TaxTMI 
TaxTMI 
2023 (12) TMI 1389
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.... Competition Commission of India (CCI), allowing the impleadment application of the Respondent No. 2, Builders Association of India, in an ongoing proceeding before the CCI titled, Suo Moto Case No. 2 of 2019, to investigate allegations of cartelisation and price manipulations of Grey Cement Manufacturers. The facts leading up to the passage of the impugned Order and the Petitioner's objections to it thereof are as follows: 2. The Petitioner, UltraTech Cement Limited, is a public company principally engaged in the business of manufacturing and marketing of grey cement, building and cement related products. The Respondent No. 1, Competition Commission of India (CCI) is a statutory authority constituted under the Competition Act, 2002. The Respondent No. 2, Builders Association of India, is an association of over 20,000 infrastructure development programmers and builders of real estate engaged in the purchasing of grey cements from grey cement manufacturing companies in the non-trade segment. 3. It is stated that CCI, prior to 01.07.2019, received multiple letters and emails from various participants in the market, including customer trade associations and dealers, alleging tha....
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....Cement Manufacturers including the Petitioner herein, to file their respective objections/suggestions to the Director General's report, along with their financial statements by 16.09.2022. The Order dated 26.07.2022 also directed them to appear for final hearing before the CCI on 29.09.2022 and 30.09.2022. The Petitioner in compliance of the Order dated 26.07.2022 passed by CCI, filed the confidential and non-confidential versions of its responses to the Director General's report on 14.09.2022 and 16.09.2022. 7. On 26.09.2022, this Hon'ble Court disposed off the writ petition filed by BAI, being Writ Petition No. 8958 of 2022, with the liberty to approach CCI to participate in the proceedings before it in accordance with Regulation 25 of the Competition Commission of India (General) Regulations 2009, which elaborated the power of CCI to permit a person or enterprise to take part in proceedings. On the same day, vide Order dated 26.09.2022, the CCI adjourned the final hearing of the Suo Moto Case. No 02 of 2019 to 29.09.2022 and 30.09.2022. 8. It is stated that before the first date of the final hearing dated 29.09.2022, BAI on 27.09.2022 filed an application before CCI in ter....
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....itiated with no special footing, has led to a change in the nature of the enquiry to one of an adversarial nature despite being initiated on Suo Moto basis by the CCI. 12. It is also stated that CCI, by way of an earlier Order dated 29.12.2021, had rejected the impleadment application of BAI and that the impugned Order dated 05.07.2023 allowing its impleadment is tantamount to a de facto review of the Order dated 29.12.2021, despite there not being any change in facts or circumstances in the intervening period. Moreover, it is stated that the CCI passed the impugned Order dated 05.07.2023 by stating that BAI has a substantial interest in the outcome of the proceeding and its opinions are necessary for a meaningful enquiry without establishing as to how it has reached its satisfaction of the same. It is further stated that such a power of reviewing and recalling of its orders does not vest with CCI as Section 37 which grants CCI the power to do so has been expressly taken away by way of a repeal, and thereby, the passage of the impugned Order dated 05.07.2023 is a clear violation of the provisions of the Act. 13. It is further stated that Section 57 of the Act lays out that no....
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....participatory role accruing to BAI via the impugned Order dated 05.07.2023 would imply that BAI would be attending the final hearings before the CCI where the Petitioner would have to refer to certain 'marked' confidential information in order to put up an effective defence which goes against the veil of confidentiality and protection of parties' information without their express consent as given under Section 57 read with Regulation 35. It is stated that the provisions under Regulation 25, which provides for the procedure for impleading a third party to the proceedings, should be read harmoniously with Section 57 of the Act and Regulation 35 of the General Regulations in a manner which does not overshadow the rights provided under the former. It is therefore stated that Regulation 37 of the General Regulations 2009, which allows for third parties to inspect records upon demonstration of sufficient cause, shall still remain subject to the provisions of Section 57 of the Act, whose requirements were not fulfilled in the present case as elaborated above. 15. It is further stated by the Petitioner that the impugned Order being a wholly unreasoned Order, fails to satisfy the two-fol....
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....s in fact a reasoned order passed under Regulation 25 of the General Regulations 2009 after taking into consideration the detailed submissions made by BAI that it is the largest consumer of cement bearing direct impact of the anti-competitive practices in the grey cement industry and is thereby a necessary party with substantial interest for a meaningful enquiry. It is also contended that the action of impleadment does not impact the legal rights of the Petitioner whose interest is limited to providing inputs and information to CCI, facilitating the arrival of a just conclusion, but merely that of BAI as a party being impleaded. 19. The learned Counsel for the Respondents further states that the application of principles of natural justice is not absolute and depends on the nature of the duty to be performed by the authority based on facts and circumstances. Reliance has been placed on the Judgment of the Apex Court in Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744, which held that the CCI when passing an Order under Section 26(1) of the Act, based on information received under Section 19(1) of the Act, are not required to give notice to the ....
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....n'ble Court in its Order dated 26.09.2022 had held that it is open to any party having substantial interest in the proceeding outcome of the Suo Moto Case No. 2 of 2019 to seek right of audience before the CCI and present the consideration of its opinion, which is what was carried out by BAI in the present case and accepted by CCI. 22. Heard the learned Senior Counsel for the parties, and perused the material on record. 23. The Competition Act, 2002 operates with the objective of providing a legislative framework for prevention of practices with adverse effects on the competition in the country and work towards protecting the interests of consumers and to ensure freedom of trade in the market. It seeks to ensure fair competition in the country via the prohibition of trade practices which cause adverse effects and is facilitated through the establishment of a quasi- judicial body, Competition Commission of India, investigations through Director General for the Commission and vests the Commission with powers granted by the Act to levy penalty upon contravention of its provisions, ordering division of dominant enterprises and order demergers that adversely affect competition. Se....
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.... information or a reference may be entertained after the period specified in the first proviso if the Commission is satisfied that there had been sufficient cause for not filing the information or the reference within such period after recording its reasons for condoning such delay.] (2) Without prejudice to the provisions contained in sub-section (1), the powers and functions of the Commission shall include the powers and functions specified in sub-sections (3) to (7). (3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:-- (a) creation of barriers to new entrants in the market; (b) driving existing competitors out of the market; (c) foreclosure of competition; (d) [benefits or harm] to consumers; (e) improvements in production or distribution of goods or provision of services; (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. (4) The Commission shall, while inquiring whether ....
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.... (a) physical characteristics or end-use of goods 5[or the nature of services]; (b) price of goods or service; (c) consumer preferences; (d) exclusion of in-house production; (e) existence of specialised producers; (f) classification of industrial products. (g) costs associated with switching demand or supply to other goods or services; (h) categories of customers." 25. The procedure for inquiry as required under Section 19 is elaborated under Section 26 of the Act read with Regulation 21 of the General Regulation of 2009, which involves a prima facie opinion of the CCI based on the receipt of a reference, information received or suspicion arising out of its own knowledge, conduction of investigation by the Office of the Director General, including further investigation thereof by the said office or the CCI itself before. Section 26 of the Act and Regulation 21 of the General Regulation of 2009 read as under: "Section 26. Procedure for inquiry under section 19.-- (1) On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge o....
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....ntral Government or the State Government or the statutory authority, as the case may be. (5) If the report of the Director General referred to in 3[sub-section (3) and (3B)] recommends that there is no contravention of the provisions of this Act, the Commission shall invite objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be, on such report of the Director General. (6) If, after consideration 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 pro....
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....the Commission may direct any person to produce such specified books or other documents relating to any trade carried out by such person or enterprise, as per the provisions of sub-section (4) of section 36 of the Act. Explanation. - For the purpose of this sub-regulation, the word "officer" shall include the experts and professionals mentioned under sub- section (3) of section 17 or sub-section (3) of section 36 of the Act. (6) On receipt of the report of the Director General on further investigation or report of the authorized officer on further inquiries, as the case may be, the Secretary shall with the approval of the Chairperson fix the meeting of the Commission within seven days for consideration thereof. (7) If the report of the Director General mentioned under sub-regulation (1) finds contravention of any of the provisions of the Act, the Secretary shall obtain the orders of the Commission for inviting objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be (8) On consideration of the objections or suggestions from the Central Government or the State Gove....
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....r the enterprise making the request; (f) documents or affidavits or evidence in support of the statement, with a list thereof. (4) On an order made under sub-regulation (1), - (a) on an application made by a party, Secretary shall furnish to the person or enterprise permitted to participate in the proceedings, copies of such documents previously filed in the matter by other parties as may be decided by the Commission within ten days of the order; (b) the person or enterprise permitted to participate in the proceedings shall furnish copies of all documents filed under sub-regulation (3) to all other parties to the proceedings within ten days of the order." 27. It is contended by the learned Counsel for the Petitioner that the Order dated 05.07.2023 to implead BAI as a party to the proceedings under Suo Moto Case No. 2 of 2019 is improper as it fails to satisfy the conjunctive two-fold test given under Regulation 25 of 'substantial interest' and 'public interest' and that in absence of its satisfaction as reflected in the inadequacy of reasoning given in the impugned Order dated 05.07.2023 to that effect, the actions of the CCI in impleading BAI....
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....1. The Court exercising the jurisdiction of judicial review would not interfere with the findings of fact arrived at in the departmental enquiry proceedings excepting in a case of malafides or perversity i.e., where there is no evidence to support a finding or where a finding is such that no man acting reasonably and with objectivity could have arrived at that finding. The Court cannot embark upon reappreciating the evidence or weighing the same like an appellate authority. So long as there is some evidence to support the conclusion arrived at by the departmental authority, the same has to be sustained." (emphasis supplied) 32. In State of Haryana v. Rattan Singh, (1977) 2 SCC 491, the Apex Court has observed as under: "4. ........The ‗residuum' rule to which counsel for the respondent referred, based upon certain passages from American Jurisprudence does not go to that extent nor does the passage from Halsbury insist on such rigid requirement. The simple point is, was there some evidence or was there no evidence - not in the sense of the technical rules governing regular court proceedings but in a fair commonsense way as men of understanding and worldly ....
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....st consumer of cement and, therefore, suffers a direct impact every time the cement manufacturers engage in anti-competitive and unfair practices. Further, BM stated that it has an insight into the entire cement manufacturing and construction industry and has time and again agitated against the anti- competitive conduct of the cement manufacturers (including before this Commission). It is submitted that BAI's submission and opinions are pivotal to understand the issues faced by the consumers of the cement manufacturers, i.e., the construction industry. It was further submitted that unless 13AI is allowed to act as an interested party by this Commission, it shall not be in a position to lead evidence/ submissions/ analysis/ data/ information etc. The same is also in the interest of justice as well as for enabling effective adjudication/investigation of the present case. " 34. In view of the settled position of law, this Court is not inclined to substitute its conclusion to the one arrived at by the Board which is based on the material on record before the Commission. 35. The contention of the Petitioner that the conclusion arrived at by the CCI that impleading BAI would ca....
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....subject to judicial review if it affects the right of a citizen, it is therefore desirable that reasons should be stated." (emphasis supplied) 37. However, it is also stated by the Apex Court in Rangi International Ltd. v. Nova Scotia Bank, (2013) 7 SCC 160, that: "3. The Competition Commission as well as the Competition Appellate Tribunal are exercising very important quasi-judicial functions. The orders passed by the Commission and the Appellate Tribunal can have far-reaching consequences. Therefore, the minimum that is required of the Commission as well as the Appellate Tribunal is that the orders are supported by reasons, even briefly. However, the impugned orders are bereft of any reasons in support of the conclusions. We are, therefore, constrained to hold that the impugned orders challenged herein cannot be sustained." 38. The desirability and importance of orders to be reasoned is appreciated duly by this Court. However, this Court sees no merit in breaking down the adequacy of the reasoning unless it is prima facie malafide, perverse or arbitrary, as noted above. In the present case, the submissions made by BAI to CCI that it is an all India associa....
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....ment, 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 o....
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....ing is to be held; (c) statement of specific charges which a person has to meet. However in The State of Karnataka & Anr. v. Mangalore University Non-Teaching Employee's Association & Ors. [(2002) 3 SCC 302] the requirement of notice will not be insisted upon as a mere technical formality when the party concerned clearly knows the case against him and is not thereby prejudiced in any manner in putting up an effective defence, then violation of the principle of natural justice cannot be insisted upon." (emphasis supplied) 43. The Supreme Court in Mahipal Singh Tomar v. State of U.P., (2013) 16 SCC 771, held as under: "15. In administrative law, the rules of natural justice have traditionally been regarded as comprising the principles of Audi alteram partem and nemo judex in causa sua. The first of these rules required the maker of a decision to give prior notice of the proposed decision to the persons affected by it and an opportunity to them to make representation. The second rule disqualified a person from judging a cause if he has direct pecuniary or proprietary interest or might otherwise be biased. The first principle is of great importance because it embraces a....
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....rected to list the mater thereafter before the Commission in one of the ensuing meetings." 45. It is therefore clear that the Petitioner being one of the Opposite Parties in the Suo Moto Case No. 02 of 2019, through the receipt of the Order dated 06.10.22 by CCI, had full knowledge of BAI being provided with the copy of the non-confidential version of the DG report dated 01.07.2022 and the presentation of its opinion on the same. This was prior to passing of the impugned Order dated 05.07.2023 which had formalised the impleadment of BAI as a party to the proceedings. There certainly existed reasonable time between the Order dated 06.10,2022 and the impugned Order thereof. A reading of the Order dated 06.10.2022 indicates that it provides sufficient notice to the Petitioner regarding the impleadment of BAI as a party in the proceedings. The Petitioner was in full knowledge of the Order dated 06.10.2022 which ordered for the disclosure of the non- confidential report of the Director-General to BAI. 46. The learned Counsel for the Petitioner has also argued that since competition law is a right in rem and not in personam, the CCI by impleading BAI as an interested party to be he....
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....learly, therefore, given the context of the Act in which the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers, it is clear that the Act vests powers in the CCI and enables it to act in rem, in public interest." (emphasis supplied) 48. The attributes of actions in rem were elucidated by the Supreme Court in Booz-Allen & Hamilton Inc v. SBI Home Finance Ltd. & Ors, (2011) 5 SCC 532, while dealing with arbitrability of disputes, wherein it has been observed as under: "23. It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, judgment in personam re....
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....d the provisions of the General Regulations 2009 being Regulation 25 which grants the power to CCI to allow persons or enterprises to take part in the proceedings as done in the present case with Suo Moto Case No. 2 of 2019. 51. Furthermore, the power to review the orders of CCI, which were given under Section 37 of the Act, had subsequently been repealed by the Competition Amendment Act, 2007. The Petitioner contents that the impugned Order accepting the impleadment application of BAI dated 05.07.2023 is a review of the previous Order dated 29.12.2021 whereby CCI had rejected the initial impleadment application of BAI. 52. The power to review, as understood under the provisions of Code of Civil Procedure, 1908, under Section 114 has been observed by the Apex Court in Krishna Swami v. Union of India, (1992) 4 SCC 605, at para 40 which reads as under: "40. This Court in Keshav Mills Co. Ltd. v. CIT [(1965) 2 SCR 908 : AIR 1965 SC 1636] laid that (SCR pp. 921-22) "In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlie....
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....han Reddy v V. Narayana Reddy, 2022 SCC OnLine SC 1034, while dealing with the application for review of judgement under Order XLVII, the Apex Court observed as under: "13. A glance at the aforesaid provisions makes it clear that a review application would be maintainable on (i) discovery of new and important matters or evidence which, after exercise of due diligence, were not within the knowledge of the applicant or could not be produced by him when the decree was passed or the order made; (ii) on account of some mistake or error apparent on the face of the record; or (iii) for any other sufficient reason." 54. It is to be noted at this juncture that after the rejection of the initial impleadment application of BAI dated 29.11.2021 via an Order dated 29.12.2021 by CCI, BAI approached this Hon'ble Court by way of Writ Petition titled, W.P. No. 8958 of 2022, whereby this Hon'ble Court, in its Order dated 26.09.2022, granted liberty to BAI to approach CCI to participate in the proceedings before Suo Moto Case No. 2 of 2019 in terms of Regulation 25 of the General Regulations 2009 which may be considered by CCI. It is only in view of this Order did BAI, on 27.09.2022, file....
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....onsent of the enterprises involved. The part of the impugned Order as mentioned is extracted below: "13. On an overall appreciation of the reasons mentioned by BAI in its application dated 27.09.2022, the Commission is satisfied that BA1 has substantial interest in the outcome of the proceedings and that it is necessary to allow it to present its opinion in this matter for a meaningful inquiry. The Impleadment Application of BAI is, thus, allowed in turns of Regulation 25(1) of the General Regulations and it is made a party to the matter henceforth. 14. Further, in view of the aforesaid direction of the Commission regarding impleadment and the request made by the BAI in its application dated 21.10. 2022, it may be allowed to inspect the non confidential records in the matter in terms of Regulation 37(1) of the General Regulations. Accordingly, the applications dated 21.10 2022 and 27.10.2022 are disposed of " 58. The impugned Order categorically mentions that in addition to the application for impleadment by BAI, the request made by BAI to allow the inspection of non-confidential record ought to be done in terms of Regulation 37(1) of the General Regulations 20....
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....tion of the provisions of Chapter II, having been committed by enterprise. (2) Every application made under sub-section (1) shall be accompanied by the findings of the Commission, if any, and also be accompanied with such fees as may be prescribed. (3) The Appellate Tribunal may, after an inquiry made into the allegations mentioned in the application made under sub-section (1), pass an order directing the enterprise to make payment to the applicant, of the amount determined by it as realisable from the enterprise as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II having been committed by such enterprise: Provided that the Appellate Tribunal may obtain the recommendations of the Commission before passing an order of compensation. (4) Where any loss or damage referred to in sub- section (1) is caused to numerous persons having the same interest, one or more of such persons may, with the permission of the Appellate Tribunal, make an application under that sub-section for and on behalf of, or for the benefit of, the persons so interested, and thereupon, the provisions of rul....