TaxTMI 
TaxTMI 
2016 (5) TMI 1625
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.... Director General to investigate the role of the appellants in the contravention allegedly committed by Respondent No. 5 and finally impose penalty on Appellant No. 1 @ 10% of the average of his income of preceding three financial years and also direct Respondent No. 5 not to associate the appellants with its affairs including administration, management and governance for a period of two years albeit without issuing action oriented notice and giving them opportunity of hearing. 2. Respondent No. 2, P.K. Krishnan, who is proprietor of Vinayaka Pharma, Palakkad District, Kerala submitted complaint dated 06.01.2014 to the Commission and prayed that action may be taken against M/s. Alkem Laboratories Limited (Opposite Party No. 2 before the Commission and Respondent No. 4 herein) and Mr. Paul Madavana (Respondent No. 3 herein) for refusing to supply the medicines despite his appointment as a stockist vide letter dated 14.11.2013. On being asked by the Secretariat of the Commission, Respondent No. 2 filed an information under Section 19(1)(a) of the Act with similar prayer but the same was found to be defective. Respondent No. 2 re-filed the information, which was registered as Case ....
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....he market. 3. In the light of the above analysis, the Commission is of the prima facie view that the Opposite Party and AKCDA have contravened the provisions of Section 3 of the Act in the matter and this is a fit case for investigation by the Director General (DG). 4. Accordingly, under the provisions of 26(1) of the Act, DG is directed to cause an investigation into the matter and to complete the investigation within a period of 60 days from receipt of this order. 5. During the course of investigation, if involvement of any other party is found, DG shall investigate the conduct of such other parties who may indulge in the said contravention. In case of contravention, DG shall also investigate the role of the persons who at the time of such contravention were in-charge of and responsible for the conduct of the business of the contravening entity. 6. Nothing stated in this order shall tantamount to final expression of opinion on merits of the case and the DG shall conduct investigation without being swayed in any manner whatsoever by any observations made herein." (Emphasis supplied) 4. The Joint Director General (for short, the 'Jt. DG....
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....wing conclusions: "9.1 Investigation has concluded that the conduct of OP-2 of refusing to deal with the IP in the absence of an NOC from AKCDA (OP-3 can be construed to be an arrangement/agreement being practiced between OP-2 and OP-3, and as such OP-2 has contravened the provisions of Section 3(1) of the Competition Act, 2002. 9.2 Investigation has also concluded that OP-3 (AKCDA) as an association of stockists and distributors has been following a practice of NOC necessarily required to be taken from it for appointment of a new/additional stockiest which has the effect of limiting and controlling the supply of drugs and medicines in Kerala, apart from being an entry barrier, thereby contravening the provisions of Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002. 9.3 Investigation has concluded that the IP has concealed/suppressed material fact before the Hon'ble Commission, thereby contravening the provisions of Section 45 of the Competition Act, 2002." 7. In paragraph 8.2 of his report, the Jt. DG noted that Respondent No. 5 is a society registered under the Travancore Cochin Literary, Scientific and Charitable Societies Regi....
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[email protected] AAVPA1159R Proprietor OLAPPILLIL MEDICALS 4. Shri K.P. Surendranath Meera Medicals, Ulliyerio. O., Calicut-673 525. VICE PRESIDNET - NORTH ZONE 09447478471 [email protected] CYUPS5305L Proprietor MEERA MEDICALS 5. Shri P. Shankaranarayanan, Sabari Medicals, Olavakod, Palghat - 678 564 VICE PRESENT SOUTH ZONE 09447065510 AGEPS1446G Proprietor SABARI MEDICALS 6. Shri Antony K.J. Suma Medicals Ayarkunnam, Kottayam - 686 564 VICE PRESENT NORTH ZONE 09747824657 AQMPA0903A Proprietor, SUMA MEDICALS 7. Shri C.K. Asif, Drug House, Opp. Hilal Shopping Complex, Main Road, Kanhangad, Kasargod - 671 315 SECRETARY NORTH ZONE 09847219821 [email protected] ANJPA4549G Managing Director DRUG HOUSE 8. Shri Wilson K.K. Sangam Medicals, Nada, Irinjalakuda, Thrissur-680 121. SECRETARY CENTRAL ZONE 09846083373 [email protected] AZMPK4404H Proprietor SANGAM MEDICALS 9. Shri S. Subramoniam, English Pharma Souparnika Buildings Aryasala, Chala P.O. Thiruvananthapuram-695036 SECRETARY SOUTH ZONE 09447078766 [email protected] ABXPC4935C Proprietor ENGLISH PHARMA ....
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....e investigation report. Today, the Commission considered the investigation report of the DG and decided to forward an electronic copy of the investigation report of the DG to the parties for filing their replies/objections. The Commission also decided to forward an electronic copy of the investigation report of the DG to the following persons who were identified by the DG as employees of OP-2 and to the executive committee members, of OP-3, who at the time of contravention of the provisions of the Act were responsible for the conduct of the affairs of OP-2 and OP-3, respectively: (1) Shri Jonson Mathew DGM (Sales South & West) of OP-2; (2) Shri T.K. Haridas, Branch Manager of OP-2; (3) Shri A.N. Mohanakurup, President of OP-3; (4) Shri Thomas Raju, General Secretary of OP-3; (5) Shri O.M. Abduljaleel, Treasurer of OP-3; (6) Shri P.K. Surendranath, Vice-President (North) of OP-3; (7) Shri P. Sankaranarayanan, Vice President (Central) of OP-3; (8) Shri Antony K.J., Vice President (South) of OP-3; (9) Shri C.K. Asif, Secretary, (North) of OP-3; (10) Shri Wilson K.K., Secretary, (Central)....
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....4 and 5. The relevant portions of the second and third orders are reproduced below: "Second Order passed on 10.06.2015: "In the instant case, the Commission vide its Order dated 29th September 2014 under Section 26(1) of the Competition Act, 2002 (Act) had directed the Director General (DG) to cause an investigation. Accordingly, the DG, after completing the investigation, has filed the investigation report along with an application dated 25th March 2015 requesting initiation of proceedings against M/s. Lividus Pharmaceuticals Pvt. Ltd. under Section 43 of the Act for not complying with the directions of the DG. The Commission considered the application dated 25th March 2015 in its ordinary meeting held on 23rd April, 2015 and decided to issue show cause notice to M/s. Lividus Pharmaceuticals Pvt. Ltd. under Section 43 of the Act. Accordingly, notice dated 12th May 2015 was issued to M/s. Lividus Pharmaceuticals Pvt. Ltd. directing them to show cause, in writing, within 15 days, from the receipt of the notice as to why a penalty upto rupees one lac per day to the maximum of rupees one crore in terms of the provision of Section 43 of the Act should not be ....
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....lowing submissions from the parties: a) reply/submission dated 4th June 2015 from OP-2 along with (i) balance sheet/profit and loss statements for the financial years 2011-12, 2012-13 & 2013-14 for OP-2; (ii) income tax return (ITRs) of Shri Johnson Matthew, DGM (Sales) of OP-2 and Shri T.K. Haridas, Branch Manager of OP-2 for financial years 2012-13, 2013-14 & 2014-15; and (iii) application dated 4th June 2015 from OP-2 filed under Regulation 26 of the Competition Commission of India (General) Regulations, 2009; b) application dated 5th June 2015 filed by the Informant inter alia seeking extension of time for filing his reply to the DG report and to the show cause notice dated 13th May 2015; c) reply/submission dated 9th June 2015 of OP-3 along with (i) trial balance sheet as on 31st March 2015, income details for the period between 20th August 2013 to 31st March 2014 and balance sheet as on 31st March 2014; (ii) ITRs of Shri A.N. Mohanakurup, President of OP-3, Shri O.M. Abdul Jaleel, treasurer of OP-3, Shri P. Sankaranarayanan, Vice-President, Secretary (South) of OP-3, Shri C.K. Asif, Secretary (North) of OP-3 and Shri Subramoniam, Secretary (South) o....
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....equesting to the Commission to allow them to join as interveners in the case. The Commission considered the aforementioned application in its ordinary meeting held on 10th June 2015 and decided to hear the applicants on 18th June 2015. Today, the Commission heard the counsel for the interveners and decided to list the matter again on 25th June 2015." "Order dated 23.06.2015 In the instant case, the Director General (DG) vide application dated 25th March 2015 had requested the Commission to initiate Section 43 proceedings against M/s. Lividus Pharmaceuticals Pvt. Ltd. as it had failed to comply with the directions of the DG. The Commission considered the said application in its ordinary meeting held on 23rd April, 2015 and decided to issue show cause notice to M/s. Lividus Pharmaceuticals Pvt. Ltd. Accordingly, notice dated 12th May, 2015 was issued to M/s. Lividus Pharmaceuticals Pvt. Ltd. directing it to show cause, in writing, within 15 days, from the receipt of the notice as to why a monetary penalty should not be imposed upon it in terms of Section 43 of the Act. M/s. Lividus Pharmaceuticals Pvt. Ltd. was also directed to appear before the Co....
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....e Commission also directed the Informant to file his reply to the show cause notice dated 13th May 2015, latest by 10th July 2015. The Commission also directed OP-1 to file his income tax returns for the last three financial years and OP-3 to file its income/turnover details including copies of its audited income and expenditure statement for the last three financial years. 3. Subsequently, the Commission has received the following submissions from the parties: a) reply/submission dated 10th July, 2015 from Informant; b) written submission/reply dated 10th July 2015 from OP-2, Shri Johnson Matthew and Shri T.K. Haridas, and c) Independent auditor's report dated 13th May 2014 (filed/received on 30th July 2015). 4. Today, the Commission heard the counsel for the Informant and Opposite Parties on the investigation report of the DG. The parties have concluded their arguments. 5. Upon the request of OP-2 and OP-3, the Commission has granted them time to file additional submissions, if any, by 24th August 2015. The Opposite Parties are directed to provide a copy of his/its additional submission to the Informant. 6. The Se....
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....ceutical companies and OP 3 clearly illustrate the prevalence of anti-competitive practice of requiring NOC. Vide e-mail dated 09.12.2014, M/s. Getwell Enterprises, a pharmaceutical company, sent the NOC received from one of its stockist to OP 3. Another email dated 10.12.2014 sent by Mr. A.N. Mohana President of OP 3 to M/s. Getwell Enterprises vide which OP 3 had requested M/s. Getwell Enterprises to send the names of the existing parties at Trivandrum to enable Mr. A.N. Mohana Kurup to send M/s. Getwell Enterprises the 'Bona-fide Member Certificate'. When enquired, Mr. A.N. Mohana Kurup could not give much justification for these emails. There are several other emails which were sent by pharmaceutical companies wherein the said companies had sent the names of their newly appointed stockists and requested the OP 3 'to do the needful'. All such emails are not reproduced herein for the sake of brevity. 7.7 It is relevant to reproduce another evidence relied upon by the DG which clearly shows the involvement of OP 3 and its district units in perpetuating their anti-competitive practices in the State of Kerala. M/s. Sunanda Associates, one of the stockist, vi....
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.... of stocks partly/non-supply of medicines by OP 2 even after they had received payment. Purportedly, the authorised representative of OP 2 i.e., Mr. T.K. Haridas has expressed that OP 3 had threatened him that OP 2 will be boycotted if supplies were made by it to M/s. Sunanda Associates. 7.9 These lead to inescapable conclusion that OP 3 has been indulging in the practice of mandatory NOC/clearance certificate from it before appointment of any new stockist. It has also been revealed that OP 3 has been threatening the pharmaceutical companies to follow its diktats by threatening them that it would boycott the products of non-complying pharmaceutical companies. 7.10 In many previous cases namely, Case No. C-127/2009/MRTPC (Varca Drugs & Chemists & Ors. v. Chemists & Druggists Association Goa); Case No. 20/2011 (M/s. Santuka Associates Pvt. Ltd. v. All India Organization of Chemists and Druggists and Ors.); Suo moto Case No. 05 of 2013 (In re: Collective boycott/refusal to deal by the Chemists & Druggists Association, Goa, M/s. Glenmark Company and M/s. Wockhardt Ltd. etc.), the Commission has unequivocally held that imposing the requirement of NOC for the appointmen....
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....e income of that financial year). The Commission also imposed penalty @ 10% of the income of Appellant No. 1 and directed him to deposit Rs. 50,203/- within sixty days. In addition to this, the Commission issued the following direction: "14. Additionally, the Commission directs OP 3 association to organize, in letter and in spirit, at least five competition awareness and compliance programmes over the next six months in State of Kerala for its members. OP 3 is further directed not to associate Mr. A.N. Mohana Kurup and Mr. Thomas Raju with its affairs including administration, management and governance in any manner for a period of two years." 15. The Commission also penalized Respondent No. 4 and its officers, but we do not consider it necessary to advert to that part of the impugned order because the same is under challenge in the appeals filed by them. 16. The appellants have challenged the impugned order mainly on the ground of violation of the provisions of the Act and the principles of natural justice. In paragraphs 7.2 to 7.4 of the memo of appeal, the appellants have averred that in the election held in August, 2009, Appellant No. 1 was elected as President a....
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....amine such persons to test their veracity apart from denying any opportunity for rebutting the allegations? F. Whether the Commission is justified in ignoring the fact that the order passed by the Commission dated 29.09.2014 directing investigation was also not supplied to the appellants which has resulted in grave miscarriage of justice as the ambit and extent of the investigative jurisdiction of the DG was not known to the appellants? AND whether the DG exceeded its jurisdiction of investigation? G. Whether the Commission lost sight the scope of the section 27 of the Competition Act in the facts and circumstances of the case? H. Whether the Commission has power to direct the association to disassociate its' democratically elected president and general secretary with its affairs including administration, management and governance in any manner that for period of two years totally disregarding the civil and Constitutional rights consequences thereto?" 17. While issuing notice of appeal and application for interim relief on 29.01.2016, the Tribunal passed the following order: "This appeal is directed against order dated 01.12.2015 passed by....
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....contains the replies/objections and written submissions filed on behalf of Respondent No. 4, its officers and Respondent No. 5. 20. Shri Rajshekhar Rao, learned counsel for the appellants argued that the penalty imposed on Appellant No. 1 and the direction contained in the second part of paragraph 14 of the impugned order are liable to be quashed because the same are not only contrary to law but are vitiated due to blatant violation of principles of natural justice. Learned counsel argued that the deeming provision contained in Section 48(1) can be invoked only after a finding is recorded by the competent authority i.e. the Commission that the company [By virtue of Explanation (a) appended to Section 48, the word 'company' means a body corporate and includes a firm or other association of individuals] has contravened the provisions of the Act or of any rule, regulation, order made or direction issued thereunder, but in the present case the proceedings for determination of the liability of the persons incharge of and responsible for the conduct of the business of Respondent No. 5 were initiated at the threshold and that resulted in serious prejudice to the cause of the ap....
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....n, management and the governance of the Association. Learned counsel also questioned the penalty imposed on Appellant No. 1 and argued that in exercise of the power vested in it under Section 27(b), the Commission could not have penalised Appellant No. 1 without giving him notice and opportunity of hearing. Learned counsel again emphasised that the direction given by the Commission to supply electronic copy of the investigation report with an opportunity to Appellant No. 1 to file his suggestions/objections and also file his income-tax return cannot be interpreted as a notice proposing imposition of penalty under Section 27(b) because till that time the competent authority had not recorded a finding that Respondent No. 5 had contravened the provisions of the Act or any rule, regulation, order made or direction issued thereunder. 21. Shri Jaiveer Shergill, learned counsel for the Commission argued that the impugned order is legally correct and the Tribunal should not interfere with the same on the hyper-technical ground of violation of the principles of natural justice because the Jt. DG had given ample opportunity to the appellants to defend themselves and he returned a finding ....
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.... to discharge. In support of this argument, Shri Shergill relied upon the judgment of the Supreme Court in Tamil Nadu Electricity Board v. Rasipuram Textile (P) Ltd. and Others - 2008 (17) SCC 285. 22. Ms. Rashmi Nandkumar, learned counsel for Respondent No. 2, argued that the appellants do not have the locus to challenge the direction contained in the second part of paragraph 14 of the impugned order because it mandates Respondent No. 5 not to associate the appellants with its affairs for a period of two years and no affirmative direction has been given by the Commission to deprive the appellants of their right to hold the offices/posts of the President and the Secretary of Respondent No. 5. 23. We have considered the respective arguments and carefully perused the record. We have also gone through various orders passed by the Commission from between 13.05.2014 and 01.12.2015 on the basis of the decisions taken in the meetings held in accordance with Clauses 3(3) and (5) of the Competition Commission of India (Meetings for Transaction of Business) Regulations, 2009, which are treated as ordinary meetings. 24. The scheme of the Act was considered by the Supreme Court in Com....
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....o cause an investigation to be made into the matter. The detailed procedure for conducting investigation is contained in Section 41 read with Section 36 and Regulations 20, 21, 35, 41, 42 and 45. In terms of Regulation 41, the Director General can determine the manner in which the evidence may be adduced. In the proceedings before him in terms of Regulation 41(2), the Director General can admit evidence taken in the form of verifiable transcripts of tape recordings, unedited versions of video recording, electronic mail, telephone records including authenticated mobile telephone records, written signed unsworn statements of individuals or signed responses to written questionnaires or interviews or comments or opinions or analyses of experts based upon market surveys or economic studies or other authoritative texts or otherwise, as material evidence; admit on record every document purporting to be a certificate, certified copy or other document, which is by law declared to be admissible as evidence of any particular fact provided it is duly certified by a gazetted officer of the Central Government or by a State Government or a statutory authority, as the case may be or a Magistrate o....
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....ignated for the said purpose. Regulation 42 provides that the Director General can, for sufficient reasons, order that any particular fact or facts may be supported by an affidavit. Various clauses of this Regulation prescribe the mode and manner in which the affidavit required to be filed under clause (1) is to be prepared. On completion of investigation, the Director General is required to submit his report to the Commission. Clause (4) of Regulation 20 provides that the report shall contain his findings on each of the allegations made in the information or reference, as the case may be, together with all evidences or documents or statements or analyses collected during the investigation. Proviso to this clause empowers the Director General to grant partial or total confidentiality to the commercially sensitive information and documents. 46. Once the report of the Director General is received, the Commission is required to act in accordance with the procedure enshrined in sub-sections (4) to (8) of Section 26, which provide for forwarding a copy of the record to the parties concerned including the Central or the State Government or the statutory body, as the case may be,....
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....and requisitioning any public record or document or copy of such record or document from any office. Under Section 36(3), the Commission is empowered to call upon experts, from the fields of economics, commerce and accountancy. Under Section 36(4), the Commission can issue direction to any person to produce books of accounts or other documents in his custody or under the control before the Director General and to furnish to him or Secretary of the Commission such other information as may be in his possession in relation to trade carried on by such person as may be required for the purposes of the Act. At the end of this exercise, the Commission can pass appropriate orders under Section 27 including an order for imposing penalty in cases involving contravention of Section 3 and/or Section 4. By virtue of Section 41(2), Director General is entitled to exercise the powers conferred upon the Commission under Section 36(2). Section 42(2) provides for imposition of fine for contravention of orders or directions issued under Section 27, 28, 31, 32, 33, 42A and 43A. The quantum of fine may extend to rupees one lakh per day, subject to a maximum of rupees ten crores. If any person fails to ....
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....009, Parliament consciously decided to retain provisions relating to adjudicatory functions of the Commission in their full vigour and the mere fact that by virtue of substituted Section 22, the business of the Commission is required to be transacted in its meetings and the business would necessarily include exercise of adjudicatory functions/powers, cannot lead to an inference that while deciding the allegations contained in the information filed or reference made under Section 19(1)(a) and passing orders under Sections 27, 33, 39, 42, 42A, 43, 43A, 44 and 45, the Commission exercises purely administrative power or discharge administrative functions or that while passing orders under those sections and also under Section 28, which can have far-reaching impact on the rights of the parties, the Commission is not required to act as per the accepted standard of fairness and render just decision after complying with the principles of natural justice as expounded by the Courts across the globe including the Supreme Court of India. Rather, on the basis of case law developed in this country, it must be held that like any other adjudicatory body, the Commission is bound to comply with vari....
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....ontinuance of such agreement, whichever is higher. *** (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; *** (g) pass such other order or issue such directions as it may deem fit: Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group." "Sec. 48. Contravention by companies - (1) Where a person committing contravention of any of the provisions of this Act or of any rule, regulation, order made or direction issued thereunder is a company, every person who, at the time the contravention was....
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....ys down that if any agreement referred to in section 3 has been entered into by a cartel than the Commission can impose penalty of upto three times of profit for each year of continuance of an agreement or 10% of the turnover for each of the year of the continuance of such agreement, whichever is higher on every producer, seller, distributor, trader or service provider who is a party to an agreement entered into by a cartel. In terms of Clause (d), the Commission can direct that the agreements found to be in contravention of Section 3 shall stand modified to the extent and in the manner as may be specified in the order. Clause (e) lays down that the Commission can direct the enterprises concerned to abide by such other orders as the Commission may pass and mandate compliance thereof including payment of costs. Clause (g) confers an omnibus power upon the Commission to pass such other order or issue such directions as it may deem fit. 27. Section 48 finds place in Chapter VI of the Act, which contains various provisions relating to penalties that can be imposed by the Commission. Section 42 confers power upon the Commission to penalize any person, who, without reasonable cause, f....
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....information or documents, omits to state any material fact knowing it to be material, or wilfully alters, suppresses or destroys any document which is required to be furnished. Section 46 confers power upon the Commission to impose lesser penalty than the one specified in the preceding sections. 28. Section 48(1) lays down that where a person committing contravention of any of the provisions of the Act or of any rule, regulations, order made or direction issued thereunder is a company, every person who, at the time of contravention was incharge of and was responsible to the company for the conduct of its business as well as the company shall be deemed to be guilty of contravention and shall be liable to be proceeded against and punished accordingly. Sub-section 2 contains a similar provision qua any director, manager, secretary or other officer of the company. The explanation appended to Section 48 makes it clear that for the purpose of Section 48, the term "Company" means a body corporate and includes a firm or other association of individuals and the term "Director" in relation to a firm, means a partner in the firm. 29. Since the provision contained in Section 48(1) raises....
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....i.e. while passing order dated 29.09.2014 under Section 26(1) of the Act and Jt. DG returned a finding in paragraph 8 of his report that the appellants are equally complicit in the practices being carried on and the decisions being taken by Respondent No. 5, which were found to be contrary to the provisions of the Act. This exercise was ex facie contrary to the plain language of Section 48 of the Act. That apart, in the absence of a determination by the Commission that Respondent No. 5 had acted in contravention of Section 3, the finding recorded by the Jt. DG in paragraph 8.2.2 of his report about the alleged complicity of the appellants in the anti-competitive practices being carried on and the decisions taken by Respondent No. 5 could not have been made basis for passing an order under Section 27(b) or 27(g) and on that ground alone, the penalty imposed on Appellant No. 1 and the direction contained in the second part of paragraph 14 of the impugned order are liable to be set aside. 31. The judgment of the Supreme Court in Tamil Nadu Electricity Board v. Rasipuram Textile Private Limited and others (supra), on which reliance has been placed by Shri Jaiveer Shergill, does not ....
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....prosecuted for alleged commission of the aforementioned offence was incharge of and was otherwise responsible for the conduct or the affairs of the Company. 13. We have noticed hereinbefore that how the learned trial Judge has dealt with the entire aspect. Learned trial Judge has misconstrued and misinterpreted the provisions of Section 49A of the Act. 14. In terms of sub-section (1) of Section 49-A, it is for the complainant to prove that the Director of the Company at the time when the theft was committed was in charge of and/or was responsible for the conduct of its business. Only in the event such an averment is made and sufficient and cogent evidence is brought on record to prove the said allegations, the proviso appended to Section 49-A would be attracted; meaning thereby only in the event it is proved that a Director or a Group of Directors of the Company were in charge of and/or were responsible for the conduct of the business of the company, the burden would shift on the accused to establish the ingredients contained in the proviso appended to Section 49-A of the Act." 32. The ratio of the above noted judgment is that the primary burden to prove that t....
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....to be punished with the help of Section 48(1). 34. The record produced before the Tribunal does not show that the Commission had, at any point of time, informed the appellants that it was intending to impose penalty on either of them under Clause (b) of Section 27 of the Act. Therefore, they did not get any opportunity to show that paragraph 5 of the order passed by the Commission under Section 26(1) and the conclusion recorded by the Jt. DG in paragraph 8.2.2 of his report were ultravires the provisions of the Act and also represent their cause against the proposed penalty. Thus, there is no escape from the conclusion that the penalty imposed on Appellant No. 1 is vitiated due to violation of the principles of natural justice. 35. The question which remains to be considered is whether the direction given by the Commission to Respondent No. 5 not to associate the appellants with its affairs including administration, management or governance for a period of two years is legally sustainable. While Shri Rajshekhar Rao argued that the Act does not empower the Commission to pass an order or issue direction which results in depriving the elected representatives of an entity of thei....
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.... interpreted as conferring unbridled power upon Commission to pass any order or issue any direction as it may deem fit, then the provision will become prone to the challenge of unconstitutionality and it is settled law that if a provision of the statute is capable of two constructions, then the Court should not adopt the one which makes it constitutionally infirm. 37. We are also convinced that in exercise of power vested in it under Section 27(g), the Commission cannot make an order or issue a direction which would directly or indirectly impinge upon the provisions of other statutes. The election to the offices of the President and the Secretary of Respondent No. 5 and such like bodies are governed by the provisions contained in the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955, rules, regulations and by-laws made thereunder. The tenure of the elected office-bearers is also fixed by these statutory provisions, rules, regulations and by-laws. Therefore, the Commission does not have the jurisdiction, power or authority to pass an order which has the effect of directly or indirectly curtailing the tenure of the duly elected office-bearers o....