role, the Tribunal held that total turnover may be used for computation in such factual matrices but that the penalty should reflect the lesser role of the appellant. Balancing deterrence and proportionality, the Tribunal reduced the penalty imposed by the Commission from 5% to 3% of the average annual turnover for the last three years. [Paras 34, 35, 68, 69, 70]The Tribunal upheld the Commission's approach to avoid a narrow 'relevant turnover' calculation in these facts and reduced the penalty on Toyfort to 3% of average annual turnover for the last three years (instead of 5% imposed by the Commission).Cease and desist order - Whether the Commission's directive to cease and desist from the anti-competitive practices should be upheld - HELD THAT: - Having affirmed that Toyfort engaged in cartelisation and bid-rigging and that the proprietor was liable under Section 48, the Tribunal found no error in the Commission issuing directions under Section 27(a) requiring the parties and identified individuals to cease and desist from the contravening practices. [Paras 29, 30, 64]The Commission's cease-and-desist directions against Toyfort and the identified individuals are upheld.Final Conclusion: The Tribunal upholds the Commission's findings that M/s Toyfort engaged in cartelisation and bid-rigging (cover bidding) in the 2017 Meerut and Jhansi soil-testing tenders and that the proprietor is liable under Section 48; the Commission's cease-and-desist directions are affirmed. The penalty originally fixed at 5% of average turnover is reduced to 3% of average annual turnover for the last three years in light of Toyfort's supporting role.

2024 (6) TMI 136 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Companies penalized for bid-rigging in soil testing tenders under Competition Act Sections 3(3)(c) and 3(3)(d)
The NCLAT upheld the Competition Commission's finding that companies engaged in bid-rigging and cartelisation in soil testing tenders floated by UP Agriculture Department during 2017-18. Three entities colluded to manipulate the bidding process through geographical allocation and cover bidding arrangements, contravening Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of Competition Act, 2002. The NCLAT confirmed the cease-and-desist order but reduced the penalty from 5% to 3% of average annual turnover for the appellant who played a supporting role by providing cover bids.

Bid-rigging - collusive bidding - cover bidding - cartelisation - cease and desist order - penalty under Section 27(b) of the Act - liability of persons in charge under Section 48 of the Act - relevant turnover vs total turnover for penalty computation - geographical allocation of tendersBid-rigging - collusive bidding - cartelisation - geographical allocation of tenders - Delicacy Continental Pvt. Ltd. engaged in bid-rigging/cover bidding and cartelisation in the 2017-2018 soil testing tenders and thereby contravened Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. - HELD THAT: - The Tribunal accepted the material findings of the DG and the Commission that only three bidders participated in the 2018 Meerut and Saharanpur tenders and that Delicacy acted as a cover bidder under the control and supervision of Austere Systems. Admissions by the directors of Delicacy and Austere, the setting up of labs without independent control, fabricated/after-the-fact MOUs, issuance of experience certificates by Austere to Delicacy to make it eligible, and evidence of bid prices being decided in consultation with Austere cumulatively establish concerted conduct to manipulate the tender process. The Commission's grouping of parties and findings that Austere and Yash Solutions had geographically allocated tenders and submitted supporting bids were endorsed. In view of this body of direct and circumstantial evidence, the Tribunal held there was sufficient meeting of minds and concerted action to constitute bid-rigging and cartelisation under the cited provisions. [Paras 36, 78]The finding of contravention of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) against Delicacy Continental is upheld and the cease-and-desist direction is sustained.Liability of persons in charge under Section 48 of the Act - The individuals identified by the DG (including Mr. Ankur Kumar for Delicacy Continental) are liable under Section 48 for having been in charge of and responsible for the conduct of the enterprises found to have contravened Section 3. - HELD THAT: - The Commission analysed statements and documentary evidence and found that the named individuals had active roles, knowledge of and participation in the anti competitive conduct or failed to credibly rebut the evidence. Specific findings include Delicacy's director admitting the company's passive/controlled role, fabrication of MOUs, involvement in deciding bids through employees in consultation with Austere, and inability to explain material discrepancies; consequently the Commission concluded these persons fall within the statutory liability under Section 48(1) and 48(2). The Tribunal endorsed the Commission's assessment that the identified persons have not credibly refuted the DG's evidence and are thus liable. [Paras 30, 33, 34]The Commission's identification and holding of the persons named in the DG report as liable under Section 48 are upheld.Penalty under Section 27(b) of the Act - relevant turnover vs total turnover for penalty computation - Quantum of penalty: the Commission's imposition of monetary penalty is sustainable in principle, but the Tribunal reduces the penalty imposed on Delicacy Continental from 5% to 3% of the average annual turnover for the relevant three-year period. - HELD THAT: - The Tribunal reviewed the debate over 'relevant turnover' as discussed in Excel Crop Care and the Commission's contrary approach. It recognized that Excel Crop Care mandates consideration of relevant turnover where it can be segregated, but observed that in the present case many bidders were first time entrants with nil or no segregable turnover from the soil testing business; applying a narrow relevant turnover approach here would risk a nil penalty and frustrate deterrence. Having accepted the Commission's rationale for using overall turnover to compute penalty in these peculiar facts, the Tribunal nevertheless exercised proportionality by reducing the Commission's 5% penalty to 3% for Delicacy given its supporting/cover role rather than the principal role in the cartel. The Tribunal also affirmed that the Commission considered aggravating and mitigating factors when fixing penalties. [Paras 39, 41, 42, 83, 84]Penalty calculation methodology as applied by the Commission is accepted in principle for these facts, but the penalty on Delicacy Continental is reduced to 3% of average annual turnover for the last three years instead of 5%.Final Conclusion: The Tribunal affirms the Commission's findings that Delicacy Continental participated in bid rigging/cover bidding and cartelisation in the UP soil testing tenders and upholds the cease and desist direction and the identification of persons liable under Section 48; the monetary penalty is proportionately reduced and Delicacy Continental's penalty is set at 3% of average annual turnover for the prescribed three year period.

2024 (4) TMI 176 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Issues:
The appeal filed u/s 53B of the Competition Act, 2002 against an order dated 10.07.2020 in Reference Case No.03/2016 involving contravention of Section 3(3)(a), 3(3)(c), and 3(3)(d) read with Section 3(1) of the Competition Act.

Issue 1: Allegations against Appellant No.1
The learned counsel argued that the Commission erroneously found Appellant No.1 guilty of contravention of the Competition Act without proper evidence or admission. It was contended that Appellant No.1 was wrongly clubbed with the cartel members without any valid basis, and fundamental principles of competition law were not followed. The submissions on behalf of Appellant No.1 were not considered in the impugned order, despite disproving the allegations against it.

Issue 2: Defense of Appellant No.1
The main contention was that Appellant No.1 only submitted bids for tenders without discussing them with other cartel members. The admissions made by an employee of the appellant were argued to be unauthorized and not binding on the company. Witness statements from other individuals also supported the defense that Appellant No.1 was not part of the cartel.

Issue 3: Evidence of Cartel Activities
Confessions of cartel members, including creating email accounts for communication, sharing bid prices, allocating quantities, and coordinating on tender bids, were presented as evidence. The statements of various witnesses implicated the appellant company in cartel activities, despite attempts to disown employee statements. Emails exchanged among cartel members further demonstrated the coordination and sharing of sensitive information.

Issue 4: Membership in the Cartel
The argument that mere receipt of information without active participation does not establish cartel membership was refuted. The evidence of cartelization, including consistent statements and email exchanges among members, indicated the appellant's involvement. The strict rules of evidence were deemed not applicable in competition proceedings, and even attempts to rig bids were considered sufficient to attract legal provisions.

Issue 5: Dismissal of Appeal
In light of the evidence presented, including the continuous receipt of emails without objection and access to shared email accounts, the appeal and all pending applications were dismissed. The exchange of information among cartel members, even without active participation from the appellant, was deemed sufficient to establish involvement in anti-competitive conduct.

This summary provides a detailed breakdown of the judgment, highlighting the key arguments, evidence, and conclusions related to the issues raised in the appeal.

Appeal dismissed as company's five-year receipt of cartel emails without protest proves participation in bid rigging under Competition Act Sections 3(3)(a), 3(3)(c), 3(3)(d)
The NCLAT dismissed an appeal challenging cartelisation findings under Competition Act Sections 3(3)(a), 3(3)(c), and 3(3)(d) read with Section 3(1). The appellant argued it was wrongly included in the cartel without proper consideration by the Commission. The NCLAT held that strict evidence rules don't apply in competition proceedings. The appellant received cartel emails for five years without protest or requesting cessation, indicating meeting of minds. Evidence showed all parties had access to a shared email account. The tribunal found that mere information exchange suffices for bid rigging cases, and continuous receipt of emails without objection demonstrated participation in anti-competitive conduct.

Contravention of Section 3(3) and Section 3(1) of the Competition Act - Cartelisation - Bid rigging - Exchange of information between competitors - Receipt of information versus exchange of information - Admissions and confessions of company employees - Holistic evaluation of evidence in competition proceedings - Strict rules of evidence not applicable in competition proceedings - Attempt to rig a bid as sufficient to attract Section 3Cartelisation - Bid rigging - Contravention of Section 3(3) and Section 3(1) of the Competition Act - Appellant was a participant in the cartel and liable for contravention of Section 3(3) read with Section 3(1) of the Competition Act. - HELD THAT: - The Tribunal accepted the Commission's finding that contemporaneous admissions by various cartel members, contemporaneous emails allocating tender quantities and pricing, and the confessions of appellant's managerial personnel cumulatively establish the appellant's participation in cartel activity. The internal emails and spreadsheets showing allocation of quantities and coordinated pricing, together with oral confirmations by multiple parties, were treated as probative of an agreement to rig bids. The fact that some witnesses exonerated the appellant did not outweigh the consistent evidence implicating the appellant, including statements by the appellant's own employees that they received and acted upon the communications. Given this matrix of evidence, the appellant's contention that it merely submitted independent bids was rejected and liability under Section 3(3) read with Section 3(1) was upheld. [Paras 11, 13, 14, 15, 19]Appellant held to be part of the cartel and guilty of contravention of Section 3(3) read with Section 3(1).Admissions and confessions of company employees - Receipt of information versus exchange of information - Exchange of information between competitors - Statements/confessions of the appellant's employees and receipt of cartel communications were sufficient to attribute cartel participation to the company; mere receipt of information without overt sending was not a defence where evidence shows continued reception and access consistent with participation. - HELD THAT: - The Tribunal rejected the submission that an employee's statements were unauthorised and therefore non-binding, observing that managerial-level admissions and contemporaneous conduct (receipt and use of emails, passing messages to seniors, and lack of protest) indicated corporate knowledge and involvement. The court held that prolonged receipt of coordinated communications without objection, and evidence that parties had access to the cartel e-mail account, supported an inference of mutuality and meeting of minds. Consequently, the narrow pleading that the appellant only received and did not exchange information was insufficient to discharge its statutory liability. [Paras 11, 12, 21]Employee confessions and prolonged receipt of cartel communications were held sufficient to attribute participation to the company; mere receipt did not absolve liability.Holistic evaluation of evidence in competition proceedings - Strict rules of evidence not applicable in competition proceedings - Attempt to rig a bid as sufficient to attract Section 3 - Competition proceedings permit a holistic appraisal of oral and documentary material and are not constrained by strict rules of evidence; an attempt to rig bids falls within the definition of cartelisation. - HELD THAT: - Relying on precedent and statutory scheme, the Tribunal reiterated that proceedings under the Competition Act call for holistic scrutiny of oral statements and documents and do not demand adherence to strict evidentiary formalities applicable in other fora. The Tribunal accepted that consistent oral confessions and contemporaneous documentary records, taken together, can establish anti-competitive conduct. Further, the Tribunal emphasised that an attempt to rig bids is sufficient to attract the prohibition on cartelisation, so that evidence of pre-award coordination and allocation of quantities was determinative even if full implementation varied. [Paras 19, 20, 21]Holistic assessment of oral and documentary evidence is permissible and an attempt to rig bids suffices to establish contravention under Section 3.Final Conclusion: The appeal and all pending applications are dismissed; the Tribunal upheld the Commission's finding of cartelisation and liability of the appellant under Section 3(3) read with Section 3(1), applying a holistic evidentiary approach and treating employee confessions and sustained receipt of cartel communications as sufficient proof of participation.

2024 (3) TMI 761 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Fee waiver for refiling competition application rejected absent indigent circumstances or economic hardship.
Rule 4(3) of the Competition Appellate Tribunal (Form and Fee for filing Competition Applications) Rules, 2009 permits waiver of filing or refiling fee only in suitable cases where the applicant shows indigent circumstances or economic hardship. A plea based on an earlier unauthorised withdrawal by the chosen representative was considered, but the record did not establish any financial inability justifying relief. Authorities on fault of counsel were distinguished on their facts. The refiling fee was therefore held payable and the waiver request was rejected.

Waiver of filing fee under Rule 4(3) of the Competition Appellate Tribunal (Form and Fee for filing Competition Applications) Rules, 2009 - discretion to waive fee to advance the cause of justice - party should not suffer for default or misconduct of his counsel - requirement of indigence or poor economic condition as basis for fee waiver - misrepresentation by agent/authorised representativeWaiver of filing fee under Rule 4(3) of the Competition Appellate Tribunal (Form and Fee for filing Competition Applications) Rules, 2009 - requirement of indigence or poor economic condition as basis for fee waiver - party should not suffer for default or misconduct of his counsel - Application for waiver of the court fee of Rs.3 lakhs for re-filing the Compensation Application was refused. - HELD THAT: - The Tribunal considered Rule 4(3) (referred to in the order as Rule 4(2) and reproduced) which permits the Tribunal to waive fee to advance the cause of justice in suitable cases, taking into account the economic condition or indigent circumstances of the applicant. The applicant's case that his former authorised representative had withdrawn the earlier Compensation Application without his instructions and that he was under a bona fide belief that the representative was a qualified advocate was examined against the statutory test for waiver. The Tribunal distinguished precedents relied upon by the applicant (Rafiq & Anr. and Sohanlalarya) on the ground that those decisions addressed situations of default or non-appearance by counsel resulting in dismissal, whereas in the present matter the representative had actively appeared and moved for withdrawal. Even assuming misrepresentation by the representative, the power to waive fees under the Rule is tied to the applicant's economic condition or indigence. On the materials and submissions, the Tribunal found no sufficient evidence of indigence or poor economic condition to justify exercise of the discretion to waive the statutory fee. Accordingly, the discretionary relief of waiving the refiling fee was not available to the applicant and the application was dismissed. [Paras 8, 9, 10, 11, 12]I.A. No. 758 of 2023 for waiver of the court fees of Rs.3 lakhs for re-filing Compensation Application No.1 of 2023 is dismissed.Final Conclusion: The Tribunal declined to waive the statutory filing fee for re-filing the Compensation Application because the discretionary power under the Rules to waive fee is primarily predicated on the applicant's indigence or poor economic condition, which was not demonstrated; precedents excusing parties for counsel's default were distinguished on the facts.

2023 (10) TMI 485 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH , NEW DELHI Law of Competition

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Issues: (i) whether the impugned order was vitiated because the coram which heard the final arguments did not remain constant and the final order was signed by fewer members than those who heard the matter, coupled with an inordinate delay in pronouncement; (ii) whether the Competition Commission was required to grant an oral hearing after receipt of the supplementary investigation report and on the issue of penalty and its quantum.

Issue (i): Whether the impugned order was vitiated because the coram which heard the final arguments did not remain constant and the final order was signed by fewer members than those who heard the matter, coupled with an inordinate delay in pronouncement.

Analysis: The statutory scheme under Section 36 of the Competition Act, 2002 requires the Commission to act in accordance with natural justice, while Section 22 contemplates decision by the members present and voting and the relevant business regulations emphasise orderly hearing and signing of final orders. The Tribunal relied on the principle that a body hearing a matter should itself decide it, and treated the constant-coram requirement as integral to fair hearing. It noted that the matter had remained reserved for a long period and that the final order was issued by a smaller set of members after some members had demitted office, creating a serious infirmity in the decision-making process and a legitimate apprehension of prejudice.

Conclusion: The challenge succeeded. The impugned order was held to be vitiated and was set aside in favour of the appellants.

Issue (ii): Whether the Competition Commission was required to grant an oral hearing after receipt of the supplementary investigation report and on the issue of penalty and its quantum.

Analysis: The Tribunal read Sections 26 and 36 of the Competition Act, 2002 together with the procedural regulations to hold that once further investigation had been directed and a supplementary report was considered, fairness required an opportunity of oral hearing to the affected parties. It further held that, where penalty was in contemplation, the parties should have been heard on the issue of quantum as part of the final adjudicatory exercise.

Conclusion: The omission to grant oral hearing on the supplementary report and penalty issue was held to be contrary to natural justice and in favour of the appellants.

Final Conclusion: The impugned order could not be sustained for breach of natural justice, and the matters were remitted for fresh consideration by an appropriately constituted coram with all contentions kept open.

Ratio Decidendi: In a quasi-judicial proceeding, the same members who substantially hear the matter must participate in the final decision, and where further material is introduced through supplementary investigation, fairness may require a fresh opportunity of oral hearing before final adjudication.

Natural justice in competition proceedings requires constant coram and oral hearing on supplementary reports and penalty quantum.
A quasi-judicial body must decide a matter with the same substantially hearing members, and a final order signed by a reduced coram after delay raises a serious natural justice concern. The text also states that, where a supplementary investigation report is considered, affected parties should ordinarily be given an oral hearing, especially when penalty and its quantum are under consideration. The combined effect is that fairness requires both proper constitution of the decision-making body and a meaningful opportunity to address additional material before final adjudication, failing which the order is vulnerable to challenge and remand for fresh consideration.

Principles of natural justice under section 36 - one who hears must decide - coram for hearings - signature and authentication of orders by members - opportunity of oral hearing on supplementary investigation report - opportunity of oral hearing on quantum of penalty - delay in pronouncement of judgment and its effect on validity - remand for fresh hearingPrinciples of natural justice under section 36 - one who hears must decide - coram for hearings - signature and authentication of orders by members - delay in pronouncement of judgment and its effect on validity - Validity of the Impugned Order in light of variation in the coram that heard the matter, fewer members signing the final order and the long delay in pronouncement. - HELD THAT: - The Tribunal examined whether the same body of members who heard the final arguments should have been the body to decide and sign the final order and whether the 13 month delay in pronouncement vitiated the Impugned Order. Relying on statutory scheme (Sections 22 and 36) and regulations governing meetings and final orders, and considering precedent emphasizing that ''one who hears must decide'', the Tribunal held that the combination of (a) a larger body having conducted hearings but a smaller body signing the order, and (b) an inordinate delay between reservation and pronouncement, produced a serious infirmity. The Tribunal observed that retirement of members in the intervening period made it impossible for all who had heard the case to sign, and that this gave rise to legitimate doubt about whether the collective deliberation of those who heard had been reflected in the final order. The cumulative effect offended the spirit of natural justice as envisaged by section 36 and the applicable regulations and authorities, and therefore the Impugned Order could not be permitted to stand. [Paras 72, 78, 79]Impugned Order set aside insofar as it was pronounced by a smaller body after an inordinate delay without the same coram that had heard the matter; the order is invalid for non adherence to the principles of natural justice.Opportunity of oral hearing on supplementary investigation report - opportunity of oral hearing on quantum of penalty - remand for fresh hearing - Whether the parties were entitled to an oral hearing after the Director General's Supplementary Investigation Report was placed before the Commission and whether they were entitled to opportunity of oral hearing on the quantum of penalty. - HELD THAT: - The Tribunal analysed section 26(5)-(7), Regulation 21 and Regulation 29 (manner of making submissions) and Regulation 48 (procedure for imposition of penalty). It concluded that once the CCI directed a supplementary investigation and received the Supplementary Investigation Report, the statutory and regulatory scheme required that objections/suggestions be invited and, in light of section 36, parties should have been afforded an opportunity to address the Commission orally on the Supplementary Investigation Report. Further, where penalty is to be imposed, Regulation 48 contemplates a show cause process including opportunity to make representations and, if oral hearing is granted, it must be afforded before determining quantum. Because these opportunities were not provided, the Tribunal found the procedural defect serious and material. [Paras 75, 76, 78]Matter remanded to CCI for fresh hearing by an appropriate coram; CCI to afford oral hearings on the Supplementary Investigation Report and on the question of penalty and its quantum, keeping all contentions open.Final Conclusion: The Impugned Order dated 18.09.2018 is set aside for failure to comply with principles of natural justice - the coram that heard the matter did not deliver and authenticate the final order and the pronouncement was inordinately delayed; the matter is remitted to the Competition Commission of India for rehearing by an appropriate coram (including oral hearings on the Supplementary Investigation Report and on penalty/quantum). The deposits furnished pursuant to the earlier direction are to be released to the appellants.

2023 (10) TMI 322 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Appeals Dismissed: Tribunal Confirms Fair Valuation and Compliance in Amalgamation Case.
The Tribunal dismissed the appeals, determining that the Appellants lacked the locus standi to challenge the Impugned Order due to insufficient shareholding and debt interest. It upheld the valuation method and swap ratio of 15:1 as fair and approved by the majority of shareholders. The Tribunal confirmed compliance with the appointed date as per MCA Circular No. 09/2019 and found no violation of Section 230 of the Companies Act, 2013. The scheme of amalgamation was deemed fair, reasonable, and compliant with legal provisions, leading to the dismissal of the appeals as meritless.

Power to sanction compromise, arrangement and amalgamation - Proviso to Section 230(4): threshold for objections by shareholders and creditors - Tribunal's discretion to dispense with meeting of creditors and shareholders - Locus and maintainability of objections to a sanctioned scheme - Scope of judicial scrutiny of commercial wisdom in sanctioning schemesProviso to Section 230(4): threshold for objections by shareholders and creditors - Locus and maintainability of objections to a sanctioned scheme - Whether the appellants have locus to challenge the Tribunal's sanction of the composite scheme of amalgamation. - HELD THAT: - The Tribunal applied the proviso to Section 230(4) and found that objectors must hold not less than 10% of shareholding or have outstanding debt of not less than 5% of the total outstanding debt (per latest audited financial statements) to be entitled to raise objections. The appellants in CA (AT) No. 132 held approximately 0.0699% of the paid-up share capital and the appellants in CA (AT) Nos. 150 & 151 did not satisfy the 5% debt threshold. The Tribunal observed that the threshold requirement prevents minuscule shareholders or creditors from stalling a scheme approved by an overwhelming majority, and that where the language of the provision is clear it must be followed. The Appellate Tribunal concluded that the appellants lacked the statutory threshold and therefore had no locus to maintain the objections to the scheme. [Paras 23]Appellants lack locus; objections were not maintainable under the proviso to Section 230(4).Tribunal's discretion to dispense with meeting of creditors and shareholders - Power to sanction compromise, arrangement and amalgamation - Whether meetings of secured/unsecured creditors were mandatorily required or whether the Tribunal could dispense with them in the present scheme. - HELD THAT: - The Tribunal held that where a scheme does not involve compromise or arrangement with creditors (i.e., it is between companies and their members as envisaged under Section 230(1)(b)), there is no mandatory requirement to convene meetings of secured or unsecured creditors. Reliance was placed on earlier decisions and on the discretion inherent in Sections 230 and 232; the Tribunal had directed issuance of individual notices to creditors and permitted representations, but dispensing with meetings was permissible where creditors' rights were not being compromised. Consequently, the absence of consent affidavits or meetings of unsecured creditors did not vitiate the sanction in the facts of this case. [Paras 23]No mandatory requirement to hold meetings of secured/unsecured creditors where the scheme does not compromise their rights; dispensing with meetings was lawful here.Scope of judicial scrutiny of commercial wisdom in sanctioning schemes - Power to sanction compromise, arrangement and amalgamation - Whether the Appellate Tribunal should examine valuation, swap ratio and other commercial points raised by the appellants despite their lack of locus. - HELD THAT: - The Tribunal observed that where appellants fail to meet the statutory threshold for objections, the Tribunal need not enter into a detailed re examination of the commercial wisdom or valuation aspects of a scheme approved by an overwhelming majority (99.99% in this case). The Appellate Tribunal emphasised that the Tribunal's role is to ensure procedural compliance and that the scheme is not violative of law or public policy, but it is not to substitute judicial commercial judgment for that of the majority of shareholders. Given that the appeals failed on locus, the Tribunal declined to adjudicate the other framed issues on merits. [Paras 24, 25]Other substantive challenges (valuation, swap ratio, compliance issues) were not examined because appeals were dismissed for lack of locus.Final Conclusion: Both appeals are dismissed for want of locus as the appellants did not satisfy the statutory thresholds in the proviso to Section 230(4); the Tribunal's dispensing with meetings of creditors was lawful in the circumstances and the Appellate Tribunal did not examine the remaining substantive issues on merits. No costs.

2023 (8) TMI 1432 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Law of Competition

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Condonation of delay in re-filing requires a full, credible explanation for repeated defects and prolonged default.
Rule 26 of the NCLAT Rules, 2016 requires a defective appeal to be re-filed within the prescribed time, and delay in re-filing is not condoned automatically. The applicant must explain the entire period of default with a reasonable and justifiable cause. Here, repeated re-filings left the same defects unrectified, including defects in the cause title, and the explanation did not satisfactorily account for the prolonged delay. The Tribunal therefore declined to condone the delay in re-filing and dismissed the condonation application.

Condonation of delay in refiling - sufficient cause for condonation - scrutiny and return of defective appeal under Rule 26 - Registrar's power to decline registration for failure to cure defects - refiling delay vis-a -vis limitation for filing appealCondonation of delay in refiling - sufficient cause for condonation - refiling delay vis-a -vis limitation for filing appeal - Whether an application for condonation of delay in refiling an appeal requires the appellant to demonstrate sufficient cause and whether delay in refiling can be condoned even if it exceeds the statutory limitation for filing the appeal. - HELD THAT: - The Tribunal held that an application for condonation of delay in refiling must be supported by sufficient cause. The five Judge Bench decision in V.R. Ashok Rao was treated as settled law: the period prescribed for filing an appeal under the substantive statute does not govern the period for curing defects and the Tribunal may condone delay in refiling/re-presentation even if it exceeds the statutory limitation for filing the appeal, provided sufficient justification is shown. Thus, while jurisdiction to condone refiling delay exists, the applicant must satisfy the Court that sufficient cause prevented timely compliance with the return under Rule 26. [Paras 6, 15, 16]An application for condonation of delay in refiling requires demonstration of sufficient cause; delay in refiling may be condoned despite exceeding statutory limitation if sufficient justification is shown.Scrutiny and return of defective appeal under Rule 26 - Registrar's power to decline registration for failure to cure defects - condonation of delay in refiling - Whether the appellant in the present case established sufficient cause for the repeated delays in curing defects and refiling the appeal, and the consequence of failing to do so. - HELD THAT: - On the facts, the Registry first intimated ten defects on 01.02.2022 and the appellant repeatedly refiled without curing those defects on multiple occasions (24.05.2022, 13.06.2022 and 19.09.2022). The Tribunal noted that one objection - the cause title showing an incorrect year - remained uncorrected, reflecting persistent default. The appellant's explanation (one counsel's temporary custody and consequent inability to refile) was rejected as insufficient and, given the repeated failures to cure defects within the period envisaged by Rule 26(2), the Registrar's remit to place the matter before the Bench was properly invoked. For these reasons the application for condonation was dismissed and the appeal was held not to be duly constituted. [Paras 5, 7, 17, 18, 19]The appellant failed to demonstrate sufficient cause for the repeated delays in curing defects; the application for condonation (IA No. 3685 of 2022) is dismissed and the appeal is dismissed as not duly constituted.Final Conclusion: The application for condonation of delay in refiling is dismissed for want of sufficient cause; consequentially the appeal is dismissed as not duly constituted.

2023 (8) TMI 620 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Cinema Merger Approved: No Anti-Competitive Issues Found, Tribunal Rules.
The Tribunal dismissed the appeal, determining that the merger between the two cinema companies constituted a combination under the Competition Act, 2002, rather than an anti-competitive agreement. It found no prima facie case under Sections 3 or 4, as the merger did not result in an appreciable adverse effect on competition. The Tribunal noted that while potential dominance was a concern, it did not warrant action without evidence of abusive conduct. Consequently, the application alleging contravention of Section 3(1) was deemed not maintainable.

Anti-competitive agreements - Combination by merger - Maintainability of information under Section 19(1)(a) - Appreciable adverse effect on competition (AAEC) - Dominance and abuse of dominant position - Conduct requirement for abuse - Ex ante assessment of potential AAECMaintainability of information under Section 19(1)(a) - Anti-competitive agreements - Combination by merger - Information under Section 19(1)(a) alleging contravention of Section 3(1) is not maintainable where the alleged arrangement is a merger/combination bringing the parties into a single entity. - HELD THAT: - The court held that Section 3(1) addresses anti competitive agreements entered into by two or more parties who retain separate identities post agreement. A merger sanctioned under the scheme results in a combination as defined in Section 5 and is governed by the regime for combinations under Section 6. Where the transaction effects a merger and the parties cease to be separate enterprises, invoking Section 3(1) by way of information under Section 19(1)(a) is not in accordance with law. The Tribunal's sanctioning of the scheme with appointed date fixed shows the entities have become one; therefore the petition framed as a complaint under Section 3(1) was misplaced and not maintainable for initiation of action under Section 19(1)(a). [Paras 15, 16]The information was not in accordance with law and thus not maintainable as a Section 3(1) case.Dominance and abuse of dominant position - Appreciable adverse effect on competition (AAEC) - Conduct requirement for abuse - Ex ante assessment of potential AAEC - Allegations of future dominance alone do not constitute abuse under Section 4; conduct must be shown for action under Section 4, and ex post investigation into abusive conduct remains open. - HELD THAT: - The court endorsed the Commission's conclusion that dominance per se is not anti competitive; liability under Section 4 requires proof of abusive conduct. While an ex ante assessment of likely AAEC can be undertaken by the Commission when statutory criteria are met, mere apprehension of future dominance without specific alleged abusive conduct does not establish a prima facie case under Section 4. The Commission correctly observed that if post merger abusive conduct is alleged or discovered, the Commission may examine it at that stage (or act suo motu), but in the absence of pleaded or demonstrable conduct, no action under Section 4 could be sustained on the present information. [Paras 7, 18]No prima facie case of abuse of dominant position was found; liberty left to examine any future or post facto allegations of abusive conduct.Final Conclusion: The appeal is dismissed. The information filed under Section 19(1)(a) alleging contravention of Section 3(1) was not maintainable in view of the sanctioned merger/combination; no prima facie case under Section 4 was made out, with liberty reserved to examine any future allegations of abusive conduct.

2023 (7) TMI 1537 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Law of Competition

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Issues: (i) whether the appellants had locus standi as "aggrieved persons" to challenge the approval order; (ii) whether notice under Section 29(1) had to be issued to both the acquirer and the target entity, and whether non-issuance to the target vitiated the approval; (iii) whether, after receipt of the response to the show-cause notice, the Commission was required to form a further prima facie opinion under Section 29(2) and direct publication of the combination details; (iv) whether the voluntary modification offered by the acquirer adequately addressed the competition concerns and whether the approval suffered from non-application of mind or breach of natural justice.

Issue (i): whether the appellants had locus standi as "aggrieved persons" to challenge the approval order.

Analysis: The expression "person aggrieved" in the Competition Act, 2002 has to be understood widely, having regard to the public-interest and inquisitorial character of the Commission's functions. A competitor, stakeholder, or affected market participant is not to be excluded merely because it was not formally a party before the Commission, especially where it had raised objections before the Commission and alleged direct competitive prejudice from the impugned combination.

Conclusion: The appellants had locus standi to maintain the appeals.

Issue (ii): whether notice under Section 29(1) had to be issued to both the acquirer and the target entity, and whether non-issuance to the target vitiated the approval.

Analysis: The phrase "parties to the combination" in Section 29(1) refers to both sides of the transaction, namely the acquirer and the target entity. However, on the facts, the target entity was under insolvency resolution, the resolution professional had placed the transaction before the committee of creditors, and the relevant information about the target was already in the public domain and used in the notice process. In that setting, the omission to issue notice to the target did not, by itself, nullify the approval.

Conclusion: Notice under Section 29(1) was required to both parties, but the absence of notice to the target did not ipso facto vitiate the approval order in the facts of the case.

Issue (iii): whether, after receipt of the response to the show-cause notice, the Commission was required to form a further prima facie opinion under Section 29(2) and direct publication of the combination details.

Analysis: Section 29(2) contemplates a fresh prima facie assessment after the response is received or a report is obtained. Only if the Commission remains prima facie of the view that the combination is likely to cause appreciable adverse effect on competition does the obligation to direct publication arise. The statutory scheme does not require publication where the Commission, after considering the response, is satisfied that the concerns no longer survive.

Conclusion: A further prima facie opinion under Section 29(2) was required only if AAEC concerns persisted; the Commission was not bound to direct publication once it accepted that the concerns had been addressed.

Issue (iv): whether the voluntary modification offered by the acquirer adequately addressed the competition concerns and whether the approval suffered from non-application of mind or breach of natural justice.

Analysis: The Commission examined the response, the voluntary modification, the market factors and the likely competitive effects, and recorded that the modification addressed the prima facie concerns. The order reflected consideration of the statutory factors and did not disclose any mechanical approval. As to natural justice, participation by third parties in combination proceedings is regulated by the statute and the regulations, and the stage for public objections arises only when publication under Section 29(2) is directed; that stage never arose here.

Conclusion: The modification was accepted as sufficient to address the competition concerns, and no violation of natural justice or non-application of mind was established.

Final Conclusion: The approval of the combination was upheld and the challenges to the Commission's order failed on merits.

Ratio Decidendi: In combination proceedings under the Competition Act, 2002, the Commission may approve the proposal upon being satisfied, after considering the response and any voluntary modification, that the transaction is not likely to cause appreciable adverse effect on competition, and third-party participation or public objections arise only when the statutory stage for publication is reached.

Competition law locus standi and combination approval: notice, prima facie reassessment, and voluntary modification upheld.
Locus standi under the Competition Act was construed widely, so competitors and affected market participants who had objected before the Commission could challenge the combination approval. Section 29(1) required notice to both parties to the combination, but on the facts the omission to notify the target, which was in insolvency resolution and already part of the information flow, did not by itself invalidate the approval. Section 29(2) required a fresh prima facie assessment only if appreciable adverse effect on competition concerns persisted; once the Commission accepted the response and voluntary modification as sufficient, publication was not mandatory. The approval was upheld, with no non-application of mind or breach of natural justice.

Locus standi to challenge the order of the Competition Commission of India (CCI) - SCN to be issued to the parties to combination, i.e., both acquirer and the target entity or word ‘parties’ occurring in Section 29(1) has to be read singularly - non-issuance of Show Cause Notice to HNG vitiates the order of approval granted by the Commission under Section 31, sub-section (1) or not - combination is likely to cause an appreciable adverse effect on competition by the CCI under Section 29, sub-section (1) or not - process as contemplated under Section 29, sub- section (2) having not been completed by the CCI before passing the order, the order passed by the CCI is against the procedure prescribed under Section 29 and deserved to be set aside - obligation to direct the parties to publish details of the combination - modifications suggested by Respondent No.2 in its reply to Show Cause Notice, adequately addressed the AAEC as expressed in the Show Cause Notice under Section 29, sub- section (1) - non-application of mind - violation of principles of natural justice. Whether the Appellant(s) have locus to challenge the order of the Competition Commission of India dated 15.03.2023 within the meaning of Section 53B of the Competition Act, 2002? - HELD THAT:- In the Judgment of the Hon’ble Supreme Court in Samir Aggarwal [2020 (12) TMI 621 - SUPREME COURT] where Hon’ble Supreme Court was considering the expression ‘person aggrieved’ in context of the Competition Act it was categorically held by Hon’ble Supreme Court that the expression person aggrieved has to be understood widely and not be constructed narrowly. The present is a case where Appellants are challenging the order passed by the Commission approving the combination of two biggest market players in container glass industry. It is contended in the Appeal that approval of the combination has been done in breach of the procedure prescribed in the Competition Act. We have noticed the pleading in C.A. (AT) No. 7/2023 where it is specifically pleaded that Appellant is also a body of micro and small manufacturers of glass based in UP which represent the interest of MSME Glass Manufacturer. The Appellant in the Appeal pleads and has enumerated various consequences of combination of two largest players in market. The Appellant expresses apprehension and filed objection before the CCI even before the approval of the combination and the Commission vide its letter dated 23.02.2023 has noted the concern raised by the Appellant and Appellant was communicated that their concerns shall be noted at the relevant time - the objection of the Respondents that none of the Appellants have locus to file the Appeal is rejected. Whether Section 29, sub-section (1) contemplates that a Show Cause Notice to be issued to the parties to combination, i.e., both acquirer and the target entity or word ‘parties’ occurring in Section 29(1) has to be read singularly? - HELD THAT:- There can be no quarrel to the provision of General Clauses Act that words in singular includes plural and vice versa but when we look into the specific purpose and object which is delineated by Section 29(1), in show cause notice to both the parties, we cannot agree with the submission of the CCI that parties in the present case shall only be the AGI who has given notice under Section 6(2). There can be no doubt that Respondent No. 2-AGI who has given notice under Section 6(2) is included within the definition of parties. The show cause notice specifically required to be given to both of them. The statute clearly contemplates issuance of show cause notice to both the parties of the combination - Section 29(1) of the Act, contemplates that show cause notice has to be issued to both parties to the combination i.e. acquirer and target entity. Whether non-issuance of Show Cause Notice to HNG vitiates the order of approval granted by the Commission under Section 31, sub-section (1)? - HELD THAT:- In the facts of the present case, especially that Respondent No. 3 is in insolvency and the Resolution Professional himself has placed proposal for acquisition of Respondent No. 2 which has been approved by the Committee of Creditors and all details and information have been given by Respondent No. 2 in its notice under Section 6(2) of Competition Act which relate both to Respondent No. 2 and Respondent No. 3, non-issuance of notice to target entity i.e. Respondent No. 3 is not to ipso facto vitiate the order of the Commission when Respondent No. 3 has neither any objection nor grievance regarding non-service of notice to Respondent No. 3 and information regarding Respondent No. 3 are all in public domain which has been used by Respondent No. 2 in submitting the notice. By mere non-issuance of notice to Respondent No. 3, the proceedings before the CCI need not be annulled. Whether after formation of prima-facie opinion that combination is likely to cause an appreciable adverse effect on competition by the CCI under Section 29, sub-section (1), there was no occasion to form again a prima facie opinion under Section 29(2) after receipt of response to the Show Cause Notice and the CCI was required to complete the further process under Section 29(2) including direction to the parties to the combination to publish details of combination? - Whether the process as contemplated under Section 29, sub- section (2) having not been completed by the CCI before passing the order dated 15.03.2023, the order passed by the CCI is against the procedure prescribed under Section 29 and deserved to be set aside? - Whether inspite of Respondent No.2 along with response to Show Cause Notice having offered modification to address the prima facie concern expressed in the said Show Cause Notice as per Regulation 25 (1) (a) of 2011 Regulations, the CCI was obliged to direct the parties to publish details of the combination? - HELD THAT:- The bone of contention of the parties is as to whether after formation of prima facie opinion under Section 29(1), whether there was any requirement of formation of prima facie opinion at the second time under sub-section (2) of Section 29. Whereas the Appellant(s) pleads that there is no requirement of formation of prima facie opinion at the second time and when notice under Section 29, sub-section (1) has been issued, even after response to the notice, the Commission is required to direct the parties to the combination to publish the details of the combination. The Appellants’ contention is that Section 29, sub-section (2), insofar as it directs for publishing the details of the combination having not been complied, the statutory procedure has not been complied by the Commission, resulting in vitiation of the order approving the combination dated 15.03.2023. The contention of the CCI and other Respondents is that formation of prima facie opinion is required at the second stage as per Section 29 sub-section (2), when response is received to the notice and the requirement of publication of details of the combination comes into play only when prima facie opinion is formed at the second time. The plain reading of Section 29, sub-section (2) indicates that the Commission, if it is prima facie of the opinion that combination is likely to have an appreciable adverse effect on competition, it shall, within seven working days from the date of receipt of the response of the parties to the combination, or the receipt of the report from Director General called under sub-section (1A), whichever is later, direct the parties to the said combination to publish details of the combination - The legislative intent is clear by sub-section (2) of Section 29 that there may be cases where the Commission is satisfied after response of the notice or the report of the Director General that there is no appreciable adverse effect on competition, it may decide not to proceed further under Section 29, sub-section (2) and approve the combination. The submission of the Appellant(s) that prima facie opinion at the second stage is not required to be formed does not commend. As per the statutory provisions contained in Section 29 and the Regulations 2011, after receipt of the response to show-cause notice, the Commission has to form prima facie opinion at the second stage as required by Section 29, sub-section (2) and in cases where prima facie opinion at the second stage under Section 29, sub-section (2) has not been formed and the Commission is satisfied that the response received in the modification, if any, submitted by the Party does not meet the requirements of law, the Commission directed publication of details of combination in such cases - the Commission proceeded to approve the combination by following the statutory procedure prescribed under Section 29 as well as Regulations 2011. Further, in the facts of the present case, under sub-section (2) of Section 29, the publication of details of combination was not required to be directed, since at the second stage, the Commission did not form any prima facie opinion of AAEC - the Commission had duly considered the modification submitted by AGI in response to the show-cause notice and after accepting the modification, proceeded to approve the combination under Section 31, sub-section (1). Whether order of the Commission dated 15.3.2023 can be said to have been passed in violation of principles of natural justice since the objections filed by Appellant the U.P. Glass Manufacturers Syndicate even after the order dated 22.02.2023 were not duly considered? - HELD THAT:- The principles of natural justice are generally to be followed when a decision is taken, which has civil consequence on any person or entity. The Competition Act, 2002 and the Regulations framed thereunder, specially Combination Regulations 2011 provides a detailed procedure and manner in which participation of others including Members of the pubic and other parties have to be allowed - The right of participation of public in general and other entities arises when under Section 29, sub-section (2) of the Act, the Commission directed the parties to the combination to publish the details of the combination within seven days from of such direction, for bringing the combination to the knowledge or information of the public and persons affected or likely to be affected. The stage for filing any objection or giving any information by public in general including the Appellant – UPGMS can arise only when details of the combination are published under Section 29, sub-section (2). In the present case, stage of direction to publish details of combination had not arisen, since there was no prima facie opinion formed at the second stage under Section 29, sub- section (2) - The right to third parties to submit objections arises when the Commission issues direction to the parties to publish the details of the proposed combination, which stage never arose in the present case - in the procedure adopted by the Commission in inquiring the notice under Section 6, sub-section (2), there is no violation of principles of natural justice, which can be attributed to the Commission. Conclusion - i) The appellants have locus standi to challenge the CCI's order, as the term "aggrieved person" is broadly interpreted in the context of the Competition Act. ii) The CCI should have issued the show-cause notice to both the acquirer and the target entity, as required by Section 29(1). iii) The non-issuance of notice to HNG did not vitiate the CCI's order, given the insolvency context and lack of objection from the Resolution Professional. iv) The CCI's process was compliant with the statutory procedure, and the acceptance of modifications addressed AAEC concerns, negating the need for a second prima facie opinion and publication of details. v) The CCI's process did not violate principles of natural justice, as the procedural framework did not require public participation at the stage reached. Appeal dismissed.

2023 (7) TMI 638 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Issues Involved:
1. Requirement of obtaining consent affidavits or holding meetings of Secured Creditors and Equity Shareholders.
2. Dispensation from convening meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors.

Summary:

1. Requirement of obtaining consent affidavits or holding meetings of Secured Creditors and Equity Shareholders:
The Appellant challenged the NCLT's directive to obtain consent affidavits from at least ninety percent of the value of total Secured Creditors and Equity Shareholders or to hold meetings as per sections 230(6) and 230(1) of the Companies Act, 2013. The NCLT's order was based on the proposed Scheme of Arrangement involving the demerger of the Digital EPC and Infrastructure Business from RPPMSL (Demerged Company) to RIL (Resulting Company).

2. Dispensation from convening meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors:
The Appellant argued that since RPPMSL is a wholly-owned subsidiary of RIL, no new shares are to be issued, and the rights of shareholders and creditors would not be affected. The Appellant cited judgments from various High Courts and the NCLAT, which dispensed with such meetings under similar conditions. The Learned Senior Counsel for the Appellant emphasized that both RIL and RPPMSL are solvent, with assets exceeding liabilities, and no consideration is to be paid for the demerger.

Judgment:
The NCLAT noted that the proposed Scheme does not involve the issuance of new shares and that both companies are solvent. The Tribunal referred to previous judgments, including those of the Bombay High Court and the NCLAT, which supported dispensing with the requirement for meetings under similar circumstances. The NCLAT found that the NCLT's direction for obtaining consent affidavits or holding meetings was not based on cogent reasoning.

Conclusion:
The NCLAT set aside the NCLT's order dated 11.5.2023, directing that the convening and holding of meetings of Equity Shareholders, Secured, and Unsecured Creditors of RIL is dispensed with, and consent affidavits of 90% of the total value of shareholders and secured creditors and all unsecured creditors will not be necessary at this stage. The appeal was allowed and disposed of accordingly, with no order as to costs.

Tribunal Overrules Order for Consent in Solvent Companies' Scheme of Arrangement, Easing Approval Process.
The NCLAT set aside the NCLT's order requiring consent affidavits or meetings of Equity Shareholders, Secured, and Unsecured Creditors for the proposed Scheme of Arrangement between RPPMSL and RIL. The Tribunal concluded that the NCLT's directive lacked cogent reasoning, especially since no new shares would be issued and both companies are solvent. Consequently, the NCLAT dispensed with the need for such meetings and consent affidavits, allowing the appeal without costs.

Power to compromise or make arrangements under section 230 of the Companies Act, 2013 - Tribunal's discretion to call or dispense with meetings of members and creditors - Dispensation of calling meetings where transferor is wholly owned subsidiary and no reorganisation of transferee's share capital - Requirement for affidavit consent of ninety per cent in value of a class of creditors under section 230(9) - Demerger/transfer and vesting of undertaking on a going concern basis - No issuance of shares / no change in share capital as relevant to shareholders' rightsDispensation of calling meetings where transferor is wholly owned subsidiary and no reorganisation of transferee's share capital - No issuance of shares / no change in share capital as relevant to shareholders' rights - Whether convening and holding of meetings of equity shareholders of the Appellant RIL should be dispensed with in respect of the proposed demerger - HELD THAT: - The Tribunal applied the settled discretionary principle that meetings may be dispensed with where the transferor is a wholly owned subsidiary of the transferee, the scheme does not contemplate issue of any shares by the transferee and there is no reorganisation of the transferee's share capital, and where the financial position shows that assets exceed liabilities so that shareholders' and creditors' rights will not be adversely affected. The Appellant established that RPPMSL is a wholly owned subsidiary of RIL, that no consideration in the form of shares is to be issued by RIL and that the rights of RIL's shareholders will not be affected. Reliance on precedents, including the Bombay High Court and this Tribunal, was accepted as demonstrating that under such facts the requirement to convene meetings of equity shareholders can be dispensed with. For these reasons the NCLT direction requiring convening of equity shareholders' meeting or affidavit consent was set aside and such meetings/affidavits were dispensed with at this stage. [Paras 20, 24, 25]Convening and holding of meetings of equity shareholders of RIL is dispensed with and consent affidavits of shareholders are not necessary at this stage.Tribunal's discretion to call or dispense with meetings of members and creditors - Requirement for affidavit consent of ninety per cent in value of a class of creditors under section 230(9) - Demerger/transfer and vesting of undertaking on a going concern basis - Whether the NCLT was justified in directing the Appellant to obtain consent affidavits of at least ninety per cent in value of secured creditors and to hold meetings of secured and unsecured creditors and to serve detailed notices to unsecured creditors - HELD THAT: - The Tribunal noted the NCLT's directions for obtaining 90% affidavit consent from secured creditors and extensive service to unsecured creditors, including requirement to hold meetings in view of perceived 'huge credit exposure'. Having considered the admitted facts that the demerged undertaking is being transferred on a going concern basis to the transferee, that no consideration in shares is payable and that both transferor and transferee have assets exceeding liabilities, the Appellate Tribunal found the NCLT's insistence on 90% consent affidavits and on holding meetings to be without cogent reasoning in the circumstances of this case. The Appellate Tribunal relied on earlier decisions where, under analogous facts, the holding of meetings and obtaining of statutory affidavit consents were dispensed with. Consequently, the impugned directions insofar as they required secured and unsecured creditors' meetings, 90% affidavit consents and the specified mode of service to unsecured creditors were set aside for the present stage. [Paras 17, 18, 25]The NCLT's directions to obtain 90% consent affidavits of secured creditors, to hold meetings of secured and unsecured creditors and the related notice/service directions are set aside; such affidavits and meetings are not necessary at this stage.Final Conclusion: The appeal is allowed. The Impugned Order is set aside and, on the facts found (wholly owned subsidiary, no issue of transferee shares, assets exceeding liabilities), the convening and holding of meetings of equity shareholders, secured and unsecured creditors of RIL and the obtaining of 90% consent affidavits are dispensed with at this stage. No order as to costs.

2023 (5) TMI 935 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Appeal Rejected: Tribunal Confirms Penalties for Anti-Competitive Bid-Rigging and Cartelization Violations.
The Tribunal dismissed the appeal, upholding the Competition Commission of India's findings that OP-7 and its Director were guilty of engaging in anti-competitive conduct, specifically bid-rigging and cartelization, in violation of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Competition Act, 2002. The Commission's order and the penalties imposed on OP-7 and its Director were affirmed, rejecting the Appellant's arguments and evidence presented in their defense.

Cartelisation - bid-rigging - acting in concert / tacit understanding - definition of "agreement" as inclusive and assessment on preponderance of probabilities - contravention of Section 3(1) read with Section 3(3)(c) and Section 3(3)(d) of the Act - suo motu inquiry under Section 19(1)Cartelisation - bid-rigging - acting in concert / tacit understanding - contravention of Section 3(1) read with Section 3(3)(c) and Section 3(3)(d) of the Act - Whether OP 7 (Hith Impex Pvt. Ltd.) and its director were part of a cartel/bid rigging arrangement in the SBIIMS tender and liable under the Act. - HELD THAT: - The Tribunal accepted the Commission's findings (as reproduced in paragraphs 77-92 of the impugned order) that OP 7 and its director provided costing inputs, sought to participate as a bidder, supplied materials to other parties and acted pursuant to instructions from OP 4, thereby facilitating geographic market allocation and rigged bidding. The Commission concluded that such conduct fell within the ambit of the statutory prohibition on agreements under Section 3(1) read with Section 3(3)(c) and (d), and the Tribunal found no infirmity in that conclusion. The Tribunal further observed that the evidentiary material - including contemporaneous emails referring to 'MJ', depositions attributing inputs to Mr. Manish Jodhavat, documentary records of OP 7's EOI submissions and other corroborative statements - justified the inference of concerted action. Given these circumstances, the Tribunal held that the Commission was justified in treating OP 7 and its director as part of the overall arrangement. [Paras 9, 10]The Tribunal upheld the finding that OP 7 and its director were part of the cartel and liable for contravention of the provisions of the Act.Definition of "agreement" as inclusive and assessment on preponderance of probabilities - acting in concert / tacit understanding - Whether the Commission could rely on circumstantial evidence, including emails not directly addressed to the accused, and apply the inclusive definition of 'agreement' to draw an inference of concerted action. - HELD THAT: - The Tribunal endorsed the Commission's statement (reproduced at paragraph 93 of the impugned order) that the definition of 'agreement' is wide and inclusive, covering tacit or unrecorded understandings, and that direct evidence of action in concert is seldom available. The Commission and Tribunal applied the standard of preponderance of probabilities to assess whether the parties had some form of understanding and were acting in cooperation. The Tribunal rejected the appellant's contention that the emails dated 02.06.2018 and 04.06.2018 could not be relied upon merely because OP 7 or its director were not addressees, accepting instead that the contemporaneous references to 'MJ' together with depositions and documentary material permitted an inference of involvement. [Paras 9, 10]The Tribunal held that the Commission was entitled to rely on the circumstantial matrix of evidence and the inclusive definition of 'agreement', assessed on the preponderance of probabilities, to sustain findings of concerted action.Final Conclusion: The appeals are dismissed; the Tribunal found no merit in the challenge to the Commission's findings that OP 7 and its director participated in cartelisation/bid rigging and that the Commission properly relied on the circumstantial evidence and the inclusive statutory definition of 'agreement' in reaching its conclusion.

2023 (5) TMI 665 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Issues involved:
The appeal challenges the order of the Competition Commission of India regarding the imposition of penalties under the Competition Act, 2002.

Detailed Summary:

Issue 1: Imposition of Penalty
The appeal was filed by the Chief Materials Manager, Eastern Railway, contesting the Competition Commission's decision not to impose penalties on the respondents as per the provisions of the Act. The Commission found multiple parties to have contravened specific sections of the Act during the period 2009 to 2017. While the Commission directed the parties to cease and desist from such practices, it refrained from imposing monetary penalties due to various factors. These factors included the cooperation of the parties during the investigation, the economic situation due to the global pandemic, and the small turnover of some parties, particularly Micro Small and Medium Enterprises (MSMEs). The Commission emphasized the importance of correcting market distortions and disciplining market behavior for the Act's objectives to be met. The Commission warned the parties to adhere strictly to the Act in the future to avoid serious consequences.

Issue 2: Legal Provisions
During the hearing, the appellant's counsel failed to specify the provision of law requiring the imposition of penalties, while the respondent's counsel referred to Section 27(a) of the Act. Section 27 of the Competition Act, 2002, empowers the Commission to pass various orders after finding contraventions, including directing parties to discontinue certain actions, imposing penalties, awarding compensation, modifying agreements, and recommending actions to the Central Government. The Commission invoked Section 27(a) in this case, directing the parties to cease cartel behavior and comply with the Act to meet its objectives.

Conclusion:
The Appellate Tribunal upheld the Commission's decision to invoke Section 27(a) of the Act and not impose monetary penalties in this case. The Tribunal found no merit in the appeal and dismissed it without costs, as the Commission's order was well-considered and supported by the circumstances outlined in the impugned order. No other issues were raised during the proceedings.

Tribunal Upholds Decision on Anti-Competitive Practices Without Fines Due to Cooperation and Pandemic Impact.
The Appellate Tribunal affirmed the Competition Commission of India's decision to apply Section 27(a) of the Competition Act, 2002, without imposing monetary penalties on the respondents. The Tribunal dismissed the appeal filed by the Chief Materials Manager, Eastern Railway, finding the Commission's decision justified based on the cooperation of the parties, the economic impact of the global pandemic, and the small turnover of some involved entities, particularly MSMEs. The Tribunal concluded that the Commission's directive for the parties to cease and desist from anti-competitive practices was appropriate, and no costs were awarded.

Commission's power to pass orders under Section 27 - direction to discontinue and not re-enter anti-competitive agreement (cessation and desistance) - discretion to impose or refrain from imposing monetary penalty after inquiry - consideration of cooperation by parties and MSME status in penalty quantification - clubbing of reference cases and consolidated investigationCommission's power to pass orders under Section 27 - direction to discontinue and not re-enter anti-competitive agreement (cessation and desistance) - discretion to impose or refrain from imposing monetary penalty after inquiry - consideration of cooperation by parties and MSME status in penalty quantification - Validity of the Commission's decision to invoke only the power under Section 27(a) and to refrain from imposing any monetary penalty. - HELD THAT: - The Tribunal examined the impugned order of the Commission which found contravention of Section 3 during 2009-2017 and invoked remedial powers. Section 27 authorises the Commission, after inquiry, to pass any of the orders listed therein, including directions to discontinue agreements (clause (a)) and to impose penalties (clause (b)). The Commission had conducted a consolidated investigation after clubbing multiple references and noted extensive cooperation by the parties, admissions of conduct, the presence of several OPs that are MSMEs and relatively small turnover in the relevant product segment, and the exceptional context of the COVID-19 economic situation. Considering these cumulative factors, the Commission exercised its statutory discretion to issue cessation/desistance directions under Section 27(a) and, in the interest of justice and having regard to cooperation and MSME status, refrained from imposing a monetary penalty. The Tribunal found no illegality in confining relief to Section 27(a) and upheld the Commission's exercise of discretion for the reasons recorded in the impugned order. [Paras 6, 7, 8]The Commission validly invoked Section 27(a) and lawfully refrained from imposing monetary penalty in the circumstances; no interference warranted.Final Conclusion: The appeal is dismissed as lacking merit; the Tribunal declines to interfere with the Commission's exercise of discretion in directing cessation of anti competitive conduct and refraining from imposing monetary penalties.

2023 (5) TMI 19 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Combination threshold computation must focus on the acquired business only; de minimis exemption defeated the non-notification penalty.
For combination threshold purposes under the Competition Act, the relevant assets and turnover are those attributable to what is actually acquired, not the seller's remaining business. The 27.03.2017 notification was treated as clarificatory and applied retrospectively, reinforcing that small acquisitions within the de minimis threshold do not require prior notification under section 6(2). On the facts, the acquired trademarks' relevant turnover was found to be below the exemption threshold, so the penalty under section 43A for non-notification could not be sustained and was set aside.

De Minimis exemption - calculation of relevant assets and turnover of the portion acquired - retrospective effect of clarificatory notification - imposition of penalty under section 43A for failure to notify under section 6(2) - applicability of Tribunal precedent in Eli LillyDe Minimis exemption - calculation of relevant assets and turnover of the portion acquired - retrospective effect of clarificatory notification - imposition of penalty under section 43A for failure to notify under section 6(2) - applicability of Tribunal precedent in Eli Lilly - Whether penalty under Section 43A could be imposed on the appellant for not notifying the trademark acquisitions when the transactions fell within the De Minimis exemption after applying the clarificatory notification and Tribunal precedent - HELD THAT: - The Tribunal held that the clarificatory notification dated 27.3.2017 makes clear that where only a portion, division or business is being acquired, the relevant assets and turnover attributable to that portion are to be taken into account for threshold calculations. The Press Release accompanying the notification explains the Government's intent to limit filings for combinations falling within threshold limits. Applying the reasoning in Eli Lilly, what is being acquired is the relevant yardstick and the assets/turnover left with the seller post-acquisition are irrelevant for the purchaser's filing obligation. The Tribunal treated the 27.3.2017 notification as clarificatory and therefore having retrospective effect, following precedents on purposive and clarificatory interpretations. On the material before it, the turnover attributable to the transferred trademarks was Rs.68.37 crores, which is below the applicable De Minimis threshold; accordingly the transactions were exempt from notification and the basis for imposing penalty under Section 43A did not subsist. The Tribunal expressly left other questions on the nature of the combination open and confined its decision to the penalty issue. [Paras 24, 25, 27, 28, 29]Penalty under Section 43A set aside because the acquisitions of the trademarks fell within the De Minimis exemption when assets and turnover attributable to the portion acquired were correctly taken into account; appeal allowed to that limited extent.Final Conclusion: The Tribunal set aside the CCI's order imposing penalty under Section 43A, concluding that the trademark acquisitions were exempt from notification under the De Minimis exemption once the assets and turnover attributable to the portion acquired were considered; other issues were left open.

2023 (4) TMI 56 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Proportionate competition law penalties may be reduced where a small market player faces an unduly destructive sanction
A competition law discussion on penalties for participation in an anti-competitive supply arrangement states that liability may remain established even where the party is a very small market player with limited bargaining power and financial losses. The penalty assessment should still be proportionate, taking account of deterrence, the nature of the conduct, the party's market position, and mitigating circumstances, so that the sanction does not become unduly punitive or destructive of the business. On that basis, the company's monetary penalty was reduced, while the penalties on directors, officers, and employees were maintained as commensurate with their role.

Anti-competitive agreements - appreciable adverse effect on competition - bilateral ancillary cartel - primary cartel - lesser penalty application - imposition of penalty for cartelisation under Section 27(B) proviso - proportionality of penalty - mitigating factors in penalty assessment - recording of reasons by a quasi-judicial authorityAnti-competitive agreements - bilateral ancillary cartel - appreciable adverse effect on competition - Geep Industries entered into an agreement (Clause 4.3 of the PSA) amounting to a bilateral ancillary cartel with PECIN/Panasonic and thereby contravened the prohibition in Section 3. - HELD THAT: - Clause 4.3 of the Product Supply Agreement recorded Geep's agreement not to take steps detrimental to PECIN's market interests and to follow market prices as reviewed by PECIN. By expressly accepting that condition, Geep agreed to conduct that restricted its pricing autonomy. The Tribunal accepted CCI's finding that such conduct places Geep in a bilateral ancillary cartel with Panasonic, while Panasonic was part of a primary cartel in the market. Although Geep was a very small player with negligible market share and limited bargaining power, the admission to follow prices set by PECIN renders the conduct anti-competitive and within the scope of Section 3(1)/(2)/(3) as adjudicated by the CCI and affirmed by the Tribunal. [Paras 20]The finding that Geep Industries contravened Section 3 by participating in a bilateral ancillary cartel is upheld.Imposition of penalty for cartelisation under Section 27(B) proviso - proportionality of penalty - mitigating factors in penalty assessment - recording of reasons by a quasi-judicial authority - The quantum of monetary penalty imposed on Geep Industries is disproportionate in the facts of the case and is to be reduced. - HELD THAT: - The Proviso to Section 27(B) permits penalties up to three times the profits or up to 10% of average turnover; CCI imposed a penalty at 4% of turnover for each year of continuance of the cartel. The Tribunal observed that the impugned order itself recognised Geep as a very small player with under 1% market share, lacking bargaining power, and having sustained losses in early years. Those features are mitigating and make an excessive monetary penalty potentially fatal to the enterprise. The Tribunal also noted that specific reasons for selecting the 4% figure were not apparent and invoked the principle that quasi judicial authorities should record clear reasons when exercising their discretion to fix penalties. Balancing deterrence with proportionality and the appellant's market position and financial record, the Tribunal concluded a reduced rate would suitably reflect seriousness while avoiding an unduly crushing consequence on a minor player. [Paras 23, 26, 28, 32, 34]Penalty imposed on Geep Industries is modified from 4% to 1% of turnover for each year of continuance of the cartel.Mitigating factors in penalty assessment - Penalties imposed on the individual directors/officers responsible for entering into the PSA are appropriate and are not disturbed. - HELD THAT: - The Tribunal accepted the CCI's view that the named directors and officers were directly responsible for entering into the PSA and should have understanding of corporate conduct and competition law. Given their roles and knowledge, the penalties imposed on Ms. Pushpa M., Mr. Joeb Thanawala and Mr. Jainuddin Thanawala are commensurate with their conduct and do not warrant modification. [Paras 35]Penalties on the named directors/officers are confirmed without change.Final Conclusion: The appeal is allowed in part: the CCI's finding of Geep Industries' participation in a bilateral ancillary cartel is affirmed, the monetary penalty on Geep is reduced to 1% of turnover for each year of the cartel's continuance, and penalties on the named directors/officers are upheld; no order as to costs.

2023 (4) TMI 173 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI Law of Competition

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Tech Giant Penalized for Unfair Practices with Pre-Installed Apps; Anti-Competitive Conduct Confirmed.
The Commission determined that the Appellant abused its dominant position by imposing unfair conditions on OEMs through the pre-installation of the GMS Suite, breaching Section 4 of the Competition Act, 2002. The Commission found the Appellant's conduct anti-competitive, limiting technical development and denying market access to competing apps. The investigation by the Director General was deemed fair, and the absence of a Judicial Member did not invalidate the Commission's order. The penalty based on relevant turnover was upheld, with the Commission's order sustained except for the deletion of specific directions in paragraph 617. The Appellant was not granted additional relief beyond this modification.

Abuse of dominant position - effect analysis - relevant turnover - tying and bundling - denial of market access - anti-fragmentation obligations - supplementary obligations - remedies under Section 27 - doctrine of proportionality - principles of natural justice - inquisitorial role of the Director General - default/pre-installation and status quo bias - side-loading (sideloading) and warnings - essential facilities / API accessEffect analysis - abuse of dominant position - For proving abuse of dominance under Section 4, an effect analysis is required to determine whether the abusive conduct is anti-competitive. - HELD THAT: - The Tribunal held that although Sections 3 and 6 expressly use the AAEC (appreciable adverse effect on competition) standard, Section 4 must nonetheless be read in the statute's overall scheme (including Section 18 and the Preamble). The Commission is therefore required to analyse whether the conduct complained of is anti-competitive in effect; a per se finding without considering anti-competitive effect is not appropriate. The determinative test is whether the conduct is capable of harming competition or competitors (i.e. whether it is anti-competitive). [Paras 66]Effect analysis is required under Section 4; the test is whether the abusive conduct is anti-competitive.Confirmation bias - inquisitorial role of the Director General - The Commission's order is not vitiated by confirmation bias; the Commission considered the record and reached independent findings. - HELD THAT: - The Tribunal examined the sequence of events, the DG report and the final CCI order and found that the CCI considered the materials collected in the India-specific inquiry, delineated relevant markets and recorded independent findings. The mere fact of resemblance to the European Commission's findings did not amount to disqualifying confirmation bias where the Commission engaged with domestic evidence and reasoning. [Paras 69]The submission of pervasive confirmation bias is rejected; the CCI conducted its own market-specific inquiry and recorded independent findings.Pre-installation - supplementary obligations - imposition of unfair conditions - Pre-installation of the entire GMS suite and prominent placement under MADA amounts to imposition of unfair/supplementary obligations and is an abuse of dominance under Sections 4(2)(a)(i) and 4(2)(d). - HELD THAT: - After reviewing the MADA terms (including Clause 2.1 and placement requirements in Clause 4.4) and OEM evidence, the Tribunal agreed with the CCI that MADA's covenants operate as tying and supplementary obligations. The CCI found OEMs had limited negotiating power and that pre-installation plus placement foreclosed rivals and reduced user choice. The CCI also carried out the requisite anti-competitive effect analysis and concluded the conduct harmed competition. [Paras 98, 373, 614]Pre-installation and prominent placement under MADA are unfair/supplementary obligations and contravene Sections 4(2)(a)(i) and 4(2)(d); the CCI considered the evidence and found anti-competitive effect.Anti-fragmentation obligations - technical/scientific development - Conditioning GMS pre-installation on signing AFA/ACC reduced OEMs' ability and incentive to develop and sell Android forks, thereby limiting technical or scientific development in breach of Section 4(2)(b)(ii). - HELD THAT: - The Tribunal accepted the CCI's finding that AFA/ACC clauses (including broad, unclearly defined anti-fragmentation obligations and compatibility requirements) had the effect of disincentivising fork development. The CCI reviewed OEM and Amazon evidence, noted the practical difficulties fork developers faced, and concluded the anti-fragmentation framework was unreasonable and disproportionate in scope, with anti-competitive effects on fork development. [Paras 115, 548, 583]Making GMS pre-installation contingent on AFA/ACC reduced incentives for Android forks and violated Section 4(2)(b)(ii); the CCI considered and relied on the evidence in reaching this conclusion.Denial of market access - revenue sharing agreements - status quo bias - Google perpetuated its dominant position in online general search and denied market access to competing search apps in breach of Section 4(2)(c). - HELD THAT: - The Tribunal upheld the CCI's finding that the interplay of MADA, RSA and AFA/ACC (including revenue-share incentives and default/pre-installation) materially reduced OEM incentives to pre-install competing search services. The CCI found pre-installation is a significant distribution channel that creates status quo bias and that RSA payments were large relative to challengers' revenues, acting as an entry barrier and producing anti-competitive effects. [Paras 132, 411, 412]Google's arrangements perpetuated dominance in general search and resulted in denial of market access to rivals, contrary to Section 4(2)(c).Leveraging dominance - tying and bundling - Google leveraged its dominance in the Play Store to protect and strengthen its position in online general search, and tying Play Store with Chrome and YouTube also contravened Section 4(2)(e). - HELD THAT: - The Tribunal agreed with the CCI that pre-installation and placement via Play Store conferred significant distribution advantages to Google's search, Chrome and YouTube products. The CCI's analysis found those leveraging practices were capable of foreclosing competition and deterring innovation in the downstream markets; relevant evidence and market shares supported the conclusion. [Paras 143, 465, 614]Google leveraged Play Store to protect its search position and tied Play Store with Chrome and YouTube in breach of Section 4(2)(e); the CCI's evidence-based findings are upheld.Principles of natural justice - inquisitorial role of the Director General - The DG's investigation did not violate principles of natural justice and was not vitiated by the framing of 'leading' questions. - HELD THAT: - The Tribunal distinguished the DG's inquisitorial fact gathering role from an adjudicator or criminal prosecutorial process. Notices and questionnaires served to elicit information; OEMs responded and the CCI considered those responses. Although some questions were criticised as leading, the Tribunal found no record evidence that the DG had pre-judged the matter so as to render the investigation unfair. [Paras 156]The DG's investigation complied with procedural fairness; allegations of natural justice breach or invalidation by leading questions are rejected.Constitution of the Commission - vacancy not to invalidate - The CCI's order is not vitiated by the absence of a judicial member. - HELD THAT: - Relying on Section 15 (vacancy not to invalidate proceedings) and precedent, the Tribunal held that lack of a judicial member at the time did not render the CCI's proceedings invalid. The question of composition raised in interlocutory decisions is noted as pending at higher courts, but on these facts the impugned order stands. [Paras 162]Absence of a judicial member did not vitiate the CCI's impugned order.Remedies under Section 27 - proportionality of remedies - Most remedial directions in paragraph 617 were upheld, but four specific directions (paragraphs 617.3, 617.7, 617.9 and 617.10) were set aside as unsustainable or unnecessary. - HELD THAT: - The Tribunal reviewed each remedy: it upheld directions that were connected to findings of abuse (e.g., not forcing OEMs to pre-install full suite, prohibiting exclusivity incentives, permitting choice of default search). However, it struck down (i) the obligation to provide unrestricted access to proprietary Play Services APIs (617.3), (ii) the broad command to allow third party app stores to distribute via Play Store (617.9), (iii) the prohibition on warnings or measures relating to sideloading (617.10), and (iv) the blanket direction to prohibit uninstallation restrictions (617.7) on the ground that those remedy elements either lacked a proper factual/legal basis or were disproportionate to findings. [Paras 195, 220]Directions in para 617 upheld generally, but 617.3, 617.7, 617.9 and 617.10 are set aside; remaining directions in para 617 are upheld.Relevant turnover - doctrine of proportionality - The penalty imposed by the CCI (calculated on the basis of relevant turnover for FY 2018-19, 2019-20 and 2020-21) was upheld; CCI's methodology in using best available data and taking a conservative lower figure was sustained and the penalty is final (not provisional). - HELD THAT: - Applying Excel Crop Care, the Tribunal accepted that 'relevant turnover' may encompass revenues arising from the Android ecosystem as a whole given the multi sided, interconnected nature of the platform and the three inter related agreements (MADA, AFA/ACC, RSA). The CCI used available financial submissions, identified inadequacies, made reasonable best estimates, chose the lower of two reasonable aggregate figures, and applied 10% on the averaged turnover for the three financial years (2018 19 to 2020 21). The Tribunal deleted references to 'provisional' penalty and held the imposed penalty final. [Paras 216, 217, 220]Penalty calculation and quantum upheld; relevant turnover determination (using FYs 2018-19, 2019-20, 2020-21) and CCI's conservative methodology sustained; penalty is final.Relief - deposits and implementation timeline - Google's appeal was dismissed except that four remedial directions were set aside; Google was directed to deposit the penalty (adjusting prior deposit) and given time to implement upheld measures. - HELD THAT: - The Tribunal upheld the CCI order in substance, set aside the specified four directions, allowed Google 30 days to deposit the penalty (after adjusting the earlier 10% deposit) and 30 days to implement the sustained remedial measures. Parties to bear their own costs. [Paras 219, 220]Appeal dismissed except for deletion of directions 617.3, 617.7, 617.9 and 617.10; penalty and other directions upheld with time for compliance.Final Conclusion: The Tribunal upholds the Competition Commission's finding that Google abused its dominant position across identified Indian relevant markets (licensable smart mobile OS, Android app store, general web search, non OS specific browsers and OVHP) contrary to Sections 4(2)(a)(i), 4(2)(b)(ii), 4(2)(c), 4(2)(d) and 4(2)(e). The CCI's remedies are largely sustained, four specific directions (617.3, 617.7, 617.9, 617.10) are set aside as unreasonable or unsupported, and the monetary penalty computed using relevant turnover for FY 2018-19, 2019-20 and 2020-21 is affirmed and declared final; Google to deposit the balance within 30 days and implement the upheld measures within 30 days.

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