DIRECTOR GENERAL UNDER COMPETITION ACT 2002 – A STATUTORY AUTHORITY?

[Mr. M. GOVINDARAJAN]

The Competition Act, 2002 (‘Act’ for short) provides that the Director General when so directed by the Commission, is to assist the Commission in investigation into any contravention of the provisions of the Act.  The Director General is bound to comply with such a direction to render requisite assistance to the Commission.

The Director General, in order to effectively discharge his functions, has been given the same powers as are conferred upon the Commission under Section 36(2).  Under Section 36(2) the Commission is having same powers as are vested in Civil Court under the Code of Civil Procedure, 1908 while trying a suit, in respect of the following matters, namely:

• summoning and enforcing the attendance of any person and examining him on oath;
• requiring the discovery and production of documents;
• receiving evidence on affidavits;
• issuing commissions for the examination of witnesses or documents;
• subject to the provisions of Section 123 and 124 of the Indian Evidence Act, 1872, requisitioning any public record or document or copy of such record or document from any office.

Without prejudice to the above powers, the provisions of Section 240 and 240A of the Companies Act, 1956, so far as may be, shall apply to an investigation made by the Director General or by a person authorized by him, as they apply to an inspector under the Companies Act, 1956.   This power includes search and seizure of the record of any person in respect of which an investigation has been directed by the Commission.   It has been provided that wherever the approval of the Central Government is required, the same shall be given by the Commission.

In ‘Hyundai Motor India Limited V. Competition Commission of India and others’ – 2015 (7) TMI 828 - MADRAS HIGH COURT the High Court considered whether the Director General is a statutory authority.  There are four places in the Act where a reference is made to a statutory authority.  They are Section 2(w), Section 19(1) (b), Section 21 and Section 21A.

Section 2(w) defines the term ‘statutory authority’.   To come within the definition of the expression ‘statutory authority’ the following shall be fulfilled:

• the authority should be a board, corporation, council, institute, university or any other body corporate;
• it should have been established by or under any State or Central or Provincial Act;
• it should have been so established for the purpose of regulating production or supply of goods or provision of any services or markets therefore; and
• it should have been established at least for any matter indicated therewith or incidental thereto.

Section 19(1)(b) speaks about the initiation of inquiry pursuance to a reference made to the Commissioner by a Statutory Authority.

Section 21 provides that where in the course of a proceeding before any statutory authority an issue is raised by any party that any decision which such statutory authority has taken or proposes to take is or would be, contrary to any of the provisions of the Act, then such statutory authority may make a reference in respect of such issue to the Commission.  Any statutory authority, may, suo motu, make such a reference to the Commission.  On receipt of a reference the Commission shall given its opinion, within sixty days of receipt of such reference, to such statutory authority which shall consider the opinion of the Commission and thereby give its findings recording reasons therefore on the issues referred to in the said opinion.

Section 21A provides that where in the course of a proceeding before the Commission an issue is raised by any party that any decision which, the Commission has taken during such proceeding or proposes to take, is or would be contrary to any provisions of the Act whose implementation is entrusted to a statutory authority, then the Commission may make a reference in respect of such issue to the statutory authority.  The Commission may suo motu make such a reference to the statutory authority.  On receipt of a reference the statutory authority shall give its opinion, within 60 days of receipt of such reference, to the Commission which shall consider the opinion of the statutory authority, and thereafter give its findings recording reasons therefor on the issues referred to in the said opinion.

The High Court held that the statutory authorities referred to in Section 21 and 21A should be those other than the Authorities functioning under the Act.   Otherwise Section 21 and 21A cannot be given a meaningful interpretation.  Section 21 provides that the statutory authority is vested with a power to record findings on the basis of the opinion of the Commission.   If the expression ‘statutory authority’ in Section 21 includes the Director General also, then the Director General should have the authority to give findings.   But that is not the scope of the Act.   The Director General is an authority constituted to assist the Commission.   But the Statutory authority referred to in Section 21 is one which can derive assistance from the Competition Commission.

The High Court further held that the statutory authority contemplated in Section 21A is one from whom the Commission itself can seek an opinion.   The Director General under the Act is not competent to give any opinion except conducting an investigation and assisting the Commission in the enquiry initiated under Section 19.  Therefore Section 19(1) (b) may have to be read and understood in the context of Section 21 and 21A of the Act.  It will be very clear that the word ‘statutory authority’ found in Sections 19(1)(b), 21 and 21A cannot include the Director General.

Another reason for this conclusion, the High Court held that the proviso to Section 21(1) empowers a statutory authority to make a reference suo motu to the Commission.   But the Director General is not empowered to initiate an investigation suo motu.  Therefore the Director General cannot come within the definition of the expression ‘statutory authority’.