2010 (9) TMI 215 - SC - Law of Competition

s.26(1) opinion formation needs no statutory notice unless Commission decides; tribunal's extension limited, respondent pays Rs.25,000

Competition Commission of India Versus Steel Authority of India Ltd.

SC held there is no statutory obligation to issue notice or hearing when forming an opinion under s.26(1) unless the Commission, after applying its mind, ... Ambit and scope of power vested with the Commission - Directions passed by the Commission in exercise of its powers u/s 26(1) - Intention of removing controls - Duties, powers and functions of commission - Principles for effective implementation of competition law - Requirement of notice and hearing at the preliminary stage - HELD THAT:- We have held that there is no statutory obligation on the Commission to issue notice for grant of hearing to the parties at the stage of forming an opinion under section 26(1) of the Act unless, upon due application of mind, it finds it necessary to invite parties or experts to render assistance to and produce documents before the Commission at that stage. We are also unable to agree with the view expressed by the Tribunal that the inquiry commences as soon as the aspects highlighted in sub-section (1) to section 19 are fulfilled and brought to the notice of the Commission. It is obvious that Regulation 18(2) was not brought to the notice of the Tribunal which resulted in error of law, particularly, when examined in the light of other provisions and scheme of the Act as well. The Commission, vide its order dated 8-12-2009, had, for reasons stated therein, declined the extension of time to SAIL. This order of the Commission cannot be stated to be without jurisdiction or suffering from any apparent error of law. However, the Tribunal, in exercise of its judicial discretion, had interfered with the said order and granted further time to SAIL unconditionally. We do not propose to interfere in the exercise of the discretion by the Tribunal except to the extent of imposition of cost. We, therefore, direct that SAIL/should pay cost of Rs. 25,000 to the informant for seeking extension of time. The cost shall be conditional, whereafter, the additional reply filed by SAIL would be taken on record and the Commission shall apply its mind to form a prima facie view in terms of section 26(1) of the Act, if the report of the Director General has not been received as yet. In the event the report prepared by the Director General during the period 8-12-2009 to 11-1-2010 has been received, the Commission shall proceed in accordance with the provisions of the Act and the principles of law enunciated in this judgment giving proper notice to the informant as well as to SAIL and pass appropriate orders. Thus, we are of the considered opinion that this is a fit case where this Court should also issue certain directions in the larger interest of justice administration. The scheme of the Act and the Regulations framed thereunder clearly demonstrate the legislative intent that the investigations and inquiries under the provisions of the Act should be concluded as expeditiously as possible. The various provisions and the Regulations, particularly Regulations 15 and 16, direct conclusion of the investigation/inquiry or proceeding within a 'reasonable time'. The concept of 'reasonable time' thus has to be construed meaningfully, keeping in view the object of the Act and the larger interest of the domestic and international trade. In this backdrop, we are of the considered view that the following directions need to be issued :- In our considered view the scheme and essence of the Act and the Regulations are clearly suggestive of speedy and expeditious disposal of the matters. Thus, it will be desirable that the Competent Authority frames Regulations providing definite time frame for completion of investigation, inquiry and final disposal of the matters pending before the Commission. Till such Regulations are framed, the period specified by us supra shall remain in force and we expect all the concerned authorities to adhere to the period specified. Resultantly, this appeal is partially allowed. Issues Involved:1. Appealability of directions under Section 26(1) of the Competition Act.2. Requirement of notice and hearing at the preliminary stage.3. Necessity and propriety of the Competition Commission of India (CCI) as a party before the Tribunal.4. Scope and exercise of power under Section 33 of the Competition Act.5. Obligation to record reasons for forming a prima facie opinion.6. Directions for ensuring procedural compliance and expeditious disposal.Detailed Analysis:1. Appealability of Directions under Section 26(1) of the Act:The Supreme Court held that directions issued by the CCI under Section 26(1) for investigation are not appealable under Section 53A of the Competition Act. The Court clarified that only specific directions, decisions, or orders mentioned in Section 53A(1)(a) are appealable. Directions for investigation do not determine the rights or obligations of the parties and are administrative in nature, thus not subject to appeal.2. Requirement of Notice and Hearing at the Preliminary Stage:The Court ruled that there is no statutory requirement for the CCI to issue notice or grant a hearing to the parties at the stage of forming a prima facie opinion under Section 26(1). The CCI can, at its discretion, invite parties for assistance or information. The formation of a prima facie view is an administrative function and does not necessitate adherence to the principles of natural justice at this stage.3. Necessity and Propriety of CCI as a Party Before the Tribunal:The Court held that the CCI is a necessary party in proceedings before the Tribunal when the inquiry has been initiated suo moto by the CCI. In other cases, the CCI is a proper party. The presence of the CCI aids in the complete adjudication of matters and ensures that the Tribunal benefits from the expertise of the CCI.4. Scope and Exercise of Power under Section 33 of the Act:The Court clarified that the CCI can exercise its power under Section 33 to issue interim orders only after forming a prima facie opinion and directing an investigation under Section 26(1). The power to issue ex parte interim orders should be exercised sparingly and under compelling circumstances. The CCI must record its satisfaction that an act in contravention of the Act has been committed, continues to be committed, or is about to be committed, and that there is a necessity for such an order to prevent irreparable damage or adverse effects on competition.5. Obligation to Record Reasons for Forming a Prima Facie Opinion:The Court emphasized that while the CCI is not required to provide detailed reasons at the stage of forming a prima facie opinion under Section 26(1), it must at least record some reasons to substantiate its view. For other orders and decisions, the CCI is required to pass speaking orders with detailed reasons.6. Directions for Ensuring Procedural Compliance and Expeditious Disposal:The Court issued several directions to ensure timely and efficient disposal of matters by the CCI and the Director General:- The CCI should form a prima facie opinion within a shorter period than the prescribed 60 days.- All proceedings, including investigations and inquiries, should be completed expeditiously to avoid adverse effects on the market.- Interim orders should be finalized within 60 days.- The Director General should submit reports within 45 days from the direction of the CCI.- Confidentiality must be maintained as per Section 57 and Regulation 35.Conclusion:The Supreme Court partially allowed the appeal, modifying the Tribunal's order and directing the CCI to proceed in accordance with the law and the principles enunciated in the judgment. The Court emphasized the importance of expeditious disposal and adherence to procedural requirements to achieve the objectives of the Competition Act.