2024 (1) TMI 1389 - HC - Law of Competition

Google payment dispute suit dismissed as competition matters fall under CCI jurisdiction under Competition Act 2002

The Madras HC dismissed an appeal challenging rejection of a plaint under Order VII Rule 11(d) CPC. Plaintiffs sought declaration that Google's payment ... Seeking a declaration that the Google Payments Terms of Service-Seller (IN) posted on 02.06.2022, Payment Policies, Policies relating to Service Fees, Terms and Conditions, posted by the defendants' on its websites/portals/ webpages on various dates, including the Blog-post dated 17.05.2023, all relating to the implementation of Google Play Billing System (GPBS)/User Choice Billing (UCB)/Consumption-Based Model vis-a-vis the Mobile Application as illegal and unenforceable - Seeking rejection of the plaints purportedly under Order VII Rule 11(d) of the Civil Procedure Code, 1908 - HELD THAT:- In the case of Durga Hotel Complex [2007 (3) TMI 379 - SUPREME COURT], the Apex Court observed that “Conceptually, an Ombudsman is only a non- adversarial adjudicator of disputes. He serves as an alternative to the adversary system for resolving disputes, especially between citizens and government agencies. An adversarial adjudication necessarily stands on a higher plane than a settlement of a complaint at the instance of an Ombudsman.” The proceedings before the Ombudsman cannot oust the jurisdiction of the civil court. As per Section 16(2)(e) of the Ombudsman Scheme, the Ombudsman may reject a complaint at any stage, if the complaint requires consideration of elaborate documentary and oral evidence. Order VII Rule 11(d) of the Code of Civil Procedure, 1908, applies to those cases only where a suit made by the plaintiff in the plaint, without any doubt or dispute, shows that the suit is barred by any law in force. An application for rejection of plaint can be filed if the allegations made in the plaint considered on face value and taken to be correct in its entirety appear to be barred by any law. The power to reject a plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 ought not to be exercised except in a clear cut case. The question of rejection of plaint has to be decided on mere perusal of the plaint. The Court can only look into the plaint filed and the documents submitted by the plaintiff, but cannot look into the defendants' defence. Under Section 33 of the Act of 2002, the Commission has powers to issue interim directions also. Section 39 of the Act of 2002 provides for execution of orders of the Commission, imposing monetary penalty. If the order of the Commission is contravened, the Commission is entitled to impose penalties under Chapter VI of the Act of 2002. Appeal is also provided against the order of the Commission - the genesis of the plaintiffs' case is that the defendant Google is in a dominant position and by exercising its dominant position has imposed certain conditions, which are unconscionable and hit by Section 23 of the ICA, 1872. The relationship between the parties is not disputed. The same is an accepted position. If a party abuses its dominant position, then the Commission can take cognizance of the same as referred to in Section 4 of the Act of 2002. Under Section 27 of the Act of 2002, the Commission can direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission. The grievance raised by the plaintiffs can be dealt with by the Commission under the Act of 2002 and it is not beyond the purview of the Act of 2002. Some of the plaintiffs have approached the Competition Commission of India under the Act of 2002 and were also granted reliefs. There is no reason for not approaching the Commission once again. In fact, the plaintiffs Matrimony and People Interactive Private Limited had approached the Commission. The pleadings in the plaint also contain the averments of the order passed by the Competition Commission of India holding Google to be a dominant player in the relevant market and that Google abuses its dominant position in contravention of provisions of Section 4 of the Act of 2002. There are no error committed by the learned Single Judge in rejecting the plaint under Order VII Rule 11(d) of the Civil Procedure Code, 1908 - appeal dismissed. Issues Involved:1. Jurisdiction of civil courts in light of the Competition Act, 2002, and the Payment and Settlement Systems Act, 2007.2. Applicability of exclusive jurisdiction clauses in agreements.3. Alleged violations of the Payment and Settlement Systems Act, 2007, and the Competition Act, 2002.4. Interpretation and application of Section 61 and Section 62 of the Competition Act, 2002.5. The role of the Reserve Bank of India as a regulator under the PSS Act, 2007.6. The powers of the Competition Commission of India under the Act of 2002.7. The enforceability of the Developer Distribution Agreement (DDA) and its clauses.Detailed Analysis:1. Jurisdiction of Civil Courts:The primary issue was whether the jurisdiction of the civil court is ousted by the Competition Act, 2002, and the Payment and Settlement Systems Act, 2007. The court held that civil courts generally have jurisdiction unless expressly or impliedly barred by law. Section 61 of the Competition Act, 2002, expressly bars civil court jurisdiction over matters the Competition Commission of India (CCI) can determine. The court found that the issues raised by the plaintiffs, such as abuse of dominance and unfair conditions imposed by Google, fall within the purview of the CCI, thus barring civil court jurisdiction.2. Exclusive Jurisdiction Clauses:The defendants argued that the jurisdiction is restricted to the courts in California as per Clause 16.8 of the Developer Distribution Agreement (DDA). The court held that such clauses, which restrict jurisdiction to foreign courts, are unenforceable under Indian law, as they contravene Section 28 of the Indian Contract Act, 1872, which deals with agreements in restraint of legal proceedings.3. Alleged Violations of the PSS Act, 2007, and the Act of 2002:The plaintiffs alleged violations of the PSS Act, 2007, by Google, particularly concerning the settlement period and service fees. The court observed that the PSS Act, 2007, is a complete code and the Reserve Bank of India (RBI) is the designated expert authority to handle such violations. The court emphasized that the RBI has the power to regulate and enforce compliance with the PSS Act, 2007, and any disputes should be referred to it.4. Interpretation of Sections 61 and 62 of the Competition Act, 2002:Section 61 bars civil courts from entertaining suits on matters the CCI can address, while Section 62 states that the Act is in addition to other laws. The court clarified that Section 62 does not negate the bar on civil court jurisdiction established by Section 61. The provisions should be read together to ensure that matters within the CCI's jurisdiction are not simultaneously adjudicated by civil courts.5. Role of RBI under the PSS Act, 2007:The court highlighted the RBI's role as the regulator under the PSS Act, 2007. It is empowered to issue directions and resolve disputes between system participants and providers. The court noted that the RBI's decisions are given finality under the Act, and civil courts should not interfere in matters that fall within the RBI's regulatory domain.6. Powers of the Competition Commission of India:The CCI is tasked with addressing anti-competitive practices and abuse of dominance under the Act of 2002. The court noted that the CCI has the authority to modify agreements, impose penalties, and issue directions to prevent abuse of dominance. The plaintiffs' grievances regarding Google's practices could be adequately addressed by the CCI, which has already issued orders against Google.7. Enforceability of the DDA and its Clauses:The court examined the enforceability of the DDA, particularly the clauses related to jurisdiction and service fees. It found that the clauses imposing jurisdiction in California are unenforceable in India. The court also noted that the CCI had already addressed the fairness of Google's service fees and billing practices, and any further disputes should be resolved by the CCI.Conclusion:The court upheld the rejection of the plaints under Order VII Rule 11(d) of the Civil Procedure Code, 1908, affirming that the jurisdiction of civil courts is barred by the Competition Act, 2002, and the PSS Act, 2007. The plaintiffs were directed to seek remedies through the appropriate regulatory bodies, namely the CCI and the RBI, for their grievances. The court also extended the interim relief for three weeks to allow the appellants to explore further appellate remedies.