TaxTMI 
TaxTMI 
2015 (7) TMI 828
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....dents to cease and desist from restrictive, unfair and monopolistic trade practices and (iii) other appropriate directions. The complainant also filed supplementary information on 27.01.2011. 3. The complaint was taken on file by the Competition Commission in Case No.03/2011 and an order was passed under Section 26(1) of the Competition Act, 2002, on 24.02.2011 directing the Director General of Investigation to conduct an investigation into the matter and submit a report within sixty days. Accordingly, the Director General of the Competition Commission appears to have initiated an investigation and issued notice to the three respondents, named in the complaint. Thereafter, the Additional Director General filed a report before the Competition Commission on 19.04.2011 stating that the investigation made by him revealed that similar practices are adopted by other car manufacturers in India in the areas of after sales service and procurement of spare parts. Therefore, the Additional Director General sought the approval of the Competition Commission to expand the scope of the investigation to cover other car manufacturers. 4. On the note submitted by the Additional Directo....
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....the order expanding the scope of investigation passed by the Competition Commission, no appeal would lie to the Appellate Tribunal under Section 53B of the Competition Act, 2002. Therefore, the Division Bench remitted the matter back to the single Judge for disposal of the writ petitions on merits. 9. After the order of remand dated 06.08.2014 passed by the Division Bench, but before the writ petitions could be taken up for disposal, the Competition Commission passed a final order dated 25.08.2014 as against 14 car manufacturers including Nissan Motors India Private Limited. Therefore, the writ petition W.P.No.26488 of 2013 filed by Nissan Motors India Private Limited became infructuous and hence the same was dismissed by me with liberty to the company to challenge the final order of the Competition Commission dated 25.08.2014 before the Competition Appellate Tribunal. 10. However, three car manufacturers namely (1) Maruti Suzuki India Limited; (2) BMW India Private Limited; and (3) Mercedes Benz India Private Limited appear to have filed writ petitions, instead of the statutory appeals, before the High Court of Delhi in W.P.(Civil) Nos.5145, 6359 and 6560 of 2014. Th....
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....he Competition Act, 2002 was enacted on the basis of the S.V.S.Raghavan Committee Report. The said report of the High Level Committee on Competition Policy and Law indicated clearly in para 6.1.8 that the Director General will not have suo motu powers on investigation. Even the Standing Committee, which examined the Draft Bill, made it clear in its report tabled in the Lok Sabha on 21.11.2002 that the Director General would not have suo motu power of investigation, though under The Monopolies and Restrictive Trade Practices Act, 1969, he had such a power. Consequently the Preamble as well as the Statements of Objects and Reasons of the Competition Act, 2002 made it clear that the Director General can conduct an investigation only as per the directives of the Commission and not suo motu. 14. Therefore, on the basis of the contents of the S.V.S.Raghavan Committee Report, the report of the Standing Committee and the Statements of Objects and Reasons, it is contended by Mr.Vijay Narayan, learned Senior Counsel for the petitioners that the Director General erred in initiating an investigation suo motu against all the car manufacturers, when the complaint of Shamsher Kataria was o....
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....ing the views of the Competition Commission. On the said report, the Competition Commission passed the order dated 26.04.2011 permitting the Director General to include within the scope of the investigation, the other car manufacturers also. 18. Keeping the above sequence of events in mind, if we now look at the records, the validity of the first contention raised by the petitioners can be tested. In paragraph 28 of the complaint dated 17.01.2011 lodged by Mr.Shamsher Kataria, he had listed out the reliefs sought by him. The reliefs mentioned in column Nos.(a), (c) and (d) read as follows:- "(a) hold an enquiry into the trade practices of the Respondents and/or any other vehicle manufacturer and their authorised dealers/service centers indulging in similar activities as detailed herein and give a finding that such parties have committed restrictive and/or unfair trade practices in contravention of the Act. ............. (c) pass appropriate orders directing the Respondent No.1-3 and other contravening vehicle manufacturers and their authorised dealers/service centers to provide spare parts, technical information, diagnostic tools, software and any other information and go....
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....ry into allegations of contravention of the provisions of the Act. 23. Section 19(1) of the Act prescribes as to how the Commission may inquire into the alleged contravention of the provisions of the Act. It reads as follows : "The Commission may inquire into any alleged contravention of the provisions contained in Sub-Section (1) of Section 3 or Sub-Section (1) of Section 4 either on its own motion or on (a) receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or (b) a reference made to it by the Central Government or a State Government or a statutory authority." 24. A careful reading of Section 19(1) would show that an inquiry by the Commission may be carried out by three different methods. They are (i) an inquiry suo motu; (ii) an inquiry upon receipt of information from any person, consumer or their association or trade association; and (iii) an inquiry upon a reference made to it by the Central Government or a State Government or a Statutory Authority. 25 . The methodology to be adopted for initiating an enquiry on its own motion, is not....
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....ctor General, who sought permission to expand the scope of the investigation, will not fall within the purview of any one of these two expressions. Therefore, the information furnished by the Director General in the note submitted to the Competition Commission on 19.4.2011 does not qualify as information within the meaning of Section 19(1)(a), as it was not received either from a person as defined in Section 2(l) or from a consumer as defined in Section 2(f). It is the further contention of Mr.Vijay Narayan, learned Senior Counsel that the Competition Commission did not suo motu order the expansion of the scope of the enquiry. Therefore, the impugned order will not also come within the purview of suo motu initiation of enquiry by the Commission. 29. Hence, the only possibility for the respondents, according to the learned Senior Counsel for the petitioners, is to fall back upon Section 19(1)(a). But, to come within the purview of Section 19(1)(b), the reference should have been made either by the Central Government or by the State Government or by a Statutory Authority. In this case, no reference was made to the Competition Commission either by the Central Government or by t....
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....nto any contravention of the provisions of the Act or any Rules or Regulations made thereunder. But, he shall do so only "when so directed by the Commission." But, Sub-Section (2) of Section 41 confers upon the Director General, the same powers as are vested upon the Commission under Section 36. In other words, the Director General has powers to summon and enforce the attendance of any person to examine him, to order the discovery and production of documents, to receive evidence on affidavit, to issue Commissions for the examination of witnesses or documents and to requisition the production of any public record or document. The provisions of Sections 240 and 240A of the Companies Act, 1956 are made applicable to an investigation made by the Director General, as they would apply to an Inspector appointed under the Companies Act. 34. As a matter of fact, if a person fails to comply, without reasonable cause, with a direction given by the Director General in terms of Section 41(2), such a person is liable to be punished with fine. Therefore, it is clear that the role of the Director General is actually to assist the Competition Commission in the effective discharge of its duti....
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....rity shall give its opinion, within sixty days of receipt of such reference, to the Commission which shall consider the opinion of the statutory authority, and thereafter give its findings recording reasons therefor on the issues referred to in the said opinion." 37. The Statutory Authorities referred to in Sections 21 and 21A should naturally be those other than the Authorities functioning under the Competition Act, 2002. Otherwise, Sub-Section (2) of Sections 21 and 21A cannot be given a meaningful interpretation. If we have a careful look at Section 21(2), it will be clear that the Statutory Authority referred to in Section 21, is a Statutory Authority which is vested with a power to record findings on the basis of the opinion of the Commission. If the expression "Statutory Authority" appearing in Section 21 includes the Director General also, then the Director General should have the authority to give findings. But that is not a scope of the Act. The Director General is an authority constituted to assist the Commission. But the Statutory Authority referred to in Section 21 is one which can derive assistance from the Competition Commission. 38. Similarly, the Statu....
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....that it was not in such manner and accompanied by such fees as may be determined by Regulations, may not really tilt the balance. If the Commission has to receive information from the list of persons indicated in Section 19(1)(a), a procedure is prescribed by the Regulations. But the Regulations do not prescribe any fee or method of sending information to the Commission by the Director General. Moreover, the manner in which information is to be furnished, as stipulated in the Regulations, is merely procedural in nature. The form in which information is to be provided, cannot belittle the substance of the information. Therefore, merely because the information furnished by the Director General was not presented in such manner and accompanied by such fee as prescribed by the Regulations, it cannot be contended that the case will not fall under Section 19(1)(a). 42. In so far as the other requirements is concerned, it is true that the information should have been received from (1) any person (2) consumer (3) their association and (4) Trade Association. The Director General cannot come within the definition of consumer, their association or Trade Association. But I failed to unde....
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....r has been covered by any previous information received, then the new information may be clubbed with the previous information." 45. Since Section 26(1) requires to the Commission to direct the Director General to investigate into the matter, if it is of the opinion that there exists a prima facie case, it is contented by the petitioner that the formation of opinion is a sine qua non. 46. In Competition Commission of India v. Steel Authority of India Limited [(2010) 10 SCC 744], the Supreme Court held that the Commission must record its reasons for forming a prima facie opinion with reference to the information furnished to the Commission. After pointing out in para 93 of its decision that the functions performed by the Commission are in the nature of preparatory measures in contrast to the decision making process, the Supreme court nevertheless held in para 97 that at the stage of forming a prima facie view under section 26 (1), the Commission should record minimum reasons for formation of a prima facie opinion. Therefore, it is contended by the petitioner that since the order dated 26.04.2011 does not contain any reason and does not reflect the formation of a prima ....
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..... Keeping the insertion of the Proviso to Section 26(1) in mind, if we look at the facts of the present case, what had really happened was that on the original complaint as lodged by Mr.Kataria on 17.07.2011 and the supplementary complaint lodged on 27.01.2011, the Commission applied its mind and formed an opinion as required under Section 26(1) that there exists a prima facie case. Therefore, the Commission passed an order on 24.02.2011. This order is not assailed as not being in accordance with Section 26(1). 53. After the Commission passed the order dated 24.02.2011, taking note of the information furnished by Mr.Kataria, the Director General gave an information by filing a memo on 19.04.2011. This information is treated as an additional information, as per the Proviso to Section 26(1). When a case falls under the Proviso to sub-section (1) of Section 26, there is no necessity to record reasons all over again for the formation of an opinion. The formation of an opinion on the first information itself is sufficient. 54. As a matter of fact, one significant amendment made under the Competition (Amendment) Act, 2007 was that the expression "complaint" as found i....
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....nce of the directions issued under Section 41(1). The moment the Commission passed an order directing him to expand the scope of the investigation, Section 41(1) came into play. Therefore, I do not think that the Director General did anything in excess of what he was directed to do by the Commission. 59. As a matter of fact, sub-section (3) of Section 41 begins with a non-abstante Clause. Therefore, it is subject to sub-section (2) of Section 41. 60. The powers conferred upon an Inspector under Section 240 and 240A of the Companies Act, 1956 are just procedural in nature. The power conferred under these provisions include the power (i) to require any body corporate to furnish information or to produce such books and papers as he may consider necessary; (ii) to keep in his custody any books and papers; (3) to examine someone on oath; and (4) to seize documents. All that sub-section (3) of Section 41 says is that these powers can be exercised by the Director General, subject to the powers conferred by the Commission under sub-section (2) of Section 41 read with sub-section (2) of Section 36. 61. Therefore, the Director General merely placed an additional informat....
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.... recorded by the Director General. Therefore, the Court had the benefit of the report of the Director General and hence the Court observed in para 10 as follows:- "10. The scheme of the Act thus, does not permit investigation by Director General into any information which was not considered by the Commission, while forming opinion under sub-section (1) of Section 26 of the Act. The formation of opinion by the Commission and direction to cause an investigation to be made by the Director General being a pre-requisite condition for initiation of investigation, the Director General would have no power to undertake investigation in respect of the complaint which the Commission did not consider while forming an opinion and directing investigation by the Director General. If the Director General investigates an information which the Commission did not consider in the first instance, while forming opinion with respect to existence of a prima facie case, such an act on his part shall be ultra vires his power under the Act and, therefore, clearly illegal. It is settled legal proposition that when the provisions of a Statute requires an act to be done in a particular manner, such an act can ....