TaxTMI 
TaxTMI 
2016 (5) TMI 1624
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.... Haridas (Appellant in Appeal No. 15 of 2016), 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. ....
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....and also against the Competition Commission of India - New Delhi Verdict (copy enclosed). The deliberate violation 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 produc....
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.... Palakkad is not a stockiest of our company and no authorized offer letter has been given to them by our Cochin office or Head office. Copy of the authorized person's letter is attached hereby for your reference. We therefore request 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 y....
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.... under: 6/1/2014 "To, The Competition Commission of India New Delhi Honorable Members Sub:-Refusal of supply of medicines by M/s. Alkem Laboratories Ltd., inspite of Competent Commission order instructing not to insist on NOC from Akeda. I am a valid drug license holder in form 20 & 21B operating in the name and style of Vinayaka Pharma, Palakkad. I am engaged in distribution of medicines manufactured by various companies, I have been offered distribution ship of M/s. Alkem Laboratories 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 NO....
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.... Copy of the registration receipt for having sent the letter to Divisional Sales Manager, Alkem Laboratories Ltd. Ernakulam * * * From P.K. Krishnan, Proprietor, Vinayaka Pharma, 11/259/1, Kannara Street, Palakkad, Kerala, Pin - 678 001. Tel: 0491-2531109, 0491-3203073 To The Secretary, Competition Commission of India, Hindustan Times House, (3rd, 4th and 7th Floor), 18-20, Kasturba Gandhi Marg, New Delhi-110001. Subject: Re-submission of Complaint/information filed u/s. 19(1)(a) of the Competition Act 2002: Reg Ref: Letter No. PC to M.F. No. 10(1)/2010-Sectt/2298 Dated 07th March 2014 of CCI Sir, Kindly refer 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. ....
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....M/s Alkem Laboratories Limited refused to deal with my firm M/s Vinayaka Pharma by refusing to supply their products in spite of sending DD for Rs.500000/- without any valid reason. The above action of M/s Alkem Laboratories is an act for creation of barriers to new entrants in the market and also for driving existing competitors out of the market. 9 Jurisdiction of CCI (applicant(s) should satisfy before filing application whether the issue taken up is covered under the provisions of the Competition Act, 2002) Refusal to deal with us by M/s Alkem Laboratories' Ltd. is a violation of Section 4(d) of Chapter II of the Competition Act 2002 read with the Competition (Amendment Act 2007), as well as Chapter IV 19(3)(b) driving existing competitors out of the market and (c) foreclosure of competition by hindering entry into the market. 10 Details of alleged contravention of the 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 ....
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....owed and a non confidential part of the documents has been filled. Not applicable 14. Any other relevant fact in connection with the filing of information NIL 15 Interim relief sought for under section 33 of the Competition Act 2002, if any (for this purpose the informant shall explain that (i) What irreparable loss is cause likely to be caused to the informant; and (ii) How balance of convenience lies in his favour M/s. Alkem Laboratories Limited. Alkem House, "Vishwarupa" No.VII/166J. Vaikom Road, South Paravoor, Poet: Udayamperoor, Dist Ernakulam, Kerala State Pin-682 320 May be directed to appoint M/s. Vinayaka Pharma as stockist ship for Palakkad District and the surrounding areas and supply their products. 16 Relief sought for from the CCI Direction of M/s. Alkem Laboratories Ltd to appoint M/s Vinayaka Pharma as stockist ship for Palakkad and nearby areas and supply their products on demand. 17. Verification 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, ....
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....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 had submitted a complaint to Asstt. Drugs Controller, Ernakulam on 06.12.2013. (Copy of the complaint i....
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.... salesmen and well trained office staff to look after the operation of my business activities. 3. On 02.09.2013, I had sent a request letter to the of M/s. Alkem Laboratories Ltd., Ernakulam for considering my firm for their Stockistship for Palakkad District and its surrounding. In response to my letter Mr. Paul Madavana, Divisional Sales Manager of M/s. Alkem Laboratories Limited informed me vide his letter No. Nil dated 14th November, 2013 that they are pleased to offer me their stockistship for Palakkad District and its surrounding. It is also mentioned that the terms and condition will be informed after completion of all the formalities from my side. Accordingly, I had completed all formalities as per their direction. Thereafter the Company officials completed the usual survey and upon satisfactory reports from the market company officials, they have issued their offer letter confirming my distribution ship for the company. Later on a list of their products required by me along with Demand Draft for Rs. 5,00,000/- (Rupees five lakh only) bearing No. 386358 dated 28.11.2013 of Indian Bank payable at Service Branch Ernakulam in favour of Alkem (Laboratories Ltd. was sen....
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....ariat of the Commission only on 30.04.2014. It is also of considerable significance to note that neither in the index or the body of the information nor in the prescribed format, the statement of facts and affidavit dated 09.04.2014, Respondent No. 2 disclosed that the complaint filed by him before the Assistant Drugs Controller, Ernakulam about the non-supply of medicines by Appellant No. 1 was not entertained by the concerned officer who accepted the latter's assertion that Respondent No. 2 had not been appointed as authorised stockist/distributor by the competent authority of Appellant No. 1. It is equally important to note that neither in the statements of facts filed with the format of the information nor in his affidavit dated 09.04.2014, Respondent No. 2 had mentioned that Appellant No. 3 had orally told him that medicines cannot be supplied unless NOC is obtained from AKCDA. These omissions will acquire significance when we critically examine the affidavit filed by Respondent No. 2 and the statement made by him before the Jt. D.G. 14. The information re-filed by Respondent No. 1 was registered by the secretariat of the Commission as Case No. 28 of 2014. The matter wa....
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....Opposite Party alleged to have confirmed the distributorship of the Informant. Later, Opposite Party returned Informant's Demand Draft No. 386358 dated 28/11/2013 for an amount of Rs. 5,00,000/- with oral instructions to submit No Objection Certificate (NOC) from All Kerala Chemists and Druggists Association (AKCDA). 2.3 It is alleged that imposing the condition of procuring NOC from AKCDA by the Opposite Party is in contravention of the provisions of section 4 of the Act. It is averred that the above direction is in violation of section 4(d) of the Act and amounts to an act of refusal to deal and driving existing competitors out of the market. 2.4 Based on the above averments and allegations, the Informant has prayed, inter alia, for the issuance of direction to the Opposite Party to appoint his firm as Stockistship for Palakkad and nearby areas for supply of their products and also to initiate action against the Opposite Party for violation of the provisions of the Act. 2.5 The facts of the case, as detailed above, reveal that the Opposite Party has refused to appoint the Informant as stockist because Informant purportedly failed to obtain NOC from ....
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....2015, 13.02.2015 and 19.03.2015. The categorical stand taken by Appellant No. 1 was that Shri Paul Madavana, Divisional Sales Manager was not authorised to appoint M/s. Vinayaka Pharma as a stockist and this was the reason why the medicines were not supplied between November, 2013 and March, 2014 and not because of non-production of NOC from AKCDA. It was also stated that Respondent No. 2 was granted stockistship by the competent authority vide letter dated 19.03.2014 and, soon thereafter, the medicines were supplied to his proprietorship concern, i.e., M/s. Vinayaka Pharma. For the sake of reference, the relevant portions of replies dated 19.01.2015 and 13.02.2015 submitted on behalf of Appellant No. 1, which contain answers to the queries made by the Jt. D.G. and which were accompanied by several dozen documents including certified true copy of the resolution passed in the meeting of the Board of Directors held on 12.06.2013 authorizing Appellant No. 3, Shri T.K. Haridas to look-after the day-to-day business of the premises situated at Ernakulam, are reproduced below: "Reply dated 19.01.2015 3. At the outset the allegation or refusal to deal under Section 3(4)(d....
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....ed that Mr. T.K. Haridas, the Branch Manager, alone was authorised to sign any such offer letter. A copy of the letter dated 22 January 2014 from the Company to the Assistant Drug Controller is attached as Annexure 2; (vii) After verifying the complete details of the matter, the Assistant Drugs Controller came to the conclusion that M/s. Vinayaka Pharma was not an authorized stockist of the Company and issued a letter to Mr. P.K. Krishnan, M/s. Vinayaka Pharma, informing that no action can be taken on the basis of his petition. A copy of the letter issued by the Assistant Drugs Controller has been obtained by the Company and is attached Annexure 3; (viii) Thus, it is amply clear that M/s. Vinayaka Pharma was never appointed as an authorized stockist at the first place-Moreover, there was no oral communication from any Depot Manager to M/s. Vinayaka Pharma about obtaining No Objection Certificate (NOC) from the All Kerala Chemists and Druggists Association ("AKCDA"). Further, the Branch Manager never received any order along with the Demand Draft; (ix) Pursuant to the reply of Assistant Drug Controller, M/s. Vinayaka Pharma again applied to be app....
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....e Company, i.e., either the Area Business Manager or the Regional Manager. (ii) On receiving the request the above-named filed employees survey the position and standing of the stockist in relation to its credit-worthiness, market presence and chemist coverage. Field employees also assess whether the prospective stockist is in a position to supply the products as per the requirement of the market. (iii) Based on the survey and assessment, the field employees prepare a report for the consideration of the concerned National Sales Manager or Division Sales Manager. Thereafter, the concerned National Sales Manager/Division Sales Manager forwards the request for appointment of the stockist to its respective Divisional Head or the Vice President (Marketing) for the final approval. (iv) Once an approval is received from the Divisional Head, the offer letter of appointment as a stockist of the Company is issued by the authorized signatory (in the instant case concerning Palakkad district, the Branch Manager). The approved request of the stockist along with a request of supplying certain documents (in the form of a check list) are provided to the Distribution Depa....
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....further documents as per the procedural requirements on 31 October 2013. The second application was made by M/s. Vinayaka Pharma under a letter dated 18 March 2014. It may be noted that as per the documents provided by M/s. Vinayaka Pharma to the Hon'ble Commission along with the information, the application was dated 2 September 2013, however, the records of Alkem indicate that the application was dated 31 August 2013 received by Alkem on 3 September 2013. The Hon'ble D.G. is requested to investigate as to why the letter dated 2 September 2013 was relied upon by the M/s. Vinayaka Pharma when the same was not sent to Alkem on the said date. Question 4 of the D.G.'s Notice How many Firms have been appointed as stockiests/distributors for M/s. Alkem Laboratories Ltd. during the last three years in Kerala State? District-wise detail thereof, (details may include serial number, name of the Firm/company, date appointment and etc.). Response: The list of the stockiests appointed during the last three years in Kerala by Alkem are provided as Annexure-4. Question 5 of the D.G.'s Notice Copies of Offer/Appointment letters....
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....D.G. has been enclosed along with Annexure - 3 above. Question 5 of the D.G.'s Notice You have stated that, considering the subsequent request of Vinayaka Pharma, M/s. Alkem Laboratories Ltd. offered stockistship of the company to applicant on 19.03.2014, after completing all formalities. Please furnish the date-wise details (in chronological order) of all events and formalities which were undertaken before offering stockiest-ship of your company to Vinayaka Pharma, till the offer letter is issued. Response All the documents pertaining to the application of M/s. Vinayaka Pharma are collectively enclosed as Annexure - 6 (colly). Question 10 of the D.G.'s Notice It is noted that, along with your submission dated 19.01.2015 you have submitted copies of letter dated 17.03.2014 but issued on 19.03.2014 by Assistant Drug Controller, Kochi to Mr. P.K. Krishnan and the petition dated 06.12.2013 made to Assistant Drug Controller, Kochi to Mr. P.K. Krishnan. Please let us know how you got copies of these letters, when a copy of the same was not marked to your company. Response It is submitted that Alkem through i....
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....oices is collectively enclosed as annexure - 9 (colly.). Notwithstanding the responses given above, Alkem would like to reiterate that the offer of stockiestship to M/s. Vinayaka Pharma was issued upon completion of formalities according to the policies and procedures of the Company and there has been no occasion to refusal to deal with M/s. Vinayaka Pharma by Alkem. It is submitted that M/s. Vinayaka Pharma's appointment as one of the recognised stockiests of Alkem was administratively delayed as the appointment was not completed through proper approvals and authorization. The administrative delays cannot be attributed to any legal breach much less a breach of Section 3(4)(d) of the Act. It is evident from the sales figures for the period from March 2014 to December 2014, provided to the Hon'ble D.G., that Alkem has been engaging regularly with M/s. Vinayaka Pharma in business and the volume of sales was to the tune of INR 26.82 Lakhs. These facts are sufficient to show that M/s. Vinayaka Pharma was a stockiest of Alkem and the allegations made by it before the Hon'ble Commission in March 2014 were misleading and are liable to be rejected post investigation by....
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.... iii) Shri A.N. Mohan, President of AKCDA (OP-3) on 03.03.2015. iv) Shri Tiji K. Varghese, Area Manager - General Medicines of M/s. Merck Limited (TP) on 13.03.2015. v) Shri V. Srinivasulu Reddy, Vice President - Demand Planning & Logistics from M/s. Glenmark Pharmaceuticals Ltd. (TP) on 16.03.2015. vi) Shri A.N. Mohan, President of AKCDA (OP-3) on 18.03.2015. vii) Shri V. Srinivasulu Reddy, Vice President-Demand Planning & Logistics from M/s. Glenmark Pharmaceuticals Ltd. (TP) on 25.03.2015. viii) Shri Sanjeev Kumar Singh, DGM-Legal and Company Secretary of M/s. Mankind Pharma Ltd. (TP) on 26.03.2015." (Although in his report, the Jt. D.G. adversely commented on the conduct of Appellants Nos. 2 and 3, neither any notice was given to them nor their statements were recorded during the investigation) 19. After completing the investigation, the Jt. D.G. considered replies/responses of various parties, the statements recorded by him and submitted report dated 31.03.2015. In Chapter 4 of the report, the Jt. D.G. outlined the procedure adopted for investigation. In Chapter 5, he identified the following issues: "(i) Whether AKCD....
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....also reveal that some office bearers indulge into anti-competitive practices. * As far as email dated 01.12.2014 (Q. No. 2.9) is concerned, the email was sent by Mr. A.N. Mohan, President, AKCDA (OP-3) from his email account ([email protected]) to personal email account of Mr. Jagannath Shinde, President, AIOCD ([email protected]) on the issue of M/s. Merck Limited. This communication clearly establishes the following crucial points: i) Most of the pharma companies are co-operating with OP-3 (AKCDA) and appointments of Stockists are made with the approval of OP-3's (AKCDA's) District/State units. ii) OP-3 (AKCDA) and AIOCD advise the pharma companies to meet them for negotiations. In this instance, it was M/s. Merck Limited, who was not interested to meet them or submit their price list even after OP-3's (AKCDA's) repeated requests. Even they (officials of AIOCD & M/s. Merck Ltd.) have had a meeting to discuss these issues at AIOCD office on 20th August, 2014. iii) OP-3 (AKCDA) influences and compels the pharma companies to meet them before making any new appointment of stockists. Even supplies are made under the ....
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.... Nos. 53 to 55, it is evident that pharma companies under an agreement or with an understanding with OP-3 (AKCDA) are influencing and insisting for NOC from OP-3 (AKCDA) before a potential/new stockiest is to be appointed. * It may also be noted that the IP as well as few other parties have confirmed that the instance of NOC is on oral basis to avoid non-compliance of the CCI orders in few cases in the past. * From the evidence listed at Sl. No. (I) Page No. 54, it may be observed that earlier OP-3 (AKCDA) issued letters to the stockists congratulating them for getting stockistship of pharma companies, which may be one of the forms of acknowledging their presence in the process of appointment of stockists by the pharma companies. This is nothing but conveying NOC by OP-3 to pharma companies. * From the evidence listed at Sl. No. (m), Page No. 54, it may also be observed that the OP-3 (AKCDA) issued Clearance Certificates on the said dates to some of the Stockists. * From the evidence listed at Sl. No. (p), Page No. 55, it is evident that AKCDA (OP-3) indulges into anticompetitive practices by pressurising the pharma companies to concede to its de....
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....utors thereby contravening the provisions of Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002. * * * 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. Moha, President, AKCDA (OP-3). From this, it is evident that the AKCDA (OP-3) is acting in consultation with OP-2. * * * Out of the 20 emails, an email dated 29th December, 2014, at 05:03 P.M., which was forwarded by Shri T.K. Haridas, Branch Manager of M/s. Alkem Laboratories Limited (OP-2) from his email ID [email protected] to Shri A.N. Mohan, President of AKCDA (OP-3) to his email ID [email protected] was also found along with an attachment to it. The fact that this communication i.e. email dated 29.12.2014 (informing appointment of IP as stockiest forwarding the stockists offer letter dated 14.11.2013 signed by Shri Paul Madavana sent by Branch Head Shri T.K. Haridas on 29.12.2014, clearly establis....
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....sis supplied] 27. The Jt. D.G. also dealt with application dated 20th February, 2014 made on behalf of Appellant No. 1 under Section 45(1)(b) and held that Respondent No. 2 had concealed/suppressed material facts, which had bearing on the prima facie view/decision of the Commission. 28. In Chapter 8 of his report, the Jt. D.G. considered the issue relating to the involvement of Appellants Nos. 2 and 3 in the alleged anti-competitive conduct of Appellant No. 1 and held that they are equally complicit in the practices being carried on and the decision taken by Appellant No. 1 in the matter of appointment of stockists. All this is borne out from paragraph 8.1.2 of the investigation report, which is extracted below: "8.1.2 However, as per the information submitted by the OP-2 vide its letter dated 19th March, 2015 (annexed as Annexure-A), the persons responsible for decision making and appointment of stockists, distributors etc. in the districts of Palakkad, Ernakulam and Calicut in Kerala on behalf of M/s. Alkem Laboratories Ltd. (OP-2) are as follows: Year: 2013-14 & 2014-15 S. No. Name & Designation Address, phone nos. & email ID PAN No. Marketing....
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....three financial years and fixed 10.06.2015 as the date for oral hearing. The order passed on the basis of the decision taken in the meeting held on 23.04.2015 reads as under: "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 D.G., after completing the investigation, has filed the investigation report. Today, the Commission considered the investigation report of the D.G. and decided to forward an electronic copy of the investigation report of the D.G. to the parties for filing their replies/objections. The Commission also decided to forward an electronic copy of the investigation report of the D.G. to the following persons who were identified by the D.G. 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....
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....d from S/Shri Sudeep P.M., K.A. Sundaran, Antony K.V. and Giri Nair for joining them as parties shall be heard on 18.06.2015. By the second order, the Commission directed that an opportunity be given to M/s. Lividus Pharmaceuticals Pvt. Ltd. to file its reply before passing an order under Section 43. In the third order, the Commission took cognisance of the replies/submissions received from Respondents Nos. 4 and 5 and issued certain directions to Respondents Nos. 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 D.G., 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 D.G. The Commission considered the application dated 25th March 2015 in its ordinary m....
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....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. 3. Subsequently, the Commission has received the following 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 D.G. report and to the show cause notice dated 13th May 2015; ....
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..... 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 Commission passed the following orders: "Order dated 18.06.2015 In the instant matter, Shri Sudeep P.M., Shri K.A. Sundaran, Shri Antony K.V. and Shri Giri Nair have filed an application dated 9th June 2015 under General Regulation 25 of the Competition Commission of India (General) Regulations, 2009 requesting 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 D.G. The Commission considered the said application in....
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....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 Informant requested for additional time to file their reply/objections regarding the D.G. report and an oral hearing thereafter. The commission acceded the request of the Informant and Opposite Parties and decided to hear the parties on 4th August 2015. The 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....
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....mit 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 to be present during the oral testimony of the Informant 2 days before i.e. on 30 January 2015 of oral deposition of Mr. Paul Madavana which was held on 2 February 2015. The presence of the Informant's Advocate as well her interpreting the communication between the D.G. and the Informant from Malayalam to English and vice versa would lead one to wonder if the Informant's answers were his own or driven by the Advocate. It is noteworthy that the Informant on his own admission submitted before the D.G. during the oral testimony on "oath" on 30 January 2015 that he was a Graduate and was also a Medical Representative as such necessity of translation from English to Malayalam and vice versa through the good offices of an Advocate during the oral deposition appears misleading in respect of "demeanour" of the Informant. This action of the D.G. in allowing the counsel of the informant d....
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....t 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 under Section 19(1) read with Section 3 of the Competition Act. In fact, it is submitted that the Informant cannot take advantage of the Competition Act through by-passing and/or suppressing its own past legal misdemeanours including internal disorders within AKCDA, if any, and initiating a false/frivolous inquiry against Alkem. This suppression of another material fact alone can vitiate the entire proceedings. 11. It is reaffirmed and reiterated that the demeanour of the Informant is doubtful and unworthy of reliance considering that the D.G. has proved violation of Section 45 of the Competition Act much before the passing of the Order by the Hon'ble Commission on 5 March 2015 as such the findings of the D.G. as against Alkem, Mr. Mathew and Mr. Haridas are liable to be rejected. 13. The D.G. has stated that Alkem has contravened the provisions....
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....ly 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 received from the Informant from time to time. Therefore, Alkem has not refused to supply products to the Informant after being appointed as stockist. There has never been any demand for NOC from the Informant and the D.G. or the Informant has not placed on record any evidence of the same. In any event, it may be noted that till date no NOC has been obtained or provided by the Informant to Alkem. However, non-furnishing of the NOC has not prevented Alkem from supplying the products to the Informant. In response to Question 10 of the deposition (Page 355 of the D.G. Report) the Informant had submitted that "For the offer of stockistship, they have not asked NOC or Clearance Certificate. However, they have directed to get the NOC before invoicing. But I got the first stock invoice date was 20th March 2014 without....
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....d 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 that the Informant has stated in response to Question 10 of the deposition (Page 355 of the D.G. Report) that "For the offer of stockistship, they have not asked NOC or Clearance Certificate. However, they have directed to get the NOC before invoicing. But I got the first stock invoice date was 20th March, 2014 without submitting any NOC to M/s. Alkem Laboratories Ltd., because of my complaint in CCI." 38. The statement of the Informant that Alkem supplied products to the Informant because of his complaint to the Hon'ble Commission, stands negated in the light of the fact that the invoice of products was raised by the Informant in March 2014, whereas the information was submitted by him to the Hon'ble Commission only on 30 April 2014, i.e....
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.... 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 find suitable and reliable evidences against Alkem under Section 3(4)(d) of the Competition Act. * * * 50. The D.G. on the basis of OP-1's deposition has concluded at page 65 that: "Further the conduct of OP-2 of refusing to deal with the IP in absence of an NOC/Consent from OP-3 (AKCDA), seems 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." 51. It is submitted that the D.G. has based its findings of agreement on an allegation of refusal to supply drugs to the Informant without any substantial evidence of actual refusal to deal within the strict meaning of Section 3(4)(d) o....
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....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 Respondent No. 3 and framed the following issues: Issue I: Whether the suppression of facts by the Informant makes the present proceedings infructuous, as alleged by the Opposite Parties? Whether the Informant is liable to be penalized under section 45(1)(b) of the Act? Issue II: Whether the conduct/practices of OP 2 and/or OP 3 amount to contravention of any of the provisions of section 3 of the Act? 38. The Commission first considered whether Respondent No. 2 can be held guilty of suppression of material facts and made the following observations: "6.4 From the material placed on record, it is an uncontroverted fact that OP 2 had appointed th....
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....ms 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 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.....
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.... 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 supply to unauthorized stockists by various pharmaceutical companies like OP 2 undoubtedly affects the competition in the market adversely and appreciably. The Commission thinks it appropriate to issue orders against such pharmaceutical companies as well to deter their actions of facilitating the associations in indulging in anticompetitive practices in the market. In view of the foregoing, the Commission deems it appropriate to hold OP 2 responsible for its anti-competitive conduct under section 3(1) of the Act as they were facilitating the acts of OP 3. With regard to the....
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....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 and filing thereof in the Secretariat of the Commission, but he deliberately omitted to inform the Commission about the crucial developments which had taken place between the initial filing of the complaint in January, 2014 and re-submission of the information in April, 2014 i.e. his appointment as a stockist by the competent authority i.e. Appellant No. 3 and supply of medicines. Shri Sibal emphasised that if the Commission had been apprised of the full and correct facts, it could not have ordered an investigation by assuming that Appellant No. 1 had refused to su....
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....ague 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 the Commission that Appellant No. 1 had insisted on production of NOC from Respondent No. 3 or that there was a tacit understanding between Appellant No. 1 and Respondent No. 3 on the issue of production of NOC is based on pure surmises and conjectures. He invited the Tribunal's attention to several paragraphs of the report of Jt. D.G. and the impugned order to show that on the one hand the Jt. D.G. and the Commission relied upon the alleged diktats/directions issued by Respondent No. 3 to the parties to obtain NOC and at the same time, recorded a finding ....
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....ri 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 and evidence brought on record and Appellants Nos. 2 and 3 have been rightly penalised because they were the persons incharge of and were responsible to Appellant No. 1 for the conduct of its business at the time of contravention of Section 3(1) of the Act. 49. We have considered the respective arguments and scanned the original record of Case No. 28 of 2014 sent by the Commission. 50. Although we do not intend to penalise Respondent No. 2 by imposing fine under Section 45 of the Act, having carefully perused the detailed information prepared by him ....
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....na (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 authorised signatory but the same was directly dealt with by Shri Paul Madavana, who, on his own, appointed Respondent No. 2 as a stockist. This was also the stand taken by Appellant No. 1 in its reply dated 22.01.2014 submitted to the Assistant Drugs Controller, who accepted the same and rejected the complaint made by Respondent No. 2. It was also the pleaded case of Appellant No. 1 that the Branch Manager was the competent authority to appoint a stockist and, at the relevant time, that post was held by Appellant No. 3. Unfortunately, the Jt. D.G. ....
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....e 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. In view of the above facts and evidences, it is established that there has been refusal to deal with IP by OP-2 with an understanding/direct or indirect agreement with the AKCDA (OP-3) and therefore it is established that the OP-2 also involved in the anti-competitive practices. * * * From the above it was noted that the OP-1 has no cogent reasons to justify his action for issuance of such an offer letter dated 14.11.2013 to the IP. Further the conduct of OP-2 of refusing to deal with the IP in absence of an NOC....
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....ue 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 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. 7.20 Based on the aforesaid, the Commission is of the opinion that denial of supply by OP 2 is established by the evidence placed on record-Such refusal was because of the instructions given by OPs and as such amounts to understanding between OP 2 and OP 3. 7.23 Therefore, OP 3's i....
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....e 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 asking for NOC from AKCDA. Indeed, it is not even the case of Respondent No. 2 that Appellant No. 1 or any of its officers had demanded NOC before his appointment as a stockist in March, 2014 or thereafter. Thus, the entire edifice of the finding recorded by the Commission that Appellant No. 1 had acted in violation of Section 3(1) falls to the ground. 58. The issue which remains to be considered is whether the Commission could have held Appel....
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....onsidered 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 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, w....
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....e (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 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 acc....
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....elating 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 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 f....
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...., 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, 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 just....
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....ucer, 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 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 companie....
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....verage 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 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. 62. Section 48 find....
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....terial 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 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 ....
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....ned 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 stockists and supply of medicines. He also held that Shri A.N. Mohana Kurup and Shri Thomas Raju, President and General Secretary of Respondent No. 3 respectively, were equally complicit in the anti-competitive practices being carried on by that respondent, but he did not return a fi....
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....d 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 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 evidenc....
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....s 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 Section 48(1). The Jt. D.G. also did not issue summons to Appellants Nos. 2 and 3 for the purpose of recording their statements, as was done in the case of the informant-Respondent No. 2 and the President of ....