2023 (4) TMI 1187 - HC - Law of Competition

Court Confirms CCI's Two-Member Functionality Under Competition Act, 2002; Doctrine of Necessity Not Applicable.

ALLIANCE OF DIGITAL INDIA FOUNDATION Versus COMPETITION COMMISSION OF INDIA & ORS

The Court concluded that the Competition Commission of India (CCI) is validly constituted with two members and can continue its adjudicatory functions ... Invocation of doctrine of necessity for initiating non-compliance proceedings against Google - non-effective compliance by Google of the CCI’s final order - Section 42 of the Competition Act, 2002 - CCI is validly constituted presently with two members to continue its adjudicatory roles or not - effect of Section 15 of the Act - whether, in the present case, would there remain any requirement to apply the principles of doctrine of necessity at all? HELD THAT:- A plain reading of the provision of Section 15 brings to fore that it contemplates two different functions of CCI which would be governed by the said Section, namely an “act” or “proceeding”. It is manifest that the “act” contemplated, would obviously be distinguishable from the “proceeding”, in that, a “proceeding” would be relatable to adjudicatory powers exercised by the CCI and anything other than an adjudicatory process would be covered by the word “act” which could mean regulatory or administrative powers of the CCI. Moreover, it is trite that when an enactment uses the word “or”, it clearly indicates that the same ought to be read disjunctively, meaning thereby, that the saving clause of section 15 would equally apply to adjudicatory/judicial powers of the CCI. So read, the intention of the Legislature to ensure that the adjudicatory functions of the CCI does not get impeded for defect arising out of vacancy or constitution arising out of vacancy, becomes clear - any adjudicatory process wherein there is a vacancy or any defect in the constitution of the Commission would not invalidate the proceedings of CCI. It is trite that a statutory interpretation ought to be based on plain reading of the Section itself unless there is any ambiguity which would entail reliance upon extraneous materials. This Court is of the considered opinion that the aims and objects of a particular enactment ought to be interpreted in a manner so as to ensure that the object desired to be fulfilled by the legislature by such promulgation are taken to its logical conclusion. In other words, merely because of a defect or a vacancy in the constitution of the CCI, the CCI cannot be considered as a statutory authority not having jurisdiction to adjudicate the complaints or other proceedings pending before it. Any interpretation, other than the aforesaid, would render the provisions of Section 15 otiose and which could not possibly be the intention of the Legislature either. The arguments of Mr. Sandeep Sethi, learned senior counsel in respect of quorum being complete only if three members of the CCI, including the Chairperson, constitute the same, is untenable. For the same reason, the argument of Mr. Sethi, learned senior counsel that the word “vacancy” used in Section 15 read with sub-section 3 of Section 22 of the Act mean that the word “vacancy” would be applicable only and only if the vacancy is in respect of members more than three and less than seven, would also be untenable, considering the plain language of both the Sections. Though the argument, at the first blush, appears to be logical, however, in view of the fact that the provisions of Section 22 are not relatable to the adjudicatory process at all, the interpretation sought to be given to the word “vacancy” in Section 15, by reading the proviso to sub-section (3) to Section 22 of the Act into it, would also stand rejected. This Court is of the considered opinion that the provisions of Section 15 act as a saving clause in regard to a situation where a vacancy or a defect in constitution of the CCI would arise and any such vacancy or defect in the constitution would not invalidate any proceedings so far as the adjudicatory powers of the CCI is concerned. Doctrine of necessity - HELD THAT:- Having regard to the definition of what constitutes doctrine of necessity as rendered by the Hon’ble Supreme Court in J. MOHAPATRA & CO. VERSUS STATE OF ORISSA [1984 (8) TMI 350 - SUPREME COURT], it is clear that it is only when an adjudicator who is subject to disqualification on the ground of bias or interest in the matter which he has to decide, may be required to adjudicate if there is no other person who is competent or authorized to adjudicate or if a quorum cannot be formed without him or if no other competent Tribunal can be constituted, that the doctrine of necessity may become applicable. The Hon’ble Supreme Court has also held that in such cases, the principles of natural justice would have to give way to the necessity, for otherwise there would be no means of deciding the matter and the machinery of justice or administration would break down. In the present case, none of the learned senior counsel appearing on behalf of the respondents, at all submitted that the members who presently comprise the CCI are disqualified for any reason. Having regard thereto, the question of examining whether the doctrine of necessity is or is not applicable to the present case does not arise at all. There is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 of the Act, as filed by the petitioner, for hearing and considering the same in accordance with law on or before 26.04.2023 - petition disposed off. Issues Involved:1. Whether the CCI is validly constituted with two members to continue its adjudicatory roles.2. The effect of Section 15 of the Competition Act, 2002.3. Applicability of the doctrine of necessity in the present case.Summary:Issue 1: Valid Constitution of CCI with Two MembersThe Court examined whether the current composition of the Competition Commission of India (CCI) with only two members is valid for continuing its adjudicatory roles. The Court referred to Section 15 of the Competition Act, 2002, which states that no act or proceeding of the Commission shall be invalid merely by reason of any vacancy or defect in the constitution of the Commission. The Court concluded that the CCI is validly constituted even with two members and can continue its adjudicatory functions. The Court emphasized that the legislative intent behind Section 15 is to ensure that the adjudicatory functions of the CCI are not impeded due to vacancies or defects in its constitution.Issue 2: Effect of Section 15 of the ActThe Court analyzed Section 15 of the Act, which states that no act or proceeding of the Commission shall be invalid merely by reason of any vacancy in, or any defect in the constitution of, the Commission. The Court interpreted this provision to mean that both adjudicatory and non-adjudicatory functions of the CCI are protected from being invalidated due to such vacancies or defects. The Court supported its interpretation by referring to previous judgments, including Cadd Systems and Services Private Limited vs. Competition Commission of India, which held that the orders passed by CCI cannot be questioned merely due to vacancies or defects in its constitution.Issue 3: Applicability of Doctrine of NecessityThe Court considered whether the doctrine of necessity is applicable in the present case. The doctrine of necessity allows an adjudicator who is otherwise disqualified to adjudicate if there is no other person competent to do so, or if a quorum cannot be formed without him. The Court found that since the CCI is validly constituted with two members and there is no disqualification of these members, the doctrine of necessity does not need to be invoked. The Court noted that the CCI is functional and capable of adjudicating the applications under Section 42 of the Act.Conclusion:The Court directed the CCI to take up the applications under Section 42 of the Act filed by the petitioner for hearing and consider them in accordance with the law on or before 26.04.2023. The petition was disposed of with the observation that the CCI is validly constituted and functional, and there is no need to invoke the doctrine of necessity. The Court clarified that its observations are limited to the present case and do not affect the merits of the case or the rights and contentions of the parties in future proceedings.