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TMI Blog2022 (12) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law. It is also relevant to note that the scope of interference of High Courts under Article 226 of the Constitution of India, in an order passed directing investigation under Section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides. A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2 is one such third party service provider which provides Maintenance, Repair Overhaul (MRO) services including Line Maintenance Services to aircrafts landing at RGIA. According to the 2nd Respondent, Line Maintenance Services can only be provided from the premises of RGIA. 4. Pursuant to the concession agreement, Petitioner No. 1 entered into a license agreement dated 20.12.2011 with the Respondent No. 2 granting an area of 96.04 Sq. Mts. at RGIA for Setting up and operating Airline Engineering Maintenance Office to provide line maintenance services for a period of three years. The said license agreement dated 20.12.2011 was extended vide agreement dated 28.11.2014 for a period of five years until 22.03.2019. 5. 1st Petitioner addressed a letter dated 22.02.2019 to Respondent No.2 informing that the license agreement dated 28.11.2014 cannot be extended as space occupied by second respondent was required for ongoing expansion works at RGIA. 2nd Respondent addressed an email dated 25.02.2019 requesting the 1st Petitioner to extend the license agreement dated 28.11.2014 which was due to expire on 22.03.2019 by another five years. 1st Petitioner replied to the said email by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of providing Line Maintenance Services at RGIA. Respondent No. 2 alleged that all third-party service providers providing MRO services including the Line Maintenance Services are subject to the control of Petitioner No. 1 as the same can only be provided from RGIA s premises and Petitioner No. 1 has discretion in granting licenses to such third-party service provides to operate businesses at RGIA. Respondent No. 2 alleged that the license agreement was not extended by Petitioner No. 1 to favour Petitioner No. 2 (subsidiary of GMR Air Cargo and Aerospace Engineering Limited (GACASEL) which in turn is a wholly owned subsidiary of Petitioner No. 1) which is also engaged in the business of providing Line Maintenance services. 9. Respondent No. 2 in its information alleged that Petitioner No. 1 abused its dominant position by a) denying market access to Respondent No. 2 by refusing to extend the market period which is contrary to S.4(2)(C) of the Act, 2002; b) by ousting Respondent No. 2 from the market from Line Maintenance Services and thereby adversely affecting competition in contravention to S.4(2)(b)(i) of the Act, 2002; c) by leveraging its dominant position in the upstream ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of market access along with alleged exclusionary motive of Petitioner No.1 suggests that it tried to eliminate competition to favour Petitioner No. 2. Therefore, Respondent No.1 noted that the allegations along with the material placed before it, prima facie, suggests that Petitioner No. 1 contravened S.4(2)(b)(i), S.4(2)(e) and S.4(2)(a)(i) of the Act, 2002. Respondent No.1 directed the Director General to conduct investigation. 14. On 04.10.2019, Respondent No.1 dealing with the application filed under S.33 of the Act, 2002 by Respondent No. 2 seeking interim reliefs, inter alia, to continue the business of Line Maintenance Services from the premises of RGIA directed the parties to appear on 17.10.2019 for a hearing on grant of interim reliefs. 15. Therefore, the Petitioners have filed the present writ petition challenging the orders dated 03.10.2019 and 04.10.2019. An interlocutory application I.A. No. 1 of 2019 was filed by the Petitioners seeking interim stay of all further proceedings pursuant to the orders dated 03.10.2019 and 04.10.2019 pending disposal of the writ petition. This Court vide order dated 16.10.2019 granted interim stay of impugned orders dated 03.10.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not domestic airlines to determine market share of the competitors. Further, Respondent No.1 considered downstream market share of providing Line Maintenance Services based on number of airlines (customers) and not the number of flights serviced by the competitors. Had Respondent No. 1 considered number of flights to consider market share it would a reach a conclusion that Petitioner No.2 was the dominant player in the downstream market. Respondent No.1 failed to consider the market share of other competitors like AI SATS which also provide Line Maintenance Services. vi. Furthermore, the relevant geographic market determined by Respondent No.1 is unsustainable as it failed to consider that Respondent No.2 operates pan India and relevant geographic market cannot be restricted to Line Maintenance Services at RGIA. vii. Further, Petitioner No.1 did not create any hurdles by not granting requisite permissions to Respondent No.2 and the said allegation is baseless. viii. There was no exclusionary motive on the part of Petitioner No.1 to benefit Petitioner No. 2, which was already in the business of providing MRO services including Line Maintenance Services from 2010 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliminate practices having adverse impact on competition and is obligated to promote and sustain competition along with protecting the interests of the consumers. Therefore, the impugned order dated 03.10.2019 was passed in exercise of the said jurisdiction. iv. The reliefs claimed in W.P. No. 13298 of 2019 have no bearing on the proceedings before Respondent No. 1 as the later deals with competition law effecting an entire market and consumers whereas the former deals with a commercial dispute between two private parties. The issues before this Court in W.P. No. 13298 of 2019 dealt with constitutional law and it could not have gone into the issues of competition law, the jurisdiction of which rests with Respondent No. 1. Therefore, it cannot be said that Respondent No. 1 usurped the jurisdiction of High Court. v. Reiterating the findings of the impugned order dated 03.10.2019 it was contended that a prima facie case was made out that Petitioner no.1 abused its dominant position and the same requires investigation. vi. Further, the impugned order dated 04.10.2019 is only a notice directing the parties to appear. The Petitioners are given opportunity of hearing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with competition law issues and the former dealt with violation of Articles 14 and 19 along with violation of principles of natural justice. Therefore, the main question before this Court is whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court. 20. Before deciding the issues at hand, it is apposite to discuss the scope of CCI s (Respondent No.1) power and jurisdiction under S.26(1) of the Act, 2002vis- -vis the scope of interference by High Court under Article 226 of Constitution of India. 21. In SAIL (supra), the Hon ble Supreme Court explaining the scope of prima facie investigationheld that an order passed under S.26(1) of the Act, is an administrative order which has no civil consequences. The relevant paragraphs are extracted below: 37. As already noticed, in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be interfered with, as the proceedings are only at the preliminary stage. It is only after the investigation that the CCI can reach a conclusion whether competition law was breached. Therefore, an order directing investigation cannot be interfered with. The relevant paragraph is extracted below: 45. If the contention of the appellants is accepted, it would render the entire purpose of investigation nugatory. The entire purpose of such an investigation is to cover all necessary facts and evidence in order to see as to whether there are any anti-competitive practices adopted by the persons complained against. For this purpose, no doubt, the starting point of inquiry would be the allegations contained in the complaint. However, while carrying out this investigation, if other facts also get revealed and are brought to light, revealing that the persons or enterprises had entered into an agreement that is prohibited by Section 3 which had appreciable adverse effect on the competition, the DG would be well within his powers to include those as well in his report . Even when CCI forms prima facie opinion on receipt of a complaint which is recorded in the order passed under Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as aforereferred. However, other decisions and orders, which are not directions simpliciter and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act 2002. The competition law enforcement deals with anticompetitive practices and in those circumstances, once the CCI forms a prima facie opinion on receipt of a complaint which is given under Section 26(1) of the Act of 2002, directs the Director General to conduct an investigation, at that initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act, which is to prevent practices having appreciable adverse effect on the competition. Therefore, at this stage, in the considered opinion of this Court, the issues and grounds raised in respect of anticompetitive practices as argued by the learned counsel for the appellants does not arise. The appellants are certainly entitled for opportunity of hearing as provided under the Statute and the present petitions/appeals are certainly premature. 21. In the light of the aforesaid, in order to achieve the object of the Act of 2002, the question of interference does not ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter. 22. The Hon'ble Supreme Court in the aforesaid case has held that unless and until the show cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first stage of initiating process under the CCI Act and the enquiry is yet to commence. The appellants do not want to participate in the enquiry for the reasons best known to them. 23. The present case is not a case where the mala fides are alleged against the Regulator, nor there is any jurisdictional infirmity. The order passed under Section 26(1) is neither an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he law laid down by the Hon'ble Supreme Court in the case of CCI v. SAIL, the order passed under Section 26(1) does not set into motion an unstoppable process that necessarily culminates into an adjudication against the entity against whom an enquiry is initiated. In fact, Section 26 of the Act of 2002 read as a whole, discloses a comprehensively and thoughtfully construed, stepwise scheme which contemplates not only a fair hearing to the concerned parties at the appropriate stage, but it is characterized by an inherent robustness by which the proceedings may culminate in closure. 28. In the present case, earlier also there was an information submitted against the appellants and the matter is ended in closure (AIOVA case). The Director General after conducting an enquiry recommended closure by submitting an investigation report and the same was accepted by the CCI. Therefore, the appellants should not feel shy in participating in the enquiry, which is yet to commence by the Director general and all the grounds raised by the appellants shall be available before the Director General as well as before the CCI. The order passed under Section 26(1) is only the starting poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rjee, reported in (1958) SCR 514. Keeping in view the aforesaid definition of prima facie case and after going through the material on record, this Court is of the opinion that the CCI has rightly exercised its jurisdiction based upon the prima facie information on receipt of a complaint and therefore, in the considered opinion of this Court, the quashment of the same does not arise. 24. Similarly, the Madras High Court in TANGEDCO v. Competition Commission of India ( 2021 SCC OnLine Mad 6549.) refused to interfere in the investigation ordered under S.26(1) under Article 226 and held as follows: 55. In the present case, perusal of the allegations raised by the 3rd respondent would reveal that there is a prima facie case that the TANGEDCO/writ petitioner enjoys dominant position in respect of electricity in the State of Tamil Nadu. This factum is not disputed. When the writ petitioner/TANGEDCO is in dominant position, the allegations set out in the complaint indicates certain abuses and therefore, the said abuse of dominant position warrants any further action or not, is to be investigated and all appropriate proceedings are to be allowed for the purpose of formi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter. As rightly observed by the learned single Judge, an order for investigation passed under Section 26(1) is a preliminary order and does not give room for conclusion on the allegation made against the erring party except for forming an opinion with regard to the existence of a prima facie case. On the other hand, orders passed under Section 26(2), 26(6) are final orders closing the matter by coming to a conclusion that no prima facie case exists even at the threshold view of the matter or when the Director General, after investigation, makes recommendation to the effect that there is no contravention and such recommendation is agreed by the Commission. Therefore, under both circumstances, a final order is passed closing the matter. On the other hand, after inquiry, if the Commission finds that there is a contravention, it will issue appropriate direction and impose penalty on the erring party. Thus, the said order is again a final order passed under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uences. Moreover, the order going to be passed by the Commission under Section 26(2) being a final order putting an end to the information received in any one of the specified modes, is only appealable. Therefore, the issue No. (ii) is also answered against the appellant. 26. From the above decisions, it is clear that an order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under Section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. A relief for breach of fundamental rights is independent from a relief sought aggrieved by abuse of dominance. Respondent No. 1/CCI was well within its jurisdiction to entertain information under S.19(1) of the Act, and order investigation on the basis of prima facie opinion. 31. The Petitioners relying on Bharti Airtel (supra) contended that when matter was pending before another authority, CCI cannot direct investigation as it may lead to contrary findings. The said contention cannot be accepted. The decision of Bharti Airtel (Supra) is distinguishable on facts. In the said case, the Court held that CCI cannot decide the issues pertaining to telecom sector as TRAI had exclusive jurisdiction. It was only after the issues pertaining to the telecom sector were decided, the CCI could have decided breaches of competition law. The relevant paragraphs of Bharti Airtel (supra) are extracted below: 104. We, therefore, are of the opinion that the High Court is right i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party towards other has little or no bearing on abuse of dominance which effects the entire market. Further, the said contention loses its relevance as W.P. No. 13298 of 2019 was withdrawn and the same was recorded in order dated 02.01.2020. Therefore, given that no parallel proceedings are pending at this juncture, this Court cannot interfere with the investigation ordered vide order dated 03.10.2019. 33. Petitioners contended that any interim order passed in furtherance of order dated 04.10.2019 directing the Petitioners to appear to decide the interim reliefs will be contrary to orders dated 16.08.2019 passed in W.A. No. 677 of 2019. Petitioners contended that the Division Bench of this Court gave a categorical finding that the dispute between Petitioner No. 1 and Respondent No. 2 is commercial in nature and the relationship between them is of a licensor and licensee. Therefore, CCI/Respondent No. 1 cannot interfere with disputes arising out of contractual obligations. This Court does not see merit in the said contentions. The findings recorded in W.A. No. 677 of 2019 were pursuant to the material placed before the Division Bench based on which it was held that commercial dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to an adjudicatory function but is merely of administrative nature. At best, it can direct the investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of Section 26(2) of the Act, which order itself is appealable before the Tribunal and only after this stage, there is a specific right of notice and hearing available to the aggrieved/affected party. Thus, keeping in mind the nature of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered view that the right of notice or hearing is not contemplated under the provisions of Section 26(1) of the Act. 36. The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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