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TMI Blog2015 (9) TMI 1691X X X X Extracts X X X X X X X X Extracts X X X X ..... association or trade association or on a reference made by the Central Government or the State Government or a statutory authority. While determining whether or not an agreement has an appreciable adverse effect on competition under Section 3, the Commission is required to take into consideration all or any of the factors enumerated in Clauses (a) to (f) of Section 19(3) of the Act. It is significant to note thatParliament has neither prescribed any qualification for the person who wants to file an information under section 19(1)(a) nor prescribed any condition which must be fulfilled before an information can be filed under that section. There is nothing in the plain language of Sections 18 and 19 read with Section 26(1) from which it can be inferred that the Commission has the power to reject the prayer for an investigation into the allegations involving violation of Sections 3 and 4 only on the ground that the informant does not have personal interest in the matter or he appears to be acting at the behest of someone else - In a given case, the Commission may not act upon an information filed under section 19(1)(a) but may suo moto take cognizance of the facts constituting vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legations made in the information and the documents filed on 15.10.2003. Thus there is no escape from the conclusion that the view expressed by the majority of the Commission that no prima facie case is made out for directing an investigation under Section 26(1) suffers from a patent legal infirmity. The majority order of the Commission is set aside. The Director General shall now conduct investigation into the allegations contained in the information filed by the appellant under section 19(1)(a) and submit a report to the Commission within three months. However, it is made clear that while making investigation, the Director General shall not proceed on the premise that Respondent No. 2 was a part of the cartel - Appeal allowed. - Appeal No. 43 of 2014 - - - Dated:- 15-9-2015 - G.S. Singhvi, Chairman, J. Advocate: Shri Amit Khare and Shri Rajul Srivastava, Shri Kamal Sultanpuri, Deputy Director (Law) CCI. Shri Matrugupta Mishra and Shri Tushar Nagar, Shri Chetan S. Dhore, Shri Amod R. Bhole, Shri Sheikh Sahabuddin. JUDGMENT This appeal is directed against order dated 11.12.2013 by which majority of the Competition Commission of India (for short, the Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court are extracted below : ..Appellant herein is in business for the last 52 years. It had been taking part in contracts involving similar jobs in various parts of India. It had all along been quoting a low rate. According to it, despite the same it has been generating profits. The employer concededly is not bound to accept a bid only because it is the lowest. It must take into consideration not only the viability but also the fact that the contractor would be able to discharge its contractual obligations. It must not forget the ground realities. MAHAGENCO considered all aspects of the matter while accepting the appellant's offer. In its counter-affidavit, it categorically stated that the appellant would be able to perform the contractual undertaking even at such a low rate. xxx xxx xxx The question which arises for consideration is as to what relief can be granted in the instant case. The private respondents who had formed a cartel have successfully obtained the contract after the judgment of the High Court. Award of such contract although was subject to the decision of this appeal, this Court cannot ignore the fact that if the appellant is permitted to take over fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. It is, however, made clear that whatever arrangement is made by the respondents the same will be subject to the final decision of this Special Leave Petition. (underlining is ours for emphasis) 10. We, therefore, fail to understand as to how a fresh tender was floated to allot the work of liaisoning of coal and the same companies who had formed a cartel were allowed to carry on the contract job. We may, however, place on record that the contracts were awarded on the condition that the same would be subject to the final outcome and decision of this Court. 11. Our attention has been drawn to the fact that the petitioner was asked to file additional documents in support of its contention that it fulfilled the essential conditions of contract, if it so intended to do. It was, however, wholly unnecessary as only a fresh look was required to be given in regard to the eligibility of the petition for the purpose of awarding the contract where for the Scrutiny Committee was required to form an opinion as to whether the petitioner had substantially complied with the tender conditions, subject, of course, to the fulfilment of essential conditions. 12. Alleged contemnors, in our op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overall situation and particularly, in view of the opinion of the Scrutiny Committee that the petitioner had substantially complied with the conditions and, thus, the general power of relaxation should have been used. 15. It is, therefore, not a case where two interpretations of the judgment of this Court were possible. 16. Before us an additional affidavit has been filed by Shri Ajoy Mehta, Contemnor 1, stating: 17. I, therefore, respectfully submit that we have not flouted the orders passed by the Hon'ble Court and we shall abide by all directions given by this Hon'ble Court including awarding of the contract to M/s B.S.N. Joshi Sons Ltd., the petitioner herein, if this Hon'ble Court so directs. Keeping in view the aforementioned statement made before us, we accept the apology tendered by the alleged contemnors for the time being and direct that the contract for a period of one year be granted to the petitioner in terms of our judgment dated 31-10-2006. 17. We are distressed to see that MAHAGENCO had been encouraging formation of a cartel and, thus, allowing the rate of transportation of coal to go high up. Unless a power generating company takes all me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve opportunity of hearing to the appellant and also permitted him to file additional documents. The appellant availed that opportunity and filed the documents on 15.10.2013. However, without even adverting to the finding recorded by the Supreme Court and without considering the documents filed by the appellant, the majority of the Commission comprising the Chairman and four members declined to order an investigation into the allegations made by the appellant and closed the case under Section 26(2) of the Act. Paragraphs 24 to 26 of the majority order, which contain the ratio of its decision, are reproduced below : 24. To begin with, the allegations against the opposite party Nos. 2 to 4 with reference to the provisions of section 3 of the Act may be examined. The informant has annexed a chart containing quotes of the opposite party Nos. 2 to 4 for the year 2010 at page 370 onwards in the paper book. On perusal thereof, it appears that the quotes made by these parties were in a narrow band, yet the same cannot be described as identical or similar. Absent any other evidence or circumstance, it is difficult to infer any anti-competitive agreement solely on the basis of the chart no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reed between them. The result is that OP2 was continuing to be the agent for Chandrapur and Nasik power stations, OP3 for Koradi, Khaperkheda and Parli power stations and OP4 for Paras and Bhusawal power stations. As such, prima facie, the conduct of Ops 2 to 4 was in contravention of section 3(3) of the Act. The conduct of OP1 (procurer) and OPs 2 to 4 (bidders) also prima facie appeared to be covered within the ambit of section 3(4) of the Act. In the instant case, the overall conduct of Opposite Parties amounted to a refusal to deal with other players. The repeated ad hoc renewal of agreement for services was likely to oust certain persons or classes of persons who had offered services at competitive rates. He opined that the relevant product market is the market of liaison services relating to coal for thermal power stations; that the relevant geographical market is the area of State of Maharashtra and the relevant market would be liaison services relating to coal for thermal power stations in the State of Maharashtra. He also noted that the installed capacity of the thermal power stations being operated by Respondent No. 2 is 68000 M.W. it procures 45.57 million tonnes of coal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty price cannot be made subject matter of investigation under the Act.Respondent No. 2 has also accused the appellant of invoking the provision of the Act for espousing the cause of M/s. B.S.N. Joshi Sons Ltd. by asserting that he is working with the advocate who has been representing M/s. B.S.N. Joshi Sons Ltd. in several litigations. Respondent No. 2 has also pleaded that the impugned order does not call for interference under Section 53- B of the Act because the appellant did not produce any substantive evidence to show that Respondent Nos. 3 to 5 had formed a cartel. Respondent No. 2 has further pleaded that it is not a part of the cartel and even the Supreme Court has not recorded any finding in that regard. 15. Respondent Nos. 3 to 5 have generally questioned the bona fides of the appellant and accused him concealing the fact that the Public Interest Litigation is pending before Nagpur Bench of the Bombay High Courtquestioning the alleged hike in the electricity rates.These respondents have also controverted the allegations of favouritism or corruption and pleaded that the award of contracts to them is in no way injurious to public interest. 16. Shri Amit Khare, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission or the Tribunal with unclean hands. They also justified the allocation of liaison work to their clients and argued that Respondent No. 2 had been greatly benefitted by regular supply of quality coal to the thermal power stationsbeing operated by it. 19. I have considered the respective arguments and carefully scanned the record. The first question which requires consideration is whether the appellant should be non-suited on the ground that he had not approached the Commission with clean hands and that he has been representing and espousing the cause of M/s. B.S.N. Joshi Sons Ltd. 20. For decidingthe aforementioned question, it will be useful to notice Section 18 which enumerates the duties of the Commission, Section 19 which provides for inquiry into certain agreement and dominant position of enterprise and Section 26 which contains the procedure for inquiry under Section 19. These provisions read as under:- 18. Duties of Commission - Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plain language of Section 18 shows that the Commission is under an obligation to ensure that practices having adverse effect on competition are eliminated. The Commission is also duty bound to promote and sustain competition, protect the interest of consumers, and ensure freedom of trade carried on by other participants in markets in India. Of course, the exercise of power under Section 18 is subject to other provisions of the Act. Section 19(1) empowers the Commission to inquire into the allegations of contravention of Section 3(1) of Section 4(1) of the Act. This can be done by the Commission on its own motion or on receipt of any information from any person, consumer or their association or trade association or on a reference made by the Central Government or the State Government or a statutory authority. While determining whether or not an agreement has an appreciable adverse effect on competition under Section 3, the Commission is required to take into consideration all or any of the factors enumerated in Clauses (a) to (f) of Section 19(3) of the Act. 22. It is significant to note thatParliament has neither prescribed any qualification for the person who wants to file an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a) cannot be questioned. 24. The issue which remains to be considered is whether the majority order of the Commission is vitiated by an error of law and calls for interference under Section 53-B of the Act. At the cost of repetition, I would like to observe that for the purpose of ordering an investigation under Section 26(1), the only thing required to be seen by the Commission is whether there exists a prima facie case warranting such investigation. Although in view of the judgement of the Supreme Court in Competition Commission of India Vs. Steel Authority of India Limited- (2010) 10 SCC 744, an order passed by the Commission under Section 26(1) cannot be appealed against, legality and propriety of an order passed under Section 26(2) can certainly be subjected to judicial scrutiny by the Tribunal. In other words, if in exercise of the appellate power vested in it under Section 53- B the Tribunal is satisfied that the negative opinion expressed by the Commission on the issue of existence of a prima facie case is vitiated by an error of law then it may set aside the impugned order and direct an investigation under Section 26(1) of the Act. 25. A reading of the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is judicially subordinate to the Supreme Court and is bound by the verdict of the highest court in the country. 27. Another grave error committed by the Commission is that even though it did take cognizance of the chart containing the rates quoted by Respondent Nos. 3 to 5 for the year 2010 but totally ignored the allegations made in the information and the documents filed on 15.10.2003. Thus there is no escape from the conclusion that the view expressed by the majority of the Commission that no prima facie case is made out for directing an investigation under Section 26(1) suffers from a patent legal infirmity. 28. In the dissenting order, Justice S.N. Dhingra has relied upon the ratio of the Supreme Court judgement and held that the information filed by the appellant prima facie disclosed violation of Section 3(3) and 3(4) of the Act. He then opined that the relevant market would be liaison services relating to coal for thermal power stations in the State of Maharashtra and concluded that a prima facie case has been made out for ordering investigation under Section 26(1). In my view, the approach adopted by Justice S.N. Dhingra is legally correct and deserves to be approve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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