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TMI Blog2019 (9) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... at wherever an interim order or stay is granted, the beneficiary of the interim order is bound to pay interest on the amount withheld or not paid by virtue of the interim order unless the final order indicates otherwise. It is material to note that the CCI had found the petitioner to be falling foul of Section 3 of the Act. This finding was not disturbed by COMPAT. The COMPAT had merely reduced the penalty and had modified CCI s order dated 10.07.2015 to that extent. Such modification would, obviously, relate back to CCI s order, that is, the order dated 10.07.2015. The contention that the order of CCI had merged with the order passed by COMPAT is correct. However, the COMPAT order reaffirmed CCI s decision to levy penalty and that decision, having been sustained, cannot be considered as inoperative or non-existent for the period during which it was suspended on account of the stay order. The interest on such penalty being a statutory levy is required to be paid - the petitioner is required to pay interest on the delayed payment - Petition dismissed - decided against petitioner. X X X X Extracts X X X X X X X X Extracts X X X X ..... delay of fourteen months in depositing the penalty. 5. The petitioner contends that the aforesaid demand notices are illegal inasmuch as they are contravention of Regulation 5 of the Recovery Regulations'). It is submitted that the demand notice was served on the petitioner during the pendency of the appeal in COMPAT and thus, the petitioner is not liable to pay the interest in terms of the aforesaid Regulations. CCI refutes the same and contends that the pendency of the appeal in COMPAT, in no manner, negates the liability of the petitioner to pay interest on account of delay in payment of penalty. It is further submitted that the CCI has acted within its powers in terms of the Recovery Regulations. 6. The only issue which falls for consideration of this Court is whether the petitioner is liable to pay interest to the CCI on account of delay in payment of penalty as levied upon it. Factual Background 7. In September 2013, information was filed with the CCI alleging that the petitioner, along with three other Public Sector General Insurance Companies - National Insurance Company Ltd., New India Assurance Company Ltd. and Oriental Insurance Company Ltd. - had indulged in carteli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the penalty amount and a sum of ₹ 15,662 crores was being deposited by the petitioner in pursuance to the said order. 15. The aforesaid appeal was disposed of by an order dated 09.12.2016, whereby the COMPAT held the aforesaid companies, including the petitioner, guilty of 'bid rigging' and thus "constituting contravention of Section 3 of the Act". However, the Tribunal after considering the mitigating factors, reduced the quantum of penalty from 2% of the average turnover to 1% of the relevant turnover. As a result, the total penalty imposed on the petitioner was reduced from ₹ 156.62 crores to ₹ 1.56 crores. A tabular statement of the aforesaid reduction in penalty, imposed on the said four companies, is set out below: S.no. Name of the Appellant Turnover being the premium share for 2010-11 Turnover being the premium share for 2011-12 Turnover being the premium share of 2012-13 Average Turnover for Three Years @1% of the Average turnover 1. National Insurance Co. Ltd. 7.89 20.95 31.10 19.98 0.20 2. New India Assurance Co. Ltd. 7.89 20.95 31.10 19.98 0.20 3. Oriental Insurance Co. Ltd. 11.84 3.94 0.04 4. United India Insurance Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore, the demand notice dated 01.10.2015 issued by CCI was unsustainable. He submitted that if the said demand is ignored - since it was contrary to the orders of COMPAT - there was no demand of penalty outstanding against the petitioner. He referred to Regulation 3(3) of the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011 (the Recovery Regulations) and contended that in terms of the said regulation, a demand notice is required to provide time of thirty days from the date of service of the demand notice to the enterprise concerned, to deposit the penalty. He submitted that since a valid demand notice had not been issued prior to the petitioner paying the penalty, no interest was payable since there was no delay. He submits that there has been no delay in paying the penalty. 23. Next, he submitted that the order dated 10.07.2015 passed by the CCI stood merged with the judgment dated 09.12.2016 passed by COMPAT and therefore the period of delay, if any, was required to be reckoned after the said decision was rendered. He relied on the decision of the Supreme Court in Khoday Distilleries Limited v. Shri Mahadeshwara Sahakara Sakkare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half per cent, for every month or part of a month comprised in the period commencing from the day immediately after the expiry of the period mentioned in demand notice and ending with the day on which the penalty is paid: Provided that the Commission may reduce or waive the amount of interest payable by the enterprise concerned if it is satisfied that default in the payment of such amount was due to circumstances beyond the control of the enterprise concerned: Provided further that where as a result of an order of the Competition Appellate Tribunal or the High Court or the Supreme Court of India, as the case may be the amount of penalty payable has been reduced, the interest shall be reduced accordingly and the excess interest paid, if any, shall be refunded in accordance with regulation 14." 27. It is clear from the plain reading of the said Regulation that simple interest at the rate of one and one half per cent for every month, or part of the month, commencing from the date immediately after expiry of the period mentioned in the demand notice, is payable. The contention that since the order passed by CCI had been stayed, there was no delay in making the penalties, is unsus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner in spite of his failure. We do not think that any such unjust consequence can be countenanced by the courts. As a matter of fact, the contention of the consumers herein, extended logically should mean that even the enhanced rates are also not payable for the period covered by the order of stay because the operation of the very notification revising/enhancing the tariff rates was stayed. Mercifully, no such argument was urged by the appellants. It is un-understandable how the enhanced rates can be said to be payable but not the late payment surcharge thereon, when both the enhancement and the late payment surcharge are provided by the same Notification - the operation of which was stayed." The above principles have been followed and reiterated by this Court in Rajasthan Housing Board vs. Krishna Kumari - 2005 (13) SCC 151 and Nava Bharat Ferro Allays Ltd vs. Transmission Corporation of Andhra Pradesh Ltd - 2011 (1) SCC 216. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss it feels that in the facts and on the circumstances of the case, the restitution would far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the Court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier would not or ought not to have passed. There is nothing, wrong in an effort being made to restore the parties to the same position in which they would have been if the interim order would not have existed." 23. It is therefore evident that whenever there is an interim order of stay in regard to any revision in rate or tariff, unless the order granting interim stay or the final order dismissing the writ petition specifies otherwise, on the dismissal of the writ petition or vacation of the interim order, the beneficiary of the interim order shall have to pay interest on the amount withheld or not paid by virtue of the interim order. Where the statute or contract specifies the rate of interest, usually inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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