2019 (4) TMI 314 - HC - Law of Competition

Court Confirms CCI's Authority to Penalize, Rules No Double Jeopardy Violation in Pre-Trial Dismissal.

M/s RAJASTHAN CYLINDERS AND CONTAINERS LTD. Versus COMPETITION COMMISSION OF INDIA

The court dismissed the petitions, affirming the Chief Metropolitan Magistrate's (CMM) jurisdiction to take cognizance of criminal complaints under ... Penal offence under Section 42(3) of the Competition Act - It is argued that since failure to pay penalty under Section 43 is not failure to comply with the orders or directions within the meaning of Section 42(2), such failure cannot lead to prosecution for the offence under Section 42(3) - Held that:- It is well settled that use of a comma and word “or” between two parts of a clause makes the two parts disjunctive. Noticeably, in the clause defining the offence punishable under Section 42(3), the failure to pay the fine imposed under sub-section (2) of Section 42 is included as one of the possible reasons leading to such criminal action, it being provided by a disjunctive clause, the words “or fails to pay the fine imposed under sub-section (2)”being preceded and followed by a comma. The comma (,) appearing prior to the said words separates it from the words “if any person does not comply with the orders or directions issued”. The use of comma (,) is with a purpose. It indicates that a cause of action for criminal complaint to be filed in the court of CMM arises in two possible situations, viz., (1) there has been a failure on the part of a person to “comply with the orders or directions” issued to him under the law or (2) on account of failure to pay fine imposed for non-compliance with orders or directions of the Commission under specified provisions (i.e., Sections 27, 28, 31, 32, 33, 42A and 43A), the Commission, after inquiry, having found absence of “reasonable cause”. The suggested interpretation of Section 42(3) of the Competition Act does not commend itself to this court. Double jeopardy - Held that:- The argument of double jeopardy can be rejected by pointing out that the penalty under Section 43 is civil in nature imposed by the statutory authority (the Commission) in exercise of the powers conferred on it by the law, the criminal complaint alleging offence under Section 42(3) carrying the additional element of failure to comply further with the said direction, the criminal action even otherwise being not violative of Article 20(2). The petitioner in the second and third captioned matters has raised questions of fact about extent of his responsibilities, his ignorance, non-service of some of the notices or processes, generally referring to cessation of his role as the Honorary Secretary of FDA after 30.10.2013. These questions of fact would need inquiry and scrutiny of evidence. The forum of Section 482 Cr.P.C. is not the correct one to embark upon such inquiry. Petition cannot be accepted and is dismissed. Issues Involved:1. Jurisdiction and powers of the Competition Commission of India (CCI).2. Interpretation of Section 42(3) of the Competition Act, 2002.3. Allegations of double jeopardy under Article 20(2) of the Constitution of India.4. Personal liability and cessation of responsibilities of office bearers.Detailed Analysis:1. Jurisdiction and Powers of the Competition Commission of India (CCI):The Competition Act, 2002, establishes the Competition Commission of India (CCI) to prevent practices adversely affecting competition, promote and sustain competition in markets, protect consumer interests, and ensure freedom of trade. The CCI is empowered to inquire into anti-competitive agreements and abuse of dominant positions, with the aid of the Director General who conducts investigations. The Act provides for penalties for non-compliance with CCI’s orders or directions, including monetary penalties and criminal prosecution under Section 42(3) for failure to comply with orders or pay fines.2. Interpretation of Section 42(3) of the Competition Act, 2002:The court analyzed Section 42(3), which penalizes non-compliance with CCI’s orders or directions, or failure to pay fines imposed under Section 42(2). The petitioners argued that Section 42(3) should not apply to non-payment of penalties under Section 43. However, the court noted that the use of a comma and the word “or” in Section 42(3) makes the clause disjunctive, meaning it covers both non-compliance with orders and failure to pay fines. The court held that Section 42(3) has a broader scope, encompassing non-compliance with orders or directions issued by the CCI or its functionaries, including the Director General.3. Allegations of Double Jeopardy under Article 20(2) of the Constitution of India:The petitioners contended that criminal prosecution under Section 42(3) for non-payment of penalties imposed under Section 43 constitutes double jeopardy, violating Article 20(2) of the Constitution. The court rejected this argument, clarifying that the penalty under Section 43 is civil in nature, while the criminal complaint under Section 42(3) involves an additional element of non-compliance, thus not violating the principle of double jeopardy. The court cited Supreme Court judgments to support the distinction between civil and criminal penalties, affirming that successive civil and criminal proceedings do not constitute double jeopardy.4. Personal Liability and Cessation of Responsibilities of Office Bearers:In the second and third cases, the petitioner argued that his responsibilities as the Honorary Secretary of FDA ceased on 30.10.2013, and he should not be held liable for non-compliance thereafter. The court noted that these are factual questions requiring evidence and cannot be resolved under Section 482 Cr.P.C. The court emphasized that such defenses should be addressed during the trial rather than in a pre-trial motion to quash proceedings.Conclusion:The court dismissed the petitions, upholding the CMM’s jurisdiction to take cognizance of the criminal complaints under Section 42(3) of the Competition Act. The court affirmed that the CCI’s powers extend to penalizing non-compliance with its orders and directions and that such actions do not violate the constitutional protection against double jeopardy. The factual disputes regarding the petitioner’s responsibilities and non-compliance were deemed matters for trial.