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TMI Blog2023 (1) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... even an action which may form itself, may be agreement of creating Cartel. It is obvious that there may not be patent evidence as to forming Cartel or creating an agreement in writing. The facts and circumstances of the case may reflect, primafacie, that there is agreement and/ or Cartel. Now, it is well settled that under Section 26(1) of the Act, the Commission is only required to see whether a primafacie opinion exist or not. The order under Section 26(1) of the Act can be passed when there is prima-facie material to direct an inquiry and elaborate reasons are not required, as Commission is required to express only a tentative view. It is also settled that in case elaborate reasons are provided in the order passed under Section 26(1), it will certainly prejudice the person against whom the complaint has been made, and therefore, the Statute provided a safeguard for holding an inquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing by holding inquiry in the matter - considering the provision of Section 53A, admittedly, the order of inquiry passed by the Commission, by virtue of power under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commission has considered every material placed before it before arriving at the prima-facie opinion as to inquiry. Now, the main grievance of the petitioner is the interpretation of L1 price and negotiation price in each packet and has submitted that the Commission has misinterpreted the information provided to it. However, it needs to be observed that it is for the Commission to interprete and consider the information provided to it by the person concerned relating to material, which may be in the form of business transactions, information relating to Accounts or such statistical data, etc. The Court has no such expertise in evaluating or interpreting the business data or statistical data pertaining to a particular commercial activity. Any such information which is in the form of statistical data relating to any business or commercial transaction and accounting procedure may be interpreted in a different manner by different person having such expertise, knowledge in such fields. The angle of interpretation of such data may be different by different person and, therefore, the submission of the petitioner that information relating to the statistical datea including the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NO. 9521 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 2 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9521 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9520 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9520 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 2 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9520 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 9583 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9583 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 2 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 9583 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 10933 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 10933 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 2 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 10933 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 12309 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 11124 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 11124 of 2020 With CIVIL APPLICATION (FOR STAY) NO. 2 of 2022 In R/SPECIAL CIVIL APPLICATION NO. 11124 of 2020 With R/SPECIAL CIVIL APPLICATION NO. 11122 of 2020 With CIVIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIMA MALHOTRA ADVOCATE ORAL JUDGMENT 1. The present group of petitions are filed against the order of respondent Nos. 1 and 2 passed in Case No. 24/2019 initiating the investigating proceedings and other notices, issued thereof, and involves the provisions of Competition Act, 2002. All these petitions are tagged together and heard finally at admission stage. 2. Since common arguments has been adressed in relation to Special Civil Application No. 10933 of 2020, the said matter has been treated as lead matter and the facts have been taken from the said petition. 3. At the outset, it requires to be observed that the petitioners of Special Civil Application No.11152 of 2020, Special Civil Application No.9521 of 2020, Special Civil Application No. 9520 of 2020, Special Civil Application No. 9583 of 2020, Special Civil Application No. 10933 of 2020, Special Civil Application No. 11124 of 2020, Special Civil Application No. 11122 of 2020, Special Civil Application No. 11128 of 2020, Special Civil Application No. 11126 of 2020, Special Civil Application No. 11123 of 2020, Special Civil Application No. 11127 of 2020, Special Civil Application No. 11150 of 2020, Special Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cie opinion by the respondent No.1. 4.4 It is contended by the petitioner that in continuation of the Information Petition filed by his father, with the sole objective of harrasing other printers and eliminating competition in Gujarat by keeping other printers embroiled in the litigation and under fear of being penalising for participating and not being awarded any tender, respondent No.3 filed Information Petition in or around June, 2019, which is for supporting evidence in the case No. 32 of 2018, filed by respondent No.3 s father. It is contended that as per respondent No.3 himself, , there is overlapping information in his Information Petition and that in case No. 32 of 2018, however, he has re-filed the same with respondent No.1 for proper investigation and outcome . The said Information Petition filed by respondent No.3 was numbered as Case No. 24 of 2019 by respondent No.1. The said Information Petition sought to make baseless allegation of restrictive tendeing by respondent No.1 and bid rigging by the successful bidders in the Pragna Tender quoted by respondent No.4 for the period from 2016-17 to 2018-19. 5. Mr. Mihir Thakore, learned Senior Counsel with Ms. Amrita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on even while forming a prima facie view. However, while passing directions and orders dealing with the rights of the parties in its adjudicatory and determinative capacity, it is required of the Commission to pass speaking orders, upon due application of mind, responding to all the contentions raised before it by the rival parties. 97. The above reasoning and the principles enunciated, which are consistent with the settled 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, requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Central or the State Government or a statutory authority or on the basis of the information/complaint under Section 19 or on the basis of its own knowledge, form an opinion that there exists a prima facie case of contravention of Section 3(1) or Section 4(1) of the Act. Without forming such an opinion, no investigation by the DG can be ordered to be made. However, while forming such an opinion, as per SAIL (supra), CCI is not mandated to hear the person/enterprise referred/informed against. 18(B) The statute does not provide any remedy to a person/enterprise, who/which without being afforded any opportunity, has by an order/direction under Section 26(1) been ordered/directed to be investigated against/into. Though ComPAT has been created as an appellate forum against the orders of CCI but its appellate jurisdiction is circumscribed by Section 53A of the Competition Act and no appeal is prescribed against the order of CCI under Section 26(1) of the Act. The said person/enterprise, in the absence of any remedy, has but to allow itself to be subjected to and participate in the investigation. 18(K) We are of the opinion that once petitions under Article 226 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act having been committed. Our Constitutional values and judicial principles by no stretch of imagination would permit an investigation where say CCI orders/directs investigation without forming and expressing a prima facie opinion or where the prima facie opinion though purportedly is formed and expressed is palpably unsustainable. The remedy of Article 226 would definitely be available in such case. 5.2 Mr. Mihir Thakore, learned Senior Counsel submits that the order dated 13.1.2020 passed by CCI is clearly non-speaking and does not record even some reason even while forming a prima facie view since it proceeds on the mere basis that there is some force in the submission of the Informant only on the patently false and untenable ground that each individual item under each package by L1 winner of that package are also lowest . He has also submitted that CCI has completely overlooked the following while arriving at this sweeping false prima facie view and directing investigation: 1. CCI has not adhered to the Supreme Court s direction in the case of CCI v. SAIL (Supra) that such opinion should be formed on the basis of the records . 2. CCI has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. These grounds limit the jurisdiction of the Central Govern- ment. No jurisdiction, outside the section which empowers the initiation of investigation, can be exercised. An action, not based on circumstances suggesting an inference of the enumerated kind will not be valid. In other words, the enumeration of the inferences which may be drawn from the circumstances, postulates the absence of a general discretion to go on a fishing expedition to find evidence. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstance leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. As my brother Shelat has put it trenchantly:- It is not reasonable to say that the clause permitted the government to say that it has formed the opinion on circumstances which it thinks exist..................... Since the existence of circumstances is a condition fundamental to the making of an opinion, the existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned in the order dated May 19, 1965. Had the Chairman applied his mind to the relevant facts, he could not have formed this opinion. I am, there- fore, inclined to think that he formed the opinion without applying his mind to the facts. An opinion so formed by him is in excess of his powers and cannot support an order under s. 237(b). The appeal is allowed, and the impugned order is set aside. I concur in the order which Shelat, J. proposes to pass . J.M.Shelat, J. 19. Thus the consideration on which action is permissible under S. 234 and the kind of action taken thereunder are different from those under S. 237. It is true that the authority to take action under S. 235 is the government and the action authorised thereunder is investigation but action can be taken thereunder not suo motu but only on an application by a certain number of members or by members with a certain amount of voting power or on the Registrar's report. Section 234, besides, has nothing to do with investigation as S. 235 and S. 237 have, though on a report under S. 234, the government can institute investigation under cl. (e) of S. 235. Section 10-E was inserted in the Act by Act LIII of 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances suggesting that the company's business was being conducted as laid down in sub-cl. (i) or that the persons mentioned in sub-cl. (ii) were guilty of fraud, misfeasance or misconduct towards the company or any of its members. According to this construction, though the opinion its subjective the existence of circumstances set out in Cl. (b) is a condition precedent to the formation of such opinion and, therefore, even if the impugned order were to contain a recital of the existence of those circumstances the Court can go behind that recital and determine whether they did in fact exist. The learned Attorney-General opposed this construction and argued that the clause was incapable of such dichotomy, that not only the opinion was subjective but that the entire clause was made dependent on such opinion, for what the clause lays down is that the authority must come to an opinion on materials before it that there exist circumstances suggesting fraud or intent to defraud, etc. Such dichotomy, according to him, is impossible and not reasonable because it cannot be that the authority must first ascertain by holding an inquiry that there are circumstances suggesting fraud or intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the ingredients of bid-rigging and no inference could have been drawn of bidrigging purely based on lowest bids since that would amount to pure conjecture. The respondent no. 1 has not discussed of analyses even to a prima facie extent, that such ingredients could be found from the material produced on record. It is well settled that quoting of lowest price by itself cannot be the basis of drawing any conclusions as to bidrigging or collusive bidding or cartelization. There may be varied situations such as monopsony or oligopsony, the manner in which the authority conducts the tender process, the control it exercises over awarding of work, etc. For the aforesaid submission, Mr. Mihir Thakore, learned Senior Counsel has relied upon the decision in case of Rajasthan Cylinders v. UOI, 2018, reported in SCC Online SC 1718 and has submitted that CCI has not even prima facie found any evidence of any connected or coordinated action which can amount to bidrigging or any agreement as defined in the Competition Act, 2002. The said order is therefore ex facie without jurisdiction, perverse, illegal and liable to be set aside. 4. There is no allegation of any wrongdoing by these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely untenable. 5 printers (being M/s. Ajay Offset, Bhavik Publication Pvt. Ltd., M/s. Jagdish Offset, Print Vision Pvt. Ltd. and Shreedhar Printers Pvt. Ltd.) did not succeed in any package. 7. CCI has ignored GCEE s categorical case that it does not look into individual prices of each and every item but the total cost of procurement and thereafter negotiates to bring the cost down further, and that there was a rise in costs of paper, printing, labour, etc and that, in 2019- 20, the tendering process underwent a drastic change as it went from nprocure website to GeM. 8. CCI has also ignored the vital fact, which was also pointed out by GCEE that this was a motivated Information Petition by persons who had failed in their earlier attempts before CCI and were trying to take entry in job work of GCEE and was an abuse of process for personal gain. 9. CCI has also ignored the fact that the Informant had approached CCI in respect of matter which were long concluded and there was gross delay which ought to have alerted CCI as to the motivated nature of the Information Petition. 5.3 Mr. Mihir Thakore, learned Senior Counsel submits that the Order suffers from the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly / indirectly results into bid rigging / collusive bidding. 6.2 The Commission will have the jurisdiction to start the inquiry only if on the available facts it has arrived at a satisfaction to form an opinion that there exists a prima facie case. The Commission cannot assume facts to enter upon the jurisdiction. The existence of facts is always open to Judicial Review. If it is established that the opinion is formed on the basis of :- (i) assumptions of facts (ii) consideration of irrelevant facts (iii) non consideration of relevant facts The Court must infer that the Authority did not apply its mind to the relevant facts. The opinion is then lacking as the condition precedent for exercise of powers does not exist. The Court would then exercise jurisdiction under Article 226 of the Constitution of India to review such a decision. 6.3 The impugned order proceeds to record a prima facie opinion that the rates quoted by parties were not independent and appear to be based on a connected and coordinated action . For arriving at the said opinion the Commission assumes that the bid/ bidders price for all items comprised in the package were always low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Commission by itself would not authorize the forming of a prima facie opinion. In Paragraph 17.2 of the order the Commission has recorded the stand of the GCEE that GCEE further stated that it does not look at individual prices of each and every item in the package but is concerned with the total cost of procurement of the tendered quantity of books and other items as it is interest in bringing down the total cost of procurement . This relevant fact is completely overlooked by the Commission. Once it is established that the tendering agency does not look at individual item prices in the package but is concerned only with the total cost of procurement, the price quoted in the individual items becomes an irrelevant consideration. 6.7 Even if prices of the bidders are the same, that by itself would not be sufficient to form an opinion that there was an agreement which directly or indirectly results in bid rigging or collusive bidding. It is essential to look at the relevant facts which would include the nature of the relationship between the tendering agency and the bidders and the tender conditions. In support of his above submission, Mr. Joshi, learned Senior Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no substitute and no significant technology change. Further, there is an active trade association in which most of the appellants are the members. Their interest is to ensure that no new entrants are able to join. Further, the trade association also ensures that all the members are able to get some order. It is for this reason the bids submitted in various standards which are floated by IOCL at different places are almost identical despite varying cost. The authorities below attributed this identical bidding to the concerted action of the appellants. This has been inferred from the fact that 2-3 days before the submission of bids, meeting of the association took place which most of the appellants attended. Not only this, common agents, six in number, were appointed who submitted the bids on behalf of these appellants. 89) We may say at the outset that if these factors are taken into consideration by themselves, they may lead to the inference that there was bid rigging. We may, particularly, emphasise the fact that there is an active trade association of the appellants and a meeting of the bidderswas held in Mumbai just before the submission of the tenders. Another very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimately, all the bidders supply the goods at the same rate which is fixed by the IOCL after negotiating with L-1 bidder. The only difference is that bidder who is L-1 would be able to receive the order for larger quantity than L-2 and L-2 may get an order of more quantity than L-3. (iv) It has also come on record that there are very few suppliers. For thetender in question, there were 50 parties already in the fray and 12 new entrants were admitted. Number of 12, in such a scenario, cannot be treated as less. Therefore, the conclusion of CCI that the appellants ensured that there should not be entry of new entrant may not be correct. (v) Since there are not many manufacturers and supplies are needed by the three buyers on regular basis, IOCL ensures that all those manufacturers whose bids are technically viable, are given some order for the supply of specific cylinder. For this purpose, it has framed its broad policy as well. This also shows that control remains with IOCL. Thus, the appellants appear to be correct when they say that all the participants in the bidding process were awarded contracts in some State or the other which was aimed at ensuring a bigge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on the ground, those very factors on the basis of which the CCI has come to the conclusion that there was cartelization, in fact, become valid explanations to the indicators pointed out by the CCI. We have already commented about the market conditions and small number of suppliers. We have also mentioned that 12 new entrants cannot be considered as entry of very few new suppliers where the existing suppliers were only 50. Identical products along with market conditions for which there would be only three buyers, in fact, would go in favour of the appellants. The factor of repetitive bidding, though appears to be a factor against the appellants, was also possible in the aforesaid scneario. The prevailing conditions in fact rule out the possibility of much price variations and all themanufacturers are virtually forced to submit their bid with a price that is quite close to each other. Therefore, it became necessary to sustain themselves in the market. Hence, the factor that these suppliers are from different region having different cost of manufacture would lose its significance. It is a situation where prime condition is to quote the price at which a particular manufacturer can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Another system, which has come to light, is to rotate orders. In such a case, the firm whose turn is to receive an order will ensure that its quote is lower than the quotes of others. 52. We are here concerned with parallel behaviour. We are conscious of the argument put forth by Mr Venugopal that in an oligopoly situation parallel behaviour may not, by itself, amount to a concerted practice. It would be apposite to take note of the following observations made by European Court of Justice in Dyestuffs: By its very nature, then, the concerted practice does not have all the elements of a contract but may inter alia arise out of coordination which becomes apparent from the behaviour of the participants. Although parallel behaviour may not itself be identified with a concerted practice, it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not respond to the normal conditions of the market, having regard to the nature of the products, the size and number of the undertakings, and the volume of the said market. Such is the case especially where the parallel behaviour is such as to permit the parties to seek price equilib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioners. In absence of the satisfaction being so recorded , the Committee would not have the authority to order an investigation against the Petitioners. 6.10 The Commission has committed material irregularity in the manner in which it has acted upon the complaint filed by the informant. The Petitioners along with GCEE were the opposite parties in the proceedings. The allegation in the Complaint is that there is cartelization and bid rigging of the tender process. The Commission could have proceeded to order the inquiry without issuing notice to any of the parties. The Commission could not have issued notice to one and not the others. The Commission issues notice upon GCEE; provides to it an opportunity to file an affidavit; bifurcates the issues qua the opposite parties and exonerates GCEE on the basis of the response submitted by it and orders enquiry only in respect of the allegation of bid rigging. The procedure to be followed by the Commission to be fair has to be the same for all parties to the Complaint. If the opportunity is provided to the GCEE it is also required to be provided to the Petitioners. The Petitioners would also have been able to place on record the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if there is real negotiable price then it might be same for every year. He has also submitted that the Commission has asked for further information from the GCEE. He has submitted that for the year 2019-20, tender has been given to GALA for much less amount than the prior years. He has submitted that he has provided further information to the CCI. He has submitted that GCEE is concealing the fact from CCI. He has supported the impugned order of the CCI directing investigation against all the petitioners. He has submitted to dismission all the petitions. 8. Mr. Devang Vyas, learned ASG with Mr. K.M.Antani and Ms. Garima Malhotra, learned advocates for the Competition Commission of India, has raised the point as to the maintainability of the petition. He has submitted that the petitioners, by way of present petition, have sought to challenge the correctness of material assessed by the Respondent No.1 and the reasons provided while passing the Impugned Order under section 26(1) of the Act thereby amounting to fling of an appeal against the said order, which in respectful submission cannot be entertained and does not warrant interference by way of judicial review under Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowest in each item of the package than other the bidders, which according to the Informant before CCI is unusual and in normal course, highly improbable. It is submitted that while initiating the proceedings under Section 26(1) of the Act, in its order dated 13.01.2020, the Respondent No.1-CCI considered in detail several relevant and material facts. From the said materials, the Commission was of the opinion that there exists a prima facie case warranting an investigation for the contravention of provisions of Section of the direction from the 3(1) read with Section 3(3)(d) of the Act. Upon receipt of the direction from the Commission, the DG issued a notice dated 25.06.2020 to the Petitioners in Case No. 24 of 2019, under Section 41(2) read with Section 36(2) of the Act, wherein certain information/documents were sought from the Petitioners. It is pertinent to note that this information sought was relevant for the purpose of investigation. 8.3 Mr. Vyas, learned ASG has further submitted that the Hon ble Supreme Court of India in CCI vs SAIL (Supra) has observed that an order passed under Section 26(1) of the Act is an administrative order and the Competition Commission has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties, as it may deem necessary. In that event it shall be `preliminary conference', for whose conduct of business the Commission is entitled to evolve its own procedure. 3) The Commission, in cases where the inquiry has been initiated by the Commission suo moto, shall be a necessary party and in all other cases the Commission shall be a proper party in the proceedings before the Competition Tribunal. The presence of the Commission before the Tribunal would help in complete adjudication and effective and expeditious disposal of matters. Being an expert body, its views would be of appropriate assistance to the Tribunal. Thus, the Commission in the proceedings before the Tribunal would be a necessary or a proper party, as the case may be. 4) During an inquiry and where the Commission is satisfied that the act is in contravention of the provisions stated in Section 33 of the Act, it may issue an order temporarily restraining the party from carrying on such act, until the conclusion of such inquiry or until further orders without giving notice to such party, where it deems it necessary. This power has to be exercised by the Commission sparingly and under compelling and e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. Wherever, in the course of the proceedings before the Commission, the Commission passes a direction or interim order which is at the preliminary stage and of preparatory nature without recording findings which will bind the parties and where such order will only pave the way for final decision, it would not make that direction as an order or decision which affects the rights of the parties and therefore, is not appealable . 87. Now, let us examine what kind of function the Commission is called upon to discharge while forming an opinion under Section 26(1) of the Act. At the face of it, this is an inquisitorial and regulatory power. A Constitution Bench of this Court in the case of Krishna Swami vs. Union of India [(1992) 4 SCC 605] explained the expression `inquisitorial'. The Court held that the investigating power granted to the administrative agencies normally is inquisitorial in nature. The scope of such investigation has to be examined with reference to the statutory powers. In that case the Court found that the proceedings, before the High Power Judicial Committee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the act, much less their being a question of violation of a fundamental right. 8.5 According to him, the scope of the preliminary conference before the Commission pursuant to which the Impugned Order dated 13.01.2020 was passed u/S 26(1) of the Act, is an administrative order based on a prima facie opinion of the CCI to cause an investigation by the DG, CCI, against the Petitioners before dealing with all the issues finally and any such order u/s 26(1) of the Act is necessarily only prima facie in nature and therefore in any event no writ is maintainable or warranted against the said prima facie order. 8.6 Mr. Vyas, learned ASG has also submitted that the Act read with the General Regulations of 2009 provide a robust procedure affording the Party under Investigation an opportunity of producing evidence before the DG during the course of investigation. Further, such parties are also given an opportunity to give their objections or suggestions to the Investigation report once it is submitted by the DG to the CCI. Parties are also afforded a fair and reasonable opportunity of a personal hearing before the Commission for consideration of the said objections or suggestions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral to cause an investigation to be made into the matter. However, the Commission, being a statutory body exercising, inter alia, regulatory jurisdiction, even at that stage, in its discretion and in appropriate cases may call upon the party(s) concerned to render required assistance or produce requisite information, as per its directive. The Commission is expected to form such prima facie view without entering upon any adjudicatory or determinative process. The Commission is entitled to form its opinion without any assistance from any quarter or even with assistance of experts or others. The Commission has the power in terms of Regulation 17(2) of the Regulations to invite not only the information provider but even such other person which would include all persons, even the affected parties, as it may deem necessary. In that event it shall be preliminary conference , for whose conduct of business the Commission is entitled to evolve its own procedure. (3) The Commission, in cases where the inquiry has been initiated by the Commission suo motu, shall be a necessary party and in all other cases the Commission shall be a proper party in the proceedings before the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acie opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to one of its own wings departmentally and is without entering upon any adjudicatory process. It does not effectively determine any right or obligation of the parties to the lis. Closure of the case causes determination of rights and affects a party i.e. the informant; resultantly, the said party has a right to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. 87. Now, let us examine what kind of function the Commission is called upon to discharge while forming an opinion under Section 26(1) of the Act. At the face of it, this is an inquisitorial and regulatory power. A Constitution Bench of this Court in Krishna Swami v. Union of India [(1992) 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.7 According to him, the Order passed u/S 26(1) of the Act is only to trigger investigation . In support of this submission, he has relied upon the decision in case of Competition Commission of India vs Grasim Industries Ltd., passed in LPA No. 137 of 2014 of the High Court of Delhi, wherein Paras-28 and 34 read as under: 28. Both Regulations 18 (1) and 20 (4) of the CCI Regulations, require the DG to investigate the matter i.e. the allegations made in information or reference, as the case may be , together with all evidence, documents, statements or analysis collected during investigation. The investigation has to be a comprehensive one. The DG may not, in fact, be able to anticipate what information may emerge during such investigation. Merely because the information that emerges does not pertain to the specific subject matter which the DG has been asked to investigate, would not constrain the DG from examining such information as well if it points to violation of some other provisions of the Act. Indeed, the directions given by the CCI to the DG under Section 26 (1) of the Act is only to trigger‟ investigation. 34. The aforementioned decisions clarify that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order under Section 26(1) of the Act of 2002, the appellants should have been invited for a discussion . 47. In the light of the aforesaid, in the considered opinion of this Court, by no stretch of imagination, the process of enquiry can be crushed at this stage. In case, the appellants are not at all involved in violation of any statutory provisions of Act of 2002, they should not feel shy in facing an enquiry. On the contrary, they should welcome such an enquiry by the CCI. The writ petitions filed against the order dated 13.1.2021 and the present writ appeals are nothing but an attempt to ensure that the action initiated by the CCI under the Act of 2002 does not attain finality and the same is impermissible in law as the Act of 2002 itself provides the entire mechanism of holding an enquiry, granting an opportunity of hearing, passing of a final order as well as appeal against the order passed by the CCI. In the considered opinion of this Court, the present writ appeals filed by the appellants are devoid of merits and substance, hence, deserve to be dismissed and are accordingly, dismissed . 8.10 In view of the above submissions, it is submitted by learned ASG Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a part of the discounts offered during the big sale events like the Big Billion Days (BBD) of Flipkart and the Great Indian Festival of Amazon. At the same time, it is alleged that preferred sellers at Amazon and Flipkart are in some way or the other connected to Amazon and Flipkart, respectively, through common investors, directors, shareholders etc. Relying on these, it has been alleged that these preferred sellers are extension of these marketplaces, operating through different 'proxy' entities blessed with the support of these marketplaces. The Commission perused the prices for different smartphone brands sold through Flipkart and Amazon, i.e. original price and discounted price. It was observed that certain smartphone brands/models are available at significantly discounted price on these platforms and are sold largely through the sellers identified, by the Informant, as the platforms' 'preferred sellers'. Whether funding of discounts is an element of the exclusive tie-ups is a matter that merits investigation. (b) Amazon Seller Services v/s Competition Commission of India and Flipkart Internet Pvt. Ltd. v/s Competition Commission of India (Supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s error apparent on the face of the record, and such act, omission, error, or excess has resulted in manifest injustice. However extensive the jurisdiction may be, it is not so wide or large AIR 1952 SC 192 W.P No.3363/2020 C/W W.P No.4334/2020 as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made. 60. In T.C. Basappa Vs. T. Nagappa and Another25, it is held that a tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice. A writ of certiorari may be available in such cases. An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be a manifest error apparent on the face of the proceedings, e.g. when it is based on clear ignorance or disregard of the provisions of law. In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision. Quoting Morris J, it is held as follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commons, the guidance being concerned with the limits of public expenditure by local authorities and the incidence of the tax burden as between taxpayers and ratepayers. Unless and until a statute provides otherwise, or it is established that the Secretary of State has abused his power, these are matters of political judgment for him and for the House of Commons. They are not for the judges or your Lordships' House in its judicial capacity. For myself, I refuse in this case to examine the detail of the guidance or its consequences. My reasons are these. Such an examination by a court would be justified only if a prima facie case were to be shown for holding that the Secretary of State had acted in bad faith, or for an improper motive, or that the consequences of his guidance were so absurd that he must have taken leave of his senses .... (Emphasis supplied) 62. Noted jurist, Shri. V. Sudhish Pai, in his Article 'Is Wednesbury on the Terminal decline?'27 has opined that the Wednesbury test, long established as ground of judicial review will be applicable in examining the validity of the exercise of administrative discretion. After analyzing the law with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) has characterized the powers of the CCI under Section 26 (1) of the Act as an inquisitorial and regulatory power . The ‟ Supreme Court then explained as under: 91. The jurisdiction of the Commission, to act under this provision, does not contemplate any adjudicatory function. The Commission is not expected to give notice to the parties, i.e. the informant or the affected parties and hear them at length, before forming its opinion. The function is of a very preliminary nature and in fact, in common parlance, it is a departmental function. At that stage, it does not condemn any person and therefore, application of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (Director General, being appointed by the Central Government to assist the Commission, is one of the wings of the Commission itself) does not amount 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e very purpose of the Act which is to prevent practices having appreciable adverse effect on the competition). The trigger for assumption of jurisdiction of the CCI is receipt of complaint or information, (when the Commission is of the opinion that there exists a prima facie case exists (per Section 26 (1)). The succeeding order is administrative (per SAIL); however, that order should disclose application of mind and should be reasoned (per SAIL). Up to this stage, with that enunciation of law, no doubt arguably Cadila could have said that absent a specific order as regards its role, by CCI, the DG could not have inquired into its conduct. However, with Excel Crop Care specifically dealing with the question of alleged subject matter expansion (in the absence of any specific order under Section 26 (1)) and the Supreme Court clarifying that the subject matter included not only the one alleged, but other allied and unremunerated ones, involving others (i.e. third parties), the issue is no longer untouched; Cadila, in the opinion of this court, is precluded from stating that a specific order authorizing transactions by it, was a necessary condition for DG's inquiry into its condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation as sought by the DG vide the impugned notices. Therefore, it is submitted that no prejudice shall be caused to the Petitioners merely because an investigation has been initiated against them under Section 26(1) of the Act. 8.13 Further, it is submitted by learned ASG Mr. Devang Vyas that it is well-established principle that a High Court will ordinarily not interfere with an on-going investigation while exercising its inherent powers under Article 226 of the Constitution of India. As such, it is evident that the Petitioners by way of the present Writ Petition are attempting to shackle the investigation before the Director General-CCI, Respondent No.2 herein. It is settled law that the hands of the investigating authorities should not be tied and the Hon'ble Court should refrain from entering into the domain of investigation. Furthermore, since the Impugned Order is well reasoned and based on the assessment of the evidence brought on record by the Informant, it would be legally untenable to disregard the prima facie opinion of the CCI provided in the order or to consider the same based on merits of the case. For the above submissions, he had relied upon the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der clearly reflects that there is application of mind on behalf of CCI. He has prayed to dismiss the petition. 9. Mr. Mihir Thakore, learned Senior Counsel for the Petitioners has, in response to respondent authorities allegations, submitted that the respondents contention that the impugned order being an administrative order, the petition is not maintainable and the court cannot go into it, is also untenable in light of the aforesaid observations of the Hon ble Supreme Court in CCI v. SAIL (Supra) and other judgments quoted hereinabove, and also in light of the well settled principle that courts have the power to judicially review even administrative orders and actions on illegality, irrationality and procedural impropriety. 9.1 Mr. Mihir Thakore, learned Senior Counsel has submitted that there is no submission of the petitioner that there is need of prior hearing to the petitioner but only argument is that why GCEE was called for and not bidders. He has submitted that one may be lowest in one package but may not be lowest in other packages as there might be immediate capacity for the concerned bidder. He has submitted that out of the respondents before the CCI, even 6 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the person who will be affected by the decision. This is because susceptibility to judicial review under this head covers also failure by an administrative tribunal to observe procedural rules 16 | Page that are expressly laid down in the legislative instrument by which its jurisdiction is conferred, even where such failure does not involve any denial of natural justice. But the instant case is not concerned with the proceedings of an administrative tribunal at all . 17. The discretionary power vested in an administrative authority is not absolute and unfettered. In Wednesbury, Lord Greene was of the opinion that discretion must be exercised reasonably. Explaining the concept of unreasonableness, Lord Greene stated that a person entrusted with discretion must direct himself properly in law and that he must call his own attention to the matter which he is bound to consider. He observed that the authority must exclude from his consideration matters which are irrelevant to the matter he is to consider. Lord Greene concluded that if an authority does not obey aforementioned rules, he may truly be said, and often is said, to be acting unreasonably. 18. Conditions pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not applicable here. It is well settled that decisions cannot be relied upon without discussing how the fact situation fits in with the fact situation of the decision on which reliance is placed. (iv) In support of the above submission, he has also relied upon the decision in case of Bharat Petroleum v. N. R. Vairamani, 2004 (8) SCC 579, wherein Para Nos. 9 to 12 read as under: 9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. In Lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie untenable since there cannot be any question of negotiating with L2 and L3 in a tender process and thereby rendering the tender process meaningless and even the Central Vigilance Commission has issued circulars banning such practice of negotiating with L2 and L3. 9.4 The respondents contention that this is akin to a criminal case where until the stage of Section 173 report, the accused has no rights is also untenable since the accused certainly has the remedy of filing a quashing petition or a discharge application. 9.5 The respondents contention that the successful bidder in a particular package ought to have quoted such competitive rates in other packages also is also untenable since this is based on a questioning of business decision of a bidder and since these printers have a limited capacity in terms of resources and while they may have submitted bids for multiple packages in the hope of winning somewhere, they would quote lowest rates in selected package depending on their stocks of paper, ink, etc. 10. Mr. Mihir Joshi, learned Senior Counsel has also adopted the submissions made by learned Senior Counsel Mr. Mihir Thakore in his rejoinder. 11. Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. (2) Any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void. (3) Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which- (a) directly or indirectly determines purchase or sale prices; (b) limits or controls production, supply, markets, technical development, investment or provision of services; (c) shares the market or source of production or provision of services by way of allocation of geographical area of market, or type of goods or services, or number of customers in the market or any other similar way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (3) The Director General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission. (4) The Commission may forward a copy of the report referred to in sub section(3) to the parties concerned: Provided that in case the investigation is caused to be made based on reference received from the Central Government or the State Government or the statutory authority, the Commission shall forward a copy of the report referred to in sub- section (3) to the Central Government or the State Government or the statutory authority, as the case may be. (5) If the report of the Director General referred to in sub-section (3) recomends that there is no contravention of the provisions of this Act, the Commission shall invite objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be, on such report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble by legal proceedings. Thus, for an agreement, under this Act , need not be in writing. On the facts and circumstances of each case, the conduct of the parties to agreement can be inferred. At the same time, under Section 2(c) Cartel would include association of producers, sellers, distributors, traders or service providers, who, by agreement amongst themselves, limit control or attempt to control the production, distribution, sale or price of, or, trade in goods or provision of services. Thus, even an action which may form itself, may be agreement of creating Cartel. It is obvious that there may not be patent evidence as to forming Cartel or creating an agreement in writing. The facts and circumstances of the case may reflect, primafacie, that there is agreement and/ or Cartel. 15. Now, according to Section 3 any Agreement, which is Anticompetitive, is deemed to be void. According to sub-section (3) of Section 3, different situations have been provided therein which may be such that it may be an agreement entered into between the enterprises or associations of enterprises or persons or association of persons or between any person and enterprise or practice carried on, or dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure and it is a departmental function. It does not condemn any person at that stage and, therefore, application of audi alteram partem is not called for. Formation of a prima-facie opinion departmentally does not amount to adjudicatory function but is merely of an administrative nature. The right of notice for hearing is not contemplated under the provisions of Section 26 of the Act. The functions performed by the Commission under Section 26(1) of the Act are in the nature of prepatory measure and in contrast to the decision making process. Under Section 26(1) of the Act, the Commission may not merely record detailed reason, but must express its mind in no uncertain terms that it is of the view that prima-facie case exist, requiring issuance of direction for investigation to the Director General. Such opinion should be formed on the basis of the record, including information furnished and reference made to the Commission under the provisions of the Act. The Commission is expected to express primafacie view in terms of Section 26(1) of the Act, without entering into any adjudicatory or determinative process and by recording minimum reasons substantiating the format ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Amount by Bidders from year 2015-16 to 2018-19' requires discussion for forming a prima facie view in the matter. The allegations of bid rigging for the said period are based upon 'individual items' prices, as quoted by the L1 bidder in each package, being also the lowest than the other bidders, which according to the Informant is unusual and in normal course, highly improbable. 21. The informant, on the basis of Annexure 3, alleged that from the FY 2016-17 to 2018-19, other than Package A of FY 2016-17, the prices quoted for individual items under every package by the bid winners of the package,whether 30 items or 2 items, were always the lowest. This, according to the informant indicates bid winner in respect of each package was allegedly decided before the bidding process and the other bidders submitted merely the cover bids. It has been further alleged that it would not be possible to quote lowest (L1) rate in all items of the Package by a single bidder without prior understanding of bidders. 22. During the preliminary conference, the contents of Annexure 3 were not denied by GCEE. However, it was submitted that the rates highlighted therein were negot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n notes that it would be improper at this stage, to address this issue in a piece meal way and therefore prima facie, is of the view that such issue may also be examined during the investigation. 27. In view of the foregoing, the Commission is of the opinion that there exists a prim-facie case which requires an investigation by the Director General (DG), to determine whether the same has resulted in contravention of the provisions of Section 3(1) of the Act, as detailed in this order. 28. Accordingly, the Commission directs the DG to cause an investigation to be made into the matter under the provisions of Section 26(1) of the Act. The Commission also directs the DG to complete the investigation and submit the investigation report within a period of 60 days from the receipt of this order. 29. It is made clear that, if during the course of the investigation, the DG comes across anti-competitive conduct of any other entity in addition to those mentioned in the Information, the DG shall be at liberty to investigate the same. 30. The DG is also directed to investigate the role of the persons/officers who were in-charge of, and were responsible for the conduct of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as observed earlier in various decisions, it is the prerogative of the Commission to invite any person or sought information from any person for forming primafacie opinion as to whether any inquiry contemplated under Section 26(1) of the Act is necessary or not. Such action of the Commission cannot be said to be bias one or giving any right to other person against whom any order of inquiry is passed. 18. Now, on perusal of the impugned extract, which has been referred to hereinabove, it clearly reveals that the Commission has considered material placed on record by the respondent No.3 as well as GCEE for forming its primafacie opinion as to initiate inquiry under Section 26(1). It clearly reveals that while passing order for initiation of inquiry, the Commission has also considered that the allegation of the informant regarding provision of restriction on Standard terms and conditions have not been accepted by the Commission. Thus, the Commission has considered every material placed before it before arriving at the prima-facie opinion as to inquiry. 19. Now, the main grievance of the petitioner is the interpretation of L1 price and negotiation price in each packet and has su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 21. Further, it is well settled that when questions of fact are involved in any matter, the High Court may not exercise its constitutional power under Article 226 of the Constitution. Admittedly, in this case, as discussed hereinabove, the disputed question of facts relating to interpreation of information in the form of data is agitated. Therefore, on this ground also, this court deems it fit not to exercise its discretionary power under Article 226 of the Constitution of India, especially when the impugned order is administrative in nature. 22. In view of the aforesaid observations, this Court is of the considered opinion that the Writ-Petitions are devoid of merit and deserved to be dismissed. However, it is pertinent to note that during the pendency of the petitions, the Director General has also issued certain notices to initiate penalty proceedings under Section 43 of the Act, as there was no stay in operation against the impugned order of the Commission. It is true that there was no stay in operation, however, since the matter was subjudice and there was Covid-19 Pandemic prevailing in the Country, the Commission may not have issued such notices for initiation of Pen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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