2015 (3) TMI 547 - HC - Indian Laws

Appeal against order passed by Competition Commission of India (CCI) - Order passed without issuing notice and without hearing appellant - Held that - The reasons given by the Supreme Court for holding that no notice or hearing is required to be given, to the person/enterprise informed/referred against, by the CCI before forming a prima facie opinion and directing investigation under Section 26(1) of the Act, apply also to the stage under Section 26(7) of the Act. The stage of Section 26(7) is also an initial stage which is not determinative in nature and substance; further investigation is also a pre-cognizance stage; issuance of notice to the person/enterprise informed/referred against, at that stage cannot be implied. Secondly, just like Section 26(1) does not contemplate any adjudicatory function and the function of the CCI thereunder has been held to be of a preliminary/departmental/administrative nature with no person being condemned at that stage, similarly the function of the CCI under Section 26(7) insofar as of directing further investigation is concerned is also not adjudicatory and of a preliminary/department/administrative nature only, with the person/enterprise informed/referred against being not condemned at that stage also. We have already noticed above that ordering investigation against anyone does not amount to condemning that person/enterprise. We therefore hold that the challenge by the appellant to the order dated 1st July, 2013 of the CCI on the ground of the same having been passed without giving any opportunity of hearing to the appellant, which is the enterprise informed against, has no merit. Resultantly, the appeal is dismissed. - Decided against the appellant.

Issues Involved:
1. Whether a notice of hearing is required to be given to the appellant before the Competition Commission of India (CCI) directs further investigation under Section 26(7) of the Competition Act, 2002.
2. Whether the order dated 1st July 2013, passed by the CCI without hearing the appellant, is valid.
3. Whether the proceedings have become infructuous due to the cross-examination of witnesses already being carried out.
4. Interpretation of Section 26 of the Competition Act, 2002, particularly in the context of the requirement of notice and hearing.

Detailed Analysis:

1. Notice of Hearing Requirement:
The primary issue was whether the appellant was entitled to a notice of hearing before the CCI directed further investigation under Section 26(7) of the Competition Act, 2002. The court examined the statutory provisions and the Supreme Court's judgment in the Steel Authority of India Limited case. It was held that "Section 26(1) does not provide for any hearing to the person against whom information is received or reference is made." The court further clarified that "Section 26(7) also does not envisage any notice to the person against whom information is provided to the CCI, before the CCI considers the report of the DG recommending that there was no contravention of the provisions of the Act."

2. Validity of the CCI Order Dated 1st July 2013:
The appellant contended that the order was passed without issuing notice to and without hearing the appellant, thus violating principles of natural justice. The court, however, upheld the order, stating that "the order directing further investigation cannot prejudicially affect the person against whom information is provided or a reference is made; an order of this nature does not visit the person against whom information is provided or a reference is made with any civil consequences nor does it impair any legal right of such a person; thus the principles of audi alteram partem would have no application at this stage."

3. Proceedings Becoming Infructuous:
The respondent argued that since the cross-examination of witnesses had already been carried out, the appeal had become infructuous. The court disagreed, stating that "if indeed the appellant succeeds, what has happened in pursuance to the impugned order dated 1st July, 2013 would be non est; without the appellant agreeing to our suggestion aforesaid, the appeal cannot be dismissed as infructuous."

4. Interpretation of Section 26 of the Competition Act, 2002:
The court delved into the interpretation of Section 26, especially subsections (5) and (7). It was noted that "while Section 26(1) does not provide for any hearing to the person against whom information is received or reference is made, Section 26(7) expressly requires the CCI to, only after consideration of the objections or suggestions referred to in sub Section (5), if of the opinion that further investigation is called for, direct further investigation by the DG." The court concluded that "the consideration under Section 26(7) thus, of the objections/suggestions has to be of the objections/suggestions of the informant/referring Government/Statutory Authority only and not of the person/enterprise informed/referred against."

Conclusion:
The court dismissed the appeal, holding that "the challenge by the appellant to the order dated 1st July, 2013 of the CCI on the ground of the same having been passed without giving any opportunity of hearing to the appellant, which is the enterprise informed against, has no merit." The court emphasized that the legislative intent and the statutory provisions did not mandate a notice or hearing to the appellant at the stage of further investigation under Section 26(7).

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