9911796707
TMI Blog2013 (5) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2012, Appeal No. 128 of 2012, Appeal No. 129 of 2012, Appeal No. 132 of 2012, Appeal No. 133 of 2012 V.S. Sirpurkar, J. (Chairman), Rahul Sarin, Member and Pravin Tripathi, Member For the Appellant: Shri Gopal Subramanium and Shri Parag Tripathi, Senior Advocates with Shri Samir Gandhi and Shri Karan Vir Khosla, Ms. Hemangini Dadwa Advocates, Shri Iqbal Chhagla, Senior Advocate with Shri Ashwath Rau, Ms. Anu Tiwari and Ms. Gargi Yadav, Advocates, Shri Ramji Srinivasan, Senior Advocate, Dr. Abhishek Manu Singhvi, Senior Advocate with Mrs. Pallavi S. Shroff, Ms. Shweta Shroff Chopra, Shri Harman Singh Sandhu, Shri Yaman Verma, Ms. Sangeetha Mugunthan and Ms. Kabita Das, Shri Rook Ray, Advocates, Shri L. Nageshwara Rao, Senior Advocate with Shri Pramod B. Agarawala, Advocates, Mr. Ravi Kadam, Senior Advocate Mr. Aspi Chimoy and Mr. Pravin H. Parekh, Sr. Advocate with Mrs. Sonali Basu Parekh, Mr. Sameer Parekh, Dr. V.K. Agarwal, Mr. Anand S. Jha, Mr. Aditya Sharma and Mr. Utsav Trivedi, Ms. Nupur Sharma, Advocates, Shri C.S. Vaidyanathan, Senior Advocate with Shri Hari Shankar, Ms. Kanika Chaudhary Nayar, Shri Vikram Sobti, Shri Udayan Jain and Ms. Nidhi Singh, Advocates, Shri A.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the CCI agreed to supply the order copies maintained under Regulation 35(13) of the General Regulations, 2009. The appellants had also sought for relief to amend their Appeal Memos on the basis of the fresh copy of the order including the confidential data. Accordingly, the appellants amended their Memo of Appeals. Seven Appellants amended Memo of Appeals while the remaining did not file any amended Memo of Appeals. All those amendments were allowed by order dated 6th December, 2012. While arguing for stay, it was found that there were some common issues which pertain to very validity of the order passed by the CCI. The learned counsel for the appellant urged that those common issues should be addressed first and thereafter appeal should be argued individually heard on the basis of the individual facts pertaining to that particular appellant. This suggestion was accepted by the counsel for the CCI and the interim protection granted was extended up to 29th January, 2013 and by order dated 30.1.2013 these appeals along with the second group of the appeals were ordered to be heard in third week of February, 2013. The first group which covers Appeal Nos.: 105 of 2012 by Lafarge Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociation of India and also the CCI also addressed us extensively opposing the grant of stay. We have now to see on the basis of the rival contentions raised as to whether the appellants are entitled for the blanket stay of the impugned order by the CCI. 4. The Builders' Association of India filed an information under Section 19 of the Act on 26.7.2010 against the Cement Manufacturers' Association and 11 other cement manufacturing companies. In their complaint they alleged violation of the provisions of Sections 3 and 4 of the Act by the appellants. In their information they describe themselves as a Society registered under the Societies Registration Act and asserted that the Cement Manufacturers Association of India was the representative body of the companies manufacturing cement and that it has 46 members. All the appellants herein were described as the members. It is alleged that under that umbrella of the cement manufacturers engaged in the monopolistic and restrictive trade practices in an effort to control the price of cement firstly by limiting and restricting the production and supply of cement as against the available capacity of production. The said cement manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the artificial scarcity the opposite party including the appellants sought the objective of causing artificial increase in the price of the cement. It was pointed out that irrespective of the areas and regions and the availability of the cement or artificial scarcity thereof in the markets, the cement prices were increasing constantly causing adverse affect on the real estate and affecting the interest of the consumers at large. It was pointed out further that there were cease and desist order passed in past in RTPE No. 99/1990 and RTPE No. 21/2001. It was pointed out that these cement manufacturers had set up their cement manufacturing units at different places in India and though they were having different costs of production and transportation. They uniformly and simultaneously increased prices at the same time and that is the common feature in respect of all the five zones namely North, East, West, South and Central. 5. Relying on some statistics it was pointed out that the growth in the construction sector decreased from 10.10% from 2007 to 2010 and so also the growth in the real estate sector had come down in these three years. The growth in the cement sector had also wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Cement Limited, the fourth largest cement producer in India was also relied upon by the informant who had claimed that cement industry had added 78 million tones between 2006-07 and 2009-10. It is pointed out that cement rose by in the range of ₹ 10/- per bag to ₹ 27/- per bag upto January-March, 2009 and further by ₹ 5 to ₹ 15 per bag upto January, 2010. Relying on the memorandum dated 15.11.2006 of the CMA addressed to the Finance Minister the informant claimed that per bag cost of cement should be ₹ 160 however that price was raised to ₹ 350/- per bag, thanks to the concerted action by the cement manufacturers. They pointed out that the gross profit by M/s. ACC and Gujarat Ambuja Cements Ltd. increased substantially. It is pointed out that as per the news item in the Economic Times dated 28.11.2009 forecasted the increase in price in cement in future. All the cement manufacturers took the clue and increased price per bag uniformly in December, 2009. This fact was also reported in Business Standard in its issue dated 3.12.2009. A reference is made to the appointment of Standing Committee by the Ministry of Commerce and Industry. On the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e margin per bag of cement is ₹ 38 to ₹ 45 showing that some manufacturers were able to charge prices which was quite high and above competitive level. As regards the existence of the agreement, the DG deduced that there was no direct evidence but only circumstantial evidence. It was found that the co-efficient of correlation of change in prices or the movement of the prices of all the companies is positive and was very close to each other giving a strong indication of price parallelism. The price of the cement used to move upward in the country in the given time period. According to the DG the price parallelism was on account of the prior consultation amongst cement manufacturers and the market leaders have to play role in the same. The examination of small players showed that they simply follow the trend of major players. The DG deduced that there was no reason for price parallelism. The movement of price of the companies in the same range and in the same direction was not possible unless the prior consultation and discussion. 8. The DG also found the decrease and downward trend in the capacity utilization. This was a major factor according to DG. According to the DG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that CMA was providing a platform. CMA was also engaged in publication for internal circulation between the members which information contained the details of production in respect of each plant of the cement companies. Thus the minute details of production, dispatch of each company became known to member companies to exchange production related information and decide production strategy in line with other companies. It was on this basis, the DG came to the conclusion that the companies were guilty for the contravention of Section 3(1), 3(3)(a) and 3(3)(b) of the Act. This report was supplied to all the appellants who filed their objections. 10. After considering the objections raised which pertained to the individual case of the appellants and after giving opportunity of hearing the CCI deduced that these companies had contravened the provision of the Act more particularly under Section 3 of the Act. The CCI in its impugned order has recorded the contentions raised by the individual manufacturers in great detail. Initially the objection was taken that the DG had taken into consideration the data prior to 20.5.2009. The CCI however rejected this objection holding that the DG had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts. 13. It was firstly submitted by Shri Gopal Subramanium, learned senior Counsel appearing for the Lafarge that the order itself is non-est as it was signed by the Chairman of the CCI and in fact he had not attended the meetings during which the appellant's counsel put in the oral arguments. Thus the principle of "he who hears decides" was breached in this case as Chairman had not heard the matter at all. The learned counsel also pointed out that if a Member of the Tribunal who has not heard the arguments at all puts his signature on the order then he actually gives an impression that he is a part of the decision making process and if in reality he was not the part of the decision making process because of his absence from the concerned meetings then apart from a basic illegality it also amounts to denial of natural justice. The learned counsel in support of this proposition has relied on number of authorities. The learned counsel also urged that in considering the information and in awarding exemplary heavy penalties, the CCI was doing adjudicatory function and therefore the CCI was bound to respect and follow the principles of natural justice. 14. This contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 17. Shri Vaidyanathan, learned Senior Counsel appearing in Appeal Nos. 106 of 2012 and 134 of 2012 supported the arguments of Shri Chhagla and pointed out that the CCI was a quasi-judicial body as per two judgments of the Hon'ble Supreme Court. They being:- Brahm Dutt vs. Union of India reported in (2005) 2 SCC 431 and CCI versus Steel Authority of India Limited reported in (2010) 10 SCC 744. It was pointed out by the learned counsel that in both the cases the Hon'ble Supreme Court had held that the function of the CCI was of adjudicatory nature. He also supported the argument of Shri Gopal Subramanium on the issue of the Chairman contributing his signature to the impugned order though he was not present to hear any oral arguments. Reliance was put by him on Sections 26(1), 26(8), 27, 33, 35, 36(2) etc. to buttress his contentions that the CCI has to "determining" the issue and this task of "determination" makes it an adjudicatory body. 18. Shri V. Gupta appearing on behalf of Binani Cement in Appeal Nos. 109 and 125 of 2012 pointed out that the Binani was holding only 2% of the market which was insignificant. He also pointed out that there was no al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of casting vote is wholly unknown where functions are adjudicatory. He also supported the other contentions raised by the other counsel. 21. Shri Arvind Datar appearing on behalf of Madras Cement in Appeals Nos. 111 and 123 of 2012 invited our attention to the amendment of the General Regulations (Regulation 20). He also invited our attention to the directions issued on 15th September, 2010. Inviting our attention to Regulation 20 the learned counsel pointed out that there need be no application for cross-examination and cross-examination is a right of the parties which has been trampled. He also pointed out that the selection of only few companies for investigation was faulty and the DG had committed an error. He also pointed out that there was no data available of the South Zone where Madras Cement was operating. He took us through the statistics and pointed out the defective approach. 22. Shri Parikh, learned counsel appearing on behalf of Ultra Tech Cement painstakingly invited our attention to the defects in the procedure. The learned counsel pointed out the said procedure adopted by the DG and the CCI breached the rules of natural justice. He pointed out that though specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Vaidyanathan pointed out that no written submissions were filed by Lafarge, India Cement and Binani Cements. 27. All these arguments were met with by Shri Balbir Singh, advocate for the CCI, who first urged that the CCI though was having adjudicatory function, however, it transacted its business in the meetings. The counsel cited the examples of the jurisdiction like Australia and New Zealand where also the Competition Commission of India transacted the business in the meetings. Our attention was invited to the amendments made to earlier Sections 22, 23, 24 and 25. Relying on Section 22, the counsel urged that the Commission had to transact its business through the meetings, unlike the un-amended Section 22 and unlike un-amended Section 22 there were no more benefits for the purpose of hearing and now the whole business was to be transacted in the meetings, where all the questions coming up before the meeting are to be decided by a majority of members present and voting. It was also pointed out that the quorum for such meeting was three members. The learned counsel therefore urged that even if the Chairman did not attend the meeting during the oral arguments, he ultimately at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned counsel, there was no miscarriage of justice in this case. The learned counsel also pointed out that such miscarriage of justice had to be shown by the appellants. As regards the other argument that there was non-application of mind on the part of the CCI, the learned counsel pointed out that there was clear cut evidence of carteling in this case, in view of the observations of the Commission in paragraph 6.5.31 and 6.5.36. Relying on those observations, the learned counsel urged that there was no question of any non-application of mind on that count. The learned counsel also relied on Section 79 (f) of the Indian Electricity Act as also Sections 92 and 94 of Indian Electricity Act and Regulation 20. He urged that at the most this could be an irregularity. According to him, when the oral arguments were made, the quorum was complete and therefore, it was a valid meeting. In so far as the question of institutional bias is concerned, the learned counsel described the report of the Economic Division to be by an expert hired by CCI. He pointed out that the experts could be hired by CCI. He pointed out that in view of the request made by the DG, the expert was provided. The learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rate in government supplies and assuring to meet the requirements. From this, the learned counsel urged that there could be no doubt about the carteling activities of the cement manufacturing companies and the further fact was established that CMA provided platforms to the members for evaluation and determination of impact of incidence of tax on cost. The learned counsel referred to the paragraph 6.5.33 and pointed out that the cement companies were interacting at the platform of CMA, sharing information about cost, prices, production and capacities which discussion facilitated interactions among the members for determination and fixation of both prices and production. Our attention was also invited to the fact of collection of prices of cement companies from all over the India. In this behalf, our attention was invited to the 95th meeting of the Managing Committee of CMA held on 30.11.2009 in New Delhi. The learned counsel also relied on the further observations. In short, the learned counsel urged that whatever would have been the cross-examination, one fact was certain that all the members of CMA and more particularly the appellants herein were availing of the platform of CMA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court as under:- if an expert body is to be created as submitted on behalf of the Union of India consistent with what is said to be the international practice, it might be appropriate for the respondents to consider the creation of two separate bodies, one with expertise that is advisory and regulatory and the other adjudicatory. This followed up by an appellate body as contemplated by the proposed amendment, can go a long way, in meeting the challenge sought to be raised in this Writ Petition based on the doctrine of separation of powers recognized by the Constitution. Any way, it is for those who are concerned with the process of amendment to consider that aspect. It cannot be gainsaid that the Commission as now contemplated, has a number of adjudicatory functions as well. 33. The adjudicatory role of the Competition Commission of India was reiterated by the Hon'ble Supreme Court in SAIL India case cited (supra), wherein it was unequivocally held that the CCI had the adjudicatory functions in addition to regulatory and advisory functions. The Hon'ble Supreme Court also referred to another function of the CCI, which was advocacy. However, it seems that by the Amendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCI to pass orders on completion of an inquiry and impose monetary penalties and in doing so the CCI would work as a collegiums and its decisions would be based on simple majority. Paragraph (c) relates to the establishment of the Competition Appellate Tribunal (CAT), which is to be headed by a retired judge of Supreme Court or Chief Justice of a High Court. There are other observations also. This Statement of Objects and Reasons is dated 24th February, 2006. In this bill also Sections 23, 24 and 25 were sought to be omitted while Section 22 was sought to be amended by omitting the reference to the Benches of the Competition Commission of India. There also in place of the Benches, it was provided that the Commission would transact its business in the meetings. Curiously enough in the Statement of Objects and Reasons dated 9th August, 2007, which was a Statement of Objects and Reasons for Competition Amendment Bill 2007 being Bill No. 70 of 2007 a significant change took place, where the earlier mentioned 3(b) was deleted. However, Section 22 as was proposed in the earlier Bill remained the same. In fact, what was changed in the Statement of Objects and Reasons, was the portion o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
