2023 (12) TMI 1389 - HC - Law of Competition

Impleadment of the Respondent No. 2 Builders Association of India in an ongoing proceeding to investigate allegations of cartelisation and price manipulations of Grey Cement Manufacturers - inspection of non- confidential records - power of CCI to review - failure to satisfy the conjunctive two-fold test given under Regulation 25 of substantial interest and public interest - Ultra vires action of Section 57 of the Competition Act - ex-parte - violation of principles of natural justice. Impleadment of the Respondent No. 2 Builders Association of India in an ongoing proceeding to investigate allegations of cartelisation and price manipulations of Grey Cement Manufacturers - HELD THAT - During the process of enquiry by the Commission Regulation 25 of the General Regulations 2009 allows the Commission the power to permit a person or enterprise to take part in proceedings given that they have a substantial interest attached to the outcome of the proceedings and that allowing them to take part is seen as a necessity in view of public interest. It is contended by the Petitioner that the Order dated 05.07.2023 to implead BAI as a party to the proceedings under Suo Moto Case No. 2 of 2019 is improper as it fails to satisfy the conjunctive two-fold test given under Regulation 25 of substantial interest and public interest and that in absence of its satisfaction as reflected in the inadequacy of reasoning given in the impugned Order dated 05.07.2023 to that effect the actions of the CCI in impleading BAI are illegal and unacceptable cannot be accepted. Exercise of jurisdiction under Aricle 227 of the Constitution - HELD THAT - It is trite law that Writ Courts while exercising its jurisdiction under Article 227 of the Constitution of India do not substitute the opinions arrived at by statutory bodies with their own unless the decision arrived at by the statutory bodies are beyond their jurisdiction or there is a failure to exercise jurisdiction vested in them or the order passed is so perverse and illegal that it finds itself in contravention of Wednesbury principles. The nature and scope of the jurisdiction under Article 226 of the Constitution of India has been crystallised in several judgements of the Supreme Court. The Apex Court in STATE OF PUNJAB AND ORS. VERSUS MEHAR DIN 2022 (3) TMI 1622 - SUPREME COURT has held that The law on the subject is settled that the Courts being the custodian of fundamental rights are under an obligation to interfere where there is arbitrariness irrationality unreasonableness malafides and bias if any but at the same time the Courts should exercise the power of judicial review with a lot of restraint particularly in contractual and commercial matters. In Bank Of India And Anr v. Degala Suryanarayana 1999 (7) TMI 703 - SUPREME COURT the Supreme Court has held that The Court exercising the jurisdiction of judicial review would not interfere with the findings of fact arrived at in the departmental enquiry proceedings excepting in a case of malafides or perversity i.e. where there is no evidence to support a finding or where a finding is such that no man acting reasonably and with objectivity could have arrived at that finding. The Court cannot embark upon reappreciating the evidence or weighing the same like an appellate authority. So long as there is some evidence to support the conclusion arrived at by the departmental authority the same has to be sustained. In the present case the impugned Order passed under Regulation 25 of the General Regulations 2009 also brings attention to the submissions made by BAI including considerations and records of BAI as an association with the largest consumers of cement - In view of the settled position of law this Court is not inclined to substitute its conclusion to the one arrived at by the Board which is based on the material on record before the Commission. The allegation of the Petitioner that the impugned order dated 05.07.2023 is devoid of adequate reasoning towards the satisfaction of the requirements under Regulation 25 of the General Regulations 2009 and it is therefore unreasoned cannot be accepted. Principles of natural justice - Petitioner alleges that the requirements under Section 36 of the Act which mandates that procedures followed by CCI ought to be in consonance with the principles of natural justice were not followed in the present case as the impugned order dated 05.07.2023 was passed by CCI ex-parte - HELD THAT - It is contended that the Petitioner was neither given due notice of the consideration of making BAI a party as under Regulation 25 of the Competition Regulation 2009 nor were they presented an opportunity of being heard before the impleadment of a third party to the Suo Moto Case No. 2 of 2019. The allegations of the Petitioner ought to be weighed here on the pointed question as to whether fulfilment of requirements under principles of natural justice were or were not followed in the present case that is whether there exists any procedural fallacy which renders the impugned Order dated 05.07.2023 improper and invalid in law. It is therefore a reiteration of the well-established principle that a fair procedure very much includes the presentation of an appropriate notice to all involved parties. However the contention of the Petitioner that such a notice was not provided to the Petitioner prior to the passing of the impugned Order dated 05.07.2023 by the CCI cannot by accepted by this Court. Power of CCI to enquire into agreements - abuse of dominant position - HELD THAT - The CCI has the power to enquire into agreements and dominant position of enterprises under Section 19 of the Act and the procedure for the same is given under Section 26 of the Act read with Regulation 21 under the General Regulations 2009. The nature of the proceedings under the ambit of this Act vis- -vis the parties and their involved interests thereof was noted by the Apex Court in Samir Agarwal v Competition Commission of India 2020 (12) TMI 621 - SUPREME COURT where it was held that given the context of the Act in which the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers it is clear that the Act vests powers in the CCI and enables it to act in rem in public interest. The power to review the orders of CCI which were given under Section 37 of the Act had subsequently been repealed by the Competition Amendment Act 2007. The Petitioner contents that the impugned Order accepting the impleadment application of BAI dated 05.07.2023 is a review of the previous Order dated 29.12.2021 whereby CCI had rejected the initial impleadment application of BAI. Ultra vires action of Section 57 of the Competition Act - HELD THAT - The impugned Order passed by CCI does not ensue the grant of confidential records of proceedings to BAI. Moreover it is also clear that the grant of non-confidential information is also explicitly recorded to be done within the bounds of Regulation 37(1) which can only be exercised subject to conformity with the safeguards enumerated within Section 57 of the Act and Regulation 35 of the General Regulations 2009 as noted above. The contention of the Petitioner that adequate safeguards under Section 57 have been ignored by CCI in its passing of the impugned Order cannot be accepted by this Court. The requisite procedural provisions on sharing information with parties to the proceedings have been duly paid attention to and followed by CCI as far as the impugned Order dated 05.07.2023 challenged in the present Writ is concerned. It is evident that the stage at which compensation under Section 53N can be invoked is that of an Appellate Stage post the final orders of CCIin any proceedings initiated before it. Therefore at the present stage of proceedings in the Suo Moto Case No. 2 of 2019 invoking Section 53N is neither an option for the Petitioner nor is there any reason to prefer an application for compensation when there exists a carved out provision in the form of Regulation 25 which allows the party to take part in the proceedings before the CCI after its satisfaction. The fact that the proceedings under the Competition Act apply in rem is of no consequence when the CCI is adjudicating the allegations regarding the cartelization and price manipulation. Conclusion - The court upheld the CCI s decision to implead BAI finding no violation of procedural fairness or statutory provisions - Petition dismissed.

Summary

Issues Involved:
1. Impleadment of Builders Association of India (BAI) in the Competition Commission of India (CCI) proceedings.
2. Violation of principles of natural justice and procedural fairness.
3. Alleged ultra vires action concerning Section 57 of the Competition Act.
4. Adequacy of reasoning in the CCI's order.
5. Availability of alternate remedies under the Competition Act.

Issue-wise Detailed Analysis:

1. Impleadment of Builders Association of India (BAI):
The primary issue revolves around the CCI's decision to allow BAI to be impleaded as a party in the ongoing Suo Moto Case No. 2 of 2019. The CCI justified this decision by noting that BAI, as a significant consumer of cement, has a substantial interest in the proceedings. The court upheld the CCI's decision, emphasizing that the impleadment was necessary for a meaningful inquiry into the alleged anti-competitive practices. The court found that the CCI had appropriately exercised its discretion under Regulation 25 of the General Regulations 2009, which allows for the inclusion of parties with a substantial interest in the proceedings.

2. Violation of Principles of Natural Justice and Procedural Fairness:
The petitioner argued that the CCI's decision violated the principles of natural justice, particularly the principle of Audi Alterum Partem, as they were not given prior notice or an opportunity to be heard before BAI's impleadment. The court rejected this argument, noting that the petitioner was aware of BAI's application and the subsequent order allowing BAI access to non-confidential documents. The court emphasized that the principles of natural justice do not necessarily require a hearing at every stage, especially in administrative proceedings where the primary objective is to gather information for a comprehensive inquiry.

3. Alleged Ultra Vires Action Concerning Section 57 of the Competition Act:
The petitioner contended that the CCI's order allowing BAI to inspect non-confidential records violated Section 57 of the Competition Act, which restricts the disclosure of information without prior permission. The court dismissed this contention, clarifying that the order only permitted access to non-confidential information, which is permissible under Regulation 37(1) of the General Regulations 2009, subject to the provisions of Section 57. The court found no procedural irregularity in the CCI's actions regarding information disclosure.

4. Adequacy of Reasoning in the CCI's Order:
The petitioner challenged the CCI's order as unreasoned and lacking adequate justification for BAI's impleadment. The court disagreed, stating that the order sufficiently articulated the rationale for BAI's inclusion, citing BAI's substantial interest as a major consumer affected by the alleged anti-competitive practices. The court reiterated that while detailed reasoning is desirable, the absence of elaborate reasons does not necessarily invalidate an administrative order unless it is arbitrary or perverse.

5. Availability of Alternate Remedies Under the Competition Act:
The petitioner argued that BAI could have sought compensation under Section 53N of the Act instead of seeking impleadment. The court clarified that Section 53N pertains to compensation claims post the final determination of contraventions by the CCI and is not an alternate remedy at the current stage of proceedings. The court emphasized that Regulation 25 provides a legitimate pathway for parties with substantial interest to participate in ongoing proceedings, and BAI's impleadment was consistent with this regulatory framework.

In conclusion, the court upheld the CCI's decision to implead BAI, finding no violation of procedural fairness or statutory provisions. The petition was dismissed, affirming the CCI's authority to regulate its proceedings and include parties with a substantial interest in the outcome.