2025 (4) TMI 1118 - HC - Law of Competition

Dismissal of application filed by the petitioners under Section 42 of the Competition Act 2002 to initiate investigation against respondent no.2/the Department of Town and Country Planning Haryana (DTCP) - non-compliance with the interim and final orders passed by the CCI - HELD THAT - After some hearing counsel for the petitioners in these matters confine themselves to seeking that the present petitions be treated as information under Section 19(1)(a) of the Competition Act and duly considered by Respondent No. 1. It is directed accordingly. The petitioners shall comply with the requisite procedural formalities as prescribed by the respondent no.1 including payment of the prescribed fees. In view of the anomalous conduct of the respondent no. 2 as highlighted by the petitioners the respondent no.1 is requested to bestow its urgent consideration to the matter. While considering the matter the respondent no.1 shall also take into account the order/s of the Supreme Court with regard to the levy of EDC which may have a bearing on the complaint of the petitioners in the present case. The respondent no.1 shall also take into account the previous investigation report already conducted by the Director General as referred to in paragraph 11 of the order dated 13.07.2022 passed by the respondent no.1. Petition disposed off.

Summary

The core legal questions considered in the judgment revolve around the following issues:

1. Whether the Competition Commission of India (CCI) was justified in dismissing the application under Section 42 of the Competition Act, 2002 seeking initiation of action and penalty against the Department of Town and Country Planning, Haryana (DTCP) for alleged non-compliance with the interim and final orders passed by the CCI in Case No. 40 of 2017.

2. The scope and applicability of Section 42 of the Competition Act concerning enforcement of compliance with orders or directions issued by the CCI.

3. The legal effect and binding nature of the interim order dated 01.08.2018 and the final order dated 13.07.2022 passed by the CCI in the underlying competition case.

4. The consequences of the withdrawal of the office order dated 02.05.2019 issued by DTCP, which had implemented the interim directions of the CCI, and whether such withdrawal amounts to contravention of the CCI's orders.

5. Whether the petitioners are entitled to seek reopening or review of the closed case or whether the appropriate remedy lies in filing fresh information before the CCI.

6. The interplay between the Competition Act proceedings and other judicial proceedings concerning the levy of External Development Charges (EDC), including orders of the Punjab and Haryana High Court and the Supreme Court.

Issue-wise Detailed Analysis

Issue 1 & 2: Scope and Applicability of Section 42 of the Competition Act and Justification for Dismissal of the Application

The legal framework under Section 42 of the Competition Act empowers the CCI to inquire into compliance with its orders or directions and impose penalties for non-compliance. The section mandates that to invoke this provision, there must be a demonstrable failure to comply with orders or directions issued by the CCI under specified sections of the Act.

The CCI's interpretation, as reflected in the impugned order dated 19.06.2024, indicates that the interim order dated 01.08.2018 was operative only until the final disposal of the proceedings, after which it ceased to have effect. The final order dated 13.07.2022 did not contain any binding directions or orders against the respondents but merely closed the matter in light of earnest steps taken by the DTCP and the withdrawal of the complaint by CREDAI-NCR.

Consequently, the CCI reasoned that since no conclusive or binding directives were issued in the final order, there was no failure to comply with any order or direction, rendering the application under Section 42 not maintainable. The Court endorsed this interpretation, emphasizing that Section 42 requires a clear breach of orders or directions, which was absent here.

The petitioners' contention that the withdrawal of the office order dated 02.05.2019 by DTCP amounted to non-compliance was rejected on the ground that the office order was not a directive of the CCI but an administrative measure taken by DTCP in response to the interim order. Since the interim order had ceased to operate following the final order, withdrawal of the office order did not amount to contravention of any binding directive.

Issue 3: Legal Effect and Binding Nature of Interim and Final Orders of CCI

The interim order dated 01.08.2018 was passed on prima facie findings to maintain status quo and protect the developers from irreparable harm pending investigation. It restrained DTCP from coercive actions regarding EDC payments and license cancellations, recognizing the absence of external development work despite collection of substantial sums.

The Court noted that interim orders are temporary and cease to operate once final orders are passed. The final order dated 13.07.2022, after considering the steps taken by DTCP and the withdrawal of the complaint by CREDAI-NCR, closed the case without issuing any binding directions or penalties.

The Court underscored that the final order's closure of proceedings extinguished the interim order's effect and that no further obligations arose from the interim order post-closure.

Issue 4: Consequences of Withdrawal of Office Order dated 02.05.2019

The office order dated 02.05.2019 was issued by DTCP to implement the interim directions of the CCI, including abeyance of license cancellations and waiver of interest on EDC instalments for certain developers. The petitioners argued that the subsequent withdrawal of this office order in January 2024 was a deliberate attempt to circumvent the CCI's findings and revive coercive measures against developers.

The Court, however, observed that since the CCI had closed the case and no binding directions remained in force, the administrative withdrawal of the office order did not constitute non-compliance with any CCI order. The withdrawal was a consequence of the final order and did not amount to contempt or violation of the Competition Act.

Issue 5: Remedy for Petitioners and Reopening of Closed Case

The petitioners sought reopening or review of the closed case relying on the alleged non-compliance by DTCP. The CCI communicated that there is no provision under the Competition Act to reopen or review a case after final disposal. The Court affirmed this position and directed that the petitioners' remedy lies in filing fresh information or an interlocutory application under the Act, rather than seeking enforcement action under Section 42 on a closed matter.

Issue 6: Interplay with Other Judicial Proceedings on EDC Levy

The Court took note of parallel judicial proceedings concerning the levy of EDC, including dismissal of writ petitions filed by CREDAI members before the Punjab and Haryana High Court and the Supreme Court's dismissal of related appeals. These judicial pronouncements were held to have attained finality on the issue of EDC levy.

The Court directed the CCI to consider these judicial decisions while examining any fresh information filed by the petitioners, recognizing that the legality of EDC levy had been adjudicated upon by higher courts and may bear on the competition complaint.

Treatment of Competing Arguments

The petitioners argued that the withdrawal of the office order and the closure of the case without binding directions left them vulnerable to unfair coercive actions and that the DTCP's conduct was misleading and contrary to the spirit of the CCI's interim order.

The respondents, including the CCI and DTCP, contended that the interim order was temporary and ceased to operate after the final order, which did not contain any directions. They maintained that the petitioners' application under Section 42 was legally untenable and that the issue of EDC had been conclusively settled by other judicial forums.

The Court balanced these arguments by clarifying the legal boundaries of Section 42 enforcement and the finality of CCI orders, while also allowing the petitioners to file fresh information and seek interim relief under appropriate provisions, ensuring procedural fairness without reopening concluded proceedings.

Conclusions

The Court upheld the dismissal of the application under Section 42 by the CCI, holding that no failure to comply with binding orders or directions existed. It recognized the interim order's limited temporal scope and the final order's closure of proceedings without directions. The withdrawal of the office order by DTCP was not deemed a breach of any CCI order. The petitioners' recourse lies in filing fresh information or interlocutory applications under the Competition Act. The Court also directed the CCI to consider relevant Supreme Court and High Court orders on EDC in any future proceedings.

Significant Holdings

"As seen above, it is clear that to invoke the provisions of the Section 42 of the Act, there needs to be a failure on the part of a person/party to 'comply with the orders or directions' issued to him under the law by the Commission or its functionary such as Director General."

"In the above context it is pertinent to note that in this matter, the interim order of the Commission dated 01.08.2018 was operational only till the final order of the Commission was passed, at which point it ceased to be in force."

"Vide order dated 13.07.2022 no directions were issued to the OPs under the provisions of the Act... there is no occasion for failure to comply with orders/directions, as no directives were included in the final order."

"The Commission may cause an inquiry to be made into compliance of its orders or directions made in exercise of its powers under the Act... If any person, without reasonable cause, fails to comply with the orders or directions of the Commission... he shall be liable to penalty..." (Section 42, Competition Act).

Core principles established include the limited temporal effect of interim orders, the necessity of binding directions to invoke enforcement under Section 42, and the finality of closure orders barring reopening absent fresh information.

Final determinations on the issues are that the application under Section 42 was rightly dismissed for lack of non-compliance with binding orders; withdrawal of administrative office orders post-closure does not constitute violation; and petitioners must pursue fresh information or interlocutory relief for any grievances.