TaxTMI 
TaxTMI 
2024 (11) TMI 1084
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....No.2- JC Bamford Excavators Limited (hereinafter, 'JCB') on one hand and Respondent No.2- M/S Bull Machines Private Ltd. (BMPL) on the other. Both the companies are manufacturers of `backhoe loaders' - the Petitioners' loader being '3DX BHL' and BMPL's loader being 'Bull Smart'. The Respondent No.1 herein, is the Competition Commission of India (hereinafter, 'the CCI'). i. W.P.(C) 2244/2014- JCB India Limited & Anr. v. The Competition Commission of India & Anr. 3. The genesis of the dispute between the parties in these petitions, is a suit filed by JCB against BMPL seeking an injunction restraining infringement of copyright, piracy of registered design, passing off etc. The said suit being CS(OS) 2934/2011 was filed on 24th November, 2011 before the Original Side of this Court and an ex-parte ad interim injunction was granted in favour of JCB on 25^th November, 2011. Vide the said order dated 25th November, 2011, local commissioners were also appointed to visit various premises of BMPL in Bangalore, Coimbatore and Noida for seizure of products. 4. Considering that the suit was based on the registered designs of JCB, the Defendant therein i.e., BMPL chose to challenge the v....
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....rights themselves were obtained fraudulently. 15. The Commission observes that the predation through abuse of judicial processes presents an increasingly threat to competition, particularly due to its relatively low antitrust visibility. 16. In view of the allegations projected in the information and as detailed hereinabove, the Commission is of prima facie opinion that JCB by abusing their dominant position in the relevant market sought to stifle competition in the relevant market by denying market access and foreclosing entry of 'Bull Smart' in contravention of the provisions of Section 4 of the Act. 17. Accordingly, the Commission directs the Director General (DG) to cause an investigation into the matter and to complete the investigation within a period of 60 days from receipt of this order." 7. Aggrieved by the above order, the Petitioners' filed the present civil writ being W.P.(C) 2244/2014 seeking quashing of the order dated 11th March, 2014. Reply affidavits were filed by the Respondents i.e., CCI and BMPL in the present writ emphasising the malafides of JCB and stated that JCB sought to amend the original suit C.S.(OS) 2934/2011 throu....
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....his Court on 04.04.2014 had observed that "a substantial question of jurisdiction of respondent No.1 to entertain respondent No.2's petition arises in the proceedings" and directed that order passed in Telefonaktiebolaget LM Ericsson (Publ) Vs. Competition Commission of India and Anr.: W.P.(C) 464/2014 on 21.01.2014 as modified by Division Bench in LPA 182/2014 would continue to operate till further hearing. In terms of the order, this Court had directed that "while the petitioner may give information as called upon by the Director General of Competition Commission of India, no final order/report shall be passed either by the Competition Commission of India or by its Director General." In light of the aforesaid order and given the manner in which the action has been taken by the respondent, I am prima facie, of the view that further proceedings in the matter before the respondent be stayed. It is, accordingly, so directed. Ali hardware seized by the respondent shall be placed in a sealed cover and kept in safe custody by respondent No.1." 12. Vide order dated 26th September, 2014 further proceedings before the CCI were stayed by the High Court and all the hardware, which was....
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....dabad premises and office premise at B-1/1-1, 2nd Floor, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi of the JCB. 15. In this criminal writ, the Petitioners averred that the impugned search and seizure conducted by the DG CCI is invalid due to multiple legal violations. Firstly, it was averred that the search and seizure were claimed to be in direct contravention of an order dated 4th April, 2014 passed by this High Court in W.P. (C) 2244/2014, which allowed the DG only to summon local officers of the Petitioners for information and not to conduct any searches. Secondly, the Petitioners assert that no summons or requisition for information was issued before the search, and employees were interrogated without legal representation, violating the High Court's directives. Thirdly, it was averred that the search was carried out by unauthorized personnel, and documents irrelevant to the investigation were seized, demonstrating a disregard for legal procedures and judicial orders. 16. It was further stated that the search and seizure breached the statutory provisions under the Companies Act, 1956, and the Indian Evidence Act, 1872. The Petitioners averred that the D....
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....urposes of testing the issue of jurisdiction." iii. Intersection of both the writ petitions: 18. In the meantime, while these proceedings were going on, an application under Order XII Rule 6 (I.A. No. 1733/2015) was filed by BMPL seeking summary dismissal of the original suit. The said application was rejected and dismissed by this Court on 20th December, 2017. The said order dated 20th December, 2017 rejecting the application was challenged before the Supreme Court in SLP No(s).7518-7519/2018 titled Bull Machines Pvt. Ltd. v. J C Bomford Excavators Limited. 19. On 9th December, 2019 the Supreme Court referred the matter to mediation during the pendency of the two writs. The disputes between the parties were then resolved before the Mediation Centre of the Delhi High Court and the settlement was taken on record vide order dated 26th August, 2021. The said order of the Supreme Court, reads as under: "Delay condoned. These matters were sent for mediation before the Mediation centre at Delhi High court. Fortunately, the matters have been settled between the parties before the Mediation Centre and now an application (I.A. No. 87472 of 2021) has been filed wit....
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....n the manner that in the above quoted prayers, we grant the prayers in Clauses no.(i), (ii), (iii), (iv) and (v). With regard to the Clause No. (vi), we provide that the parties may approach the High Court for early disposal of the W.P.(C) No.2244 of 2014 and W.P. (Crl.) No.1823 of 2016, pending before the Delhi High Court and we hope and trust that the High Court will decide the same as expeditiously as possible."" 20. In view of the settlement and the above decision of the Supreme Court, the parties i.e., Petitioners and Respondent No.2 - BMPL, jointly moved an application being CM APPL.31397/2021 with the following prayers: "a. bring on record the fact of the successful conclusion of the mediation directed by the Hon'ble Supreme Court and in light thereof, quash, set aside the Impugned Order dated 11 March 2014 passed by Respondent No. 1 under the provisions of Section 26(1) of the Competition Act, 2002 in Case 105 of 2013, and terminate the proceedings/actions emanating from the said Impugned Order;" Both the writ petitions are now listed before this Court for hearing and disposal. iv. Submissions: 21. Mr. Sandeep Sethi, ld. Sr. Counsel appearing on beh....
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....onounce the same, a presumption cannot be made. 26. Mr. Samar Bansal, ld. Counsel appearing for the CCI submitted that the jurisdiction of the CCI and the impact of CCI proceedings are in rem. In an application under Order XXIII Rule 3 CPC, Competition law parameters are not examined and thus the settlement made, whether by coercion or by consent is unknown. In the Ericsson (supra) decision, the conflict between the Competition Act, 2002 and the Patents Act, 1970 was considered and the conclusion was that the CCI did not have subject matter jurisdiction. It is his submission that even filing of a vexatious litigation by a dominant player against a small player could also be anti-competitive under certain circumstances and hence a settlement can also be anti-competitive as in the case of reverse payment settlement agreements. 27. He further submitted that in the US, the FTC has enquired into such matters, wherein vexatious litigations were filed for harnessing monetary profits. He referred to foreign decisions to elaborate that the Eleventh Circuit Court in the US supports a legal policy favouring settlements, acknowledging the practical concerns that antitrust scrutiny of rev....
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....e an anti-competitive practice or vexatious/sham litigation, so as to lead to a conclusion that the Plaintiff in the infringement action in the original suit (CS (OS) 2934/2011) has engaged in abuse of dominance. Initially, an interim order dated 25th November, 2011 was passed in the matter which was later suspended vide order dated 12th December, 2011 and the matter remained pending. 31. The issues that have been raised in the present petitions are multifarious and ld. Counsels have, accordingly, addressed submissions. 32. In the opinion of the Court, however, none of the issues which have been raised in the writ petitions need to be adjudicated at this stage in these matters. The design infringement action instituted in CS(OS) 2934/2011 has admittedly come to an end owing to the settlement which has been arrived at and recorded vide order dated 26th August, 2021 in SLP Nos. 7518-7519/ 2018 before the Supreme Court. 33. The clauses of the settlement agreement dated 22nd July, 2021 as extracted above in the order passed by the Supreme Court dated 26th August, 2021 have resulted in the disposal of the following proceedings: * SLP No.7518-7519 of 2018 and SLP bearin....
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....nts in general being agreements voluntarily agreed to between parties, unless there is an extraordinary situation, they cannot be permitted to be reopened - so as to ensure 'FINALITY' and 'CLOSURE'. Furthermore, the threat of continued investigations by the CCI could compel parties to engage in prolonged and costly legal battles, defeating the purpose of settlements. 38. The Information under Section 19(1) of the Act in the present matter itself is clearly based on the filing of the infringement suit CS(OS) 2934/2011 by JCB against BMPL. A perusal of the Information would show that the first and foremost paragraph in the Information relating to the dispute reads as under: "10. The present case involves a clear and deliberate abuse of judicial process by JCB to deny market access to Bull Machines; an indigenous, cheaper and a more efficient competitor. The present case also involves an abuse of the regulatory process by JCB, by attempting to "evergreen" its fraudulently obtained intellectual property rights. xxx xxx xxx 12. A cursory view of the designs in question will demonstrate the mischief perpetrated by JCB. First, the images relied upon by JCB to....
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.... cartel formation or with regard to collusive arrangements, controlling of shares in markets, refusal to deal, tie-in-arrangements, bid-rigging etc. No issues regarding anti-competitive practices were also raised in the information, apart from the allegation of abuse of dominant position in the garb of filed injunction suit and being lead players in the market. 40. Reliance was placed by BMPL, in the said Information, upon certain foreign judgments to argue that sham litigation can be the basis of anti-trust laws. The further argument was that the intellectual property i.e., designs were obtained by fraud. BMPL also contended that not only does sham litigation violate antitrust laws, but it also leverages fraudulently obtained IP rights, thereby compounding the anti-competitive impact. 41. On the basis of such Information, the order under Section 26(1) of the Act was passed by the CCI. In the impugned order dated 11th March, 2014, under Section 26(1) of the Act, the CCI itself captures the allegations as under: "14. The entire case of abuse as laid and made by the Informant is predicated upon the alleged bad faith litigation filed by JCB before the Hon'ble High C....
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.... interest of the parties who have brought an end to the commercial dispute. 45. Continuation of the CCI's proceedings would in effect mean participation by both parties in the inquiry, production of documents, adducing of evidence, reports being prepared by the CCI which could also result in various unintended consequences to the parties. Such a consequence is not even contemplated under the Act. In essence, the CCI's over-involvement, post-settlement would disrupt the harmony and finality that mediation seeks to achieve, undermining trust in both the mediation process and the regulatory body itself. Competition authorities ought to respect the boundaries of their jurisdiction, ensuring that their role complements rather than conflicts with the resolution of disputes, thereby maintaining a fair competitive market environment without overstepping their mandate. 46. The dispute between the parties was a design infringement action which has been settled. There is no broader impact that this settlement has over the society at large or public at large. 47. Mediation processes and settlements have to be recognised and acknowledged by all Courts/fora where disputes are pending. R....
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....mportance of mediation proceedings and held as under: "16. According to us it would have been more appropriate for the parties to at least agree to resort to mediation as provided under Section 89 CPC and make an endeavour to find amicable solution of the dispute, agreeable to both the parties. One of the aims of mediation is to find an early resolution of the dispute. The sooner the dispute is resolved the better for all the parties concerned, in particular, and the society, in general. For parties, dispute not only strains the relationship but also destroys it. And, so far as society is concerned it affects its peace. So what is required is resolution of dispute at the earliest possible opportunity and via such a mechanism where the relationship between individual goes on in a healthy manner. Warren Burger, once said: "The obligation of the legal profession is ... to serve as healers of human conflict ... we should provide mechanisms that can produce an acceptable result in shortest possible time, with the least possible expense and with a minimum of stress on the participants. That is what justice is all about." MEDIATION is one such mechanism which ha....
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....laws such as commercial disputes, labour disputes etc. In one such dispute under the Industrial Disputes Act, 1947, the Division Bench of Madras High Court in the matter of United Labour Federation, (represented by its General Secretary, K. Nithyanandan), Chennai v. Union of India (represented by its Secretary to Government, Ministry of Surface Transport Department of Shipping, Port Department), New Delhi, [2002 (2) L.L.N. 1128] held as under: "There is a sanctity for the statutory settlement entered under the Industrial Disputes Act. Such statutory settlement is binding on the parties thereto. Neither party can wriggle out of the settlement so long as the settlement is in force. In Tata Engineering and Locomotive Company, Ltd. v. Their workmen, [1982 (1) L.L.N. 28], there was a settlement between the labour and the management and that was reduced to writing. Some workmen who were not parties to the settlement had ratified the same by their individual letters. Under the settlement wage-structure was arrived at. Some of the workmen who were parties to the settlement turned back and questioned the settlement on the ground that wage-structure was not reasonable, and it could ....
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....g the settlement and that there is an underlying assumption that a settlement reached with the help of the Conciliation Officer must be fair and reasonable and can, therefore, safely be made binding not only on the workmen belonging to the union signing the settlement but also on others. It was also held that a settlement arrived at in the course of conciliation proceedings is put on par with the award made by an adjudicatory authority."" 50. A settlement has a finality attached to it and without such finality parties may be dissuaded from settling disputes. The examination of settlements is a power which may exist with the CCI, but under the existing scheme of the Act, unless a settlement is alleged as being abuse of dominance, the same would not be liable to be examined under Section 4 of the Act. No allegation has been made by any party that the settlement is an abuse of dominance. A theoretical power with CCI to examine settlements cannot lead to uncertainty for the parties, and their commercial behaviour. In fact both parties jointly seek disposal of the petitions and closure of the proceedings before CCI, in view of the settlement. 51. Moreover, in the present context, ....
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.... (4) Any other agreement amongst enterprises or persons including but not restricted to agreement amongst enterprises or persons] at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including- (a) tie-in arrangement; (b) exclusive 3[dealing] agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale price maintenance, shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India. [Provided that nothing contained in this sub-section shall apply to an agreement entered into between an enterprise and an end consumer.] xxx xxx xxx (5) Nothing contained in this section shall restrict-- (i) the right of any person to restrain any infringement of, or to impose reasonable conditions, as may be necessary for protecting any of his rights which have been or may be conferred upon him under-- (a) the Copyright Act, 1957 (14 of 1957); ....