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....6), who was then working as Branch Manager of M/s. Alkem Laboratories Ltd. at Kochi, Ernakulam (Kerala) are individually responsible under Section 48(1) of the Act and imposed penalty on all the appellants @ 3% of their respective average income. 2. For the sake of convenient reference, the three appellants shall hereinafter be referred to as Appellant Nos. 1, 2 and 3. 3. Appellant No. 1 is engaged in the manufacture and marketing of branded as well as generic drugs. It is one of the most efficient Pharmaceuticals Companies of the Indian Market in the anti-infective and pain management segments. It has eight manufacturing plants across the country and maintains 25 depots along with four Clearing and Forwarding (C&F) agents in various regions and 29 distribution points for supply of the products to various distributors/stockists. 4. Respondent No. 2 Shri P.K. Krishnan is the Proprietor of M/s. Vinayaka Pharma, which is a stockist of the medicines manufactured by various pharmaceutical companies and is doing business in District Palakkad. Respondent No. 2 submitted application dated 02.09.2013 to the Branch Manager of Appellant No. 1 for grant of stockistship of the products of Ap....
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....iolation of the above mentioned Acts by the company have not only cost financial losses to me but also has hurt me mentally and physically. It is therefore my humble request to look into the matter and do the needful for providing justice to my Fundamental Rights. Thanking you, Yours faithfully, P.K. KRISHNAN (Proprietor)" 06.12.13 [Emphasis supplied] 6. The Assistant Drugs Controller issued notice to Appellant No. 1 and called upon it to explain as to why the medicines were not supplied to M/s. Vinayaka Pharma. On behalf of Appellant No. 1, reply dated 22.01.2014 was sent in which it was categorically stated that Shri Paul Madavana, Additional Divisional Manager, who had issued the offer letter on behalf of the company was not an authorised person. Appellant No. 1 also denied the assertion of Respondent No. 2 that the Depot Manager had orally asked him to produce NOC from AKCDA. According to Appellant No. 1, there is no Depot Manager in the Cochin office and no money had been received for supply of the products. For better appreciation of the stand taken by Appellant No. 1, its reply is reproduced below: "ALKEM LABORATORIES LIMITED ALKEM House, 'Vishwarups'....
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....quest you to kindly reject their petition and oblige. Thanking you, For Alkem Laboratories Ltd. AUTHORISED SIGNATORY" [Underlining is ours] 7. The Assistant Drugs Controller accepted the reply of Appellant No. 1 and informed Respondent No. 2 vide letter dated 17.03.2014 that no action can be taken on his petition. The letter of the Assistant Drugs Controller reads as under: "L7271/2013/ADC/EKM. Office of the Asst. Drugs Controller, Civil Station, Kakkanad, Kochi-30, Dated: 17.03.2014 From The Asst. drugs Controller To Shri P.K. Krishnan, Vinayaka Pharma 11/259/1, Kannara Street, Palakkad-678 001. Sir, Sub:- Refusal Supply of drugs - reg. Ref:- Your Petition dated: 6.12.2013. Your immediate attention is invited to the reference. On verification of the issue raised in your petition it is found that you are not an authorised stockist or distributor of M/s. Alkem Laboratories Ltd. M/s. Alkem Laboratories Ltd., informed that the offer letter issued to you by the Divisional Sales Manager of the company is not an authorised person to sign and act on behalf of the company. Hence, it is informed that no action can be taken on your petition. Yours faithf....
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....atories Ltd., Alkem House, Devashish, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013, Phone No. 022-39829999, Fax No. 022-24902419 for Palakkad district by the company, after completing the usual survey conducted by them and upon satisfactory reports from the market company officials have issued M/s. Vinayaka Pharma, Palakkad their office letter confirming my distribution ship for the company. As advised by them I had completed all formalities by sending them a DD for Rs. 5 lakhs along with order for the company products. Surprisingly the company has returned the order and draft with the direction orally from the depo manager to obtain NOC from All Kerala Chemists & Druggists Association. Which is led by President A.N. Mohan. This is the gross violation of competitive commission of India, New Delhi verdict and also against drugs & cosmetics act. The deliberate violation by the company due to interference from AKDCA have not only cause financial losses but also has hurt me mentally. It is therefore my humble request look in to the matter and do the needful for providing justice my fundamental rights. End: M/s. Alkem offer letter DD copy Order copy Drugs Licence copie....
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....r to your letter number PC to M.F. No. 10(1)/2010-Sectt/2298 dated 07th March 2014 through which I was informed about the various defects found in my complaint/information. 2. The above defects were rectified and the following documents are enclosed herewith for your kind perusal and further necessary action please. (a) Information in Format No. 1 along with all documentary evidence in booklet form-8 Nos. (b) Proof of Information copy provided to M/s. Alkem Laboratories Limited, Alkem House, "Viswarupa" No. VII/166J, Vaikom Road, South Paravoor, Post: Udayamperoor, Dist: Ernakulam, Kerala - 682 320. (c) It is kindly requested to look into my grievance and necessary action/direction may be given to M/s. Alkem Laboratories Limited for the relief sought by me at the earliest please. Encl: Palakkad, Date: 31/03/2014 Yours faithfully (P.K. KRISHNAN) Proprietor * * * Format No. 1 BEFORE COMPETITION COMMISSION OF INDIA AT NEW DELHI (FOR FILING INFORMATION) 1. Particulars of the Informant(s) Legal name P.K. KRISHNAN 2. Complete Postal address in India for delivering of summons or notice with PIN code Vinayaka Pharma, 11/259/1 Kannara Street, Post: Palakkad Di....
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.... provisions of the Competition Act 2002 (in the the case of contravention of Section 3 of the Competition Act 2002, all documents, affidavits and evidence, as the case may be, in support of the alleged contravention may be furnished) And/or In the case of contravention of Section 4 of the Competition Act, 2002, information relating to relevant market and all documents, affidavits and evidence, as the case may be, in support of alleged contravention may be furnished) On 02.09.2013, my firm M/s. Vinayaka Pharma requested M/s. Alkem Laboratories Ltd. for stockistship of their products for Palakkad District and its surrounding. In reply. On 14.11.2013, M/s. Alkem Laboratories confirmed that they were pleased to offer their stockistship to us for Palakkad District and its surroundings on the terms and conditions after completion of all formalities from my end. All formalities as per their direction were completed by me and the company officials of M/s. Alkem Laboratories Ltd. completed their survey which was satisfactory. Accordingly a DD No.386358 dated 28.11.2013 for Rs.500000/- (Rupees five lakh only) was sent to M/s. Alkem Laboratories Ltd. with a list of their products required ....
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....tion I, P.K. Krishnan, Proprietor of M/s Vinayaka Pharma, 11/259/1, Kannara Street, Palakkad-678 001, do hereby declare that the above information is true and correct to the best of my knowledge and belief. Palakkad, Date: 31/03/14 (Signature of the Informant(s) (P.K. KRISHNAN) * * * STATEMENT OF FACTS I, P.K. Krishnan, Proprietor, Vinayaka Pharma, 11/259/1, Kannara Street, Palakkad, Kerala - 678 001, do solemnly affirm and state as follows:- 2. That, I am the proprietor of Vinayaka Pharma, 11/259/1, Kannara Street, Palakkad, Kerala - 678 001. I started the firm at my own and I am the sole and absolute owner of the above said Vinayaka Pharma and having a valid drug licence holder in Form 21 & 21B operating in the name and style of Vinayaka Pharma at Palakkad in Kerala State. I am engaged in distribution of medicines manufactured by various companies. My firm is one of the fastest growing distributors of Pharmaceutical products in Palakkad District with a turnover of over Rs. 6.5 Crores per annum. I have an excellent coverage of all the territories in Palakkad district of Kerala. I am having well experience salesmen and well trained office staff to look after the operat....
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....pter IV 19(b) and (c) of Competition (Amendment Act 2007). Therefore, I had submitted a complaint to Asstt. Drugs Controller, Ernakulam on 06.12.2013. (Copy of the complaint is enclosed as Annexure-5 as the receipt of the Asst. Drugs Controller is enclosed as Annexure-6). 6. Therefore, relief is sought from the Competitive Commission of India to issue direction to M/s. Alkem Laboratories Ltd. on the above mentioned address to fulfill their offer of distribution ship as per the rules to my firm Vinayaka Pharma. It is also requested to take necessary action against M/s. Alkem Laboratories Limited for refusal to deal with me which is a deliberate act of driving me out of the market and foreclosure of the competition by hindering my firms entry into the market which is violation of Chapter IV 19(b) and (c) of Competition (Amendment Act 2007). I P.K. Krishnan, Proprietor of Vinayaka Pharma, 11/259/1, Kannara Street Palakkad - 678 001, Kerala State, do hereby declare that the above information is true and correct to the best of my knowledge and belief. Palakkad Date: 31.03.2014 (P.K. KRISHNAN) Proprietor, Vinayaka Pharma 11/259/1 Kannara Street, Palakkad, Kerala, Pin - ....
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....ayable at Service Branch Ernakulam in favour of Alkem (Laboratories Ltd. was sent to them on 28.11.2013. 4. Surprisingly, M/s. Alkem Laboratories Ltd. refused to receive my letter and Demand Draft and informed me orally over phone to obtain No Objection Certificate from All Kerala Chemists and Druggists Association which is led by President Mr. A.N. Mohan. 5. The above direction is a gross violation of Section 3(4)(d) (refusal to deal) of Chapter II of the Competition Act 2002 read with the Competition (Amendment) Act 2007 without any valid reason. It is also a violation of the Order No. F No. 1(20)2011-Sectt/1248 dated 25th February 2013 of the Competition Commission of India, New Delhi. In this order it is clearly mentioned that "It will not be required to obtain NOC for appointment of stockiest". It is also a violation of Drugs and Cosmetics Act. The above act of M/s. Alkem Laboratories Ltd. is refusal to deal with my firm and also a deliberate act of driving me being existing competitor out of the market and foreclosure of competition by hindering my firms entry into the market which is violation of Chapter IV 19(b) and (c) of Competition (Amendment Act 2007). Therefore, I ....
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.... 28 of 2014. The matter was considered in the ordinary meeting of the Commission held on 19.06.2014 in the presence of the Advocate for Respondent No. 2, but was adjourned at her request. On the next date i.e. 01.07.2014, Respondent No. 2 appeared in person and made oral submissions before the Commission, which decided to pass an appropriate order in due course. This is evident from the orders passed by the Commission on those dates, which are reproduced below: "Order dated 19.06.2014 The Commission considered the matter in the ordinary meeting held on 19.06.2014. Advocate Ms. Rashmi Nandakumar appeared on behalf of Informant before the Commission and sought for short adjournment to explain the case. The Commission allowed the request and decided to hear the Informant on 01.07.2014 at 10.30 A.M." "Order dated 01.07.2014 The Commission considered the matter in the ordinary meeting held today. Informant Shri P.K. Krishnan in person, appeared before the Commission and made oral submissions at length. The Commission decided to pass appropriate order in due course." 15. After two months and 29 days, the Commission passed order dated 29.09.2014 under Section 26(1) and directed t....
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....arty in refusing to deal with Informant emanated from its anxiety to avoid punitive action from AKCDA and to protect its business interest the same, nonetheless, falls foul of section 3(4)(d) read with section 3(1) of the Act. Furthermore, although the Informant has not made AKCDA party in this case the refusal of Opposite Party to appoint Informant as stockist essentially arises from the anticompetitive conduct of AKCDA requiring the pharmaceutical companies not to appoint any person as stockist unless he obtains NOC from the association. In Case No. 30 of 2011 the Commission has found such practice on behalf of AKCDA and AIOCD violative of section 3(3)(b) read with section 3(1) of the Act as it controlled and limited the supplies of pharma products in the 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, D.G. is directed to cause an investigation into the matter and to complete the investigation within a peri....
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....This is to bring to you notice that the Company never refused to deal with M/s. Vinayaka Pharma. The factual matrix establishing that there has been no refusal to deal by the company is provided below: (i) M/s. Vinayaka Pharma applied for being appointed as a Stockiest on 2 September 2013 to the Branch Manager of Alkem, Ernakulam; (ii) Pursuant to the application from M/s. Vinayaka Pharma, Mr. Vijayan K. Nair, Area Business Manager, and Mr. Peter A Tharu, Regional Manager, conducted the field survey. The field survey was based on the oral feedback of various chemists about M/s. Vinayaka Pharma in the region; (iii) In terms of the procedure for appointing of a Stockist, the request for appointment would require the approval from the divisional head of the region, i.e., Vice President (Marketing). After obtaining approval of the Divisional head, the approval could only be given under the hand of authorized signatory of the Company for such matters, i.e., the Branch Manager of the region. However, in this particular case, Mr. Paul Madavana, the Divisional Sales Manager processed the request at his own end and without authorization replied with the letter dated 14 November 2013 o....
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....strict. A copy of the offer letter dated 19th March 2014, issued by the Company to M/s. Vinayaka Pharma for appointment as a stockist is attached as Annexure 4; (x) Currently, M/s. Vinayaka Pharma is an active stockist of the products of the Company and there have been regular transactions between the companies ever since M/s. Vinayaka Pharma has been appointed as an authorized stockist through authorized channels of the Company. A true copy of the value of the transactions of the Company with M/s. Vinayaka Pharma, as an evidence of regular transactions is attached herewith as Annexure 5; (xi) In light of the above factual details, it is clear that there has been no "refusal to deal" with M/s. Vinayaka Pharma which can possibly attract the provisions of Section 3(4)(d) of the Competition Act. (xii) Without prejudice to the above, the question under consideration before you and the Hon'ble Commission is not within the ambit of the provisions relating to refusal to deal under Section 3(4)(d) of the Competition Act. Section 3(4)(d) relates to refusal to deal when there are vertical agreements between parties at different stages of production stage. The provision is to attack....
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....st. Question (v) of the D.G.'s Notice What formalities are to be completed by prospective distributors, stockists, wholesalers or retailers before you retain them in respective capacity as pointed by you in your letter dated 14 November 2013 issued to M/s. Vinayaka Pharma, Palakkad. Response: As stated in our response to Question (iv) above, a prospective distributor, stockist, or a wholesaler is required to submit certain documents which are provided to it in the form a checklist. The checklist of documentation is attached herewith for your reference as Annexure 10. * * * Question (xiii) of the D.G.'s Notice Copies of all the letters/mails/communications/notes including in the electronic form received by you from All India Organisation of Chemists and Druggists, Mumbai and its various State affiliates including All Kerala Chemists and Druggists Association. Response The All India Organization of Chemists and Druggists, Mumbai has communicated with the Company through certain letters over the relevant period (2013 onwards) which are attached herewith for your ready reference as Annexure 13. Please note that there have been no communication with All Kerala C....
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....atories Ltd. during last two years in the State of Kerala (District-wise)? Also provide a copy of application made by the respective stockiest and the documents viz. check-list/filled-up formats so submitted to you for obtaining the stockiest-ship. Response: The copies of the applications submitted by stockiest to Alkem along with the procedural documents are provided along with Annexure - 5 above. Question 7 of the D.G.'s Notice How many Firms have been submitted NOC/Clearance Certificate from AKCDA for their appointment as stockiest/distributor for your company during the last three years. Copies of such NOC/Clearance certificate may be provided to us. Response: It is submitted that no stockiest has submitted any NOC to Alkem in the last three years. Question 8 of the D.G.'s Notice It is also observed that the letter dated 17.03.2014 of Assistant Drug Controller was issued only to Vinayaka Pharma on 19.03.2014 i.e. the date on which Vinayaka Pharma has been offered stockiest-ship of your company. Please clarify as to how all the requisite formalities were completed on the same day and offered stockiest-ship of your company to Vinayaka Pharma? Response ....
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....harma to the Assistant Drug Controller dated 6 December 2013, it is submitted that the Assistant Drug Controller issued a letter dated 21 December 2013 to Alkem seeking response on the issues raised by the petition filed by M/s. Vinayaka Pharma. The petition dated 6 December 2013 was enclosed along with the letter of the Assistant Drug Controller. It may be noted that the letter dated 21 December 2013 has already been field as Annexure - 1 of the reply dated 19 January 2015. Question 11 of the D.G.'s Notice Please refer to your submission dated 19.01.2015. It may be noted that along with Annexure - II (page 19 & 20) i.e. letter dated 22.01.2014 of Alkem, it was mentioned on page 20 that "copy of the authorized person's letter is attached hereby for your reference." However, the same was not enclosed by you, hence you are advised to submit the same. Response The enclosure in the letter dated 22 January 2014 filed before the office of the D.G. was inadvertently missed out and the same is enclosed as Annexure - 8. The attachment is a board resolution in favour of Mr. T.K. Haridas, Branch Manager of Alkem. Question 12 of the D.G.'s Notice Similarly, in reply dat....
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....on'ble Commission while filing the information and even until the date of formation of the prima facie view by the Hon'ble Commission in terms of Section 26(1) of the Act. Thanking you Yours faithfully For and on behalf of Alkem Laboratories Ltd. Manas Kumar Chaudhuri Advocate Khaitan & Co. Enclosed: Index and Annexures" [Emphasis supplied] 17. The Jt. D.G. also issued notices dated 24.12.2014, 07.01.2015, 06.02.2015 and 24.03.2015 to Respondent No. 2, who filed replies and reiterated the allegations made in the complaint. Respondent No. 3, to whom notices dated 24.12.2014, 08.01.2015, 24.03.2015 and 26.03.2015 were issued, denied the allegations that it had indulged in anti-competitive activity and claimed that it had not insisted on obtaining of NOC as a condition for appointment of the stockist or the supply of medicines. Notices/probe letters were also issued to by the Jt. D.G. to All India Organisation of Chemists and Druggists, M/s. Merck Limited, M/s. Mankind Pharma Ltd., M/s. Lividus Pharmaceuticals Limited (TP), M/s. Cadila Healthcare Limited, M/s. Glenmark Pharmaceuticals Ltd., M/s. Sunanda Associates, M/s. C.M. Corporation (C&F Agents of M/s. Merc....
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....tigation concluding contravention of the provisions of the Competition Act, 2002, identification of persons who are responsible for the said conduct." 20. In Chapter 6 of the report, the Jt. D.G. referred to the notices/probe letters issued to various persons and briefly adverted to their responses. In Chapter 7, the Jt. D.G. recorded the findings on various issues. While dealing with Issue No. (i), the Jt. D.G. referred to the allegation made by Respondent No. 2 that even though he had been offered stockistship by Appellant No. 1 vide letter dated 14.11.2013 and he had sent demand draft dated 28.11.2013 for purchase of medicines, the same was returned with the direction to submit NOC from Respondent No. 3. The Jt. D.G. also adverted to the statement of Shri A.N. Mohan, President of Respondent No. 3 and replies given by him to the queries made during the investigation and recorded the following findings: "Findings: The replies given by the President of AKCDA (OP-3) are evasive and factually incorrect. The contents of the above emails prove him otherwise. * From the above, it was noted that Emails dated 19.02.2015 (Q. No. 2.1.i) and 09.12.2014 (Q. No. 2.8) reveal that require....
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....arket, which is in contravention with the provisions of the Competition Act, 2002. vii) This communication also confirms the anticompetitive conduct of AKCDA (OP-3) requiring the pharmaceutical companies not to appoint any person as stockiest unless he obtains 'NOC from it." [Underlining is ours] 21. In the second part of the discussion made under Issue No. (i), the Jt. D.G. referred to the affidavits of Shri Giri Nair, Managing Director of M/s. Pharma Trade and of Shri D. Krishna Murthy, Managing Partner of M/s. Dorai Agencies and recorded the following observations: "This reveals that in order to avoid any action by CCI/Courts etc. the OP-3 (AKCDA) has stopped giving instructions in writing and is adopting the anti-competitive practices orally." 22. The Jt. D.G. then referred to the e-mails/communications and documents exchanged by various persons and held that the existing practice in the industry to insist on NOC from Respondent No. 3 is clearly established. He also took cognizance of letters dated 07.08.2014 and 20.08.2014 sent by M/s. Sunanda Associates to Appellant No. 1 on the issue of stoppage of supply of medicines, order dated 04.12.2014 passed by the Kerala H....
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....conclusion: "Based on the above investigation, it has been concluded that the AKCDA (OP-3), the office bearers, together collectively with an understanding or in direct or indirect agreement with the pharma companies have been following a practice of insisting for NOC necessarily required to be taken from the State/District unit of AKCDA for appointment of new/additional stockists which has the effect of limiting and controlling the supply of drugs and medicines in Kerala apart from creating an entry barrier to take out the business of stockist/distributors thereby contravening the provisions of Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002." 24. The Jt. D.G. then dealt with Issue No. (ii), referred to the allegation made by Respondent No. 2 in the context of non-supply of medicines by Appellant No. 1 in December, 2013 and observed: "Based on the above investigation, it has been concluded that the AKCDA (OP-3), the office bearers, together collectively with an understanding or in direct or indirect agreement with the pharma companies have been following a practice of insisting for NOC necessarily required to be taken from the State/District unit of AKCDA ....
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....ment/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." "Conduct of the OP-2 in refusing to deal with the IP even emanated from its anxiety to avoid punitive action from OP-3 (AKCDA) and to protect it's own business interest the same, none-the less, falls foul of Section 3(1) of the Act. The actions/conduct of OP-2 cannot be excused on the ground of compulsions as there are various other pharma companies which may not be indulging in any such anti-competitive practices in the same region." [Emphasis added] 26. The Jt. D.G. next considered whether Respondent No. 2 had concealed material facts from the Commission at the time of filing information, took cognizance of the apologies tendered by Respondent No. 2 in reply to Question Nos. 20 and 23 and observed: "From the above, it may be worth noting here that the IP, though he got the appointment as stockiest of the OP-1 on 19th March, 2014 and get the first Stock Invoice on 20th March, 2014 itself, the same was not informed to the Hon'ble Commission during the process of filing the information before the Commission on 30th April, 2....
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....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. 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. 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." [Emphasis supplied] 30. The investigation report was considered by the Commission in its meeting held on 23.04.2015 and it was decided that electronic copy thereof be forwarded to the parties and 11 individuals including the appellants to enable them to file their replies/suggestions/objections. The Commission also directed the opposite parties and the indi....
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....atest by 5th June 2015. All the parties are directed to appear before the Commission, either in person or through a duly authorized representative, for oral hearing on the investigation report of the D.G. on 10th June 2015 at 10:30 AM. The Commission also considered the following submission/application: (a) Findings in the investigation report of the D.G. under Section 45 of the Act, regarding concealment/suppression of the material facts by the Informant with respect to the information filed before the Commission; and (b) Application dated 25th March 2015 of the D.G. requesting initiation of proceedings against M/s. Lividus Pharmaceuticals Pvt. Ltd. under Section 43 of the Act. With regard to these applications, the Commission decided to issue show cause notice to the Informant and M/s. Lividus Pharmaceuticals Pvt. Ltd. under Sections 45 and 43 of the Act, respectively. The Secretary is directed to inform, and issue notices, to the concerned parties for necessary compliance." 31. On the next date, i.e., 10.06.2015, the Commission passed three orders. By one order, the Commission directed that application dated 09.06.2015 received from S/Shri Sudeep P.M., K.A. Sundaran, Anto....
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.... its written reply to the notice dated 12th May 2015 latest by 16th June 2015 and to appear for an oral hearing on 23rd June 2015." Third order passed on 10.06.2015: "1. In the instant case, the Commission had considered the investigation report of the D.G. in its ordinary meeting held on 23rd April 2015 and decided to forward an electronic copy of the same to all the parties, including the individuals, identified by the D.G. as responsible for the conduct of the affairs of OP-2 and OP-3 at the time of alleged contravention of the Act. The Parties were directed to file their replies/objections to the investigation report, latest by 5th June 2015 and appear for an oral hearing before the Commission on 10th June 2015. The Opposite parties were also directed to furnish their audited balance sheet and profit and loss account/turnover for the last three financial years latest by 5th June 2015. The said individuals were also directed to furnish their income details including their income tax returns for the last three financial years latest by 5th June 2015. 2. On 23rd April 2015, the Commission had also considered the findings in the investigation report of the D.G., regarding con....
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....e D.G. report and an oral hearing thereafter. The Commission considered the request and directed the parties to file their reply/objections latest by 10th July 2015 and appear for oral hearing on 4th August 2015 at 10.30 A.M. The Informant is directed to provide a copy of his/its reply/objection to the Informant. 6. The counsel for the Informant was also directed to file his reply to the show cause notice dated 13th may, 2015, latest by 10th July 2015 and appear for an oral hearing in that regard on 4th August 2015. The Commission also observed that OP-1 did not file his income details regarding the income tax returns for the last three financial years. Similarly, OP-3 has not filed its income details/profit and loss details/balance sheet for the last three financial years. Therefore, the Commission 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. 7. The Secretary is directed to inform the concerned parties accordingly." [Underlining is ours] 32. In the meetings held on 18.06.2015 and 23.06.2015, the C....
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.... separate information and pass appropriate order in due course. 34. On 04.08.2015, the Commission heard further arguments and recorded the following order: "1. In the instant case, the Commission had considered the investigation report of the D.G. in its ordinary meeting held on 23rd April, 2015 and decided to forward an electronic copy of the same to all the parties. The parties were directed to file their replies/objections to the investigation report, appear for an oral hearing on 10th June 2015. The Commission had also considered the findings in the investigation report of the D.G., regarding concealment/suppression of material facts by the Informant. In that regard, the Commission had decided to issue show cause notice to the Informant under Section 45 of the Act. Accordingly, show cause notice dated 13th May 2015 was issued to the Informant directing him to appear for an oral hearing on 10th June 2015. 2. Accordingly, the Commission heard the counsel for the Informant and Opposite Parties on the investigation report on 10th June 2015. The Commission inter alia directed OP 2 to file certain details/information regarding its internal policy/process. Further, OP-3 and the I....
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....reach of the statutory provision of Regulation 20(4) of the Regulations which alone can be considered a breach of principles of natural justice and render the entire Investigation Report a nullity in law. Regulation 20(4) provides that "the report of the Director-General 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". 6. It is an admitted position of the D.G., and a very unusual practice, which has recently been adopted by the D.G. without any public notice that no Advocate be allowed to accompany the client/deponent(s) during the oral deposition before the D.G. In fact, when the D.G. conducted the oral testimony on "oath" of Mr. Paul Madavana on 2 February 2015, the Advocates for Alkem, orally requested the D.G. to permit them to assist the deponent during the oral deposition process, however, the D.G. did not allow this request. Surprisingly, Alkem and its Advocates noticed that a gross discrimination in procedure of oral testimony on "oath" was adopted by the D.G. The D.G. permitted the Informant's Advocate ....
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....of Section 48 of the Competition Act against Mr. Mathew and Mr. Haridas without issuing any notice or taking oral depositions on "oath" thereby denying them any opportunity to place their facts and role on record. It is also unclear how the D.G. can come to a conclusion without even calling upon or taking evidences from a person alleged to have contravened the Competition Act in his personal capacity. This is a clear violation of the principles of natural justice and makes the D.G. Report untenable under law. 10. It is submitted that the Informant is an active member of the AKCDA and did not even make them a party to case (the Hon'ble Commission decided to add the AKCDA as a party in the prima facie order) and this very important fact goes on to prove that the informant may all along have been a party to demanding "NOCs" from various other distributors/stockist in the past, since AKCDA and its members could jointly and severally be liable for all activities including breaches, if any, of the Competition Act prior to instituting of this very inquiry/investigation. Alkem strongly challenges the intent of the Informant to initiate the proceedings against Alkem and its officers u....
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....zed signatory of Alkem, i.e. the Branch Manager of the region. However, in this particular case, Mr. Madavana, processed the request at his own end and without authorization replied with the letter dated 14 November 2013 on the letter-head of Alkem. 20. The Informant has alleged that he had sent a request to Alkem on 28 November 2013 for certain products along with a Demand Draft of Rs. 5,00,000 which was allegedly not honoured by Alkem. Surprisingly, the Informant has failed to provide any evidence in proof of his allegation. It is submitted that the D.G. did neither ask the Informant to confirm as to whether or not the DP of Rs. 5,00,000/- allegedly given to Alkem was debited from its Bank Account in favour of Alkem nor did it ask Alkem or its functionaries to submit the details of the crediting of Rs. 5,00,000/- allegedly given to it by way of a DP by the Informant. Absence of this prudent procedural process alone shall render the allegation of the Informant void as against Alkem and its functionaries. It is submitted that the D.G. has failed to apply its mind in this important procedural function. 26. That ever since March 2014, products are being supplied against orders re....
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....h no invoice could be raised. However, the Informant has been unable to produce any evidence in corroboration of this allegation. 34. The D.G. at paragraph 7.2 on page 36 of the D.G. Report has noted that "Subsequently, the IP had sent a purchase order dated 28.11.2013 along with a Demand Draft No. 386358 dated 28.11.2013 for an amount of Rs. 5,00,000/-. However, purportedly, the OP-2 returned IP's above demand draft in 1st or 2nd week of December, 2013 with oral instructions to submit "No Objection Certificate" (NOC) from OP-3 (AKCDA)." 35. It is submitted that this statement is a mere conjectures unsupported by any evidence. The Informant has also failed to place on record any evidence of delivery of the purchase order dated 28 November 2013. It is reiterated that the Informant had not been appointed as an authorized stockist in November 2013 as has been alleged by the Informant. It is reiterated that the D.G. should have ascertained the veracity of the furnishing of the DD of Rs. 5,00,000/- by examining the Bank records of the Informant and Alkem. Uncorroborated evidences of vital facts are unworthy of being relied upon. 37. In fact, it is reiterated and reaffirmed t....
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....ion of enterprises....shall enter into any agreement in respect of production, supply, distribution, storage, acquisition and control of goods and production of services, which causes or is likely to cause an appreciable adverse effect on competition within India". Therefore, it is very clear that there has to be an "agreement" which has to cause an appreciable adverse effect on Competition ("AAEC") for a breach under Section 3 of the Competition Act. The charging sub-section in this case as per the information of the Informant could have been Section 3(4)(d) only. Section 3(1) is the general sub-section which legally intended to cover the overall principles of breach of either Section 3(3) or 3(4) of the Competition Act. Conclusion of breach of Section 3(1) in the absence of findings relatable to breach of Section 3(4)(d) in this case against Alkem is bad in law. Had that been the intent of the legislation then sub-section 3(3), 3(4) and 3(5) would not have found place in the overall ambit of Section 3 of the Competition Act. It is undisputed that Alkem and the Informant are in vertical chain of business, as such non-invoking of Section 3(4) is possible only when the D.G. fails to....
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..... Merely quoting Section 19(3) of the Competition Act at paragraph 7.9.1 at page 66 of the D.G. Report is no sufficient to establish AAEC. Therefore, the conclusions of the D.G. are baseless and liable to be rejected." [Emphasis added] 36. After hearing the parties, the Commission passed the impugned order whereby it held that Appellant No. 1 is responsible for contravention of Section 3(1) and Appellants Nos. 2 and 3 are individually responsible under Section 48(1) for the anti-competitive conduct perpetrated by Appellant No. 1. As a sequel to these findings, the Commission imposed penalty @ 3% of the average income of the appellants. Appellant No. 1 was saddled with the penalty of Rs. 7463.1066 Lacs and Appellants Nos. 2 and 3 were saddled with the penalty of Rs. 71371.0701 and Rs. 342448.36 respectively. 37. In paragraph 2 of its order, the Commission noticed the background in which the information was filed by Respondent No. 2. In paragraph 3, it referred to the methodology adopted by the Jt. D.G. for conducting investigation and the findings recorded by him. In paragraph 4, the Commission briefly adverted to the replies/submissions made by the informant, the appellants and ....
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....ktats by threatening them that it would boycott the products of non-complying pharmaceutical companies." [Emphasis added] 41. After recording an unequivocal conclusion that Respondent No. 3 has been threatening pharmaceutical companies to follow its diktat, the Commission considered whether Appellant No. 1 had acted in violation of Section 3(1) and observed: "7.17 With regard to OP 2, it may be noted that as per the accepted position, the Informant was offered to become a stockist of OP 2 vide letter dated 14.11.2013. However, no supplies were made to the Informant in spite of repeated request. Thereafter, the Informant claims that he was informed by the Branch/Depot Manager of OP 2, Mr. T.K. Haridas that supplies were denied because of the pressure from OP 3 as the Informant did not obtain NOC before being appointed as a stockist. OP 2, on the other hand, claims that supplies were denied because the letter dated 14.11.2013 was issued by OP 1 without authority. Thereafter, the Informant was finally appointed as stockist of OP 2 on 19.03.2014 and the supplies were made from 20.03.2014 onwards. 7.18 The Commission is not convinced with the justification offered by OP 2. OP 2 fa....
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....he arrangement/understanding between them. 7.23 Therefore, OP 3's instructions to OP 2 and OP 2's agreement to such instructions can be construed as an agreement amenable under section 3(1) of the Act subject to establishment of AAEC. 7.24 With regard to the AAEC, the Commission has looked into the effect of OP 2's conduct in executing the anti-competitive instructions of OP 3. During oral arguments, OP 2 submitted that there is no AAEC of OP 2's conduct as its market share is miniscule in market for supply of drugs and medicines." [Emphasis supplied] 42. In paragraph 7.26, the Commission made the following general but significant observations: "7.26 The Commission has seen in number of previous cases involving chemists and druggists associations where the diktats of the Association are followed by the members without any hesitation. Even though OP 2 acted on the directions and threats of OP 3, the same cannot absolve it from any liability under the Act. OP 2 could have approached the Commission instead of complying with the directions of OP 3 which were against the order of the Commission for refusing to deal with unauthorized stockists. Such denial of supp....
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....nt Drugs Controller, Ernakulam about non-supply of medicines by Appellant No. 1 had been rejected vide letter dated 17.03.2014 on the ground that he had not been appointed as a stockist of Appellant No. 1 by the competent authority. Respondent No. 2 was also very much aware that he had been appointed as stockist by the competent authority i.e. Appellant No. 3 vide letter dated 19.03.2014 and the medicines had also been supplied to him in response to the order placed on 20.03.2014 but he deliberately refrained from incorporating these facts in the information, and thereby, misled the Commission in believing that Appellant No. 1 had indulged in the anti-competitive practices. To substantiate this argument, Shri Sibal relied upon the averments contained in Columns 10 and 11 of Format No. I of the information filed by Respondent No. 2. Shri Sibal also pointed out that Respondent No. 2 also concealed the fact that he was appointed as stockist vide letter dated 19.03.2014 without requiring him to produce NOC from AKCDA. Learned senior counsel pointed out that there was a gap of 30 days and 21 days respectively between preparation of the information and the affidavit of Respondent No. 2 a....
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....and Others 2010 (14) SCC 38 and Amar Singh Vs. Union of India (UOI) and Others 2011 (7) SCC 69. 45. On merits, Shri Sibal argued that the concurrent finding recorded by the Jt. D.G. and the Commission on the issue of violation of Section 3(1) by Appellant No. 1 is per se contrary to the plain language of that section and is also perverse. He pointed out that even though Respondent No. 2 had not produced any evidence to prove that Appellant No. 3 had orally asked him to produce NOC from Respondent No. 3, the Jt. D.G. and the Commission relied upon the bald and vague statement contained in the information that at the time of refusal to supply medicines, the Depot Manager had orally asked him to bring NOC from Respondent No. 3 and concluded that it was Appellant No. 3 who had said so. Shri Sibal submitted that at the relevant time, there was no Depot Manager at Ernakulam and the Jt. D.G. as also the Commission committed grave illegality by assuming that it was Appellant No. 3 (who was then holding the post of Branch Manager), who declined to supply the medicines and asked Respondent No. 2 to produce NOC from AKCDA. 46. The next argument of Shri Sibal is that the finding recorded by ....
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....e importance of making a mention of letter dated 17.03.2014 issued by the Assistant Drugs Controller and his own appointment as stockist by Appellant No. 3 vide letter dated 19.03.2014 in the information, but he did not intend to conceal the material facts and documents from the Commission. Shri Mukherjee emphasised that the information had been initially filed in the form of a complaint in the month of January, 2014 and as on that date, neither the Assistant Drugs Controller had decided his complaint nor Appellant No. 3 had appointed him as a stockist. Shri Mukherjee pointed out that copy of letter dated 14.11.2013 issued by Shri Paul Madavana appointing Respondent No. 2 as a stockist of Appellant No. 1 was endorsed to Appellant No. 3, but the latter did not object to the same on the ground of lack of competence of Shri Paul Madavana and argued that this should be treated as his tacit approval to Respondent No. 2's appointment as a stockist. Learned senior counsel further argued that the finding recorded by the Jt. D.G. about the involvement of Appellant No. 1 in the anti-competitive practice, which has been approved by the Commission is based on correct analysis of the facts ....
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....ommission. 52. We shall now consider whether the finding recorded by the Jt. D.G., which has been approved by the Commission that Appellant No. 1 had acted in violation of Section 3(1) of the Act is legally sustainable. 53. As a prelude to this, we deem it proper to point out that both the Jt. D.G. and the Commission have proceeded on a wholly erroneous assumption that Respondent No. 2 had been appointed as a stockist by the competent authority of Appellant No. 1. Rather, from the day one, Appellant No. 1 had taken a stand that Shri Paul Madavana (Divisional Sales Manager), who had issued letter dated 14.11.2013 appointing Respondent No. 2 as a stockist was not competent to do so. According to Appellant No. 1, application dated 02.09.2013 made by Respondent No. 2 for grant of stockistship for Palakkad district was processed by Shri Vijayan Nair, Area Business Manager and Shri Peter A Tharu, Regional Manager, who conducted the field survey and submitted report. Appellant No. 1 had also pointed out that as per the prevalent practice, the application of Respondent No. 2 was required to be approved by the Divisional Head of the Region i.e. Vice President-Marketing and also by the aut....
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....f NOC from Respondent No. 3 before a potential/new stockist is to be appointed. While dealing with Issue No. 2 in Chapter 7, the Jt. D.G. recorded findings and conclusions on pure assumptions and conjectures as is evident from the following portions of the investigation report: "7.8.4 Resultantly, the IP did not get supply of stock from OP-2 during the period from 28.11.2013 to 20.03.2014 i.e. about 4 months. Considering the development of the case, it appears that due to influence of OP-3 (AKCDA), the OP-2 not supplied any stock to the IP for about 4 months. The influence of the OP-3 (AKCDA) in this regard was also noticed when the offer letter dated 14.11.2013 issued by OP-1 to the IP was found in the Email dated 29.12.2014 of Shri A.N. Mohan, President, AKCDA (OP-3). From this, it is evident that the AKCDA (OP-3) is acting in consultation with OP-2. 7.8.7 The IP, in support of his allegations has also submitted the Email dated 01.12.2014 of Shri A.N. Mohan, President, AKCDA (OP-3) which was sent to Shri J.S. Shinde, President, AIOCD informing about decision of their State Committee for non-cooperation against M/s. Merck Limited etc., which was discussed earlier in detail. ....
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....intment 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. 7.18 The Commission is not convinced with the justification offered by OP 2. OP 2 failed to explain why OP 1 issued a letter without authority. It is observed that letter was also sent to Mr. T.K. Haridas who was the authorised signatory to issue such appointment/offer letters. Further, the demand draft of the Informant dated 28.11.2013 was returned without assigning this reason which also shows that the same was an after-thought to cover up the refusal to supply for want of NOC. 7.19 The Commission further notes that the evidence collected by the D.G. in this case shows that OP 2 was holding up the supply of stocks to other stockists also because of the pressure of OP 3. The complaint dated 11.09.2014 and 08.11.2014 submitted by M/s. Sunanda Associates to Drug Controller of Kerala regarding holding up of the stocks partly/non-supply of medicines by OP 2 shows that OP 2 was indulging in such anticompetitive conduct. Purportedly, the authorised rep....
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.... of a person as a stockist or supply of medicines, the element of agreement/concurrence automatically disappears and Appellant No. 1 could not have been held guilty of acting in violation of Section 3(1) of the Act. 57. The Jt. D.G. and the Commission committed another grave error in returning a finding of guilty against Appellant No. 1. At the cost of repetition, we may observe that Appellant No. 1 had taken a categorical stand from the day one that Shri Paul Madavana was not competent to appoint Respondent No. 2 as a stockist and this was the reason why the medicines were not supplied to him. Appellant No. 1 had also pleaded that the application made by Respondent No. 2 in March, 2014 was accepted by the competent authority i.e. Appellant No. 3 because a field survey had already been conducted by Shri Vijayan Nair, Area Business Manager and Shri Peter A. Tharu, Regional Manager and letter dated 19.11.2013 was issued without insisting on production of NOC from Respondent No. 3. It is also an admitted position that after his appointment as a stockist by the competent authority i.e. Appellant No. 3, Respondent No. 2 applied for supply of medicines and the needful was done without a....
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.... scrutinized by the Secretary of the Commission and if the same is found to be fulfilling all the requirements of the Regulation 14, then the same is placed before the Commission for consideration whether a prima facie case has been made out for investigation. In terms of Regulation 17, the Commission can hold preliminary conference for that purpose. The Commission can invite the information provider and such other person, as may be considered necessary for the preliminary conference. Section 26(1) read with Regulation 18 provides that if the Commission forms an opinion that there exists a prima facie case, then it is required to issue direction to the Director General to 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 m....
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.... for the proceedings. Clause (3) of Regulation 41 makes Sections 22A, 47A, 65B, 67A, 73A, 81A, 85A, 85B, 85C, 88A, 89 and 90A of the Evidence Act applicable for the purpose of investigation by the Director General, subject, of course, to clause (2) of Regulation. 45. In terms of clause (4), the Director General can call for the parties to lead evidence by way of affidavit or lead oral evidence in the matter. In terms of clause (5), the Director General can give an opportunity to the other party or parties to cross-examine the person giving the evidence. Clause (6) empowers the Director General to entrust the task of recording evidence to any officer or person designated 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 ....
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....ties by their representatives before the Commission. Regulation 52 empowers the Commission to invite experts of eminence to assist the Commission in discharging of its functions under the Act. Section 36(2) lays down that the Commission shall have, for the purposes of discharging its functions under the Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 in respect of the matters relating to summoning and enforcing the attendance of any person and examining him on oath; requiring the discovery and production of documents; receiving evidence on affidavit; issuing commissions for the examination of witnesses or documents 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 trad....
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....y the Commission as a prelude to the passing of orders/issue directions under Section 27 and/or the various provisions contained in Chapter-VI of the Act and corresponding regulations is akin to the procedure required to be followed by the Civil Court for deciding a suit except that the Director General and the Commission are not bound by the technicalities of the procedure contained in the Code of Civil Procedure, 1908 and rules embodied in the Evidence Act except to the extent indicated in the Act. 48. The above survey of various provisions of the Act and the Regulations shows that even while amending the Act by Act 39 of 2007 and Act 39 of 2009, 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....
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....ose such penalty, as it may deem fit which shall be not more than ten per cent 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 any 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 per cent of its turnover for each year of the continuance 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 sec....
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....sociation of enterprises or person or association of persons involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position. Under Clause (b), the Commission can impose penalty upto of 10% of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to the agreements referred to in Section 3 or abuse referred to in Section 4. Proviso to this clause lays 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 ....
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....ne percent of the total turnover or the assets, whichever is higher, of such a combination. Section 44 provides for imposition of penalty on a person, who is a party to a combination and makes false statement in any material particular, or knowing it to be false, or omits to state any material particular knowing it to be material. The extent of penalty which can be imposed under this section is rupees fifty lakh to one crore. Section 45 empowers the Commission to punish any person who fails to provide necessary information or documents, omits to state any material fact knowing it to be material, or willfully 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. 63. 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 contr....
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....ose consent or connivance or negligence may have resulted in contravention of the provisions of the Act or of any rule, regulation or order made or direction issued thereunder by the company unless a finding is recorded by the competent authority that the company has in fact contravened the provisions of the Act. 65. In the present case, the Commission initiated investigation into the role of the persons incharge of and responsible for the conduct of business to Appellant No. 1 at the threshold. This is crystal clear from paragraph 5 of order dated 29.09.2014 passed by the Commission under Section 26(1) of the Act. However, the issues framed by the Jt. D.G. in Chapter 5 of his report, which have been extracted in the earlier part of this order, do not contain any indication that the role of Appellants Nos. 2 and 3 was also to be investigated. On his part, Respondent No. 2 neither averred/alleged nor he led any evidence to prove that Appellants Nos. 2 and 3 were incharge of and were responsible to Appellant No. 1 for the conduct of its business. The Jt. D.G. did record a conclusion that Appellant No. 1 is equally complicit in the decisions being taken by AKCDA for appointment of st....
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....r is attributable to any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. - For the purposes of this section.--(a) 'company' means any body corporate and includes a firm or other association of individuals; and (b) 'director', in relation to a firm, means a partner in the firm." 12. In terms of the aforesaid provision, therefore, it was obligatory on the part of the complainant not only to make requisite averments in the complaint petition but also to prove that any of the Directors who had been 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 49-A of the Act. 14. In terms of sub-section (1) of Section 49-A, it is for the complainant to prove that t....
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....erence that he was incharge of and responsible for the conduct of the business of Appellant No. 1. As far as Appellant No. 2 is concerned, not a shred of evidence was produced before the Jt. D.G. to show that his case falls within the ambit of Section 48(1) of the Act. Therefore, the Commission committed grave error by penalising the two appellants under that section. 69. The manner in which the Commission had dealt with their cases leaves much to be desired. Even a person of ordinary prudence would not have, on the basis of material/evidence collected by the Jt. D.G., recorded a finding that Appellants Nos. 2 and 3 should be penalised by invoking the deeming clause contained in Section 48(1) of the Act. 70. Another fatal flaw with which the exercise undertaken by the Commission to penalise Appellants Nos. 2 and 3 suffers is gross violation of principles of natural justice. The record of the case shows that the Jt. DG did not issue any notice to Appellants Nos. 2 and 3 and called upon them to explain their position in regard to the alleged anti-competitive conduct of Appellant No. 1 and, as mentioned above, no evidence was adduced by Respondent No. 2 to prove the ingredients of S....