2022 (12) TMI 731 - HC - Companies Law

Powers to impose monetary as well as non-monetary sanctions - online intermediation services - HELD THAT - This Court has perused the order dated 6th December, 2022 passed by the NCLAT, as also, the order dated 19th October, 2022 passed by the CCI. Various directions have been issued by the CCI vide order dated 19th October, 2022, which were challenged before the NCLAT. One of the components of the said order dated 19th October, 2022 is the aspect relating to penalty. The total amount, which has been fixed as penalty in the case of the Petitioner herein, is to the tune of Rs.223.48 crores. The appeal before the NCLAT is a first appeal challenging the order passed by the CCI. Thus, in the opinion of this Court, a pre-deposit of 10% of the penalty amount could not have been made for mere admission of the appeal. It is obvious that the intention, which may not be explicitly made clear in the entire order dated 6th December, 2022 passed by the NCLAT, is against the recovery of the remaining 90% of the penalty amount. It is directed that subject to the deposit of 10% of the total penalty amount of Rs.223.48 crores, in accordance with the order of the CCI, as directed by the NCLAT, no recovery shall be effected in respect of the remaining 90% of the penalty amount. The said deposit shall be without prejudice to the rights and contentions of the parties - Petition disposed off.

Summary

Issues Involved:
1. Violation of Competition Act by MMT-Go and OYO.
2. Imposition of penalties by the CCI.
3. Directions issued by the CCI for fair competition.
4. Appeal before the NCLAT and the requirement of a pre-deposit.
5. Interim protection against recovery of penalties.

Detailed Analysis:

1. Violation of Competition Act by MMT-Go and OYO:

The Competition Commission of India (CCI) found that MMT-Go violated Sections 4(2)(a)(i) and 4(2)(c) read with Section 4(1) of the Competition Act. Additionally, the arrangement between MMT-Go and OYO was found to contravene Section 3(4)(d) read with Section 3(1) of the Act. The CCI highlighted that MMT-Go's conduct and the exclusivity conditions imposed on hotel partners restricted competition.

2. Imposition of Penalties by the CCI:

The CCI imposed a monetary penalty of 5% of the relevant turnover on MMT-Go and OYO. For MMT-Go, the relevant turnover for the financial years 2017-18, 2018-19, and 2019-20 was considered, resulting in a penalty of Rs. 223.48 crores. For OYO, the relevant turnover was similarly calculated, resulting in a penalty of Rs. 168.88 crores. The penalties were based on the entire turnover of the companies, considering the integrated nature of their digital market platforms.

3. Directions Issued by the CCI for Fair Competition:

The CCI directed MMT-Go to modify its agreements with hotels to remove price and room availability parity obligations and exclusivity conditions. MMT-Go was also instructed to provide fair, transparent, and non-discriminatory access to its platform and to disclose properties not available on its platform. These measures aimed to ensure fair competition among online travel agencies (OTAs) and benefit consumers and independent hotels.

4. Appeal Before the NCLAT and the Requirement of a Pre-deposit:

Make My Trip (India) Pvt. Ltd. (Petitioner No.1) challenged the CCI's order before the National Company Law Appellate Tribunal (NCLAT). The NCLAT admitted the appeal but directed a deposit of 10% of the penalty amount as a condition for admission. The NCLAT's order did not explicitly provide interim protection against the recovery of the remaining 90% of the penalty amount, leading to ambiguity.

5. Interim Protection Against Recovery of Penalties:

The Delhi High Court observed that the NCLAT's order lacked clarity regarding the stay on the recovery of the remaining 90% of the penalty. The Court noted that a pre-deposit of 10% for mere admission of the appeal was not justified without interim protection for the remaining amount. The Petitioner agreed to deposit 10% of the penalty amount, subject to which the recovery of the remaining 90% would be stayed. The Court directed that no recovery shall be effected for the remaining 90% of the penalty amount upon the deposit of 10%.

Conclusion:

The Delhi High Court disposed of the petition, directing that the deposit of 10% of the penalty amount would stay the recovery of the remaining 90%. The Petitioner was allowed to approach the NCLAT for any other interim reliefs regarding the CCI's directions. The Court did not adjudicate on the other contentions or the maintainability of the writ petition.