2025 (3) TMI 906 - AT - Law of Competition

Abuse of dominant position under Sections 3(4) and 4 of the Competition Act 2002 - Appellant s failure to disclose the restoration of its retailing tier status prior to filing the information constituted a lack of clean hands - adequate opportunity of hearing provided or not - HELD THAT - The Information under Section 19(1)(a) was filed on 01.07.2021 but before the said date the retailer tier revoked on 20.04.2021 was restored on 23.06.2021 but this fact was not made part of the information. In the information the Appellant mainly pray for clubbing the information filed by it with case no. 36 of 2019 and made the interim prayer to direct the R2 to immediately reinstate the CR states of the Appellant and restart the CR products. In support of the information an affidavit has also filed by the Appellant in which it had specifically averred that and 47 of information are based on my personal knowledge which means that the prayer made in para 47 (a) for immediately reinstatement of CR status of the Appellant was also based upon the information of the Appellant to be correct whereas the CR status of the Appellant had already been restored on 23.06.2021 much before the information was filed on 01.07.2021 and false affidavit was filed in support of it. Besides this fact that the Appellant did not disclose the fact in the information that the issue of downgrade of CR status which is the bedrock of the information has already been restored and as far as the Appellant is concerned the personal injury caused to it has been redressed it not only filed the information but also continued with it before the R1 and disclosed the same very late. The Hon ble Supreme Court in the case of S.P. Chengalvaraya Naidu 1993 (10) TMI 315 - SUPREME COURT has held that the courts of law are meant for imparting justice between the parties. One who comes to the court must come with clean hands. We are constrained to say that more often than not process of the court is being abused. Property-grabbers tax-evaders bank-loan- dodgers and other unscrupulous persons from all walks of life find the court- process a convenient lever to retain the illegal-gains indefinitely. There are no hesitation to say that a person who s case is based on falsehood has no right to approach the court. He can be summarily thrown out at any stage of the litigation. The Commission has therefore observed that the allegation made by the Appellant that the sudden revocation of the CR status without prior intimation was to punish him for dealing with R3 is misplaced. It has also been brought on record that from Oct 2020 to March 2021 there has been consistent reduction in the offtake by the Appellant in this regard a chart has been given in the earlier part of this order from which it can be assumed that change of the retailing tier of the Appellant was not because of its new dealership taken by the Appellant but because of the reducing offtake. Conclusion - The appeal was dismissed due to lack of merit in the abuse of dominant position claim and the Appellant s failure to disclose material facts with the investigation process deemed fair. There are no merit in the present appeal for the purpose of interference and the same is hereby dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

• Whether the downgrading of the Appellant's retailing tier by Respondent No. 2 constituted an abuse of dominant position under Sections 3(4) and 4 of the Competition Act, 2002.
• Whether the Appellant's failure to disclose the restoration of its retailing tier status prior to filing the information constituted a lack of clean hands, impacting the validity of the appeal.
• Whether the process followed by the Competition Commission of India (CCI) and the Director General (DG) in investigating the allegations was fair and provided adequate opportunity for the Appellant to present evidence.

2. ISSUE-WISE DETAILED ANALYSIS

Abuse of Dominant Position

• Relevant Legal Framework and Precedents: The analysis focused on Sections 3(4) and 4 of the Competition Act, which address anti-competitive agreements and abuse of dominant position. The Tribunal examined whether the downgrading of the Appellant's retailing tier was an attempt to foreclose competition.
• Court's Interpretation and Reasoning: The Tribunal agreed with the CCI's finding that the downgrade was justified based on the Appellant's reduced offtake from Respondent No. 2, rather than an anti-competitive motive related to the Appellant's dealings with a competing brand.
• Key Evidence and Findings: Evidence showed the Appellant's reduced purchases from Respondent No. 2 over a 10-month period. The retailing tier was restored before the information was filed, undermining the Appellant's claim of ongoing harm.
• Application of Law to Facts: The Tribunal found no contravention of Sections 3(4) or 4, as the downgrade was based on business performance criteria, not an intent to exclude competition.
• Treatment of Competing Arguments: The Appellant's argument that the downgrade was retaliatory was dismissed due to lack of evidence. The Tribunal noted that other dealers dealing with the competing brand did not experience similar downgrades.
• Conclusions: The Tribunal concluded that the downgrading was not an abuse of dominant position and upheld the CCI's decision to dismiss the information.

Disclosure and Clean Hands

• Relevant Legal Framework and Precedents: The principle that parties must approach the court with clean hands was emphasized, referencing precedents such as S.P. Chengalvaraya Naidu v. Jagannath.
• Court's Interpretation and Reasoning: The Tribunal found that the Appellant failed to disclose the restoration of its CR status before filing the information, which was a material fact affecting the case's merits.
• Key Evidence and Findings: The Appellant's CR status was restored on 23.06.2021, yet this was not disclosed in the information filed on 01.07.2021.
• Application of Law to Facts: The Tribunal determined that the non-disclosure of the restoration constituted a lack of clean hands, warranting dismissal of the appeal.
• Treatment of Competing Arguments: The Appellant's argument that the proceedings were in rem and not affected by personal grievances was rejected as the case was based on personal injury, which had been redressed.
• Conclusions: The Tribunal dismissed the appeal due to the Appellant's failure to disclose material facts, aligning with the principle that parties must come to court with clean hands.

Fairness of the Investigation Process

• Relevant Legal Framework and Precedents: The Tribunal considered whether the CCI and DG provided a fair opportunity for the Appellant to present its case.
• Court's Interpretation and Reasoning: The Tribunal found that the Appellant had ample opportunity to present evidence during the investigation process, which spanned several months.
• Key Evidence and Findings: The DG provided opportunities for objections and oral hearings, and the Appellant failed to present additional evidence within the given timeframe.
• Application of Law to Facts: The Tribunal held that the investigation process was fair and adequate, dismissing claims of procedural unfairness.
• Treatment of Competing Arguments: The Appellant's claim of insufficient time was rejected, as the record showed multiple opportunities to submit evidence.
• Conclusions: The Tribunal concluded that the investigation process was fair, and the Appellant's procedural complaints lacked merit.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands."
• Core principles established: The necessity for parties to disclose all material facts when approaching judicial bodies; the importance of fair investigation processes; and the application of competition law principles to business practices.
• Final determinations on each issue: The appeal was dismissed due to lack of merit in the abuse of dominant position claim and the Appellant's failure to disclose material facts, with the investigation process deemed fair.