TaxTMI 
TaxTMI 
2014 (11) TMI 1269
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....19(1) of the Act, to institute an enquiry against the petitioner and the respondent Nos.3 to 7, by passing an order directing the respondent No.9 - Director General of Investigation, Competition Commission of India, to carryout investigation into the cartel like behaviour of the petitioner and respondent Nos.3 to 7 and their members and submit report there on, for the purpose of taking further action and the Commission having issued a direction dated 18.10.2012, as at Annexure-A, in exercise of its power under S.26(1) of the Act, this writ petition was filed on 24.04.2013, to quash the same. 3. The petitioner is an Association, registered under the provisions of the Karnataka Societies Registration Act, 1960. It has 7 categories of members i.e., film producers, film distributors, film exhibitors, Studio and laboratory and out door equipment hirer members, honorary members, affiliated members and temporary members. The objects with which the petitioner was established was to encourage and promote the film industry in the state of Karnataka and also to protect, conserve and promote Kannada, Konkani, Tulu and Kodava literature, culture and language and also to protect the welfare o....
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....ed. 7. Keeping in view the submissions made, the following points arise for consideration: 1) Whether the opinion formed by the Commission with regard to the existence of a prima facie case, to direct the Director-General to cause an investigation into the matter, calls for interference? 2) Whether the reference made by the Commission to the Director-General for Investigation vide the impugned order is bad, as being violative of Audi alteram partem? 8. To decide the said points, it is apposite to set out Ss.19(1) and 26 of the Act, in its entirety. They read as follows: "19. Inquiry into certain agreements and dominant position of enterprise.- (1) The Commission may inquire into any alleged contravention of the provisions contained in subsection (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. ***** ***** ***** ....
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.... order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (7) If, after consideration of the objections or suggestions referred to in sub-section (5), if any, the Commission is of the opinion that further investigation is called for, it may direct further investigation in the matter by the Director-General or cause further inquiry to be made in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act. (8) If the report of the Director-General referred to in subsection (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act." 9. With regard to the scope and object of the Act, in the case of SAIL (supra), Apex Court, has held as follows: "8. The Bill sought to ensure fair competition in India by prohibiting trade practices which cause appreciable adverse effect on the competition in market within India and for this purpose establishment of a quasi-ju....
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....tions 19 and 26 to 29 of the Act. They are anti-competitive agreements, abuse of dominant position and regulation of combinations which are likely to have an appreciable adverse effect on competition. Thus, while dealing with respective contentions raised in the present appeal and determining the impact of the findings recorded by the Tribunal, it is necessary for us to keep these objects and background in mind." (emphasis supplied) 10. The information furnished by respondent Nos.1 and 2, vide Annexure-C, was registered as Case No.58/2012 and was considered in the meeting held on 18.10.2012. The Commission being of the opinion that there exists a prima facie case, on account of the petitioner and respondent Nos.3 to 7 alleged to have indulged in violation of Ss.3 and 4 of the Act, a direction was issued to the Director-General to initiate investigation into the allegations made by the informants and submit report within 60 days. 11. S.7 of the Act provides for the Establishment of the Commission. S.8 is with regard to the Composition of the Commission. S.9 is with regard to the Selection Committee for Chairperson and Members of Commission. It is evident from S.8, that from....
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....s opined as follows: "5. The Commission has considered the facts disclosed by the informant. The plea under Section 3 of the Act regarding anticompetitive agreements and cartel like behaviour vis-à-vis OP No.1 is supported by the Article of Association of the OP No.1 whereby the various unfair conditions and sanctions are imposed on the members. The conduct of other opposite parties also appears to be anti-competitive to the extent that they restrict the exhibition of non-regional films, ban non-members from releasing films, withhold the payment of distributors' share for non-compliance of its directions, ban broadcasting of dubbed TV shows etc. These acts prima facie seem to be in violation of section 3 of the Act. ***** ***** ***** 7. As far as violation of section 4 is concerned, the Commission has to devolve upon the relevant market. To consider relevant market, the Commission has to consider relevant product/service market and the relevant geographic market. The informant in this case has clubbed two markets (i) exhibition of films at theatres in State of Karnataka and (ii) the market of broadcast of TV shows. The two service markets are different m....
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.... in their nature and substance, can hardly be implied; wherever the legislature so desires it must say so specifically. This can be illustrated by referring to the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles for Determination of Injury) Rules, 1995 under the Customs Tariff Act, 1975. Rule 5(5) provides that while dealing with an application submitted by aggrieved domestic producers accounting for not less than 25% of total production of the like article, the designated authority shall notify the government of exporting country before proceeding to initiate an investigation. Rule 6(1) also specifically requires the designated authority to issue a public notice of the decision to initiate investigation. In other words, notice prior to initiation of investigation is specifically provided for under the Anti-Dumping Rules, whereas, it is not so under the provisions of Section 26(1) of the Act. 78. Cumulative reading of these provisions, in conjunction with the scheme of the Act and the object sought to be achieved, suggests that it will not be in consonance with the settled rules of interpretation that a statutory notice or ....
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....age, 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 by the Commission in terms of Section 26(1), we are of the considered view that the right of notice of hearing is not contemplated under the provisions of Section 26(1) of the Act. ***** ****** ***** 93. We may also usefully note that the functions performed by the Commission under Section 26(1) of the Act are in the nature of preparatory measures in contrast to the decision-making process. That is....