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TMI Blog2015 (7) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... d apply to an Inspector appointed under the Companies Act. As a matter of fact, if a person fails to comply, without reasonable cause, with a direction given by the Director General in terms of Section 41(2), such a person is liable to be punished with fine. Therefore, it is clear that the role of the Director General is actually to assist the Competition Commission in the effective discharge of its duties. - Therefore, Section 19(1)(b) may have to be read and understood in the context of Section 21 and 21A of the Competition Act, 2002. If so done, it will be very clear that the word "Statutory Authority" found in Section 19(1)(b), Section 21 and Section 21A cannot include the Director General. There is yet another reason for my conclusion. 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". First contention that the permission to expand the scope of the enquiry cannot be construed as the initiation of investigation suo motu by the Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction on 26.04.2011, the Director General could not have proceeded against all other car manufactures. The direction issued by the Commission on 26.04.2011 would tantamount to a directions under Section 41(1). Therefore, the question of overstepping of jurisdiction did not arise. Commission or the Director General had not done anything in a manner otherwise than what is prescribed in the Act and the Regulations. As stated earlier, the Director General did not suo motu initiate any investigation. He merely placed before the Commission, an information already available in the complaint lodged by the individual. It was an additional information that could be taken note of under the Proviso to Section 26(1). The Commission had already formed a prima facie opinion and recorded its reasons in respect of the three named car manufacturers. Therefore, it was not necessary for the Commission to again and again record reasons. The Commission did not come to any conclusion with regard to the writ petitioners, on the basis of any special pleadings as against them. The decision taken by the Commission was only to expand the scope of the investigation. Therefore, I do not think that either the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 26.04.2011, approving the request for expansion of the scope of the investigation. It was actually indicated in the said order of the Competition Commission that whenever an investigation is ordered, it need not be confined to the parties mentioned in the information. 5. Therefore, based upon the order of the Competition Commission dated 26.04.2011, the Director General ordered a notice dated 04.05.2011, to Hyundai Motor India Limited, under Section 36(2) read with Section 41(2) of the Competition Act, 2002. Immediately, the company appears to have submitted a request for inspection of the records. After the office of the Competition Commission gave a Compact Disk containing soft copies of the investigation report of the Director General, the petitioner sought copies of the note placed by the Additional Director General on 19.04.2011 and the order passed by the Competition Commission on 26.04.2011. 6. After getting the copies of those documents, the company namely Hyundai Motor India Limited, came up with two writ petitions in W.P.Nos. 31808 and 31809 of 2012, challenging respectively: (i) the order of the Competition Commission dated 26.04.2011; and (ii) the notice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed by the Delhi High Court by an order dated 22.09.2014 on the short ground that it would be appropriate for them to approach this Court (Madras High Court) in view of the heavy reliance placed by them upon the interim order passed by the Madras High Court on 24.09.2013. Therefore, in pursuance of the order dated 22.09.2014, passed by the Delhi High Court, BMW India Private Limited has come up with a fresh writ petition in W.P.No.26986 of 2014 before this Court, challenging the order of the Competition Commission dated 26.04.2011, permitting the Director General to include all car manufacturers within the scope of the enquiry conducted by them. On this writ petition notice was ordered on 10.10.2014. Thereafter, the same was tagged along with the two writ petitions filed by Hyundai Motor India Limited in W.P.No.31808 and 31809 of 2012. 11. I have heard Mr.Vijay Narayan, learned Senior Counsel appearing for the petitioners and Mr.G.Rajagopalan, learned Additional Solicitor General appearing for the respondents, assisted by Mr.P.Mahadevan, learned Senior Central Government Standing Counsel. 12. As we have seen earlier, all the three writ petitions challenge either the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi High Court in Grasim Industries Limited vs. Competition Commission of India reported in [2014 (124) SCL 79 (Delhi)], wherein it was held that the Director General is obliged to confine his report only to the allegations made in the information or the reference received by the Commission and that he is not entitled to travel outside the scope of the same. Drawing my attention to Section 19 of the Competition Act, 2002, the learned Senior Counsel for the petitioners contended that the Director General can collect information only from three sources of information indicated in Section 19. But, by making a request to the Competition Commission to widen the scope of the investigation, the Director General became an informant, which is prohibited by Object No.5 of the Preamble to the Act. 15. I have carefully considered the above submissions. I have no doubt in my mind that the Director General cannot initiate an investigation suo motu. This is very clear from paragraph 4.4.7 of the Ninety-Third Report of the Department Related Parliamentary Standing Committee on Home Affairs submitted to the Chairman of the Rajya Sabha in August 2002. The Report of the Standing Committee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ps and also make the same freely available in the open Indian automotive after market; (d) pass appropriate orders directing the Respondents and other contravening vehicle manufacturers to provide the relevant spare parts, diagnostic tools, technological information, technical training and equipment for repair, maintenance and service of the vehicles manufactured by them at the same time as it is made available to their authorised dealers/service centers. 19. From the very prayers made by the complainant before the Competition Commission, it will be clear that he wanted an investigation into the monopolistic, restrictive or unfair trade practices or anti corruption competitive practices adopted by all car manufacturers. Though he named only three car manufacturers, against whom, he had an immediate cause of action, the prayers in his complaint made it clear that he wanted the scope of the investigation to cover 'any other vehicle manufacturer'. Therefore, the contention that the main complaint was only against three car manufacturers and that the Director General suo motu roped in other car manufacturers may not be correct. 20. Keeping this factual aspect in min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence made to it by the Central Government or State Government or a Statutory Authority, is also not spelt out in Section 19(1)(b). 26. It is only in cases falling under Section 19(1)(a) where an inquiry is initiated on receipt of any information that two requirements are to be satisfied. One relates to the person from whom such information was received; and the other relates to the manner in which such information should have been received. The expression 'receipt of information' appearing in Section 19(1)(a) is regulated by what follows. The information should have been received in such a manner and should be accompanied by such fee as may be prescribed by the Regulations. Additionally, the information should have been received from any person, consumer or their association or trade association. If both these requirements are not satisfied, an inquiry under Section 19(1)(a) cannot be initiated. This is on account of the fact that the Act defines even the expressions consumer and person . Section 2(f) defines a consumer to mean a person, who buys any goods for a consideration or hires or avails of any service for a consideration. The definition of the word 'con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermission of the Competition Commission to expand the scope of the enquiry, would not even fall under the category of 'Statutory Authority'. The expression 'Statutory Authority' is defined in Section 2(w) as follows : Statutory authority-means any authority, board, corporation, council, institute, university or any other body corporate, established by or under any Central, State or Provincial Act for the purposes of regulating production or supply of goods or provision of any services or markets therefor or any matter connected therewith or incidental thereto. 30. To come within the definition of the expression 'Statutory Authority', the following criteria should be fulfilled : (i) the Authority should be a Board, Corporation, Council, Institute, University or any other body corporate; (ii) It should have been established by or under any State or Central or Provincial Act; (iii) It should have been so established for the purpose of regulating production or supply of goods or provision of any services or markets therefor; and (iv) It should have been established at least for any matter indicated therewith or incidental thereto. 31. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defines the expression 'Statutory Authority'. Section 19(1)(b) speaks about the initiation of inquiry pursuant to a reference made to the Commission by a Statutory Authority. Apart from these two places, Section 21 of the Act also refers to Statutory Authority. Under Section 21(1), any Statutory Authority may make a reference of an issue to the Commission, when, in the course of a proceeding before it, a issue is raised by any party that any decision, which such Statutory Authority proposes to take, would be contrary to any of the provisions of the Act. Section 21 reads as follows : 21.(1) 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 this Act, then such statutory authority may make a reference in respect of such issue to the Commission: Provided that any statutory authority, may, suo motu, make such a reference to the Commission. (2)On receipt of a reference under sub-section (1), the Commission shall give its opinion, within sixty days of receipt of such reference, to such statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Act is not competent to give any opinion except conducting an investigation and assisting the Commission in the enquiry initiated under Section 19. 39. Therefore, Section 19(1)(b) may have to be read and understood in the context of Section 21 and 21A of the Competition Act, 2002. If so done, it will be very clear that the word Statutory Authority found in Section 19(1)(b), Section 21 and Section 21A cannot include the Director General. There is yet another reason for my conclusion. 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 . 40. Therefore, I have no difficulty in accepting the contention of the learned Senior Counsel for the petitioner that the case on hand will not come within the four corners of Section 19(1)(b). The expansion of the scope of the enquiry to include all car manufactures has not been done by the Competition Commission suo motu, so as to fall within the main part of Section 19(1). Therefore, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion person as found in Section 2(l) is very exhaustive. As per Section 2(l)(x), every artificial juridical person not falling within any of the sub-clauses, may fall within the definition of the expression person . To hold that the Director General will not come within the purview of the expression person , would be to render the entire scheme of the Act very brittle and ductile. Therefore, I hold on the first contention that the permission to expand the scope of the enquiry cannot be construed as the initiation of investigation suo motu by the Director General. So long as the Competition Commission has the power to initiate an enquiry suo motu and take the assistance of the Director General in the conduct of such enquiry and so long as there is no bar for the Director General to provide information under Section 19(1)(a) of the Act, the petitioner cannot find fault either with the Director General or with the Commission. In this case the Director General did not rope in other car manufactures, of his own accord. The Director General, by filing a memo, merely brought to the notice of the Commission that there are other car manufactures who follow the very same practices, as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Kataria was against 3 named car manufactures, the Director General converted the complaint from party-centric to issue-centric. But if it is actually issue-centric, the Commission or the Director General ought not to have left out 12 other car manufactures. Since the Commission as well as the Director General did not include within the purview of the investigation, 12 other car manufactures as well as the manufactures of two-wheelers, three-wheelers etc., it is contended that the investigation was not really issue-centric. Therefore, it is contended that the impugned order dated 26.04.2011 is not in accordance with the procedure prescribed by Section 26(1). 48. The learned Senior Counsel for the petitioners also relies upon the decision of the Delhi High Court in Grasim Industries Limited vs. Competition Commission (2014) 41 Taxmann.com. 333 (Delhi), wherein it was held in paragraph 10 that the Director General would have no power to undertake an investigation in respect of the complaint which the Commission did not consider while forming an opinion and directing investigation by the Director General. 49. But it appears that the Delhi High court lost sight of the Provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was also amended to incorporate the Proviso under sub-section (1). The Statement of Objects and Reasons for the Competition (Amendment) Bill, 2007 shows that it was intended to enlarge the powers of the Competition Commission. Therefore, the second contention of the petitioner cannot also be accepted. Contention No.(iii):- 55. The third contention of the petitioner is that the Director General has overstepped the jurisdiction vested in him in law. Section 41(3) of the Competition Act, 2002 circumscribes the duties of the Director General. His duties are akin to that of an Inspector under Sections 240 and 240A of the Companies Act, 1956. The Inspector performs only a fact finding role under those provisions of the Companies Act, as held by the Supreme Court in Raja Narayanlal Bansilal v. Maneck Phiroz Mistry [AIR 1961 SC 29]. In other words, the contention of the petitioner is that the Director General being a subordinate to the Commission, is obliged only to do what he is told to do by the Commission. But in this case by filing a memo on 19.04.2011, the Director General exceeded the jurisdiction that was conferred upon him by the order of the Commission dated 24.02.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactures. The direction issued by the Commission on 26.04.2011 would tantamount to a directions under Section 41(1). Therefore, the question of overstepping of jurisdiction did not arise. 62. The contention that other car manufacturers and automobile manufactures have not been roped in, is actually a contention based upon Article 14. It is interesting to note that it is this very same contention that lead the Director General to make a request to expand the scope of the investigation. Therefore, this contention can always be raised by the petitioner before the Competition Commission. I have no problem and I suppose neither the Competition Commission nor the Director General would have any problem in a further expansion of the scope of the investigation to cover even other car manufactures and other automobile manufacturers. 63. Therefore, in fine, the third contention of the petitioner is also liable to be rejected. 64. The learned Senior Counsel for the petitioner placed heavy reliance upon the decision of the Delhi High Court in Grasim Industries Limited v. Competition Commission of India [2014(41) taxmann.com 333 (Delhi)]. In this case, an information was received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion with respect to existence of a prima facie case, it cannot, of its own carry out investigation based upon an information which was not available to the Commission. It would be appropriate to note here that though MRTP Act, 1969 empowered the Director General to exercise suo motu power of investigation, the said power has been expressly denied to him under the Competition Act. In clause (5) of the State of Objects and Reasons for enacting the Competition Act, it is clearly stated that the Director General would be able to act only if so directed by the Commission, but will not have any suo motu power for initiating investigation . If the Director General, is directed by the Commission to cause an investigation to be made into information 'X' and he, besides investigating information 'X' also investigates information 'Y'. which was not considered by the Commission, while directing investigation by him, that would amount to conferring suo motu, power of investigation upon the Director General which would clearly contravene the scheme of the Act, as far as investigation into complaint 'Y' is concerned . 66. The learned Senior Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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