TaxTMI 
TaxTMI 
TaxTMI 
2014 (1) TMI 1462
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.... that there existed a case to direct the Director General to cause an investigation into the matter. The Director General was accordingly instructed to conduct an investigation into the matter. The allegations against MMF manufacturers, who were alleged to be contravening the provisions of Section 3(3)(a)(b)(c) of the Competition Act, 2002 (hereinafter referred to as the „Act‟) in a nutshell were as follows: (a) Price fixation of MMF products in the domestic markets; (b) The domestic manufacturer of MMF basing their price on import landed cost; (c) Selling cheaper in overseas market than domestic market; (d) Allocation of customers for specific suppliers and other suppliers not supplying to these customers/regions. (e) Consumer based division on the basis of region, quantity, quality and supplier preference. (f) Cutting down production jointly to avoid competition. (g) Due to the imposition o....
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....buyers by way of exporting more quantities and at times by cutting down the production; 8. Limiting quantity of specific quality of fibre (Kharach fibre), when there is a requirement of yarn made out of that fibre; 9. Not entertaining any complaint with respect to quality related issues emanating out of their products. If there was any loss of productivity or quality during spinning due to the poor or inferior quality of fibres supplied by GIL, they will not provide any financial compensation for the same; 10. GIL was selling fibre at commercial/invoice weight (13% moisture) whereas subsequent textile value chain does not entertain such a commercial invoicing. The payment of additional moisture becomes the cost for the spinners. Payment of all the fibre discounts given by GIL to the spinners was calculated on net weight of yarn produced by us and not on commercial weight of fibre. Therefore, the waste generated during the process of spinning, spinners don‟t get any benefit of discounts on the same. A copy of invoice has been pro....
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.... "1. The GIL has kept dual basic price and differential discounts for the sale of VSF, by imposing unfair conditions relating to subsequent production and sale of yarn (either domestic or export) by virtue of its dominance and violated the provisions of section 4(2)(a) of the Act. 2. The GIL provides segmental discounts for export or domestic consumption on the conditions that a minimum of 25% content of VSF is necessary in yarn. In case the content of VSF is less than that, no discounts are offered. GIL obtains proof of production/export before providing discounts. Customers have no choice but to manufacture the yarn in the given manner to obtain such discount. Otherwise they have to pay higher prices for the same VSF. GIL being dominant in the relevant market have imposed such unfair condition and violated the provisions of section 4(2)(a) of the Act. 3. A continuity discount/rebate is given by GIL with a condition that the yarn manufacturer shall not purchase VSF from anybody (including imports) other than GIL. The policy of GIL in this regard is not transparent and th....
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....missed by the Commission vide impugned order dated 30.5.2013. Being aggrieved from the aforesaid order, the petitioner is before this Court seeking quashing of the said order as also the report of the Director General dated 26.2.2013 to the extent it pertains to the alleged contravention of Section 4 of the Act. 6. As would be seen from its Objects and Reasons, the Competition Act seeks to ensure fair competition in India, by prohibiting trade practices which cause appreciable adverse effect on competitions, besides curbing negative aspects of competition. The Act provides for investigation by the Director General for the assistance of the Commission, but the Director General can act only if so directed by the Commission and does not have the suo moto powers for initiating investigation. The Act has also repealed the Monopolistic and Restrictive Trade Practices Act, 1969. Section 3(1) of the Act prohibits agreements in respect of production, supply, distribution, shortage, acquisition or control of goods or provisions of services which cause or are likely to cause appreciable adverse effect on competition within India whereas section 4(1) of the Act prohibits use of its dominant p....
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....concerned including the Central Government/ concerned State Government/ concerned Statutory Authority in case the investigation was directed on a reference received from such Government/Authority. This exercise is required to be undertaken irrespective of whether the Director General reports a contravention of the provisions of the Act or otherwise. In case the Director General recommends that no contravention of the provisions of the Act is made out, the Commission is required to invite objections or suggestions, on the said report, from the Central Government, or the State Government or the Statutory Authority of the parties concerned, as the case may be. Such report then is required to be considered by the Commission in the light of the objections or suggestions received by it. If the Commission, on consideration of the matter in the light of the objections or suggestions, if any, received by it, agrees with him, the matter is required to be closed forthwith. However, the recommendation made by the Director General in this regard is not binding on the Commission and after considering the said report in the light of the objections or suggestions received by it if the Commission ....
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....in the matter. It may close the proceedings forthwith if in its opinion, no contravention of the provisions of the Act is made out and no further inquiry was called. The second option available to the Commission, in such a case, is to hold further inquiry into the contravention reported by the Director General and the third option available to the Commission is to accept the report without directing any further inquiry and proceed to pass orders in accordance with the provisions of Section 27 of the Act. 9. Regulation 18 (2) of the Competition Commission of India (General) Regulations, 2009 (for short „the Regulations‟) provides that a direction of investigation to the Director General shall be deemed to be the commencement of an Inquiry under Section 26 of the Act. Regulation 20(1) requires the Secretary to send a copy of the information or the reference, as the case may be, with all other documents or material or affidavit or statements which have been filed either along with the said information or reference or at the time of preliminary conference to the Director General, while conveying to him, the directions of the Commission under Regulation 18. Clause (4) of th....
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....e in a particular manner, such an act can be done only in the prescribed manner and not otherwise. Since the Act requires the Director General to investigate only such information which was considered by the Commission, while forming its opinion with respect to existence of a prima facie case, it cannot, of its own carry out investigation based upon an information which was not available to the Commission. It would be appropriate to note here that though MRTP Act, 1969 empowered the Director General to exercise suo motu power of investigation, the said power has been expressly denied to him under the Competition Act. In clause (5) of the State of Objects and Reasons for enacting the Competition Act, it is clearly stated that "the Director General would be able to act only if so directed by the Commission, but will not have any suo motu power for initiating investigation". If the Director General, is directed by the Commission to cause an investigation to be made into information „X‟ and he, besides investigating information „X‟ also investigates information „Y‟, which was not considered by the Commission, while directing investigation by him, tha....
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....upon an altogether different information which the Commission did not consider, while forming its opinion with respect to existence of a prima facie case, his action would be contrary to the scheme of the Act and the powers conferred upon him. As noted earlier, clause (4) of Regulation 18 requires the Director General to give report containing his findings on each of the allegations made in the information or the reference as the case may be. This is yet another indicator that the report of the Director General is to be confined to the allegations made in the information or the reference received by the Commission and he is not competent to travel outside the said information or reference. 12. It was contended by the learned counsel for the Commission that in terms of sub-section (8) of Section 26, the Commission would inquire further into the matter and during such an inquiry, the petitioner would get ample opportunity to place its case before the Commission and satisfy it that no contravention of Section 4 of the Act is made out against it and, therefore, the Commission should not be precluded from considering the report of the Director General, to the extent he has reported con....
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....ndatory and in a given case, the Commission may in its discretion proceed to pass an order in terms of Section 27 of the Act, without any further inquiry, if it is satisfied on the report of the Director General that there has been a contravention of any of the provisions of the Act. In such a case, the enterprise against whom a report of contravention of the provisions of the Act is submitted by the Director General, will get no opportunity to lead evidence and to cross-examine the witnesses of the opposite party, even before the Commission. In any case, it would be contrary to the scheme of the Act and ultra vires the powers of the Director General if he carries out investigation into an information which, in the first instance, was not considered by the Commission, while forming its opinion with respect to existence of a prima facie case of contravention of the provisions of the Act, by an enterprise. In Institute of Chartered Accountants vs. L.K. Ratna, (1986) 4 SCC 537, the appellant before the Apex Court contended that since Section 22A of Chartered Accountants Act, 1949 provides an appeal to the High Court against an order of the Council imposing penalty and there was no li....
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.... Vs. ITO Ward 14(3), New Delhi, W.P.(C) No. 7538/2012 of High Court of Delhi. In Kingfisher Airlines Limited (supra), Bombay High Court was examining the notices issued by the Commission in respect of an alliance between Kingfisher Airlines Limited and Jet Airways (India) Ltd. On 17.10.2008, MRTP Commission ordered an investigation into the said agreement. On 29.10.2008, the Director General issued a notice to Kingfisher Airlines Limited calling for certain information under Section 11 of the MRTP Act. This was followed by exchange of letters between the Director General of Investigation and the petitioner. Respondent No. 3 in the petition, referring to newspaper reports in respect of the market shares and the strength of fleet etc. of the aforesaid airlines provided certain information to the Commission which formed an opinion that there existed a prima facie case and referred the matter to the Director General for investigation. Being aggrieved, the petitioners filed the aforesaid writ petition contending inter alia that since MRTP Commission was already seized of the matter, the cognizance taken by the Commission was without jurisdiction. This was also the contention of the peti....
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.... is to be placed before the Commission; and if the Commission finds a prima facie case, it can direct the investigation; and it has an option to drop the matter if there is no prima facie case. It is, therefore, not necessary that the investigation would be ordered in each and every case. Therefore, the information that is received can be treated as if it is an F.I.R. It will have to be found out by the Commission from that information whether there is any material in the said information which requires them to take cognizance of the complaint and then order an investigation. The investigation, the purpose of which, would be to collect evidence and would disclose if the group abused its dominant position. Therefore, it is clear that the investigation would reveal if there is sufficient evidence available to take further action. It is after the report of the Director General that the Commission proceeds to pass order under Section 26(6) either to close the matter forthwith or under clause (7) may order further investigation. If the report discloses any breach, the Commission is supposed to enquire into such breaches. This enquiry report is again considered under Section 27 and then ....
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....careful and circumspect. If the allegations contained in FIR or complaint disclose commission of some crime, then the High Court must keep its hands off and allow the investigating agency to complete the investigation without any fetter and also refrain from passing order which may impede the trial. The High Court should not go into the merits and demerits of the allegations imply because the petitioner alleges malus animus against the author of FIR or the complainant. The High Court must also refrain from making imaginary journey in the realm of possible harassment which may be caused to the petitioner on account of investigation of FIR or complaint. Such a course will result in miscarriage of justice and would encourage those accused of committing crimes to repeat the same." Although the decision is basically on criminal law, the ratio can be squarely applied. If the said ratio is to be applied, the enquiry / investigation cannot be stifled at all. We have not made reference to other decisions cited, since we find that the decisions referred to in this judgment were enough to arrive at a conclusion. We find that it was not necessary for the Commission to first find out the rele....
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....irector General to allow cross-examination of a witness by the opposite party during the course of investigation conducted by him. Therefore, the scheme of investigation by a police officer, in terms of the provisions contained in the Code of Criminal Procedure and investigation by the Director General in terms of the Competition Act, are altogether different. In any case, nothing prevents the Commission from treating the evidence collected by the Director General as information under Section 19 of the Act and if on its consideration, the Commission forms an opinion that there exists a prima facie case showing contravention of the provisions of Section 4 of the Act by the petitioner, it would be well within the power of the Commission to direct the Director General to cause an investigation to be made into the said information. If a police officer, while carrying out investigation into a cognizable offence, receives information or evidence relating to Commission of yet another offence, whether that be cognizable or non-cognizable, he is competent to carry out investigation into the said offence as well, the reason being that investigation in a cognizable case can be carried out wit....
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.... that there is no power given to the Commission to quash or setting aside the report of the Director General, but at the same time, it is also an admitted position that the report of the Director General does not bind the Commission. Therefore, if the Director General carries out investigation into an information which was not considered by the Commission while forming opinion in terms of sub-section (1) of Section, 26, the Commission is entitled to either reject that part of the report which pertains to such an investigation or it may in its discretion treat the said information as an information under Section 19 of the Act and if the Commission, on examining that part of the report, is of the opinion that there exists a prima facie case of contravention of the provisions of the Act, it has to direct the Director General to cause an investigation to be made into that opinion. In the case before this Court, admittedly, the information alleging abuse of its monopolistic position by the petitioner and thereby contravention of the provisions of Section 4 of the Act, was not considered by the Commission when it recorded a prima facie view that there existed a case to direct the Directo....