2017 (9) TMI 1636 - HC - Indian Laws

Jurisdiction - case of petitioner is that the impugned order is without jurisdiction as the petitioners are administering the liquor policy of the State of Uttarakhand and, therefore, are not enterprises within the meaning of Section 2(h) of the Act - whether the petitioners are excluded from the scope of the term enterprise as defined under Section 2(h) of the Act. Section 2(h) of the Act? - Held that - A plain reading of Section 2(h) of the Act indicates that an enterprise would also include a department of the Government, which is engaged in any activity relating to production, storage, supply, distribution, acquisition or control of articles or goods. Indisputably, the petitioners were charged with the function of supply and distribution of IMFL (the manner in which they conducted such business is the subject matter of information provided by respondent no. 2). The activity carried on by the petitioners is clearly not relatable to any sovereign function of the State of Uttarakhand and, therefore, the petitioners are not excluded from the ambit of Section 2(h) of the Act - distribution of liquor cannot by stretch be considered as one of the activities falling within the above exclusionary provision - the contention that the petitioners are not enterprises within the meaning of Section 2(h) of the Act is unmerited and is rejected as such. Merely because multiple remedies arise from a set of facts or multiple consequences arise from the same set of facts does not prevent recourse to more than one proceedings. Unless the proceedings are mutually destructive - which in this case they are not - recourse to multiple proceedings on the same set of facts is not barred. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Jurisdiction of the Competition Commission of India (CCI) over the petitioners.
2. Applicability of the principles of res judicata.
3. Classification of the petitioners as 'enterprises' under Section 2(h) of the Competition Act, 2002.
4. The nature of the order passed under Section 26(1) of the Competition Act, 2002.

Detailed Analysis:

1. Jurisdiction of the Competition Commission of India (CCI) over the petitioners:
The petitioners challenged the jurisdiction of the CCI, arguing that they were administering the liquor policy of the State of Uttarakhand and thus were not 'enterprises' under Section 2(h) of the Competition Act, 2002. The court noted that Section 2(h) includes any person or department of the government engaged in activities related to production, storage, supply, distribution, acquisition, or control of articles or goods, excluding sovereign functions. The court concluded that the petitioners' activities in the distribution of liquor were not sovereign functions and thus fell within the ambit of 'enterprise' as defined under the Act. The court referenced the Supreme Court's interpretation in Agricultural Produce Marketing Committee v. Ashok Hariuni, emphasizing that sovereign functions are primary inalienable functions that only the state can exercise, which did not include the distribution of liquor.

2. Applicability of the principles of res judicata:
The petitioners argued that the matter had already been adjudicated by the Uttarakhand High Court and thus was barred by res judicata. The court rejected this argument, stating that the parties in the two proceedings were not the same, and the scope of the petitions before the Uttarakhand High Court and the CCI were materially different. The High Court was concerned with the arbitrary and unreasonable administration of liquor procurement, whereas the CCI was examining whether the petitioners' conduct violated Section 4 of the Act. Additionally, Section 62 of the Act states that the provisions of the Act are in addition to and not in derogation of other laws, allowing CCI's jurisdiction to proceed.

3. Classification of the petitioners as 'enterprises' under Section 2(h) of the Competition Act, 2002:
The petitioners contended that they were not 'enterprises' as defined under Section 2(h) of the Act. The court held that the petitioners were engaged in the supply and distribution of IMFL, which is not a sovereign function. The court cited Union of India v. Competition Commission of India & Ors., where the Indian Railways was held to be an enterprise under the Act, reinforcing that the petitioners' activities fell within the definition of 'enterprise.'

4. The nature of the order passed under Section 26(1) of the Competition Act, 2002:
The petitioners challenged the CCI's order under Section 26(1) of the Act, which directed an investigation into their activities. The court referenced the Supreme Court's decision in Competition Commission of India v. Steel Authority of India Ltd. and Anr., which clarified that an order under Section 26(1) is administrative and does not determine the rights and obligations of the parties. The court found no merit in interfering with the CCI's order, emphasizing that the legislative intent was not to permit appeals against such orders.

Conclusion:
The court dismissed the petitioners' contentions, upholding the CCI's jurisdiction and rejecting the applicability of res judicata. The petitioners were classified as 'enterprises' under the Act, and the nature of the CCI's order under Section 26(1) was deemed administrative. Consequently, the petition and pending applications were dismissed.