TaxTMI 
TaxTMI 
2022 (12) TMI 1153
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....Mr. D. Prakash Reddy, learned senior counsel, appearing for Mr. Sriram Polali, learned counsel for 2nd respondent. Facts of the Case:- 3. Petitioner No.1 is a company exclusively involved in the maintenance, financing, development and operation of Rajiv Gandhi International Airport, Hyderabad (RGIA) by virtue of a concession agreement dated 20.12.2004 entered into between itself and the Government of India. Clause 3.2.2 of the said concession agreement granted exclusive rights to the 1st Petitioner to grant third party service providers rights to carry out activities and business to maintain and operate RGIA. Respondent No. 2 is one such third party service provider which provides Maintenance, Repair & Overhaul (MRO) services including Line Maintenance Services to aircrafts landing at RGIA. According to the 2nd Respondent, Line Maintenance Services can only be provided from the premises of RGIA. 4. Pursuant to the concession agreement, Petitioner No. 1 entered into a license agreement dated 20.12.2011 with the Respondent No. 2 granting an area of 96.04 Sq. Mts. at RGIA for Setting up and operating Airline Engineering Maintenance Office to provide line maintenance services ....
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.... writ appeal W.A. No. 677 of 2019 before the Division Bench of this Court. The writ appeal was dismissed vide order dated 16.08.2019 and upheld the order dated 02.07.2019. 8. While the proceedings were pending in W.P. No. 13298 of 2019, Respondent No. 2 filed information under S.19(1) of the Competition Act, 2002 (hereinafter 'the Act 2002') before the Competition Commission of India ((hereinafter referred to as CCI for brevity)/ Respondent No.1 on 07.10.2019. In the said information, Respondent No. 2 alleged that by virtue of the concession agreement dated 20.12.2004, Respondent No. 1 was in dominant position in the market of providing Line Maintenance Services at RGIA. Respondent No. 2 alleged that all third-party service providers providing MRO services including the Line Maintenance Services are subject to the control of Petitioner No. 1 as the same can only be provided from RGIA's premises and Petitioner No. 1 has discretion in granting licenses to such third-party service provides to operate businesses at RGIA. Respondent No. 2 alleged that the license agreement was not extended by Petitioner No. 1 to favour Petitioner No. 2 (subsidiary of GMR Air Cargo and Aerospace Engin....
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....oner No. 1, the said facility (RGIA) cannot be duplicated by other competitors (third party service providers) and they cannot enter the relevant market of providing Line Maintenance Services without being present RGIA's premises. Respondent No. 1 also noted that Petitioner No. 1 denied market access to Respondent No. 2 by not extending the license agreement. Respondent No.1 further noted that the allegations by Respondent No. 2 that Petitioner No. 1 is trying to poach its clients and employees suggests exclusionary motive. 13. Respondent No. 2 is a significant market player in providing line maintenance services and denial of market access along with alleged exclusionary motive of Petitioner No.1 suggests that it tried to eliminate competition to favour Petitioner No. 2. Therefore, Respondent No.1 noted that the allegations along with the material placed before it, prima facie, suggests that Petitioner No. 1 contravened S.4(2)(b)(i), S.4(2)(e) and S.4(2)(a)(i) of the Act, 2002. Respondent No.1 directed the Director General to conduct investigation. 14. On 04.10.2019, Respondent No.1 dealing with the application filed under S.33 of the Act, 2002 by Respondent No. 2 seeking in....
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....dated 02.07.2019 in W.P. No. 13298 of 2019 and order dated 16.08.2019 in W.A. No. 677 of 2019. Further, any determination of issues by Respondent No.1 will amount to determination of issues already pending in W.P. No. 13298 of 2019. v. The impugned order dated 03.10.2019 suffers from errors apparent on the face of the record as it failed to consider and note the order dated 16.08.2019 in W.A. No. 677 of 2019. The said impugned order determined Petitioner No.1's dominant position and market shares of the players relying on wrong facts. Respondent No.1 only took into account figures in relation to foreign airlines and not domestic airlines to determine market share of the competitors. Further, Respondent No.1 considered downstream market share of providing Line Maintenance Services based on number of airlines (customers) and not the number of flights serviced by the competitors. Had Respondent No. 1 considered number of flights to consider market share it would a reach a conclusion that Petitioner No.2 was the dominant player in the downstream market. Respondent No.1 failed to consider the market share of other competitors like AI SATS which also provide Line Maintenance Ser....
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....of India (CCI)): i. The writ petition is premature and is liable to be dismissed. ii. The impugned order dated 03.10.2019 is an administrative order and is based on prima facie opinion and requires no adjudication. The said order is not a final order on merits and causes no prejudice to the Petitioners. Further, S.26(1) does not contemplate an opportunity of hearing before directing investigation. Therefore, at such a preliminary stage cannot interfere with an order directing investigation under Article 226. Reliance was placed on CCI v. SAIL((2010) 10 SCC 744). iii. Respondent No.1 is statutorily obligated under S.18 to eliminate practices having adverse impact on competition and is obligated to promote and sustain competition along with protecting the interests of the consumers. Therefore, the impugned order dated 03.10.2019 was passed in exercise of the said jurisdiction. iv. The reliefs claimed in W.P. No. 13298 of 2019 have no bearing on the proceedings before Respondent No. 1 as the later deals with competition law effecting an entire market and consumers whereas the former deals with a commercial dispute between two private parties. The is....
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....002 and 04.10.2019 directing the parties to appear on the ground that the same is without jurisdiction as similar reliefs were claimed in W.P. No. 13298 of 2019 and directing investigation will usurp the jurisdiction of this Court under Article 226 of the Constitution of India. 1st respondent lacks jurisdiction. On the other hand, the respondents contended that the impugned orders were passed under S.26(1) by prima facie determining the existence of possible abuse of dominant position by the 1st Petitioner. The Respondents contended that the reliefs claimed in W.P. No. 13298 of 2019 has no bearing on the proceedings before Respondent No. 1 as the latter deals with competition law issues and the former dealt with violation of Articles 14 and 19 along with violation of principles of natural justice. Therefore, the main question before this Court is whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court. 20. Before deciding the issues at hand, it is appo....
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....ed by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. 39. Wherever, in the course of the proceedings before the Commission, the Commission passes a direction or interim order which is at the preliminary stage and of preparatory nature without recording findings which will bind the parties and where such order will only pave the way for final decision, it would not make that direction as an order or decision which affects the rights of the parties and therefore, is not appealable. 22. In Excel Corp. Care Ltd. v. CCI (2017) 8 SCC 47), the Supreme Court held that investigation ordered under S.26(1) of the Act, cannot be interfered with, as the proceedings are only at the preliminary stage. It is only after the investigation that the CCI can reach a conclusion whether competition law was breached. Therefore, an order directing investigation cannot be interfered with. The relevant paragraph is extracted below: 45. If the contention of the appellants is accepted, it would render the entire purpose of investigation nugatory. The entire purpose of such an investigation is to cover all necessary facts and evidence in order to see a....
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....rts, should record reasons in support of their decisions or orders is no more res integra and has been settled by a recent judgment of this Court in CCT v. Shukla & Bros. [CCT v. Shukla & Bros., (2010) 4 SCC 785 : (2010) 3 SCC (Civ) 725 : (2010) 2 SCC (Cri) 1201 : (2010) 2 SCC (L&S) 133] , wherein this Court was primarily concerned with the High Court dismissing the appeals without recording any reasons. The Court also examined the practice and requirement of providing reasons for conclusions, orders and directions given by the quasi-judicial and administrative bodies. 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the s....
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....ion Bench of Karnataka High Court in W.A. No. 562 of 2021 and W.A. No. 563 of 2021.) explained the scope of prima facie opinion under S.26(1) and the limited interference of High Courts under Article 226 of the Constitution of India. It is relevant to note that the said decision of the Division Bench was upheld by the Supreme Court vide order dated 09.08.2021 in SLP(C) No. 11558 of 2021. The relevant paragraphs are extracted below: 19. The Hon'ble Supreme Court has held that in order to avoid anticompetitive agreements, which causes harm to consumers by fixing the prices, limits outputs or allocating the markets, the Indian Parliament has enacted Competition Act 2002. The competition law enforcement deals with anticompetitive practices and in those circumstances, once the CCI forms a prima facie opinion on receipt of a complaint which is given under Section 26(1) of the Act of 2002, directs the Director General to conduct an investigation, at that initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of violation revealed through investigation. If the investigation process is to be r....
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....ot give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in suc....
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....t an opportunity of hearing while holding an enquiry in the matter. Therefore, the petitions filed by the appellants before the learned Single Judge were certainly premature petitions and without permitting the Director General of the CCI to look into various agreements executed by the appellants with the other persons, the appellants want this Court to hold that the appellants have not committed breach of the statutory provisions as contained under the Act of 2002. In the considered opinion of this Court, unless and until a detailed enquiry is conducted by the CCI, the question of giving a finding in respect of the violation of the statutory provisions, does not arise. 27. Keeping in view the law laid down by the Hon'ble Supreme Court in the case of CCI v. SAIL, the order passed under Section 26(1) does not set into motion an unstoppable process that necessarily culminates into an adjudication against the entity against whom an enquiry is initiated. In fact, Section 26 of the Act of 2002 read as a whole, discloses a comprehensively and thoughtfully construed, stepwise scheme which contemplates not only a fair hearing to the concerned parties at the appropriate stage, ....
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.... Bangalore Woollen Cotton and Silk Mills Co. Ltd., v. B. Dasappa, reported in AIR 1960 SC 1352, reads as under; "9. A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence." In the aforesaid case, the Hon'ble Supreme Court has placed reliance upon its earlier judgment delivered in the case of Martin Burn Ltd., v. R.N. Banerjee, reported in (1958) SCR 514. Keeping in view the aforesaid definition of prima facie case and after going through the material on record, this Court is of the opinion that the CCI has rightly exercised its jurisdiction based upon the prima facie information on receipt of a complaint and therefore, in the considered opinion of this Court, the quashment of the same does not arise. 24. Similarly, the Madras High Court in TANGEDCO v. Competition Commission of Indi....
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....wer of investigation under the Electricity Act, but it confers with the powers to frame policy or to pass orders for maintaining the efficient supply, securing the equitable distribution of electricity and promoting competition, then the Competition Commission of India is empowered to deal with the complaint with reference to Section 4 and initiate further proceedings by following the procedures as contemplated under the Competition Act. 25. The Madras High Court in MRF Limited v. Ministry of Corporate Affairs (2022 SCC OnLine Mad 50) has held as follows: 42. A reading of the above provision shows that on receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter. As rightly observed by the learned single Judge, an order for investigation passed under Section 26(1) is a preliminary order and does not give room for conclusion on the allegation made against the erring party except for forming an opinion with....
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....minary order directing investigation on the ground of procedural lapses either in making the reference or entertaining the same, does not call for any interference by this Court. ***** 47. The above ratio clearly shows that the order passed by the Commission under Section 26(1) is not amenable to writ jurisdiction, as it does not affect the rights of the parties and it also does not effectively determine any right or obligation of the parties to the lis. The direction issued under Section 26(1) being inquisitorial, preparatory and preliminary in nature, the same does not affect the rights of any party, because it is departmental in nature and does not cause any prejudice giving rise to civil consequences. Moreover, the order going to be passed by the Commission under Section 26(2) being a final order putting an end to the information received in any one of the specified modes, is only appealable. Therefore, the issue No. (ii) is also answered against the appellant. 26. From the above decisions, it is clear that an order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the alle....
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....ral justice. It cannot be said that Respondent No.2 had raised competition law concerns before the High Court. It only approached the High Court on the ground of violation of principles of natural justice. The same did not preclude it from approaching the CCI (Respondent No. 1) under Section 19(1) of the Act, 2002 raising concerns of abuse of dominant position. 30. A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. A relief for breach of fundamental rights is independent from a relief sought aggrieved by abuse of dominance. Respondent No. 1/CCI was well within its jurisdiction to entertain information under S.19(1) of the Act, and order investigation on the basis of prima fa....
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....isdictional aspects, there may be a possibility that the two authorities, namely, TRAI on the one hand and CCI on the other, arrive at conflicting views. Such a situation needs to be avoided. This analysis also leads to the same conclusion, namely, in the first instance it is TRAI which should decide these jurisdictional issues, which come within the domain of the TRAI Act as they not only arise out of the telecom licences granted to the service providers, the service providers are governed by the TRAI Act and are supposed to follow various regulations and directions issued by TRAI itself. 32. In the present case, there is no threat of contrary findings as breach of principles of natural justice by one party towards other has little or no bearing on abuse of dominance which effects the entire market. Further, the said contention loses its relevance as W.P. No. 13298 of 2019 was withdrawn and the same was recorded in order dated 02.01.2020. Therefore, given that no parallel proceedings are pending at this juncture, this Court cannot interfere with the investigation ordered vide order dated 03.10.2019. 33. Petitioners contended that any interim order passed in furtherance of or....
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....cted below: 91. The jurisdiction of the Commission, to act under this provision, does not contemplate any adjudicatory function. The Commission is not expected to give notice to the parties i.e. the informant or the affected parties and hear them at length, before forming its opinion. The function is of a very preliminary nature and in fact, in common parlance, it is a departmental function. At that stage, it does not condemn any person and therefore, application of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (the Director General, being appointed by the Central Government to assist the Commission, is one of the wings of the Commission itself) does not amount to an adjudicatory function but is merely of administrative nature. At best, it can direct the investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of Section 26(2) of the Act, which order itself is appealable before the Tribunal and only after this stage, there is a specific right of notice and hearing available to the aggrieved/affected party. Thus, keeping in mind the nature of the functions required to be performed....