TaxTMI 
TaxTMI 
2019 (4) TMI 2107
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.... COMMISSION OF INDIA; UNION OF INDIA & ANR For the Respondents : Mr. Arvind K. Nigam, Sr. Advocate with Mr. Sameer Gandhi, Mr. Mikhil Sharda, Mr. Mehtaab Singh Sandhu & Mr. Pratishth Kaushal, Advs. for TATA Motors. Mr. Abhishek Manu Singhvi, Sr. Advocate with Mr. Arvind. K. Nigam, Sr. Advocate, Ms. Ruby Singh Ahuja, Mr. Shravan Sahny, Ms. Ashwati, Mr. Nakul Gandhi, Ms. Hemangini, Ms. Krithika Ramesh & Mr. Nitin Nair, Advs. for TATA Motors. Mr. Amit Sibal, Sr. Advocate with Mr. Aakash Bajaj, Mr. Sanjeev Kapoor, Mr. Vinay Tripathi & Mr. Ambar Bhushan, Advocates, for Mahindra Electric Mobility Ltd. & M&M Ltd. Mr. Sanjay Jain, Sr. Advocate with Mr. Vaibhav Gaggar, Ms. Neha Mishra, Ms. Aayushi Sharma, Mr. Vidur Mohan, Mr. Adarsh Chamoli, Ms. Niti Richhariya, Mr. Soham Goswami, Mr. Uvraj Sharma, Advs. for Respondent/CCI. Mr. V. Lakshmikumaran, Mr. Aditya Bhattcharya & Ms. Aishwarya Dubey, Advs. for Honda Motors. Mr. Neeraj Kishan Kaul, Sr. Advocate, Mr. Arun Kathpalia, Sr. Advocate. with Mr. Akshat Kulshrestha, Ms. Rajshree Sharma, Ms. Bani Brar & Mr. Siddharth Nath, Advs. for Mercedes Benz. Mr. Abhishek Malhotra & Mr. Karan Kapoor, Advs. for Hindustan Motors. Mr. Ne....
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....es Benz, BMW, Audi etc., on 27.01.2011. On the basis of these materials, the Competition Commission of India (hereafter "CCI") recorded its prima facie opinion that the complaints needed investigation by its order of 24.02.2011. Subsequently, on 19.04.2011, the Director General ("DG" hereafter) in pursuance of the directions of the CCI conducted investigation into the allegations made by the Informant and submitted his investigation report. The DG by that report requested for permission to expand the scope of the investigation to include other car manufacturers. By its order of 26.04.2011, CCI expanded the scope of investigation being conducted by the DG to include the petitioner herein and certain other car manufacturers operating in India. The DG thereafter issued notice to the other car manufacturers, on 04.05.2011 under Section 36 (2) read with Section 41(2) of the Act, seeking detailed information and documents from them with reference to an investigation being conducted into certain anti-competitive practice alleged to be prevalent in the sale, maintenance, service and repair market of the cars manufactured in India in Case No. 03/2011. Proceedings in this case were stayed by....
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....ies and Restrictive Trade Practices Act to check concentration of economic power and to control monopolistic and restrictive trade practices. The report of the MIC highlighted the opinion that restrictive practices need a judicial determination and finding. The report of the MIC clearly stated that the success of the proposed MRTP Commission to curb the restrictive practices would largely depend on fair and quick investigations of all complaints. The MIC considered it essential in their view that the question whether a restrictive practice is the common detriment or not should be decided judicially by those at the head of the permanent body. The MIC considered it essential that the Commission should judicially decide the questions to be determined by it. The MIC stated in its report that where the judicial examination results in a finding that no restrictive practice is being pursued or that though such a practice is being pursued, it is in the interest of the general public, then no further action be taken. Where, however, the decision is otherwise, the most fruitful line of action would be for the Commission to issue an order. It is submitted that based on the recommendations of ....
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.... Authority should be transparent, non -discriminatory and rule-bound. 7. The Competition Law Authority should have a positive advocacy role in shaping policies affecting Competition." *********************** ******************* B) Adjudication 6.2.2 Central to effective implementation and enforcement of Competition Policy and Competition Law is an appropriate competent and effective adjudicative body, in the instant case, the Competition Commission of India. CCI will have to be a quasi-judicial body with autonomy and administrative power. It would be an independent statutory body without any political or budgetary control of the Government. Like the Supreme Court of India the CCI should be free to control its budget, after the Parliament votes its budgetary subvention. The remuneration of the Chairperson and Members of the CCI and all other expenditure should be a charge on the Consolidated Fund of India. 6.2.3 CCI will be a multi-member body with its Chairperson and Members chosen for their expertise, knowledge and experience in Judiciary Economics Law International Trade, Commerce, Industry, Accountancy, Public Affairs and Administrati....
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.... of the CCI being a quasi-judicial or judicial body, the four prerequisites of a judicial body as enumerated in a decision laid down by King's Bench in Cooper v. Wilson {C1937 2 KB 309), were brought to the notice of the Department for their comments. The Ministry has admitted in their written submission that the Bill (clauses 36 read with clause 40) makes it closer to a judicial body. The CCI has specific adjudicatory function in relation to abuse of dominance and anti-competitive agreement and on combinations under clause 27 and 31, respectively. The decision of CCI has extraterritorial reach under clause 32. Clause 36(3) says that the proceedings before the CCI would be judicial proceedings. The CCI can detain a person in civil prison for specific purposes. Thus, the Ministry is of the opinion that it is a judicial body. 7.3 In contradistinction to the Statement of Objects and Reasons which describes CCI as a quasi-judicial body, the Department has now submitted that it is adjudicatory. Besides, the Department, having admitted the apparent contradiction, has also submitted that CCI can sue or be sued. Here, the Committee wishes to point out that a judicial body neve....
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....ers and that in the background of the doctrine of separation of powers recognized by the Constitution of India, the Chairman of the CCI had necessarily to be a retired Chief Justice or Judge of the Supreme Court or of a High Court, to be nominated by the Chief Justice of India or by a Committee presided over by the Chief Justice of India and further the right to appoint the Judicial Members of the CCI should also rest with the Chief Justice of India or his nominee. The Supreme Court in its interim order dated 31.10.2003 stayed the judicial functioning of the CCI and the operation of Rule 3 of the Competition Commission of India (Selection of Chairperson and other Members of the Commission) Rules, 2003. It is stated that the Central Government then submitted before the Supreme Court that it intended to bring about certain changes in the Act, in light of the issues raised in the Writ Petition. The Supreme Court delivered its judgment in the matter on 20.01.2005. It disposed of the writ petition leaving open all questions regarding the validity of the enactment, including the validity of Rule 3 of the Rules to be decided after the amendment of the Act and declined to pronounce on the ....
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....t body is to be created as submitted on behalf of the Union of India consistent with what is said to be the international practice, it might be appropriate for the respondents to consider the creation of two separate bodies, one with expertise that is advisory and regulatory and the other adjudicatory. This followed up by an appellate body as contemplated by the proposed amendment, can go a long way, in meeting the challenge sought to be raised in this Writ Petition based on the doctrine of separation of powers recognized by the Constitution. Any way, it is for those who are concerned with the process of amendment to consider that aspect. It cannot be gainsaid that the Commission as now contemplated, has a number of adjudicatory functions as well." 8. The petitioners then refer to portions of the Standing Committee Report of 2006 on the Bill to amend the Act, so far as it related to the Central Government‟s views on the need to ensure transparency and fairness in selection of members, through a provision by which the Chief Justice of India or his nominee was to chair the selection committee and its views on the expression "information" substituting the then existing term "....
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....onsider the creation of two separate bodies: one advisory and regulatory, and the other adjudicatory; and an appellate body following up the adjudicatory body. The Competition Amendment Act, 2007 was passed on a complete misreading of Braham Dutt (supra). The adjudicatory function of the CCI remained unchanged, but several amendments with respect to its procedure were a mismatch to its adjudicatory functions and were more suited to a corporate body. 11. Mr. Sibal urges that CCI's functions are overwhelmingly adjudicatory (to substantiate this, reference is made to Sections 3, 4, 26, 27 and 28 of the Act). It is argued that the CCI perceives itself to be a judicial body and in this regard, he placed reliance on Regulations 24, 26, 27, 29, 31, 32, and 35 of the General Regulations. Learned senior counsel submitted that the CCI clearly passed the impugned order while exercising adjudicatory/judicial functions. It was also contended that Section 22(3) of the Act is ex facie unconstitutional. He said that the terms used, i.e. "meetings", "voting", "second" or "casting vote" and "quorum" are anathema to adjudicatory functions. According to the learned senior counsel, Section 22(3)....
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.... signing the impugned order is cited as incurably illegal and not merely procedurally improper. 14. The petitioners argue that the CCI‟s hearing procedure ingrains the concept of the "revolving door" whereby members of the body participate in any proceeding at any given point of time, without any principle or pre-determined manner, essentially destroying the guarantee of fair hearing: this is enabled by Section 22(3) of the Act and violates the basic principle that one who hears must decide. It is submitted that the "revolving door" is a death knell to collegiality and collective decision making which is essential to all judicial decision making, as a collegium has a personality that exceeds its members. This is an unconstitutional aspect embedded in Section 22(3) in unambiguous and definite terms. Therefore, it cannot be read down nor be saved by the manner in which it is administered. 15. The learned senior counsel relied on Surendra Singh v State of UP AIR 1954 SC 194 to underline that the essence of a tribunal‟s functioning is the ability of a judge sitting on it, to effectively participate and bring her mind to the final decision, till the making of that deci....
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....the "judgment". 12. Now up to the moment the judgment is delivered Judges have the right to change their mind. There is a sort of locus poenitentiae, and indeed last-minute alterations often do occur. Therefore, however much a draft judgment may have been signed beforehand, it is nothing but a draft till formally delivered as the judgment of the court. Only then does it crystallise into a full-fledged judgment and become operative. It follows that the Judge who "delivers" the judgment, or causes it to be delivered by a brother Judge, must be in existence as a member of the court at the moment of delivery so that he can, if necessary, stop delivery and say that he has changed his mind. There is no need for him to be physically present in court but he must be in existence as a member of the court and be in a position to stop delivery and effect an alteration should there be any last-minute change of mind on his part. If he hands in a draft and signs it and indicates that he intends that to be the final expository of his views it can be assumed that those are still his views at the moment of delivery if he is alive and, in a position, to change his mind but takes no steps to ....
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....Judge should prevail when there is conflict between two Judges. We really fail to understand as to how the seniority of the Judge can be said to be a relevant criterion for deciding an appeal under the Act. The rule appears to have been based on assumption that opinion given by the Chief Judge or a Judge having precedence in rank or seniority, more experienced is always right and preferable to the opinion of a junior Judge. In our view, this assumption is totally illogical and irrational. The seniority or a rank of a Judge may be relevant consideration in the internal administration of the Court. It may also be relevant for further promotion to the higher Court, but merely because the Judge happens to be the Chief Judge or he happens to be a senior Judge cannot be a ground for accepting his decision as correct decision by completely disregarding the decision given by the junior Judge. Needless to mention that the Judges, who are equal in rank, enjoy equal powers and jurisdiction as far as judicial work is concerned. The irrationality of the rule can be further demonstrated by a simple illustration where both the Judges are appointed on the same day and out of whom, one Judge will b....
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....sic structure and provides that the legislature and executive shall not, in discharge of their functions, transgress constitutional limitations. This relates to the principle of the independence of the judiciary, which provides that judicial functions shall be independent of executive influence. Separation of powers equally applies to all legislations, but is violated in the Act. It is submitted that separation of powers prohibits one branch of the State taking over an essential function of another branch (in the present case, the Executive exercising both direct and indirect control and influencing over adjudication by the CCI). The following passage from R. Gandhi (supra) was highlighted: "Impartiality, independence, fairness and reasonableness in decision making are the hallmarks of the judiciary. If impartiality is the soul of the judiciary, "independence" is the lifeblood of the judiciary. Without independence, impartiality cannot. Independence is the not freedom for judges to do what they like. It is independence of judicial thought. It is the freedom from interference and pressure which provides the judicial atmosphere where he can work with absolute commitment to t....
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.... be a mix of judicial members and technical members, there should nevertheless be a predominance of judicial members. In this context, it is stated that Section 19 of the Act, does not derogate from the requirement of a predominance of judicial members. Minority of technical members, along with the power to call upon experts under Section 36(3) would satisfy the requirement of Section 19. Judges experienced in these fields can be appointed. On the other hand, that final arguments in the present case were heard in part by seven members, but finally signed by three non-judicial members which illustrates the perils of proceeding without judicial/legal members. 22. The argument advanced by Mr. Gopal Subramanian, learned senior counsel was that CCI adjudicates a lis whereas the COMPAT, is primarily appellate and has limited original jurisdiction. This is in contrast to the TRAI-TDSAT model, where the TDSAT discharges adjudicatory functions with a very wide original jurisdiction, while the TRAI is a regulatory body. Reliance was placed upon State of Gujarat v. Utility Users Welfare Association 2018 (6) SCC 21 where the Supreme Court held that it is mandatory that a person of law to be....
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.... adjudicated by an independent judicial forum. Judicial independence and separation of judicial power from the executive are part of the common law traditions implicit in a Constitution like ours which is based on the Westminster model." 25. Counsel stressed that the right to equality envisions the right to have adjudication of disputes of citizens "adjudicated by a forum which exercises judicial power in an impartial and independent manner, consistent with the recognized principles of adjudication" and that "wherever access to courts to enforce such rights is sought to be abridged, altered, modified or substituted by directing him to approach an alternative forum such legislative Act is open to challenge if it violates the right to adjudication by an independent forum." 26. Reliance was also placed on the observations that the personnel who man such tribunal should be sufficientlyqualified and should possess relevant experience in law or judicial office, so as to discharge the functions entrusted impartially; and furthermore, the predominance of any individuals attached to or associated with the government or the executive would undermine the rule of law and separation of po....
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....ng of ad interim orders in relation to such agreements, which may continue for indefinite periods. To avoid this mischief, it is necessary that wherever the Commission exercises its jurisdiction to pass ad interim restraint orders, it must do so by issuing notices for a short date and deal with such applications expeditiously. Order XXXIX, Rules 3 and 3A of the Code of Civil Procedure also have similar provisions. Certain procedural directions will help in avoiding prejudicial consequences, against any of the parties to the proceedings and the possibility of abuse of jurisdiction by the parties can be eliminated by proper exercise of discretion and for valid reasons. Courts have been issuing directions in appropriate cases and wherever the situation has demanded so. Administration of justice does not depend on individuals, but it has to be a collective effort at all levels of the judicial hierarchy, i.e. the hierarchy of the Courts or the fora before whom the matters are sub-judice, so that the persons awaiting justice can receive the same in a most expeditious and effective manner. The approach of the Commission even in its procedural matters, therefore, should be macro level rath....
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....ntire field of administration. Every organ of the State under our Constitution is regulated and controlled by the rule of law. In a welfare State like ours it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate. The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision. " 31. It is submitted that the Supreme Court underpinned that it is impossible to delineate watertight categories of what are "administrative" and "quasi- judicial" functions. Therefore, in this event, slotting the CCI into one or other of these watertight categories is inappropriate in deciding the instant case. This is because firstly, irrespective of whether CCI is a judicial body, all statutory decision makers are delegates of state power. So, they must be indepe....
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.... even the SEBI's structure includes certain safeguards that are not present in the CCI, such as the fact that SEBI separates the judicial and regulatory function by providing for a dedicated adjudicatory officer (Section 15 of the SEBI Act and other similar provisions); the concept of a casting vote (as in Section 22 of the Act) does not come into play during adjudication by the SEBI. 34. Counsel submits that though superficially, CCI and ECI perform adjudicatory functions with no judicial input in the latter body, a deeper analysis of the ECI‟s functions show that adjudication is confined to registration of parties and recommending findings on qualification or disqualification; it lacks any power of review or imposition of penalty. On the other hand, even with such limited adjudicatory functions, it has greater functional independence; the appointment of its Commissioners (and Chief Election Commissioner) is not by a government dominated body, but rather by an independent collegium; its members have an assured age of retirement and constitutionally protected tenure of office and protected conditions of service. Despite performing judicial functions, CCI‟s member....
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....unsel also impugned the appeal provided by the Act (Section 53T) to the Supreme Court, stating that a direct appeal to the Supreme Court, which tended to exclude scrutiny through judicial review under Article 226 of the Constitution of India, was anathema to the rule of law 36. Appearing on behalf of Tata Motors, Dr. A.M. Singhvi and Mr. Arvind Nigam, learned senior counsel submitted that Section 27 (b) of the Act is void and arbitrary, because CCI has unfettered discretion on WHEN to impose penalty; Section 27(b) provides no guidance on when CCI should impose penalty, i.e. whether circumstances warrant the imposition of penalty. It also has unfettered discretion as to quantum of penalty; it has unfettered discretion to pick an arbitrary percentage figure from 0 - 10% of turnover or 0 times to 3 times of profits of an enterprise for imposing penalty. The Act provides no guidelines. 37. Learned senior counsel stated that the Act contains no provisions engrafting the factors to be taken into consideration CCI must consider for imposing a penalty. The separate opinion of N.V. Ramana, J in Excel Crop Care India v Competition Commission of India 2017 (8) SCC 47 highlighted the nee....
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....] that the CCI must carry out an independent inquiry further to the DG's report. Therefore, the only time parties are provided with an opportunity of hearing, they do not know the CCl's charge against them. 39. As a sequitur, parties do not know what arguments to make on penalty. Had the petitioners known that the CCI was going to pass a blanket penalty on total turnover of the OEMs, they could have used the opportunity to distinguish the cases and highlight that penalty on turnover from outside India should be excluded. Unlike the Act, the Competition and Markets Authority, UK provides a draft penalty statement, which sets out key aspects for penalty calculation, post which parties are able to present arguments. 40. It was contended that there is discrimination in the manner for imposing penalty: Regulation 48(1) of the General Regulation- specifically denies enterprises an opportunity of hearing to present arguments on penalty if CCI finds a case of contravention of Sections 3 and 4. By amendment to Regulation 48 (1)of General Regulations in 2011, CCI amended its own regulations to take away the right of parties to benefit from (a) a show cause notice and (b) reason....
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....appearing on behalf of M/s. Honda Cars India Limited dwelt in length on the role of regulatory bodies in India and that of the CCI in particular. He emphasized that a regulator is a governing or independent body setting standards or striving at a fair balance between the interests of consumer and that of the service provider - by relying on P. Ramanatha Aiyar‟s, The Major Law Lexicon, (Vol.5, 4thEdn. 2010 P.5804) . It is submitted that in India, regulators were set up in different sectors to ensure that the interests of consumers and the interest of the various players in the market are balanced. Such bodies dealt in different sectors where previously the government was operating exclusively and has since liberalized or privatized the sector. It was contended that this was thought to be expedient to bring in independent bodies balancing the competing interests of the stakeholders in the field. 44. Mr. Lakshmikumaran, argued that regulators principally performed the functions which are regulatory, advisory or recommendatory, executive and in certain cases adjudicatory (the latter is incidental to regulatory framework in order to maintain the balance in the principal sector ....
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....ulators are not involved in adjudicatory functions but involved rather in regulating a market or an industry and in the process independently under certain circumstances undertake functions requiring it to act in a judicial manner. The reliance was placed upon PTC India Ltd. vs. Central Electricity Regulatory Commissioner, (2010) 4 SCC 603, which held that regulatory functions fall in between legislative and administrative functions and that they partake legislative character as well as administrative (in the nature of directions licensing, etc.). The regulatory functions are predominantly legislative. On the other hand, authorities which are required to adjudicate are either quasi judicial statutory bodies or tribunals. Counsel relied upon provisions of Customs Act, which creates adjudicating officials and bodies to undertake specific functions but without trapping of courts. The Appellate Tribunal under Section 129 has power of Civil Court and its proceedings are considered judicial proceedings. If one keeps this functions and rules in mind, it is clear that the Competition Commission of India is not a regulator and it is a principal authority which exercises a judicial functions....
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....justice, adjudication in India and in complete deviation of standards which constitutes the rule of law. It was submitted that it is the only judges or adjudicatory personnel who hear the case finally and throughout the final hearing, who are competent and empowered to decide the final order. The participation of others at intermittence stages and absence of one or many of them in the final decision vitiates it. Learned counsel relied upon the judgment of the Calcutta High Court in Mahomed Akil vs. Asadunnisa Bibee, 9WR 1 (FB) and the judgment in State of Punjab vs. Khan Chand (1974) 1 SCC 549. 47. Mr. Gurukrishnakumar, learned senior counsel appearing for Skoda Auto India Pvt. Ltd. argued that the Act sought to replace the forum dealing with anticompetitive behaviour. Both under the MRTP Act as well as the Act, the investigation is conducted by Director General (Investigation) ["DG(I)" or "DG"] under the supervision of the Commission. Further, under both the Acts, the DG submits the report to the respective Commission on the basis of which the Commission decides to enquire. The procedure for enquiry of a restrictive/unfair/monopolistic trade enquiry under the MRTP Act was that ....
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....rity over some area of human activity in a regulatory or supervisory capacity". The CCI, as evident from the Preamble and the Statement of Objects and Reason of the Act, was conceptualized as a pro-active administrative machinery armed with the requisite expertise to actively engage with the complex and ever-evolving economic landscape of the country. Economic liberalisation in the 1990‟s necessitated the introduction of the CCI which discharges a wide array of functions in order to achieve its administrative policy, i.e. to promote competition and protect the interest of consumers. 51. Mr. Jain argued that it is a well settled principle of law that the executive is bound to implement its policies in accordance with the Constitution, thus by necessary implication the CCI is an executive body. Furthermore, it is also no longer res integra that if a function is not performed by the legislature or the judiciary it is a function which is performed by the executive. CCI regulates the economic landscape by performing a wide array of functions under the various provisions of the Act. The CCI under Section 6 of the Act is entrusted with the function of approving combinations, whic....
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.... an expert regulatory body performing the role of independent regulator/watchdog for the economy in the same mould as Securities and Exchange Board of India (hereinafter referred to as "SEBI") performs qua the Securities market. In the course of its functioning CCI undertakes "executive adjudication" in juxtaposition to judicial adjudication in respect of all aspects entrusted under the Competition Act. Therefore merely because CCI also performs adjudicatory functions it does not acquire the character of judicial tribunal or Court. According to Black‟s Law Dictionary, Seventh Edition, Administrative Adjudication is defined as "the process used by an administrative agency to issue regulations through an adversary proceeding. The same definition has been reiterated in Wharton's Law Lexicon, Fifteenth Edition." 53. It is emphasized that CCI was not set up to substitute any court or tribunal or to adjudicate upon matters which earlier belonged to the domain of an Adjudicatory body akin to a Court or Tribunal. The observations in S.P. Gupta v. Union of India, AIR 1982 SC 149 are relied on to show that such functions could never be performed by courts. The court held: "....
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....sing penalty under Section 27 of the Act are appealable with no precondition of a pre-deposit. Under the amended Act the order passed under Section 27 of the Act are not treated as "Decrees" of the Court. The COMPAT on its part can reduce or even completely waive the requirement of depositing the penalty at the hearing stage or for that matter setting aside the order to this effect. Therefore, it is not an unbridled or unfettered power. 55. It is argued that administrative adjudication is not an alien concept but rather its importance has been recognized in various judgments in India and internationally. Fundacio Privida Intervida vs. Additional Commissioner, Pune Division & Anr. 2005 (2) ALL MR 48 that under the Indian Constitution, quasi-judicial or administrative adjudication is a known feature; the observations of the Bombay High Court in this context, were relied on, that "Sometimes, the task of adjudication is merely an incidental administration; sometimes, it is more than incidental and it begins to assume a very close resemblance with the work usually assigned to the judiciary. This practice of vesting adjudicatory functions in person, bodies or institutions outside the ....
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....ial function should be taken away from the Registrar and assigned to some other authority. The petitioner has pleaded for appointment of a person with legal background as Registrar, etc. to enable him to decide the dispute between the parties more effectively, as according to him, any person with no legal/judicial background is incapable of deciding those cases. However, same arguments can be pressed by other side in a reverse situation. If a person with legal background is appointed to any of these posts, then his appointment can be challenged on the ground that such a person though would be fit to discharge the quasi-judicial duties, but totally unfit to discharge other administrative duties which are the primary and day-to-day duties attached to the said office. 12. We would have still given some weightage to the argument of the petitioner, had it been a case where the order of the Registrar, deciding the dispute, was made final. That is not so...." 59. Learned counsel also relied on the observations in Ujjam Bai v State of Uttar Pradesh AIR 1962 SC 1621, to advance CCI‟s argument in this context, especially the following passage: "169. In this case a ....
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....enforce it; but the Executive authority says, "I have a right to decide wrongly and, therefore the Supreme Court cannot enforce the fundamental right". There is nothing in the Constitution which permits such an extraordinary position. It cannot be a correct interpretation of the provisions of the Constitution if it enables any authority to subvert the paramount power conferred on the Supreme Court. 170. It is conceded that if the law is invalid, or if the officer acts with inherent want of jurisdiction, the petitioner's fundamental right can be enforced. It is said that if a valid law confers jurisdiction on the officer to decide rightly or wrongly, the petitioner has no fundamental right. What is the basis for this principle ? None is discernible in the provisions of the Constitution. There is no provision which enables the Legislature to make an order of an executive authority final so as to deprive the Supreme Court of its jurisdiction under Article 32 of the Constitution. 171. But the finality of the order is sought to be sustained on the principle of res judicata. It is argued that the Sales-tax Tribunals are judicial tribunals in the sense they are court....
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.... The said authorities have to follow certain principles of natural justice, but that does not make them courts. The scheme of the Act clearly shows that the sales-tax authorities appointed under the Act, following the principles of natural justice, ascertain the turnover of an assessee and impose the tax. The hierarchy of tribunals are intended to safeguard the interest of the assessees as well as the State by correcting wrong orders. The fact that, following the analogy of the Income-tax Act, at the instance of the party aggrieved a reference can be made by the reviewing authority to the High Court on a question of law shows only that the help of the High Court can be requisitioned only to elucidate questions of law, but the High Court has no power to make final orders, but on receipt of the judgments of the High Court, the revising authority shall make an order in conformity with such judgment. 60. Mr. Jain argued that it is clear that a body charged with performing multiple functions can adjudicate and it is not necessary that the person(s) manning the body must have a legal background. The only aspect that emerges is that the body while adjudicating performs in a quasi-judic....
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....ve agency. See Columbia Broadcasting System v. United States, 316 U.S. 407, 316 U.S. 421." Hence we refuse to say that the Commission, which had not previously been confronted with the problem of management trading during reorganization, was forbidden from utilizing this particular proceeding for announcing and applying a new standard of conduct...." 61. Distinguishing the judgments cited by the petitioners, CCI urges that in those judgments the Supreme Court was only concerned with the issue whether a particular body was a "tribunal" for the purposes of Article 136 of the Constitution of India, i.e. if an appeal would lie to the Supreme Court from the decision of such a body and not whether tribunals required judicial members. The fallacy of the said argument can be seen from these judgments itself wherein the Central Government/State Governments have been held to be a tribunal, therefore these purely executive bodies have been held to be tribunals. Therefore, the reliance placed by the petitioner on these judgments to show that the tribunals must be manned by judicial members is completely misplaced. 62. Mr. Jain argued that the doctrine of separation of powers doe....
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....nvolved for which knowledge of law was essential, whereas such intensive legal knowledge is inessential in deciding issues of competition; fifthly, NTT decided a lis that invariably involved the government as a litigant before the tribunal, unlike CCI which did not decide a lis, and in which the government was not necessarily or always a party. Dealing with the petitioner‟s contentions as regards R. Gandhi (supra), Mr. Jain highlighted that the longestablished jurisdiction of existing tribunals and the High Court as regards interpretation of company law and allied enactments was sought to be ousted and replaced by a tribunal. This attempt was similar to the creation of NTT, which sought to do away with over five decades old tribunals and High Courts‟ jurisdiction, which was held to be unconstitutional inasmuch as judicial power was sought to be tribunalized thus undermining the doctrine of separation of power, leading to arbitrariness. 65. It was next argued-in the context of Section 27 that there is no need to give a separate hearing for the purpose of determination of quantum of penalty, for the reason that (a) the "opposite parties" are at liberty to address them ....
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....arings, there is nothing irrational in providing for a minimum quorum of 3 members particularly in the light of Section 22(3) of the Act. In a regulatory mechanism where decisions are taken in a meeting, the casting vote contemplated under Section 22(3) is an effective and logical working tool. This is the only viable option in a scenario, where in a particular meeting, there are only 4 or 6 members present and the meeting results in a deadlock. In such situations the provision of casting vote enables achievability of a majority decision. 68. Mr. Jain refuted that the enactment was void as it permitted "the revolving door" procedure. It was submitted that the allegation is unfounded and misconceived since it is a settled proposition of law that validity of a law cannot be determined on the assumption that the concerned authority is likely to act in an arbitrary or irregular manner. It was further submitted that "the revolving door" allegation is based on the premise that certain members who heard the final arguments of the case, chose not to sign the final order. This is disputed as incorrect since apart from the three members who signed the final order, all the other members wh....
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....ctions, if any. Though in the context of the Act, the matters which are incidentally adjudicated by CCI in exercise of its regulatory functions are not in the nature of bilateral dispute between two parties, still, the same being of a civil nature (as well), as a matter of abundant caution, the legislature wanted to rule out a possibility where under a mistaken belief, a Civil Court would end up entertaining such a matter. Section 61 only compliments the objectives of the Act and does not militate against it. 71. Counsel submitted that CCI is considered to be an expert regulatory body. While culling out the market share, relevant geographical, relevant product market there are various economic formulae, economic tools, accounting principles, understanding of socio-economic factors and algorithms which are required to be pressed into service and are used by the CCI, thus there is a need for experts. An example of one of such formulas is the Herfindahl index (also known as Herfindahl- Hirschman Index, or HHI) -a measure based on the total number and size distribution of firms in the industry which is important for determining the level of concentration in a sector. It is computed ....
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.................................................Members. (2) The term of the Selection Committee and the manner of selection of panel of names shall be such as may be prescribed.] Section 15 : Vacancy, etc. not to invalidate proceedings of Commission No act or proceeding of the Commission shall be invalid merely by reason of- (a) any vacancy in, or any defect in the constitution of, the Commission; or (b) any defect in the appointment of a person acting as a Chairperson or as a Member; or (c) any irregularity in the procedure of the Commission not affecting the merits of the case Section 22 : Meetings of Commission (1) The Commission shall meet at such times and such places, and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be provided by regulations. (2) The Chairperson, if for any reason, is unable to attend a meeting of the Commission, the senior-most Member present at the meeting, shall preside at the meeting. (3) All questions which come up before any meeting of the Commission shall be decided by a majority of the Members present and voting, and in the event of a....
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.... of the objections or suggestions referred to in sub-section (5), if any, the Commission agrees with the recommendation of the Director General, it shall close the matter forthwith and pass such orders as it deems fit and communicate its 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 sub-section (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.]] Section 27 : Orders by Commission after inquiry into agreements or abuse of dominant position....
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....e by the Central Government, the Commission shall have the powers to regulate its own procedure. (2) The Commission shall have, for the purposes of discharging its functions under this Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:- (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses or documents; (e) requisitioning, subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), any public record or document or copy of such record or document from any office. (3) The Commission may call upon such experts, from the fields of economics, commerce, accountancy, international trade or from any other discipline as it deems necessary to assist the Commission in the conduct of any inquiry by it. (4) The Commission may direct any person: (a) to produce before the Director General or the Secretary or an officer authorized by it, such books, or other....
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....that on account of circumstances beyond the control of the Commission, it is unable to discharge the functions or perform the duties imposed on it by or under the provisions of this Act; or (b) that the Commission has persistently made default in complying with any direction given by the Central Government under this Act or in the discharge of the functions or performance of the duties imposed on it by or under the provisions of this Act and as a result of such default the financial position of the Commission or the administration of the Commission has suffered; or (c) that circumstances exist which render it necessary in the public interest so to do, the Central Government may, by notification and for reasons to be specified therein, supersede the Commission for such period, not exceeding six months, as may be specified in the notification: Provided that before issuing any such notification, the Central Government shall give a reasonable opportunity to the Commission to make representations against the proposed supersession and shall consider representations, if any, of the Commission. (2) Upon the publication of a notification under sub-section (1) supe....
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....pplication of a person, who is not a party to the proceedings, on sufficient cause demonstrated, allow such person inspection of documents or records mentioned in sub-regulation (1) on payment of fee as specified in regulation 50. (3) An inspection shall be allowed only in the presence of an officer so authorized by the Secretary: Provided that the inspection of documents or copying thereof as per sub-regulation (1) or sub-regulation (2) shall be allowed under the supervision of and subject to the time limits to be specified by the Secretary or an officer authorized by him in this behalf. (4) An officer of the Central or State Government or the Director General or a statutory authority shall be allowed inspection and obtain copies of documents or records mentioned in sub-regulation (1) on making written request to the Secretary for the purpose. 41. Taking of evidence. - (1) Subject to the provisions of the Act, the Commission or the Director General, as the case may be, may determine the manner in which evidence may be adduced in the proceedings before them. (2) Without prejudice to sub-regulation (1), the Commission or the Dire....
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....ccurate, if the document purports to be certified in any manner which Is certified by any representative of the National Government of such country to be the manner commonly in use in that country for the certification of copies of such records, including certification by the Embassy or the High Commission of that country in India. (i) admit such documents including electronic records in evidence as may be considered relevant and material for the proceedings. (3) Subject to the provision of sub-regulation (2), the following sections of the Indian Evidence Act, 1872 (1 of 1872), in so far as they are applicable to the matters relating to, - (a) section 22-A -when oral admission as to contents of electronic records are relevant; (b) section 47-A - opinion as to digital signature when relevant; (c) section 65-B - admissibility of electronic records; (d) section 67-A - proof as to digital signature; (e) section 73-A - proof as to verification of digital signature; (f) section 81-A - presumption as to Gazettes in electronic forms; (g) section 85-A - presumption as to electronic agreements; (h) section 85-B ....
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....be examined on oath. 45. Power of Commission or Director General to issue commissions for examination of witnesses or documents. - (1) Subject to the provisions of clause (d) of sub-section (2) of section 36 and subsection (2) of section 41 of the Act, the Commission or the Director General, as the case may be, either on its or his own motion or on an application made by a party to any proceeding before the Commission or the Director General, may issue a commission for the examination on questionnaires or otherwise of the specified witness (es), - (a) residing within India; (b) who is about to leave India before the date on which he or she is required to be examined as a witness; (c) Who, being in the service of the Central Government, a State Government or a statutory authority, cannot, in the opinion of the Commission or the Director General, as the case may be, attend without detriment to the public service; (d) who is unable to attend due to sickness or infirmity; (e) who resides at a place which is more than five hundred kilometres distance from the office of the Commission or the Director General, as the case may ....
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....al, as the case may be, shall furnish the commissioner appointed under sub-regulation (4) with such part of record of the proceedings and such instructions as appear necessary and the instructions shall distinctly specify that the commission is restricted to finding the facts through the examination as directed and the Commissioner is merely required to transmit the record of the proceedings to the Commission on completion of the examination. (7) Any Commissioner appointed under this regulation may, unless otherwise directed by the order of appointment - (a) examine the witness himself; (b) call for and examine the documents and other things relevant to the subject of inquiry. (8) The Commission or the Director General, as the case may be, issuing a commission under this regulation shall fix a date on or before which the commission shall be returned after execution, and the date so fixed shall not be extended except, for reasons to be recorded, the Commission or the Director General, as the case may be, is satisfied that there is sufficient cause for extending the date. 48. Procedure for imposition of penalty under the Act. - (1) Notwithstanding ....
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.... considered the effect of orders made under Section 26 (1), analysed Sections 3, 4, 19, 26 and various regulations, and ruled on the effect of the enactment: "Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act." This enunciation of the law binds the courts; furthermore, there can be no other view, given that SAIL (supra) delineated the role of CCI, which decides whether to commence an inquiry or investigation, under Section 26 (1). The court unambiguously ruled that at that stage, the function was administrative: "Now, let us examine what kind of function the Commission is called upon to discharge while forming an opinion under Section 26 (1) of the Act. At the face of it, this is an inquisitorial and regulatory power. A Constitution Bench of this Court in the case of Krishna Swami v Union of India [(1992) 4 SCC 605] explained the expression `inquisitorial'. The Court held that....
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....or produce requisite information or documents as per the direction of the Commission. This discretion is exclusively vested in the Commission by the legislature. The investigation is directed with dual purpose; (a) to collect material and verify the information, as may be, directed by the Commission, (b) to enable the Commission to examine the report upon its submission by the Director General and to pass appropriate orders after hearing the parties concerned. No inquiry commences prior to the direction issued to the Director General for conducting the investigation. Therefore, even from the practical point of view, it will be required that undue time is not spent at the preliminary stage of formation of prima facie opinion and the matters are dealt with effectively and expeditiously. 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 the precise reason that the legislature has used the word `direction' to be issued to the Director General for investigation in that provision and not that the Commission shall take a decision or pass ....
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.... 124 of the Indian Evidence Act, 1872 (1 of 1872), any public record or document or copy of such record or document from any office. The CCI can also require the opinion of experts [Section 36 (3)]. Significantly, CCI has no power to review its orders: previously, Section 37 permitted review; however, the 2007 amendment repealed that provision; it has limited rectification power, under Section 38. In case of imposition of penalty, one mode of recovery is through reference to the concerned income tax authority [Section 39 (2)]; such officer or income tax authority can then recover the penalty as if the party concerned were an "assessee in default" under provisions of the Income tax Act [Section 39 (3)]. These investigative powers are also conferred concurrently upon the DG [Section 41 (2)]. 79. The powers of the CCI and duties cast upon it include an advisory role, whereby the Central or any State Government can seek its opinion on any aspect of its competition policy and make any reference to its impact; the CCI has to give its opinion within 60 days of receipt of such a reference [Section 49 (1)]. The opinion, however, is not binding. CCI is also invested with the duty of compe....
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....en the CCI forms prima facie opinion on receipt of a complaint which is recorded in the order passed Under Section 26(1) of the Act and directs the DG to conduct the investigation, at the said 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 the violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the Appellants, it would defeat the very purpose of the Act which is to prevent practices having appreciable adverse effect on the competition. We, therefore, reject this argument of the Appellants as well touching upon the jurisdiction of the DG." 83. In view of these specific functions, this court is of opinion that there can be no manner of doubt that the CCI does not perform exclusive adjudicatory functions to be called a tribunal. A tribunal - and one entrusted solely with the judicial power of the state (the touchstone on which L. Chandra Kumar v. Union of India and Ors. 1995 (1) SCC 400, R. Gandhi (supra)and Madras Bar Association(supra) are premised) is seen as a substitute for courts. However, the creation of CCI and in....
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....ers principle, which underlies the Constitution - and is now recognized as a basic or essential feature of the Constitution of India 86. The recurring theme of the petitioners‟ attack on CCI was that it exercises powers that have wide ramifications that potentially implicate the right to carry on trade, and occupation and that the exercise of such powers must necessarily be entrusted with a tribunal that is judicial- in turn, implying that its personnel should be either exclusively or substantially, judges or persons trained in law. Various counsel took pains to contrast the CCI with the regulatory models and legislations in the country [TRAI and TDSAT, the APTEL in the electricity/energy sector; SEBI and Securities Appellate Tribunal, for the securities market and the Reserve Bank of India (RBI)]. The observations in Braham Dutt (supra) and the observations of the Dasgupta Commission report (which led to enactment of the MRTP Act and formation of the MRTP Commission as well as the Parliamentary committee report prepared in anticipation of the Act) too were relied on. 87. There can be no two opinions that CCI performs important regulatory tasks. No doubt, it has no subo....
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....ency has used either the rulemaking or adjudication process.6 Federal agencies have made full use of this discretion to choose among policymaking instruments. Some agencies, notably the National Labor Relations Board (NLRB), make policy largely through the adjudication process, while others, notably the Environmental Protection Agency (EPA), proceed largely through the rulemaking through adjudication and others through rulemaking. Implicit in the deference that both Congress and the courts have shown to agencies as to the choice between rulemaking and adjudication is faith that the agency itself is in the best position to identify the appropriate means of proceeding. An agency's choice of policy- making instruments, however, probably does not reflect a straight- forward effort to identify the method that will produce the best substantive decision. The agency will be primarily concerned with choosing a policymaking method that will allow it to be efficient and yet survive judicial review. Each technique also has advantages and disadvantages for the agency. Policies adopted through rulemaking cannot be applied retroactively; hence an agency that believes th....
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....gulatory Authority of India Act, 1997 (TRAI Act, governing the telecom sector); the Electricity Act, 2003 (regulating the electricity sector) and the Airports Economic Regulatory Authority of India Act, 2008 (regulating the airports segment) have followed different evolutionary paths. These laws have also been amended, to cater to changing circumstances. This court proposes to briefly discuss each of them. (a) The securities market regulatory model: SEBI 91. The SEBI Act envisages two kinds of adjudication. The first is a civil adjudicatory process. The second is a criminal proceeding. In civil adjudication, adjudicatory powers are deployed. A decision rendered by the Adjudicating Officer is, in interim cases, subject to an appeal before the Securities Appellate Tribunal (Section 15K) followed by a statutory appeal before the Supreme Court (Section 15Z). SEBI‟s powers include the power to suspend the trading of any security in a recognized stock-exchange; to restrain (a trader, etc) from accessing the securities market and prohibit any person associated with the securities market from buying, selling or dealing in securities; the power to suspend any office-bearer of an....
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....egulations), to pass orders that have wide ranging repercussions, including prohibiting individuals and entities (i.e directors, companies etc) for specified periods from buying, selling or dealing in securities in any manner whatsoever or accessing the securities market directly or indirectly, or not dealing in mutual funds, etc. The behaviour that is proscribed, is elaborately dealt with in provisions of the SEBI Act and Regulations (Sections 12A and 12B), etc. 92. Section 4 of the SEBI Act deals with its composition; its power consists of Chairman, two Members (from amongst officers of the Union Government and Finance Ministry dealing with administration of the Companies Act.), one member from the Reserve Bank of India (RBI) and five other members (of whom at least three are to be whole time members) to be appointed by the Central Government. The Chairman of SEBI has the powers of superintendence and direction of its affairs subject to express regulations. Notably, the Chairman and all members are to be appointed by the Central Government and the member from the RBI is to be nominated by the RBI; Central Government in turn has the power to nominate five members under Section ....
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....wers to frame such subordinate regulation are in respect of matters enumerated in Section 11 (1) (b). 95. The TRAI is comprised of a Chairman and other members. Section 4 of the TRAI Act merely prescribes that its members shall be appointed by the Central Government "from amongst members who have special knowledge of, and professional experience in telecommunication, industry, finance, accountancy, law, management or consumer affairs". Proviso to Section 4 states that no one who has or holds any position in the Central Government can be appointed as a member unless she or he acted as Secretary or Additional Secretary or any equivalent post in the Central Government or the State Government for not less than three years. Under Section 5(2), the Chairperson and members of TRAI hold office for a term not exceeding three years or until they attain the age of 65 years, whichever is earlier. Section 8(3) mandates that all decisions of the TRAI are to be decided by majority of its members and in the event of equality of votes, the Chairperson would have a casting vote. 96. The TDSAT is a creation of the Act, through an amendment (that introduced Chapter IV in the TRAI Act) with effec....
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....amongst the former Judges of the Supreme Court or Chief Justice of a High Court under Section 77(2) after consultation with the Chief Justice of India. Section 78 provides for constitution of Selection Committee to recommend members. 99. The functions of the Central Commission include regulations of tariff of generating companies under or controlled by Central Government; tariff of generating companies other than those under or controlled by Central Government, if they enter into or otherwise for a composite segment of generation and sale of electricity in more than one State; Regulation of Interstate transmission of electricity; determination of tariff for inter-state transmission of electricity; issuance of licenses for functioning as transmission licensee and electricity trader with respect to inter-state operations and adjudication of disputes involving generating companies or transmission licensees in regard to matter enumerated in Section 79(1)(a) to (d); levy of fees; specifying the Grid Code with Grid standards specification and enforcement of standards; fixing of trading margin wherever deemed necessary, etc. The Central Commission also composition with advisory powers ....
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....er Section 83). 103. The Electricity Appellate Tribunal comprises of a Chairperson and three members; under Section 112(2) option of constituting benches has been prescribed; Section 113 stipulates qualification for appointment of Chairperson. A Chairperson [Section 113(1)(a)] has to be a Judge of the Supreme Court or a Former Chief Justice of a High Court; in the case of a member of the Tribunal, one qualified to be a Judge of a High Court or has been a Secretary of the Central Government dealing with the Economic Affairs or the matters of infrastructure or a person of ability and standing of adequate knowledge or experience in dealing with the matters relating to electricity generation, transmission and distribution and regulations or economic, commerce, law or management. The term of office under Section 114 is three years; the Chairperson and members can be considered for re-appointment for a second term of three years. The outer age limit after which appointments are impermissible - in the case of Chairperson is 70 years of age and in case of members - till 65 years. 104. Decisions of the Tribunal are to be taken by majority and in case of difference by two members panel....
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....mmoning witnesses, recording evidence etc. 107. Section 28I of the Act provides for an Airport Appellate Tribunal consisting of a Chairperson, to be appointed by the Central Government; the qualification of such person is that she or he should have been a judge of a High Court; the appointment is to be after prior consultation with the Chief Justice of India. The tenure of office of the chairperson is three years. Section 28K confers appellate jurisdiction to the tribunal; any person aggrieved by the order of an eviction officer, can appeal to the Airport Appellate Tribunal, which can pass appropriate orders. These orders have the force of a civil court‟s decree. Airports Economic regulation: the Airports Economic Regulatory Authority Act 108. The second regulator in the airport segment is the Airports Economic Regulatory Authority, established through the Airports Economic Regulatory Authority Act (AERA Act), in 2008. By virtue of Section 4, the AERA has a Chairperson and two other members, appointed by the Central Government. They are to be from amongst persons of ability and integrity having "adequate knowledge of, and professional experience in, aviation, economi....
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....against directions and orders by AERA (Section 15) lie to AERAT. By Section 19, the tribunal is to consist of "a Chairperson and not more than two Members to be appointed, by notification in the Official Gazette, by the Central Government". The Chairperson or a member holding a post as such in any other tribunal, established under any law for the time being in force, in addition to his being the Chairperson or a Member of that Tribunal, may be appointed as the Chairperson or a Member, as the case may be, of the Appellate Tribunal under the Act. By Section 19 (2) "the selection of Chairperson and Members of the Appellate Tribunal shall be made by the Central Government in consultation with the Chief Justice of India or his nominee." 111. In the case of Chairperson of AERA, the qualification is that she or he is, or should have been, a Judge of the Supreme Court or the Chief Justice of a High Court. In the case of a Member, has held the post of Secretary to the Government of India or any equivalent post in the Central Government or the State Government for a total period of not less than two years in the Ministries or Departments dealing with aviation or economics or law or a pers....
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....ervice for at least three years. The Selection Committee under Section 4(2) of the Act is to comprise of Member of the Planning Commission, in-charge of the energy sector and four Secretaries to the Government of India. The term of office of the Chairperson and other members is for five years or till they attained the age of 65 years whichever is earlier. Meeting of the Board have to be through a majority and in case of equality of votes, by Section 8(3), the Chairperson would have the casting vote. By Section 24 of the PNGRB Act, the Board has powers to settle disputes between two entities or between the entity or any other person. Section 26 outlines the power of investigation to aid the dispute settlement jurisdiction. 114. The Appellate Tribunal - by virtue of Section 30 is the appellate tribunal constituted under Section 110-111 of the Electricity Act 2003.By Section 30(2), the Central Government can, in addition to the other members of the Electricity Tribunal, appoint technical Member (Petroleum and Natural Gas) in the Appellate Tribunal for electricity or designated technical member of that Tribunal having the concerned qualifications. The qualifications for a Technical ....
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.... SAT, AERA) is not from the judicial or legal field. Undoubtedly, the chairperson of such tribunals should have possessed judicial experience as Judges of Supreme Court, or Chief Justice of any High Court, or judge of High Court. But in all these tribunals (barring one) the other members are not necessarily from the judicial and legal field. 116. The plurality and multifarious tasks conferred upon each regulatory body and the plenitude of their powers and authority in the respective fields occupied by them leaves no manner of doubt to this Court, that the functions of each of them have lasting impact on those it seeks to regulate. The impact can be diverse- as it may operate as a direction in rem against a class of service providers, (terms of licensing, grant of licensing, permitting interconnection in the telecom segment) or operate in rem against both service providers and consumers (as in the case of tariff fixation). In the case of SEBI, the directions can be drastic (as for instance, when for any violation or infraction of the enactment or the prescribed regulations, the trader or stockbroker, fund house, etc. can be prohibited from operating for specific duration). Such a....
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....erience with a particular problem to warrant rigidifying its tentative judgment into a hard and fast rule. Or the problem maybe so specialized and varying in nature as to be impossible of capture within the boundaries of a general rule. In those situations, the agency must retain power to deal with the problems on a case-to-case basis if the administrative process is to be effective. There is thus a very definite place for the case by case evolution of statutory standards. And the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primary in the informed discretion of the administrative agency." 118. Somewhat similar observations were made by the Supreme Court in PTC India v Central Electricity Regulatory Commission 2010 (4) SCC 603. The court stated as follows, after analysing provisions of the Electricity Act: "49. On the above analysis of various sections of the 2003 Act, we find that the decision-making and regulation-making functions are both assigned to CERC. Law comes into existence not only through legislation but also by regulation and litigation. Laws from all three sources are binding. According to Professor Wa....
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....Electricity Act, 2003, the Central Electricity Regulatory Commission and the various State Electricity Regulatory Commissions have to discharge legislative, administrative, and quasi-judicial functions. This is clear on a reading of Section 79 (1)(f) and Section 86 (1) (f) of the Electricity Act.." 120. The question then is, whether conferment of power on the CCI, whose orders and decisions have a lasting impact on the economic ability and freedom of business, trade and commerce (in the course of which business relationships are ordered and contracts of long duration are entered) are the result of an adjudicatory process which does not meet the standards required of by the Constitution in respect of decision of disputes by courts. 121. The petitioners relied on two kinds of decisions: on the one hand, the first line of decisions [Bharat Bank (supra); Harinagar Sugar Mills (supra); Jaswant Sugar Mills Ltd(supra) etc.]. In Bharat Bank(supra). the Supreme Court held that the term "tribunal" used in Article 136 does not mean the same thing as "court" but includes, within its ambit, all adjudicating bodies, provided they are constituted by the State and are invested with judicial ....
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....relevant and material, then it would no doubt, be inappropriate to say that certain authorities or bodies which are given the power to deal with disputes between parties and finally determine them, are tribunals because the judicial power of the State has been statutorily transferred to them. In that case, the more appropriate expression to use would be that the powers which they exercise are quasi-judicial in character, and tribunals appointed under such a scheme of rigid separation of powers cannot be held to discharge the same judicial function as the courts. However, these considerations are, strictly speaking, in-applicable to the Indian Constitution, because though it is based on a broad separation of powers, there is no rigidity or exclusiveness involved in it as under Section 71 as well as other provisions of Chapter III of the Australian Constitution; and so, it would not be inappropriate to say that the main test in determining the status of any authority in the context of Article 136(1) is whether or not inherent judicial power of the State has been transferred to it." 123. In R. Gandhi (supra), the Supreme Court had to deal with provisions of the National Company Law....
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....tion) to any tribunal. (b) All courts are tribunals. Any tribunal to which any existing jurisdiction of courts is transferred should also be a Judicial Tribunal. This means that such Tribunal should have as members, persons of a rank, capacity and status as nearly as possible equal to the rank, status and capacity of the court which was till then dealing with such matters and the members of the Tribunal should have the independence and security of tenure associated with Judicial Tribunals. (c) Whenever there is need for `Tribunals', there is no presumption that there should be technical members in the Tribunals. When any jurisdiction is shifted from courts to Tribunals, on the ground of pendency and delay in courts, and the jurisdiction so transferred does not involve any technical aspects requiring the assistance of experts, the Tribunals should normally have only judicial members. Only where the exercise of jurisdiction involves inquiry and decisions into technical or special aspects, where presence of technical members will be useful and necessary, Tribunals should have technical members. Indiscriminate appointment of technical members in all Tribunals will....
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....n the negative. The power of "judicial review" vested in the High Court under Articles 226 and 227 of the Constitution, has remained intact. This aspect of the matter, has a substantial bearing, to the issue in hand. And will also lead to some important inferences. Therefore, it must never be overlooked, that since the power of "judicial review" exercised by the High Court under Articles 226 and 227 of the Constitution has remained unaltered, the power vested in High Courts to exercise judicial superintendence over the benches of the NTT within their respective jurisdiction, has been consciously preserved. This position was confirmed by the learned Attorney General for India, during the course of hearing. Since the above jurisdiction of the High Court has not been ousted, the NTT will be deemed to be discharging a supplemental role, rather than a substitutional role. In the above view of the matter, the submission that the NTT Act violates the "basic structure" of the Constitution, cannot be acquiesced to. *********************** *************** 112. Before we proceed with the matter further, it is necessary to keep in mind the composition of the adjudica....
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.... constitutional mandate, for the appellate jurisdiction pertaining to tax matters, to remain with the High Court? Secondly, whether the express provisions of the Constitution mandate, that tax issues should be decided by the concerned jurisdictional High Court concerned? *********************** *************** 124. One needs to also examine sub-sections (2), (3), (4) and (5) of Section 5 of the NTT Act, with pointed reference to the role of the Central Government in determining the sitting of benches of the NTT. The Central Government has been authorized to notify the area in relation to which each bench would exercise jurisdiction, to determine the constitution of the benches, and finally, to exercise the power of transfer of Members of one bench to another bench. One cannot lose sight of the fact, that the Central Government will be a stakeholder in each and every appeal/case, which would be filed before the NTT. It cannot, therefore, be appropriate to allow the Central Government to play any role, with reference to the places where the benches would be set up, the areas over which the benches would exercise jurisdiction, the composition and the constitution of ....
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....d in countries which have constitutions on the Westminster model. The Indian Constitution is one such Constitution. The position has been clearly recorded while interpreting constitutions framed on the above model, namely, that even though the legislature can transfer judicial power from a traditional court, to an analogous court/tribunal with a different name, the court/tribunal to which such power is transferred, should be possessed of the same salient characteristics, standards and parameters, as the court the power whereof was being transferred. It is not possible for us to accept, that Accountant Members and Technical Members have the stature and qualification possessed by judges of High Courts. 129. It was not disputed, that the NTT has been created to handle matters which were earlier within the appellate purview of the jurisdictional High Courts. We are accordingly satisfied, that the appointment of Accountant Members and Technical Members of the Appellate Tribunals to the NTT, would be in clear violation of the constitutional conventions recognized by courts, the world over. References on questions of law (under the three legislative enactments in question), were ....
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....erefore, all the more, the composition of the NTT would have to be on the same parameters as judges of the High Courts. Since the appointments of the Chairperson/Members of the NTT are not on the parameters expressed hereinabove, the same are unsustainable under the declared law. A perusal of Section 6 of the NTT Act leaves no room for any doubt, that none of the above parameters is satisfied insofar as the appointment of Chairperson and other Members of the NTT is concerned. In the above view of the matter, Section 6(2)(b) of the NTT Act is liable to be declared unconstitutional. We declare it to be so. *********************** *************** Conclusions: 134. (i) The Parliament has the power to enact legislation, and to vest adjudicatory functions, earlier vested in the High Court, with an alternative court/tribunal. Exercise of such power by the Parliament would not per se violate the "basic structure" of the Constitution. 135. (ii) Recognized constitutional conventions pertaining to the Westminster model, do not debar the legislating authority from enacting legislation to vest adjudicatory functions, earlier vested in a superior court, with a....
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....ments of the Supreme Court in Bharat Bank (supra), Harinagar Sugar Mills (supra), Jaswant Sugar Mills (supra), Associated Cement (supra) etc. Each of those decisions were rendered in the context of a dispute whether orders made by statutory bodies were appealable by special leave to the Supreme Court, under Article 136 of the Constitution, as orders made by judicial tribunals. These decisions held - having regard to the peculiarities of the statute concerned that as long as an order was a judicial order, and made in exercise of undoubted judicial power, it was amenable to special leave to appeal, under Article 136 of the Constitution. In one of the decisions, i.e. Associated Cement (supra), the court juxtaposed provisions of the Indian Constitution with provisions in other constitutions and held that the rigid doctrine of separation of powers was inapplicable to India. 127. It would be necessary to trace the development of law on the question of creation of tribunals, in the backdrop of the debate whether such bodies can be invested with powers and jurisdiction hitherto exercised by courts of law and not tribunals. The first decision on this aspect is the Constitution B....
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.... issue of exclusion of the power of judicial review of the High Courts. We have already held that in respect of the power of judicial review, the jurisdiction of the High Courts under Article 226/227 cannot wholly be excluded. It has been contended before us that the Tribunals should not be allowed to adjudicate upon matters where the vires of legislations is questioned, and that they should restrict themselves to handling matters where constitutional issues are not raised. We cannot bring ourselves to agree to this proposition as that may result in splitting up proceedings and may cause avoidable delay. If such a view were to be adopted, it would be open for litigants to raise constitutional issues, many of which may be quite frivolous, to directly approach the High Courts and thus subvert the jurisdiction of the Tribunals. Moreover, even in these special branches of law, some areas do involve the consideration of constitutional questions on a regular basis; for instance, in service law matters, a large majority of cases involve an interpretation of Articles 14, 15 and 16 of the Constitution. To hold that the Tribunals have no power to handle matters involving constitutional issue....
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....ave been provided from the decisions of all Tribunals to the Supreme Court under Article 136 of the Constitution. In view of our above-mentioned observations, this situation will also stand modified. In the view that we have taken, no appeal from the decision of a Tribunal will directly lie before the Supreme Court under Article 136 of the Constitution; but instead, the aggrieved party will be entitled to move the High Court under Articles 226/227 of the Constitution and from the decision of the Division Bench of the High Court the aggrieved party could move this Court under Article 136 of the Constitution. 94. Before moving on to other aspects, we may summarise our conclusions on the jurisdictional powers of these Tribunals. The Tribunals are competent to hear matters where the vires of statutory provisions are questioned. However, in discharging this duty, they cannot act as substitutes for the High Courts and the Supreme Court which have, under our constitutional setup, been specifically entrusted with such an obligation. Their function in this respect is only supplementary and all such decisions of the Tribunals will be subject to scrutiny before a Division Bench of th....
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....ecialist bodies comprising both trained administrators and those with judicial experience would, by virtue of their specialised knowledge, be better equipped to dispense speedy and efficient justice. It was expected that a judicious mix of judicial members and those with grass- roots experience would best serve this purpose. To hold that the Tribunal should consist only of judicial members would attack the primary basis of the theory pursuant to which they have been constituted. Since the Selection Committee is now headed by a Judge of the Supreme Court, nominated by the Chief Justice of India, we have reason to believe that the Committee would take care to ensure that administrative members are chosen from amongst those who have some background to deal with such cases." ************************** *************** In view of the reasoning adopted by us, we hold that Clause 2(d) of Article 323A and Clause 3(d) of Article 323B to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the "exclusion of jurisdiction" clauses in all othe....
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....ership etc.). Therefore, judicial review over such tribunals‟ decisions was reinstated in L. Chandra Kumar (supra). In the later decisions R. Gandhi (supra) and Madras Bar Association (supra), the tribunals created by new statutes supplanted established jurisdiction and powers of High Courts, in regard to important matters concerning administration of law and justice: i.e. income tax law, company law jurisdiction, etc. (and its interface with securities law). The court‟s overarching concern was that the steady erosion of judicial power, - inch by inch, as it were, insidiously, meant that the important judicial functions reserved by the Constitution were sought to be taken away. Inevitably, what would then be left (if the statutes had been left alone) would have been a rump of the court‟s jurisdiction, a pale shadow of courts' judicial authority. This concern- at the effect of such steady erosion of judicial power from the court, in essence led to the court holding that in each case, the statute was unconstitutional. 131. The separation of powers discussion- in both R. Gandhi (supra) and Madras Bar Association (supra) was in the context of the divestment of cour....
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.... judicial functions in a limited way. The executive Government, however, can never go against the provisions of the Constitution or of any law." 133. If these observations are kept in mind, the fact that some powers under an enactment, which clothe the authorities with a broad range of powers (and jurisdiction) - such as administrative, quasi legislative and quasi-judicial per se would not make that body a judicial or purely administrative one. Previously, this Court noticed various decisions which held that the bodies created under the TRAI Act and the Electricity Act are acknowledged to be regulatory ones; in the case of TRAI, one of the rulings of the Supreme Court stated that regulation can take shape through subordinate legislation (i.e. rule making, regulation framing) or through "litigation" i.e. quasi-judicial determination in the course of decisions, directions and orders, after fact gathering i.e. granting opportunity to the parties concerned. In the case of the Electricity Commissions, it was held that they do perform quasi-judicial functions. As regards primary authorities under SEBI (i.e. the Board and the adjudicatory officers) there is no question that they do per....
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.... the informant is not heard. SAIL (supra) and subsequent decisions of the Supreme Court have iterated that this function is administrative and not quasi-judicial. There is no parallel to this procedure amongst any other tribunal which exercises judicial power of the state. Every judicial tribunal has to issue notice to the disputant parties and is obliged to hear them in accordance with the prescribed procedure, and render a reasoned decision. The CCI, even at the stage of forming a prima facie opinion acts within jurisdiction if it determines that no case is made out. 136. The second important feature is that unlike judicial tribunals, which depend entirely on the records of the lower statutory authorities and also what is produced before them, regulatory bodies (SEBI and CCI) have independent investigative mechanisms, which act as fact gathering statutory authorities. Depending upon the particular sectoral needs, these investigative bodies might be given powers to take depositions on oath, etc. (as in the case of DG under the Competition Act)- the DG has powers that are concurrent to the CCI. This is another unique feature, which sets apart such regulatory bodies from pure jud....
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....arate the investigative, prosecutorial and adjudicative functions.... -------- -------- ---- --- 6.1.3 In many developed countries and economies in transition, the judiciary therein may be inexperienced in dealing with free market problems. Such problems relating to free and fair trade and relating to restrictive and other prohibited trade practices like abuse of dominance require a certain level of specialised knowledge in economics, trade and the relevant law for adjudication. Even if the judiciary has the reputation and exposure to commerce and market related matters, the Competition Law administration will be better handled if a specialized agency is set up for the purpose. With due respect to the judiciary around the world and in particular India, it needs to be underscored that in the era of specialisation Competition Law would be better administered and consumer welfare better sub-served, if placed in the hands of a specialised agency. 6.1.4 It is therefore recommended that for the administration and enforcement of Competition Law in India, a Specialised Court/Tribunal which can be christened "COMPETITION COMMISSION OF INDIA" may be establ....
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....e new Competition Law should scrap the registration requirements altogether 6.1.8 Investigation, Prosecution, Adjudication, Mergers Commission And Competition Advocacy" 139. All the petitioners had urged that given the nature of tasks conferred upon the CCI, i.e. to probe into the allegations of anti-competitive agreements, which under Section 3(3) directly or indirectly (a) determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provision of services; (c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market which is the consequence of anti-competitive arrangement; directly or indirectly results in bid rigging or collusive bidding, and also investigate into the matters provided in Section 3(4), i.e. agreements at different stages or levels of production generally in different markets, including by any arrangement, exclusive of supply arrangement, distribution arrangement, refusal to deal or resale price maintenance, the implications of exercise of jurisdiction by CCI hav....
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.... for reasons elaborated in the preceding section of this judgement, held that the CCI does not perform purely adjudicatory functions like in the case of deciding a list between two competing parties. It is tasked with investigating into complaints received and information provided to it by individual entities and those aggrieved by patterns of behaviour perceived to be barriers in the course of trade and business, which would have the undesirable effect of injecting anti-competitive elements. Now, this task is not a straight forward adjudicatory one. The Commission has to, through an administrative process, sift the complaint or information and arrive at an opinion which the Supreme Court has characterized in SAIL (supra) to be of "administrative nature". With that, the CCI directs investigation into the complaint or information, by the DG. In the course of this investigation and inquiry, again not an adjudicatory function, as no rights of any party are decided or determined, the representatives of the parties as well as the officials and employees of the concerned entities which are allegedly involved in the anticompetitive practices, are examined, and wherever necessary, depositi....
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....er Article 19(1)(g) is restricted. Per se that it is done after following such a procedure without the aid of a court or without the intervention of a judicial tribunal, in the opinion of this Court, does not result in the restriction being an unreasonable one. 143. If one sees in sequence, the three decisions - L. Chandra Kumar (supra), R. Gandhi (supra) and Madras Bar Association (supra) - as noticed previously, the court‟s overarching concern was the judicial power, whenever parcelled away from the mainstream adjudicatory bodies (courts) or established tribunals, such as the ITAT, and in the case of the High Court, [dealt with by the Madras Bar Association (supra)] or the jurisdiction of the CLB and the High Court conferred upon the then established NCLT - dealt with by R. Gandhi (supra) was frowned upon and contrary to the doctrine of separation of powers as the alternative mechanisms were inefficacious and ineffective. 144. The Competition Act does not take away or supplant the jurisdiction of the preexisting jurisdiction of any court or tribunal. The decision of the Seven Judges‟ in L. Chandra Kumar (supra) is authority for the proposition that in the case o....
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....conditioned upon a detailed fact gathering and fact analysis carried out by a body specially designated with the task, i.e. the DG. That official‟s powers are circumscribed by the Act and regulations. Furthermore, the conduct of proceedings and the application of principles by the CCI after the report of the DG- with assistance of parties‟ counsel or their representatives, is not only factual and legal, but substantially depends upon analysis of a complex matrix of economic impact on competition of the particular entities‟ behaviour. As such, CCI does not decide a traditional lis which is premised on an adversarial proceeding, which the courts are wont to, in their regular course of work. 146. This court notices, in this context, the observations of the Supreme Court, in Union of India v Delhi High Court Bar Association, 2002 (4) SCC 275, when it decided and upheld the bar to jurisdiction of civil courts enacted by Section 18 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The court held that: "The manner in which a dispute is to be adjudicated upon is decided by the procedural laws which are enacted from time to time. It is....
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....to the High Court, jurisprudence can develop in the regulatory field, thus generating a body of regulatory law and standards that is available to the regulatory field. However, that can hardly be a ground for holding a law unconstitutional; the policy choice in that regard is to be made by Parliament, not the courts. Therefore, it is held that Section 53T is valid- similar provisions have been made in the TRAI Act, SEBI Act, Electricity Act, etc. 149. As far as the argument that the CCI‟s membership (i.e. the Chairman and members) qualification and experience are concerned, the Act visualizes that individuals with qualifications and expertise in diverse fields can be appointed; these include persons from the legal field. This statutory provision ipso facto, however, does not satisfy the test of constitutionality, in view of the decisions of the Supreme Court in Utility Users' Welfare Association (supra). In that decision, the Supreme Court dealt with a challenge to Section 113 on the ground that appointment of a judicial member was not mandated, which rendered the functioning of the State Commission (under the Electricity Act) questionable in law. The previous ruling i....
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....opriate to create two separate bodies for the same. That is, however, an aspect, which is in the wisdom of the legislature and that course is certainly open for the future if the legislature deems it so. However, at present there is a single Commission, which inter alia performs adjudicatory functions and, thus, the presence of a man of law as a member is a necessity in order to sustain the provision, as otherwise, it would fall foul of the principles of separation of powers and judicial review, which have been read to be a part of the basic structure of the Constitution. 109. We are also not in a position to accept the plea advanced by the learned Attorney General that since there is a presence of a Judge in the Appellate Tribunal that would obviate the need of a man of law as a member of the State Commission. The original proceedings cannot be cured of its defect merely by providing a right of appeal. 110. We are, thus, of the unequivocal view that for all adjudicatory functions, the Bench must necessarily have at least one member, who is or has been holding a judicial office or is a person possessing professional qualifications with substantial experience in th....
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....recent decision in Swiss Ribbons Pvt. Ltd v Union of India 2019 SCC OnLine SC 73, has outlined the correct perspective, having regard to the decisions in R. Gandhi (supra) and Madras Bar Association (supra). The court had observed as follows: "13. Shri Rohatgi has argued that contrary to the judgments in Madras Bar Association (I) (supra) and Madras Bar Association (III) (supra), Section 412(2) of the Companies Act, 2013 continued on the statute book, as a result of which, the two Judicial Members of the Selection Committee get outweighed by three bureaucrats. 14. On 03.01.2018, the Companies Amendment Act, 2017 was brought into force by which Section 412 of the Companies Act, 2013 was amended as follows: 412. Selection of Members of Tribunal and Appellate Tribunal.-- xxx xxxxxx (2) The Members of the Tribunal and the Technical Members of the Appellate Tribunal shall be appointed on the recommendation of a Selection Committee consisting of-- (a) Chief Justice of India or his nominee-- Chairperson; (b) a senior Judge of the Supreme Court or Chief Justice of High Court--Member; (c) Secretary in the Ministry of Co....
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....ction (2) thereof provides for the Selection Committee consisting of: (a) Chief Justice of India or his nominee-Chairperson; (b) a senior Judge of the Supreme Court or a Chief Justice of High Court--Member; (c) Secretary in the Ministry of Corporate Affairs--Member; (d) Secretary in the Ministry of Law and Justice--Member; and (e) Secretary in the Department of Financial Services in the Ministry of Finance--Member. Provision in this behalf which was contained in Section 10FX, validity thereof was questioned in 2010 judgment, was to the following effect: 10FX. Selection Committee: (1) The Chairperson and Members of the Appellate Tribunal and President and Members of the Tribunal shall be appointed by the Central Government on the recommendations of a Selection Committee consisting of: (a) Chief Justice of India or his nominee Chairperson; (b) Secretary in the Ministry of Finance and Member; Company Affairs (c) Secretary in the Ministry of Labour Member; (d) Secretary in the Ministry of Law and Justice (Department of Legal Affairs or Legislative Department) Member; (e) Secretary in the Ministry ....
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....o be valid in 2010 judgment. Reason is simple, out of these five Members, three are from the administrative branch/bureaucracy as against two from judiciary which will result in predominant say of the members belonging to the administrative branch, is situation that was specifically diverted from. The composition of Selection Committee contained in Section 412(2) of the Act, 2013 is sought to be justified by the Respondents by arguing that the recommended composition in the 2010 judgment was in broad terms. It is argued that in view of subsuming of BIFR and AAIFR which are in the administrative jurisdiction of Department of Financial Services, Secretary DFS has been included. No casting vote has been provided for the Chairman as over the period of time the selection processes in such committees have crystallized in a manner that the recommendations have been unanimous and there is no instance of voting in such committees in Ministry of Corporate Affairs. Moreover other similar statutory bodies/tribunals also do not provide for 'casting vote' to Chairperson of Selection Committee. Further, the Committee will be deciding its own modalities as provided in the Act. The followin....
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....t directly under Section 53T) are with the approval of the Chief Justice, and at least a judge of the Supreme Court, following the pattern indicated in Madras Bar Association-II and reiterated in Swiss Ribbons (supra). Consequently, Section 53E- as it stood prior to amendment, cannot be sustained. 156. The above observations are, however, not determinative or seem to be dispositive of the issue entirely- that the validity of Section 53E which was repealed by Sections 171(d) of the Finance Act, 2017 and instead replaced by the provisions in Section 184 of the Finance Act, 2017 are pending consideration before the Supreme Court. 157. As regards the objections with respect to the tenure and term of office and the potentiality of the Central Government to supersede CCI as well as its powers to issue directions, this Court notices, that in all the regulatory enactments creating bodies, which the Parliament hitherto enacted, (SEBI, AAI, Electricity Act, PNG etc.) similar provisions have been made. For instance, under Sections 39 and 40 of the AAI Act and Sections 49 and 42 of the AERA Act, the Central Government is empowered to issue directions to AAI and AERA and supersede the aut....
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....bles the Chairperson or the senior member presiding a board meeting to vote twice, i.e. have a casting vote is anathema to judicial functioning. It is submitted that the concept of casting vote is relatable to board meeting in private environs such as company board meetings etc. and cannot have any place where the duty to act judicially and give reasons for such decisions are mandated. It was urged consequently that having regard to the stipulation of a minimum quorum (3 members) wherever there is a difference of opinion, in the CCI where the quorum is of even members - 4 or 6 invariably, the Chairperson or the member presiding would have his say because, he would necessarily vote twice. 161. On behalf of the CCI, it was further urged that such provision for a casting vote is not anathema to all statutory bodies and finds place and mention in several statutes, such as SEBI, TRAI etc. Further, under Section 81(1)(A)(b) of the old Companies Act, 1956 - deals with further issue of capital; Section 149(2B), - deals with restrictions on commencement of business and Section 189(1), which prescribed for ordinary and special resolutions, the law envisioned a casting vote by the Chairman....
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.... entirely irrational; the court demonstrated, this irrationality, by illustrating that where both judges are appointed on the same day, one of whom is designated as senior merely because such status is conferred upon him at the time of appointment. That would not in any manner explain why a casting vote is conferred on such individual member. 163. The court further is of the opinion that the principle of equal weight for the decisions of each participant of a quasi-judicial tribunal is undoubtedly destroyed by Section 22(3) and further that the provision is incapable of compartmentalization or "reading down". This can be shown by an illustration whereby the decision taken by a majority of four members might be to question a complaint and record that there is no prima facie opinion. The potential mischief which the casting vote provision can result in is that the Chairperson may well take recourse to the second or casting vote and tip the balance the other way and direct that a prima facie case exists in order to investigate into the matter further. There can be several such illustrations where the potential repercussions can be felt in the ultimate adjudicatory result. Consequen....
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.... meeting; Bunker, who was present at this meeting was not present during the oral submission made by Tata and only joined the CCI on 25 March 2013). 28.5.2013 CCI requested for further additional information from parties (including Tata). HC Gupta Anurag Goel Ashok Chawla Geeta Gouri S N Dhingra S.L. Bunker M L Tayal [R Prasad (retired on 28.02.2013), who heard Tata Motors was not present for this ordinary meeting.] Bunker, who was present at this meeting was not present during the oral submissions made by Tata and only joined the CCI on 25 March 2013) 24.7.2013 CCI recorded that Mahindra, Nissan Motor and BMW had filed application seeking fresh oral hearings in the matter on ground that there was change in the constitution of the quorum of the CCI. CCI dismissed these applications after recording that the only those members who heard the parties will pass the final order. Anurag Goel Ashok Chawla Geeta Gouri S N Dhingra S.L. Bunker M.L. Tayal [R Prasad (retired on 28.02.2013) and HC Gupta, who heard Tata Motors were not present for this ordinary meeting. Bunker, who was present at....
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....tion (Mr. HC Gupta, Anurag Goel, M L Tayal, Ashok Chawla, Justice S.N. Dhingra (Retd) and Ms. Geeta Gouri) were present. Instead of R Prasad, Mr. Bunker, was present at this meeting. He was not present during the oral submissions and he joined the CCI on 25 March 2013. On 08.08.2013, five equipment manufacturers (OEMs) made submissions; on this date, Mr. Anurag Goel, M L Tayal, Ashok Chawla, Justice S.N. Dhingra (Retd) and Ms. Geeta Gouri (from the original combination who heard the matter consecutively on 5th-8th February, 2013) were present; two (R. Prasad, who had retired and H.C. Gupta) were not present; Mr. Bunker was present like in the previous hearing. The final order was made on 25.08.2014; it was by three members, i.e. Mr. Anurag Goel, Ashok Chawla and M.L. Tayal. 167. It is evident that Mr. Bunker, who was not present in the initial hearings on 05.02.2013 to 08.02.2013 and 05.03.2013, joined the hearings of 09.05.2013 and 08.08.2013. Those who had initially heard, but retired, in the meanwhile, before the final order was made, were Mr. R. Prasad, Justice S.N. Dhingra (Retd); Mr. H.C. Gupta and Ms. Geeta Gouri. The petitioners had urged that the hearings in which Mr. B....
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....ant objections of the petitioners. This circumstance has not, therefore, caused any prejudice to the petitioners. The delay in the passing of the order also does not, in the above circumstances, vitiate the order in the absence of any suggestion that there has been a change of circumstances in the interregnum brought to the notice of the authorities or that the authority passing the order has forgotten to deal with any particular aspect by reason of such delay. The argument that the application of the Modis had referred to bonemeal as the raw material used and this was later changed to "crushed bones" is pointless because it is not disputed that all along the petitioners were aware that the reference to bonemeal was incorrect and that the Modis were going to use crushed bones in their project. The last contention that some documents were produced at the hearing by the Modis which the petitioners could not deal with effectively is also without force as, admittedly, the assessee's representatives were shown those documents but did not seek any time for considering them and countering their effect. There has, therefore, been, in fact, no prejudice the petitioners. They have had a ....
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....re, members walked in and out of the inquiry as and when they liked when evidence of the witnesses was recorded. The High Court held the inquiry to be vitiated, stating that: "... a person who has not seen and heard a witness is as a rule incapable of estimating the value of his evidence. It was therefore improper for members of the Council to walk in and out of the Inquiry while evidence was being recorded or to be absent altogether... such conduct is not only improper and unfair to the practitioner ... but it also tends to destroy confidence in the fairness of the Council's decision..." 171. It is clear that on the question whether in a particular case, a suitor or litigant can justly complain of violation of principles of natural justice- on the aspect that a tribunal of varied composition rendered decision through only some members, when at earlier stages, all members had participated and heard, is not capable of any one answer. Much depends on the factual context. Here, the three members who did finally decide the complaints (Mr. Anurag Goel, Ashok Chawla and M.L. Tayal) were present throughout all the dates of final hearing. No doubt, as time passed, four original....
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....and at the same time incapable of mischief." 175. In view of the above discussion, it is held that the mere circumstance that in a given case or group of cases, the practise of "revolving door" hearing is resorted to, would not ipso facto, constitute a valid ground to declare Section 22 invalid or arbitrary. Whether in a particular case, the concerned party has been prejudiced would have to therefore, be examined, in the light of the facts and circumstances of that case. 176. Only three parties, Nissan Motors, BMW and Mahindra & Mahindra had raised an issue with regard to the varying composition of the members who heard the matter. The relevant extract of the application dated 19.10.2012 filed by Mahindra & Mahindra is as follows: "d. This Respondent requests this Hon'ble Commission to ensure that the varying quorum of honourable members who have heard the matter would not result in any injustice to the Respondents or adversely impact the outcome of the Hon'ble Commission's judgment in the Case No.3 of 2011." 177. These contentions were dealt with by the Commission in its order dated 24.07.2013 in the following manner: "4. Nissan Motor India Pvt. Ltd. and....
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....3 or 5 or seven) should continue to be part of the proceeding, and all hearings, en banc. An analogy may also be drawn to the hearings in courts before benches of more than one member. Hearings may take place from time to time before benches of varying composition, but once the final hearing has commenced, the matter is heard and decided only by the same bench. There is no addition, deletion or substitution in the composition of the bench during the course of final hearing. If at all, it becomes impossible to continue the hearing before the same bench (for example, due to one of the judges having demitted office), the matter is heard afresh by the new bench even if the composition is partly common with the previous bench. A similar example may be given of hearings in the Supreme Court - if a matter is heard in part by a bench of two judges, further hearings are held only before that bench, and not before the bench of three judges even if both the original members of the bench are also part of the three judge bench. The invariable practice of the courts, which also ought to be followed by the CCI, is that the bench which hears the matter decides it, and that every member who partici....
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....HSIL, VIPL and FIAL. The informant has inter-alia alleged anti- competitive practices by these entities such as: a. genuine spare parts, diagnostic tools, technological information etc are not made available to independent repair workshops; b. restrictions are imposed on original equipment suppliers (OESs) forcing them not to supply spare parts in the open market. c. Dealers are prohibited from taking dealership of other car manufactures. 2..... 3. However, in view of the fact that these practices may not be confined to these entities, the case involves larger issue related to prevalent conduct of the players in the automobile sector and its implication on the consumers at large it is suggested that the investigation may not be restricted to the opposite parties mentioned in the order. Accordingly, it is proposed that the scope of the investigation may be expanded to examine the practices, in the areas under consideration, of all the car manufacturers in India. A list of car manufacturers in India, as obtained from SIAM (Society of Indian Automobile Manufacturers) is placed at Annexure I. Submitted for consideration and approval....
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....ecting the DG to investigate against those car manufacturers also who were not specifically named in the information, the Commission treated the almost similar conduct of all car manufacturers equally and gave mandate to the DG that he can investigate the matter against not only the named car manufacturers but against other car manufacturers as well. 20.3.7 In the present case the DG brought the matter to the Commission and thereafter exercising its power under the Act, the Commission allowed the request in order to achieve the objectives of the Act, as mentioned in the preamble an discharge of its functions under section 18 of the Act. The Commission, therefore, cannot be said to have committed any irregularity by allowing the request of DG for doing thorough and complete investigation as mandated under the Act for achieving its objectives. It is also noted that all OPs were given ample opportunity by the DG to present their case and without exception all of them have indeed taken that opportunity to make detailed submissions. Further, all OPs have not only submitted their detailed objections to the report of the DG but they have been heard at length by the Commission and....
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.... of jurisdiction of the CCI, then is upon receipt of complaint or information, when the "Commission is of the opinion that there exists a prima facie case" [as per Section 26 (1)]. The following order is administrative [as per SAIL (supra)]; however, that order should disclose application of mind and should be reasoned [as per SAIL (supra)]. Till that time, with the enunciation of law confined to SAIL (supra), it could arguably have been said that in the absence of a specific order as regards its role, by CCI, the DG could not have inquired into a particular party‟s conduct. However, with Excel Crop Care (supra) specifically dealing with the question of alleged "subject matter" expansion (in the absence of any specific order under Section 26 (1)) and the Supreme Court clarifying that the subject matter included not only the one alleged, but other allied and unenumerated ones, involving others (i.e. third parties), the issue is no longer untouched; the petitioners are precluded from stating that a specific order authorizing transactions by it, was a necessary condition for the DG‟s inquiry into its conduct. 186. This Court is further reinforced in its conclusion in th....
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....ntinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be; (b) impose such penalty, as it may deem fit which shall be not more than ten percent of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: [Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten percent of its turnover for each year of the continuance of such agreement, whichever is higher.] (c) [Omitted by Competition (Amendment) Act, 2007] (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any; (f) [Omitted....
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.... prescribed foundation of the "relevant market". The CCI, had, on the other hand, distinguished the rulings relied upon by the petitioners and relied upon certain other decisions to say that providing a statutorily mandated prior hearing as condition precedent for imposition of penalty is inessential. In this regard, Sh. Sanjay Jain relied upon F.N. Roy (supra); Organic Chemicals (supra) and Prestolite India Limited 1994 (Suppl) (3) SCC 390. CCI‟s previous decision in Indian Foundation of Transport Research and Training [Case No.61/2012 dated 16.02.2015; M/s. Rohit Medical Store v. Macleods Pharmaceutical Ltd. [Case No.78/2012 dated 29.01.2015]; M/s. Swastik Stevedoves Pvt. Ltd. v. M/s. Dumper Owner's Association Case No.42/2012 dated 21.01.2015]. This Court notices that the Act envisions that the Statement of Objects and Reasons of the Act underlines that Parliament intended CCI to be a regulatory body. Its uniqueness perhaps is in the manner it interprets various facets and dimensions of anti-competitive behaviour, outlined in Sections 3 and 4 of the Act, on a case-by-case basis. This case-by-case enshrining of principles is not unknown. As noted in a previous part of this ....
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....tal, and thereupon such producer, seller, distributor, trader or service provider may be tried for the offence with respect to which the lesser penalty was imposed and shall also be liable to the imposition of penalty to which such person have been liable, had lesser penalty not been imposed." 191. It is quite evident from a bare reading of the provision that if a full and necessary disclosure is made at the outset of the investigation and before the report is submitted to the CCI, a lesser penalty under Section 46 can be issued. Chapter VI of the Act deals with various kinds of penalties, such as contravention of the CCI‟s order (Section 42); compensation in the case of contravention of CCI‟s order (Section 42A); penalty for failure to comply with Commission or DG (Section 43); not furnishing information (Section 43A); false statement or omission to furnish material information (Section 45); offences in relation to furnishing of information etc. Each one - barring Section 46, this Court notices, deals with the consequence of orders made by the Commission, either substantive or during the course of the proceeding. In one sense, these are ensuring the enforcement of t....
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.... notice. Excel Crop Care (supra) and the later decisions have now held conclusively that this step is administrative and does not contemplate any prior notice or hearing to the opposite parties. The next stage is investigation by the DG. At this stage, the parties - whenever needed - receive notice and opportunity; if it is denied, they can seek directions to the DG from the CCI. This stage incudes evidence gathering and wherever necessary, cross-examination on behalf of one or more individuals, before the DG- and later, before the CCI, if the complaint is that cross-examination is not granted. The next stage is the report of the DG, which is shared by the parties, who then make their comments, and are granted full opportunity of hearing. This step is very significant, because when the parties do address the CCI and submit their contentions, they have foreknowledge of all the materials, including adverse materials and comments made in the DG‟s report. This stage is a "full blown" hearing, when the parties know and have a fair awareness of the range of options available with the CCI in terms of both findings and the sanctions (such as orders enjoining some activity, or requiri....
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....justified deduction or tax benefit. It is during the course of assessment that such behaviour, in the form of a claim, is noticed; the assessment order, which is adverse on that point, then becomes the occasion for imposition of penalty. Therefore, at that stage only would the adjudicating authority have the "cause" to issue show cause notice. 197. If these considerations are kept in mind, the fact that certain types of penalties (which are pre-determined quantum for specific violations of the Act) elicit show cause notice as prelude to penalty on the one hand, and absence of any compulsion to issue a separate show cause notice preceding a penalty under Section 27 (b) (although a show cause notice and full hearing is provided with opportunity to submit against the report of DG) does not in the opinion of this Court, render that provision arbitrary. 198. The court is cognizant of the fact that there are several adjudications- quasi judicial and by judicial tribunals, which envision a "rolled up" hearing which visualizes only one show cause notice- that can culminate in both an adverse finding and a consequential penalty. The most obvious example of this is Union of India v Tul....
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....ng of pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature and no full review or appeal on merits against that decision is provided courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless viewed pragmatically it would paralyse the administrative process or frustrate the need for utmost promptitude" 200. This Court is of the opinion that the Supreme Court felt compelled to say what it did, in each of those decisions, and the long line of successive authorities, because the action taken by the executive government or the public agency was not preceded by fair procedure, that encapsulated any opportunity of hearing. Here, however, the CCI followed all the steps indicated in the statute; the DG held an inquiry, during which the petitioners were permitted participation; the consequent report and documents were shared with them, or they were given access to the record. After these, each petitioner was given full hearing which included subm....
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....s discretion provided Under Section 27 needs to be regulated and guided so that there is uniformity and stability with respect to imposition of penalty. This discretion should be governed by Rule of law and not by arbitrary, vague or fanciful considerations. Here we may deal with two judgments which may be helpful in deciding the concerned issue. In Dilip N. Shroff v. Joint Commissioner of Income Tax (2007) 6 SCC 329, this Court while dealing with the imposition of the penalty has observed that- The legal history of Section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that the Explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of the Explanation having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of Sub-section (1) of Section 271 categorically states that the penalty would be leviable if the Assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the Assessee does not ipso facto become liable for pena....
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....following manner- 'proportionality' is a principle where the Court is concerned with the process, method or manner in which the decision-maker has ordered his priorities, reached a conclusion or arrived at a decision. The very essence of the decision-making consists in the attribution of relative importance to the factors and considerations in the case. The doctrine of proportionality thus steps in focus true nature of exercise-the elaboration of a Rule of permissible priorities. De Smith states that 'proportionality' involves 'balancing test' and 'necessity test'. Whereas the former ('balancing test') permits scrutiny of excessive onerous penalties or infringement of rights or interests and a manifest imbalance of relevant considerations, the latter ('necessity teat') requires infringement of human rights to the least restrictive alternative' In consonance of established jurisprudence, the principle of proportionality needs to be imbibed into any penalty imposed Under Section 27 of the Act. Otherwise excessively high fines may over-deter, by discouraging potential investors, which is not the intention of the Act....
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....ein the discretion of the commission is guided by principles established by law would sub-serve the intention of the enactment.." 202. In the opinion of this Court, the enunciation of the above principles as the guiding norm which CCI has to follow, in each case, when it determines deviant behaviour that invite adverse findings and appropriate sanctions, are a sufficient answer to the charge of unconstitutionality levelled against Section 27. It is a recognized and sound principle of constitutional interpretation that courts will, while considering the vires or validity of a law, lean in favour of its constitutionality, if it is so capable of construction, rather than to hold it void. In Namit Sharma v Union of India (2013) 1 SCC 745 therefore, it was held that: "(the) most significant canon of determination of constitutionality is that the courts would be reluctant to declare a law invalid or ultra vires on account of unconstitutionality. The courts would accept an interpretation which would be in favour of the constitutionality, than an approach which would render the law unconstitutional. Declaring the law unconstitutional is one of the last resorts taken by the cour....
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....pugned order was inconsistent, and, therefore, arbitrary, inasmuch as it faltered in the application of that principle- in its (i.e. Tata Motors‟) case, despite outlining the relevant market as the domestic market, the turnover (based on which penalty was imposed) was expanded to include the global turnover. The objection of Mercedes Benz (articulated by its senior counsel Mr. Neeraj Kishan Kaul) was that the manufacturer sold an entire system that left no room for a separate spare parts market and, consequently, the finding of anti-competitive behaviour was unjustified and illegal. A plain reading of the order impugned would show that the CCI has considered Benz‟s submissions, and given several reasons why it proceeded to record adverse findings and impose penalties. In the view that, this Court is ultimately taking, which is to address itself only with the constitutionality and vires of the statute, it is held that a further discussion on the merits of the order- vis-à-vis- each aggrieved petitioner would not be essential. The court prefers to leave these submissions open for decision on merits, by the Appellate Tribunal. 207. In S.N. Mukherjee v. Union of I....
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....s that the judgment of the Court should meet with this requirement with higher degree of satisfaction. The order of an administrative authority may not provide reasons like a judgment but the order must be supported by the reasons of rationality. The distinction between passing of an order by an administrative or quasijudicial authority has practically extinguished and both are required to pass reasoned orders..." 208. Several subsequent authorities have reiterated the necessity of furnishing reasons in support of conclusions. Therefore, this Court concludes that to decide whether to, and to what extent impose penalty are in the domain of the CCI‟s discretion, which it is bound to exercise, keeping in mind the factors (deemed not exhaustive) in Excel Crop Care (supra) and also general objects and purposes of the Act. The challenge to Section 27(b) and Regulation 48, therefore, fails. It goes without saying that the exercise of such power can be interfered by COMPAT on appeal, on its merits. All these are inbuilt safeguards which if transgressed by the CCI in any given case, are capable of correction within the framework of the Act. Conclusions and Directions 209. Thi....
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.....e the CCI) is to be maintained. 103. The conclusion of the aforesaid discussion is to give primacy to the respective objections of the two regulators under the two Acts. At the same time, since the matter pertains to the telecom sector which is specifically regulated by the TRAI Act, balance is maintained by permitting TRAI in the first instance to deal with and decide the jurisdictional aspects which can be more competently handled by it. Once that exercise is done and there are findings returned by the TRAI which lead to the prima facie conclusion that the IDOs have indulged in anti-competitive practices, the CCI can be activated to investigate the matter going by the criteria laid down in the relevant provisions of the Competition Act and take it to its logical conclusion. This balanced approach in construing the two Acts would take care of Section 60 of the Competition Act as well. 104. We, thus, do not agree with the appellants that CCI could have dealt with this matter at this stage itself without availing the inquiry by TRAI. We also do not agree with the respondents that insofar as the telecom sector is concerned, jurisdiction of the CCI under the Competi....
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....o so- as well as the correct approach that courts should adopt was outlined as follows in New State Ice Co. v. Liebman, 285 U.S. 262 (1932), where Justice Brandeis stated as follows: "...There must be power in the States and the Nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs. I cannot believe that the framers of the Fourteenth Amendment, or the States which ratified it, intended to deprive us of the power to correct the evils of technological unemployment and excess productive capacity which have attended progress in the useful arts. To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to prevent an experiment. We may strike down the statute which embodies it on the ground that, in our opinion, the measure is arbitrary, capr....
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....ny of its provisions. If any crudities, inequities or possibilities of abuse come to light, the legislature can always step in and enact suitable amendatory legislation. That is the essence of pragmatic approach which must guide and inspire the legislature in dealing with complex economic issues." 212. Similar views were expressed in Director General of Foreign Trade v Kanak Exports, (2016) 2 SCC 226, and Swiss Ribbons (supra). In the former (Kanak Exports) the court stated that: "in complex economic matters every decision is necessarily empiric and it is based on experimentation or what one may call trial and error method and therefore, its validity cannot be tested on any rigid prior considerations or on the application of any straitjacket formula. In Balco Employees' Union v. Union of India [Balco Employees' Union v. Union of India, (2002) 2 SCC 333], the Supreme Court held that laws, including executive action relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. that the legislature should be allowed some play in the joints because it has to deal with complex problems which d....