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TMI Blog2019 (4) TMI 2107X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of their legislation with competition, the Act was introduced, with due deliberation. Recent decisions have emphasized the importance of the CCI in imbuing the market place with the culture of competition, and even underlined that sectoral regulators‟ decisions or regulations (within the frame works of their parent legislations) cannot foreclose enquiry and consequential action by the CCI in its overarching concerns with respect to market domination and anti-competitive behaviour of erring entities. In Competition Commission of India v Bharti Airtel Limited And Ors. [ 2018 (12) TMI 1683 - SUPREME COURT] this was emphasized and underlined having taken note of the skillful exercise which the TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February, 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which the CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, i.e. to ensure that one who hears decides is embodied in letter and spirit in all cases where final hearings are undertaken and concluded. In other words, once final hearings in any complaint or batch of complaints begin, the membership should not vary- it should preferably be heard by a substantial number of 7 or at least, 5 members. (b) The Central Government shall take expeditious steps to fill all existing vacancies in the CCI, within 6 months; (c) The CCI shall ensure that at all times, during the final hearing, the judicial member (in line with the declaration of law in Utility Users Welfare Association, (supra) is present and participates in the hearing; (d) The parties should in all cases, at the final hearing stage, address arguments, taking into consideration the factors indicated in Excel Crop Care [ 2017 (5) TMI 542 - SUPREME COURT] and any other relevant factors; they may also indicate in their written submissions, or separate note, of submissions, to the CCI, why penalty should not be awarded, and if awarded, what should be the mitigating factors and the quantum- without prejudice to their other submissions. (iv) Since the petitioners had not availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. for Mercedes Benz. Mr. Abhishek Malhotra Mr. Karan Kapoor, Advs. for Hindustan Motors. Mr. Neel Mason, Ms. Sanyukta Banerjie Mr. Vishesh Kumar, Advs. for Super Cassettes Industries Pvt. Ltd. Mr. Anand S. Pathak, Mr. Amit K, Mishra, Mr. Akshat Hansaria, Mr. Avinash Amarnath, Mr. Pavan Bhushan, Sh. Abhinav Meena Mr. Ujwala Uppalusi, Advs. for General Motors. Ms. Pranaya Goyal, Mr. Nikhil Ranjan, Ms. Pratyushi Mehta, Advs. for Fiat India Automobiles. Mr. Ravi Prakash, Mr. Varun Pathak Mr. Farmanali, Advs. in W.P.(C) 6634/2014. Mr. Diwakar Maheshwari, Mr. Shreyas Edupuganti, Advs for BMW India. Mr. Gaurang Kanth, Advocate. with Mr. Aman Singh Bakshi, Advs. for UOI. Mr. Bhagvan Swarup Shukla, CGSC with Mr. Kamaldeep Mr. Shravan Kumar Shukla, Advs. for UOI. Mr. Ashim Sood, CGSC with Ms. Rhythm. B., Advocate, for Respondent No.1 in W.P.(C) 7321/2014. Ms. Monika Arora with Sh. Harsh Ahuja, Advocates, for UOI, in W.P.(C) 7306/2014. ORDER 1. In all these proceedings, under Article 226 of the Constitution of India, the petitioners challenge various provisions of the Competition Act, 2002 (hereafter the Act ). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintenance, service and repair market of the cars manufactured in India in Case No. 03/2011. Proceedings in this case were stayed by the Madras High Court in WP 31808/2012 filed by M/s. Hyundai Motors India Ltd., inter alia, challenging the order dated 26.04.2011 passed by the CCI. This led to some of the petitioners seeking stay of proceedings through orders of the CCI; in the meanwhile, this court in W.P.(C) 2734/2013 filed by M/s. Maruti Suzuki India Ltd, directed that CCI could continue with the proceedings before it, but not give effect to its final order for 10 days. One of the petitioners, i.e. Mahindra Mahindra (W.P.(C) 6610/2014) filed an application dated 10.07.2013 which requested CCI to ensure that the varying quorum of its Members who have heard the matter would not result in any injustice to or adversely impact the outcome of the judgment in Case No.03/2011. Consequently, CCI by its order dated 24.07.2013 while dismissing that application held that only those (of its) members who had heard the matter and were present at the time of arguments, shall decide the case in question. 3. In the meanwhile, the writ petition before this court and the Madras High Court le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the most fruitful line of action would be for the Commission to issue an order. It is submitted that based on the recommendations of the MIC, the Monopolies and Restrictive Trade Practices Act, 1969 (hereafter the MRTP Act ) was enacted by the Parliament. It is stated that the MIC was aware that there had to be positive statute by the Parliament and it should be enforced only by substantive due process. This, necessarily needed a judicial body. 5. Next, the Raghavan Committee Report, 2000 (hereafter the Raghavan Report ) was referred to. It was urged that the MRTP Act, which came into effect on 01.06.1970, was the first enactment to deal with competition issues. In the wake of economic reforms since 1991, it was felt that this Act had become obsolete in the light of international economic developments which relate more particularly to competition laws and thus, there was a need to shift the focus from curbing monopolies to promoting competition. Therefore, a High-Level Committee on Competition Policy and Law (Raghavan Committee) was formed. The following extracts of the Raghavan report are relied upon: 4.8.4 Competition Law and Competition Law Authority For implementing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomics Law International Trade, Commerce, Industry, Accountancy, Public Affairs and Administration. It is imperative that those selected have a record of unimpeachable probity, integrity and solvency. 6.2.4 The number of Members of CCI is obviously relatable to its work load. It needs to be kept in view that the Mergers Commission (See below) will be a part of 1 and at least two Members will have to be detailed to deal with cases of mergers, amalgamation, acquisitions and takeovers. It is suggested that the Headquarters may have two Benches of two members each, of which one will be the Mergers Commission Bench. The Headquarters of the CCI may be located at a Metropolitan Centre outside Delhi. 6.2.5 There will be three Benches, in addition to the Headquarters Bench and the may be located at Delhi, Calcutta, Mumbai and Chennai. Later depending upon the workload and experience more Benches may be created at other places. This means that CCI (including Mergers Commission) should have not less than ten Members including the Chairperson. The Headquarters will have one Bench of two members as Mergers Commission. It will also have another Bench of two members to deal with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued. Here, the Committee wishes to point out that a judicial body never needs to sue anybody but it can issue orders for compliance. Suing means filing litigation against an opposite party before another judicial body to ventilate grievances. Admittedly a judicial body shall not require to sue anyone because that is not permissible in law. Hence it can also not be sued. 7.4 The Committee notes that there is a difference between the Chairperson and Members of the CCI insofar as their status and remuneration are concerned whereas there is no difference between them in relation to their qualifications. In this context, the Committee wanted to know why the age cap of 70 years and status of a Supreme Court Judge is stipulated for Chairperson in the Bill in the light of the fact that the age of retirement of Supreme COUl1 Judge including the Chief Justice of India is 65 years. 7.5 The Ministry has submitted in their written submission that conferment of status of a Supreme court Judge on the Chairperson is designed to attract eminent persons including from sitting/retired Judges from Supreme Court/High Court. Further the age cap of70 years for Chairperson and 65 years for M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded after the amendment of the Act and declined to pronounce on the matters argued before it in a theoretical context and based only on general pleadings. The relevant portions of the case decided by the Supreme Court of India is as follows: 5. We find that the amendments which the Union of India proposes to introduce in Parliament would have a clear bearing on the question raised for decision in the Writ Petition essentially based on the separation of powers recognized by the Constitution. The challenge that there is usurpation of judicial power and conferment of the same on a non- judicial body is sought to be met by taking the stand that an Appellate Authority would be constituted and that body would essentially be a judicial body conforming to the concept of separation of judicial powers as recognized by this Court. In the Writ Petition the challenge is essentially general in nature and how far that general challenge would be met by the proposed amendments is a question that has to be considered later, if and when, the amendments are made to the enactment. In fact, what is contended by learned counsel for the petitioner is that the prospect of an amendment or the proposal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression information substituting the then existing term complaint . 9. The common thread of arguments of all the writ petitioners is that the CCI is essentially an adjudicatory body, given its mandate to investigate into allegations that fall within its watch (abusive behaviour due to market dominance, cartelization etc.), adjudicate the rights of parties and entities, and where necessary, impose penalties. The petitioners submit that composition of the CCI (in terms of its membership), manner of their appointment, their qualifications, the procedure adopted by it, violate principles of separation of powers and independence of the judiciary, which are essential bulwarks upon which the Constitution rests and which are assured to the people of India, in regard to adjudication of disputes. The petitioners contest the position of the UOI that CCI is basically a regulatory body, invested with certain adjudicatory attributes and that the objective of setting it up was to regulate market behaviour to ensure a level playing field. 10. It is argued by Mr. Amit Sibal, learned senior counsel appearing in the lead matter [W.P.(C) 6610/2014- the Mahindra case ], that the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions. According to the learned senior counsel, Section 22(3) particularly, which enables the Chairperson to rely on a casting vote is anathema to a judicial body. It is submitted that the Union of India ( UOI hereafter) and the CCI failed to point out a single instance of judicial functions, in any other statute, where there is a provision for a casting vote or where a subset of those who hear and deliberate are permitted to pass the order. Learned counsel relied on Punjab University v. Vijay Singh Lamba (1976) 3 SCC 344, especially the observations of the court that: A court is not a committee and if by law any matter is required to be heard, say by a bench of three judges, there is no power in those three judges to resolve that only two of them will form a quorum. In fact quorum is fixed for meetings of committees and not for the sittings of courts. 12. It was submitted that the Security Exchange Board of India Act ( SEBI ), no doubt, contains provision for a casting vote. However, that power applies only when SEBI functions as a regulatory board, and does not apply to the power of the Adjudicating Officer. Unlike the CCI, there is a wall between the regulatory and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er mind to the final decision, till the making of that decision or judgment. Particularly, the following observations were relied on: 10. In our opinion, a judgment within the meaning of these sections is the final decision of the court intimated to the parties and to the world at large by formal pronouncement or delivery in open court. It is a judicial act which must be performed in a judicial way. Small irregularities in the manner of pronouncement or the mode of delivery do not matter but the substance of the thing must be there: that can neither be blurred nor left to inference and conjecture nor can it be vague. All the rest - the manner in which it is to be recorded, the way in which it is to be authenticated, the signing and the sealing, all the rules designed to secure certainty about its content and matter - can be cured; but not the hard core, namely, the formal intimation of the decision and its contents formally declared in a judicial way in open court. The exact way in which this is done does not matter. In some courts the judgment is delivered orally or read out, in some only the operative portion is pronounced, in some the judgment is merely signed after giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition, to change his mind but takes no steps to arrest delivery. But one cannot assume that he would not have changed his mind if he is no longer in a position to do so. A Judge's responsibility is heavy and when a man's life and liberty hang upon his decision nothing can be left to chance or doubt or conjecture; also, a question of public policy is involved. As we have indicated, it is frequently the practice to send a draft, sometimes a signed draft, to a brother Judge who also heard the case. This may he merely for his information, or for consideration and criticism. The mere signing of the draft does not necessarily indicate a closed mind. We feel it would be against public policy to leave the door open for an investigation whether a draft sent by a judge was intended to embody his final and unalterable opinion or was only intended to be a tentative draft sent with an unwritten understanding that he is free to change his mind should fresh light dawn upon him before the delivery of judgment. 16. It is argued that the CCI‟s reliance on the decision of the COMPATs decision in Nissan Motor India Pvt. Ltd. v. Competition Commission of India (Civil Appeal No. 951/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same day and out of whom, one Judge will be necessarily senior and simply because seniority has been given to him at the time of his appointment, his opinion will always supersede the opinion of the junior Judge (who was also appointed on the same day). We do not see any rational or logic in giving a preference to the opinion rendered by the senior Judge in this fashion. Therefore, in our opinion, the impugned rule suffers from vice of arbitrariness and unreasonableness and on that count also, it is liable to be struck down. 18. 18. It is submitted, next, that the Act violates the doctrine of separation of powers and the independence of the judiciary. Counsel submitted that the CCI is a tribunal and satisfies the test highlighted in the case of Cooper v. Wilson [1937] 2 K.B. 309relied in the Bharat Bank v Employees of Bharat Bank Ltd AIR 1950 SC 188; Harinagar Sugar Mills v Shyam Sundar Jhunjhunwala AIR 1961 SC 1669 and Jaswant Sugar Mills Ltd v Lakshmi Chand Ors AIR 1963 SC 677. In Harinagar Sugar Mills (supra), it was observed that a tribunal is a body which is required to act judicially and which exercises judicial power of the State does not cease to be one exercisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can work with absolute commitment to the cause of justice and constitutional values. It is also the discipline in life, habits and outlook that enables a judge to be impartial. Its existence depends however not only philosophical, ethical or moral aspects but also upon several mundane things -security in tenure, freedom from ordinary monetary worries, freedom from influence and pressures from within (from others in the judiciary) and without (from the executive). 20. It was argued that provisions for members‟ re-appointment [Sections 10 (1) and 53F], selection by a committee with majority members from the Executive (Sections 9 and 53E), and directions and supersession by the Central Government (Sections 55 and 56) clearly violate separation of powers and independence of the judiciary. Similar provisions have also been struck down in Madras Bar Association v. Union of India (2014) 10 SCC 1. It is argued that this principle has significant relevance, because the Government and its instrumentalities are commonly informants or opposite parties in proceedings before the CCI. The Ld. Senior Counsel argues that Section 18 of the Act shows that the regulatory and adjudicatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is mandatory that a person of law to be a member of a primarily regulatory body performing some judicial function and further that the presence of a judge in an appellate body cannot cure the defect of not having a judicial member in original adjudicatory proceedings. 23. Mr. Subramanian argued that there is no provision stipulating any qualification for a member of the Election Commission of India (hereafter ECI ), which is a constitutional body under Article 324 of the Constitution. The ECI primarily conducts elections, and its adjudicatory aspect is only a fraction of its functions. Even the ECI, in its adjudicatory functions, as per Kailash Gahlot Ors. v. Election Commission of India Ors. (2018) 250 DLT 193 (DB) must follow the principle that one who hears must decide, and cannot follow a revolving door‟ policy. The fact that the ECI does not have any judicial member has not been tested in a court of law and therefore cannot be relied on. 24. It was submitted that justice through an independent tribunal, comprised entirely or mainly of legally trained professionals, is a manifest guarantee held out by the Constitution of India. Therefore, a body, such as CCI, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule of law and separation of powers. It was further argued that adjudicatory responsibilities do not involve technical expertise of any kind, or knowledge and that consequently, provisions enabling appointment of non-judicial members is unconstitutional. 27. It was urged that the predominantly judicial nature and function of the CCI is evident from the various provisions of the Act which show that its proceedings are akin to civil court proceedings; a tabular chart was presented to the court, which is extracted below: RELEVANT SECTION OF THE ACT DETAILS Section 35 States that the parties can present the case before CCI Regulation 29 Provides the manner of making submissions or arguments by parties before the Tribunal. Section 36(2) While discharging its functions has the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit. Section 19 Determines/adjudicates the issue of contravention of the provisions of Section 3 or Section 4 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts or the fora before whom the matters are sub-judice, so that the persons awaiting justice can receive the same in a most expeditious and effective manner. The approach of the Commission even in its procedural matters, therefore, should be macro level rather than micro level. It must deal with all such references or applications expeditiously in accordance with law and by giving appropriate reasons. Thus, we find it necessary to issue some directions which shall remain in force till appropriate regulations in that regard are framed by the competent authority. 29. It is argued that Section19 of the Act is a provision for the CCI‟s enquiry into any alleged contravention of the provision of Sections 3 or 4 of the Act; Section 35 of the Act read with Regulation 29(1) of the regulations provides for making of submission or arguments by parties before the CCI; Section 27 of the Act read with Regulation 32 of the regulations gives the power to the Commission to pass various orders after enquiry into agreements or abuse of dominant position; Section 26(2) further empowers the CCI to close the matter forthwith and pass such orders as it deems fit in case it is of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCI into one or other of these watertight categories is inappropriate in deciding the instant case. This is because firstly, irrespective of whether CCI is a judicial body, all statutory decision makers are delegates of state power. So, they must be independent of influence, and have duty to act justly and fairly to uphold the rule of law. Secondly, CCI has the power to alter freely formed agreements. Whenever freedom of contract is at issue, the substance and impact of the action is material, not the form in which it is performed. Furthermore, the counsel submitted, various forms of state action are changing and merging, so the standard adopted to distinguish different forms of state action must focus on purpose of the protection and not the mechanics of it. The State is increasingly delegating its functions to new forms of entities. The Supreme Court, through its decisions, has been ensuring that the force of the Constitution is maintained through both the form and means by which power is exercised. Two notable instances of this approach are the following- first, the Supreme Court's shift towards a function-based test for interpreting other authorities under Article 12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... government dominated body, but rather by an independent collegium; its members have an assured age of retirement and constitutionally protected tenure of office and protected conditions of service. Despite performing judicial functions, CCI‟s members lack both protections and are chosen by a selection body dominated by members of the government. It was argued that Sections 55 and 56 show that CCI inherently lacks independence. These provisions are so sweeping in scope that they cast the shadow of the central government over all activities of the CCI. This creates a high likelihood of bias, and fatally undermines CCI‟s independence from the executive. Therefore, it is not necessary that these sections be directly at issue in the lis in this case. It is therefore, submitted that Sections 55 and 56 are so fundamentally unconstitutional that they must be struck down even though these are not directly in issue in the present case. 35. It was submitted that an overemphasis on the technical expertise or qualification of members of the CCI, cannot obscure its role as an adjudicatory body or a judicial tribunal, deciding serious and important question, which directly and adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act contains no provisions engrafting the factors to be taken into consideration CCI must consider for imposing a penalty. The separate opinion of N.V. Ramana, J in Excel Crop Care India v Competition Commission of India 2017 (8) SCC 47 highlighted the need for guidelines while imposing penalties. It is argued that non-judicial bodies in and outside India, set out elaborate guidelines for imposing penalties. It is submitted that reliance on fiscal statutes, like the Customs Act or Excise Act is inapt, because those enactments provide upper penalty limits. There is no upper absolute limit under Section 27(b) of the Act. Section 27(b) only sets a maximum penalty percentage of 10% or profit multiple of 3. Ultimate penalty may vary from INR 0 to ₹ 1346.46 Crores (as in this case). Therefore, the absence of an upper limit in Section 27(b) allows for the exercise of unfettered powers. It is stated that CCI's reliance on Organo Chemical Industries v. Union of India (1979) 4 SCC 573 is also incorrect, because unlike Organo (supra) the petitioners in the instant case (a) were not provided' an opportunity to present arguments and (b) imposition of blanket penalty of 2% of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments on penalty if CCI finds a case of contravention of Sections 3 and 4. By amendment to Regulation 48 (1)of General Regulations in 2011, CCI amended its own regulations to take away the right of parties to benefit from (a) a show cause notice and (b) reasonable opportunity to represent his case before CCI. Counsel highlighted that in contrast, opportunity of hearing is provided before imposing penalties in cartel cases under Section 46 of the Act, read with lesser Penalty Regulations, but not under Section 3 of the Act. Hearing on penalty is extended to all other cases under Chapter VI of the Act including for non-cooperation and gun-jumping, but not for penalties in respect of contraventions under Sections 3 and 4. The contrasting and differential treatment is per se discriminatory and not based on any rationale. 41. Further, submitted counsel, the Act envisions multiplicity of wide-ranging and extensive orders under Section 27(b), which further demonstrates the requirement for a hearing in this case, a finding of contravention did not only lead to penalties, but also burdensome directions on the Petitioner's business. An opportunity of hearing would have allowed the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argued that regulators principally performed the functions which are regulatory, advisory or recommendatory, executive and in certain cases adjudicatory (the latter is incidental to regulatory framework in order to maintain the balance in the principal sector or industry concerned). In the process, the regulator is concerned mainly with issuing rules or regulations which forms the framework governing the sector and ensuring compliance by issuing directions; it advices in certain cases while also discharging adjudicatory functions. The learned counsel dealt with the provisions of the SEBI Act (Section 11 delineating the regulatory functions of SEBI; Section 15A to 15JA empowering adjudication and levy of penalties, etc.); the Telecom Regulatory Authority of India Act [Section 11(1)(b) granting regulatory powers and section 11(1)(a) providing for recommendatory powers]; the Airports Authority of India Act (Section 12 dealing with regulatory functions to its standards for development, construction and maintenance of runway airports, etc.; Section 28B Officers empowered to evict unauthorized persons and consequentially Section 28E power to remove unauthorized construction; Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Civil Court and its proceedings are considered judicial proceedings. If one keeps this functions and rules in mind, it is clear that the Competition Commission of India is not a regulator and it is a principal authority which exercises a judicial functions conferred by the Statute. It has all the trapping of courts and is a Tribunal. It in fact determines the rights and liabilities of the parties before it. 46. It is urged by Mr. Lakshmikumaran who supplemented the submission of the previous counsel that a body which is a Tribunal and performs judicial functions as opposed to one which predominantly advices or regulates or discharges its executive functions that independently adjudicatory functions, its composition has to be of judicial members. Reliance was placed upon Jaswant Sugar Mills vs. Lakshmi Chand, AIR 1963 SC 677; Harinagar Sugar Mills vs. Shyam Sunder AIR 1961 SC 1669 and Associated Cement Companies Ltd. vs. P.N. Sharma, AIR 1965 SC 1595. In this context, it was urged that the CCI in exercise of its powers under Section 3 and 4 is conferred with judicial power of the state and, therefore, discharges the judicial functions. This is demonstrable from its powers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, under both the Acts, the DG submits the report to the respective Commission on the basis of which the Commission decides to enquire. The procedure for enquiry of a restrictive/unfair/monopolistic trade enquiry under the MRTP Act was that the MRTP Commission followed an adjudicatory process which involved hearings, recording of evidence, cross-examination and proper adjudication. Under the Act, this step/stage of adjudication under Section 26 of the Act is done by the CCI which is also evident from Section 36(2) of the Act. Therefore, the determination of existence of anti-competitive behaviour and consequential passing of an order, which was done by following a proper judicial process under the MRTP Act, cannot be taken away under the new law, i.e., Competition Act. Reliance was placed on Union of India vs. R. Gandhi, President, Madras Bar Association (2010) 11 SCC 1; Madras Bar Association vs. Union of India Anr. (2014) 10 SCC 1. 48. Mr. Neeraj Kishan Kaul, learned senior counsel for Daimler Benz, adopted the submissions of the previous counsel who argued before him; he also urged that in the case of Benz, the findings rendered by CCI were perverse and arbitrary, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erformed by the executive. CCI regulates the economic landscape by performing a wide array of functions under the various provisions of the Act. The CCI under Section 6 of the Act is entrusted with the function of approving combinations, which are defined in Section 5 of the Act. In the process of approving combinations, the enterprises approach the CCI with the terms of proposed combination, to which CCI can make changes to, before approving the proposed combination. For it to do so CCI has to conduct an in-depth analysis of various economic factors and adjudicate / determine whether the proposed combination could cause an appreciate adverse effect on competition. It is also called upon to promote competition advocacy which includes creating awareness and imparting training on various economic issues and also giving opinion to the Central Government on policies. Furthermore, CCI is required to and has in fact entered into various Memoranda/Arrangements with agencies of foreign countries for discharging its duties and bringing about mutual cooperation. In its regulatory role, it has to adjudicate executively- issues of appreciable Adverse Effect on Competition and Abuse of Domina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the domain of an Adjudicatory body akin to a Court or Tribunal. The observations in S.P. Gupta v. Union of India, AIR 1982 SC 149 are relied on to show that such functions could never be performed by courts. The court held: The Court does not decide issues in the abstract. It undertakes determination of a controversy provided it is necessary in order to give relief to a party and if not relief can be given because none is sought, the Court cannot take upon itself a theoretical exercise merely for the purpose of deciding academic issues, howsoever important they may be. The Court cannot embark upon an inquiry whether there was any misuse or abuse of power in a particular case, unless relief is sought by the person who is said to have been wronged by such misuse or a bust of power. The Court cannot take upon itself the role of a commission of inquiry a knight errant roaming at will with a view to destroying evil wherever it is found . 54. Thus, CCI is a commission of inquiry performing regulatory functions and adjudicating even if no relief is sought from it; it is clearly not a substitute for a Court nor is it performing a function which was hitherto performed by a Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... metimes, it is more than incidental and it begins to assume a very close resemblance with the work usually assigned to the judiciary. This practice of vesting adjudicatory functions in person, bodies or institutions outside the ordinary hierarchy or regular law courts is becoming increasingly pronounced with the passage of time. 56. It is urged that the CCI must impose penalty in a quasi-judicial manner. The expression quasi-judicial is an expression where an executive body exercises discretion by adopting certain judicial procedures to ensure fairness. This is described in Gullapalli Nageswara Rao v. State of Andhra AIR 1959 SC 1376 as follows: The concept of a quasi-judicial act implies that the act is not wholly judicially; it describes only a duty cast on the executive body or authority to conform to norms of judicial procedure in performing some acts in exercise of its executive powers. 57. Furthermore, the observations of the Supreme Court in Clariant International Ltd. v. SEBI AIR 2004 SC 4236, which held that administrative adjudication has become a necessary concomitant of a welfare state and finds home in many statutes, is relied on: 66. The modern s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel also relied on the observations in Ujjam Bai v State of Uttar Pradesh AIR 1962 SC 1621, to advance CCI‟s argument in this context, especially the following passage: 169. In this case a further attempt is made on behalf of the State to restrict the scope of the Court's jurisdiction. Uninfluenced by judicial decisions, let us approach the question on principle. An illustration arising on the facts of the present case will highlight the point to be decided. A citizen of India is doing business in bidis. He has fundamental right to carry on that business. The State Legislature enacts the Sales Tax Act imposing a tax on the turnover and on the sales of various goods, but gives certain exemptions. It expressly declares that no tax shall be levied on the exempted goods. The said law is a reasonable restriction on the petitioner's fundamental right to carry on the business in bidis. Now on a true construction of the relevant provisions of the Act, no tax is leviable on bids. But on a wrong construction of the relevant provisions of the Act, the Sales-tax Officer imposes a tax on the turnover of the petitioner relating to the said bidis. He files successive s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution. 171. But the finality of the order is sought to be sustained on the principle of res judicata. It is argued that the Sales-tax Tribunals are judicial tribunals in the sense they are courts, and, therefore their final decisions would operate as res judicata on the principle enunciated by this Court in Daryao's case [1962]1SCR574 . Can it be said that Salestax authorities under the Act are judicial tribunals in the sense they are courts ? In a Welfare State the Governments is called upon to discharge multifarious duties affecting every aspect of human activity. This extension of the governmental activity necessitated the entrusting of many executive authorities with power to decide rights of parties. They are really instrumentalities of the executive designed to function in the discharge of their duties adopting, as far as possible, the principles of judicial procedure. Nonetheless, they are only executive bodies. They may have the trappings of a court, but the officers manning the same have neither the training nor the institutional conditions of a judicial officer. Every Act designed to further the social and economic progress of our country or to raise taxes, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functions can adjudicate and it is not necessary that the person(s) manning the body must have a legal background. The only aspect that emerges is that the body while adjudicating performs in a quasi-judicial manner, which mandates that the executive must adopt judicial procedures and not that the person performing a quasi-judicial function must have a judicial background. Furthermore, if a body decides between an individual and public interest at large there is no lis per se, which further ratifies the fact that the CCI does not perform a judicial function. CCI‟s adjudication is also used to regulate and monitor conduct of various companies. According to Black s Law Dictionary, Seventh Edition, Administrative Adjudication is defined as the process used by an administrative agency to issue regulations through an adversary proceeding . The same definition has been reiterated in Wharton s Law Lexicon, Fifteenth Edition. The method of regulating through adjudication is a well-recognized practice globally, for instance, in Securities and Exchange Commission v. Chenery Corporation 332 US 194. The relevant extract of the judgment has been reproduced below : . Not every pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner on these judgments to show that the tribunals must be manned by judicial members is completely misplaced. 62. Mr. Jain argued that the doctrine of separation of powers does not apply in its strict rigor in India and highlighted observations in several judgements of the Supreme Court, which said so: Bhim Singh v Union of India 2010 (5) SCC 538; Indira Nehru Gandhi v Raj Narain AIR 1975 SC 2299 and Jayantilal Amritlal Shodhan v F.N. Rana 1964 (5) SCR 294. It is submitted, therefore, that the incidental performance of quasi judicial functions by a regulatory authority, under law, cannot militate against that doctrine so as to be called arbitrary or vitiate the setting up of the agency. Counsel distinguished the decision in Amriksingh Lyallpuri v Union of India 2011 (6) SCC 535, (cited by the petitioners in support of their proposition that composition of COMPAT was not compatible with the decisions of the Supreme Court, as it was not a judicial tribunal); he submitted that in Amriksingh (supra), the provision of appeal to an administrative body against a quasi-judicial order was held unconstitutional. It was submitted that the COMPAT does not, however, suffer from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 27 that there is no need to give a separate hearing for the purpose of determination of quantum of penalty, for the reason that (a) the opposite parties are at liberty to address them compositely while making submissions on merits and (b) the COMPAT is empowered to reduce or stay the penalty even without insisting on full or partial pre-deposit unlike several other appellate regimes. It was submitted that as to the concept of relevant turnover‟, merely because the CCI has in a particular order, taken the total turnover or a company rather than the product specific turnover, it does not given rise to challenge being mounted for constitutional validity of the provision. In fact the COMPAT itself has interpreted the expression turnover as the relevant turnover which in turn would consider the data confined to the product in question. The matter is presently pending adjudication in the Supreme Court and hence need not be addressed in these proceedings. Suffice to state, the terms turnover, enterprise etc have been clearly defined under the Act and there is neither any vagueness nor any unconstitutionality qua the same. 66. Turning next to the manner of appointment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the final arguments of the case, chose not to sign the final order. This is disputed as incorrect since apart from the three members who signed the final order, all the other members who had heard the final arguments of the petitioners before the CCI had retired. Further, the cases cited by the petitioners relate to the proposition that only one who hears must decide , i.e.; someone who has not heard the parties should not decide and that‟s the reason that even when new members were appointed, since they had not heard the petitioners on the final arguments, they did not sign or pass the final order. It is argued that the petitioners are seeking to take benefit of their own doings inasmuch as on the one hand they enjoyed a stay of proceedings before the CCI pursuant to their final arguments having been heard on the basis of a stay granted by the Madras High Court in WP No.26488/2013, on the other they are seeking to challenge the order on the so called revolving door policy even though a majority of the members had retired in the interregnum and could not pass the orders while they were in service due to the operation of the stay. The car makers also had committed to change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex, or HHI) -a measure based on the total number and size distribution of firms in the industry which is important for determining the level of concentration in a sector. It is computed as the sum of the squares of relative size of all firms in the industry. 72. Mr. Jain concluded his submissions, urging that the grounds in support of the petitioner‟s case that the doctrine of separation of powers or independence of the judiciary, being violated resulting in the invalidation of the Act are insubstantial. He submitted that even if arguendo, any particular procedure in a given case or group of cases is found to be irregular, that cannot lead to the declaration by the court, that the legislation is unconstitutional. Provisions of the Act 73. The present case concerns the constitutionality of Section 8, 9, 15, 17, 22, 26, 17, 36, 53C, 53D, 55, 56 and 61 of the Competition Act, 2002 and Regulations 37, 41, 44, 45 and 48 of the Competition Commission of India (General Regulations, 2009). They are extracted below: Section 8 : Composition of Commission: (1) The Commission shall consist of a Chairperson and not less than two and not more than six other Members to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns which come up before any meeting of the Commission shall be decided by a majority of the Members present and voting, and in the event of an equality of votes, the Chairperson or in his absence, the Member presiding, shall have a second or casting vote: Provided that the quorum for such meeting shall be three Members.] Section 26 : Procedure for inquiry on complaints under section 19 (1) On receipt of a reference from the Central Government or a State Government or a statutory authority 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: Provided that if the subject matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information. (2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t.]] Section 27 : Orders by Commission after inquiry into agreements or abuse of dominant position Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:-- (a) direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be; (b) impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: 1[Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al or the Secretary or an officer authorized by it, such books, or other documents in the custody or under the control of such person so directed as may be specified or described in the direction, being documents relating to any trade, the examination of which may be required for the purposes of this Act; (b) to furnish to the Director General or the Secretary or any other officer authorized by it, as respects the trade or such other information as may be in his possession in relation to the trade carried on by such person, as may be required for the purposes of this Act.] Section 53C. Composition of Appellate Tribunal.- (Omitted by the Finance Act, 2017 ) The Appellate Tribunal shall consist of a Chairperson and not more than two other Members to be appointed by the Central Government. Section 53D. Qualifications for appointment of Chairperson and Members of Appellate Tribunal. (Omitted by the Finance Act, 2017) (1) The Chairperson of the Appellate Tribunal shall be a person, who is, or has been a Judge of the Supreme Court or the Chief Justice of a High Court. (2) A Member of the Appellate Tribunal shall be a person of ability, integrity and stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification under sub-section (1) superseding the Commission, (a) the Chairperson and other Members shall as from the date of supersession, vacate their offices as such; (b) all the powers, functions and duties which may, by or under the provisions of this Act, be exercised or discharged by or on behalf of the Commission shall, until the Commission is reconstituted under subsection (3), be exercised and discharged by the Central Government or such authority as the Central Government may specify in this behalf; (c) all properties owned or controlled by the Commission shall, until the Commission is reconstituted under sub-section (3), vest in the Central Government. (3) On or before the expiration of the period of supersession specified in the notification issued under subsection (1), the Central Government shall reconstitute the Commission by a fresh appointment of its Chairperson and other Members and in such case any person who had vacated his office under clause (a) of sub-section (2) shall not be deemed to be disqualified for re-appointment. (4) The Central Government shall cause a notification issued under sub- section (1) and a full report of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r General, for the purpose of inquiry or investigation, as the case may be, may (a) admit evidence taken in the form of verifiable transcripts of tape recordings, unedited versions of video recording, electronic mail, telephone records including authenticated mobile telephone records, written signed unsworn statements of individuals or signed responses to written questionnaires or interviews or comments or opinions or analyses of experts based upon market surveys or economic studies or other authoritative texts or otherwise, as material evidence; (b) admit on record every document purporting to be a certificate, certified copy or other document, which is by law declared to be admissible as evidence of any particular fact provided it is duly certified by a gazetted officer of the Central Government or by a State Government or a statutory authority, as the case may be or a Magistrate or a Notary appointed under the Notaries Act, 1952 (53 of 1952) or the Secretary of the Commission; (c) admit the entries in the books of account, including those maintained in an electronic form, regularly kept in the course of business, including entries in any public or other offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signatures; (i) section 85-C - presumption as to digital signature certificates; (j) section 88-A - presumption as to electronic messages; (k) section 89 presumption as to due execution etc., of documents not produced; (l) section 90-A - presumption as to electronic records five years old; may be applicable for the purpose of inquiry or investigation, by the Commission or the Director General, as the case may be. (4) The Commission or the Director General, as the case may be, may call for the parties to lead evidence by way of affidavit or lead oral evidence in the matter. (5) If the Commission or the Director General, as the case may be, directs evidence by a party to be led by way of oral submission, the Commission or the Director General, as the case may be, if considered necessary or expedient, grant an opportunity to the other party or parties, as the case may be, to cross examine the person giving the evidence. (6) The Commission or the Director General, as the case may be, may, if considered necessary or expedient, direct that the evidence of any of the parties to be recorded by an officer or person designated for the said purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be procured without incurring unnecessary expense within the stipulated time; (f) not being covered under any of the situations mentioned in clauses (a) to (e), if his or her evidence is considered necessary in the interest of justice. (2) Subject to the provisions of sub-regulation (1), the Commission or the Director General, as the case may be, either on its or his own motion or on an application made by a party to any proceeding before the Commission or the Director General, may also issue a commission for the examination on questionnaires or otherwise of any witness residing at any place not within India if satisfied that the evidence of such witness is necessary and may issue a letter of request to the Indian High Commission or the Indian Embassy to facilitate the execution of the commission, under this regulation. (3) Subject to the provisions of sub-regulations (1) and (2), the Commission or the Director General, as the case may be, either on its or his own motion or on an application made by a party to any proceeding before the Commission or the Director General, may also issue a commission for the examination of specific document(s) whether available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act shall be made unless the person or the enterprise or a party to the proceeding, during an ordinary meeting of the Commission, has been given a show cause notice and reasonable opportunity to represent his case before the Commission. (2) In case the Commission decides to issue show cause notice to any person or enterprise or a party to the proceedings, as the case may be, under sub- regulation (1), the Secretary shall issue a show cause notice giving not less than fifteen days asking for submission of the explanation in writing within the period stipulated in the notice. (3) The Commission shall, on receipt of the explanation, and after oral hearing if granted, proceed to decide the matter of imposition of penalty on the facts and circumstances of the case. The Issues needing determination 74. This court is of the view that the issues involved in these batch of petitions are the following: (1) Is the CCI a tribunal exercising judicial functions, or is it performing administrative and investigative functions and also adjudicating issues before it; (2) Is the CCI unconstitutional inasmuch as it violates the separation of powers principle, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statutory powers. In that case the Court found that the proceedings, before the High-Power Judicial Committee constituted, were neither civil nor criminal but sui generis. 76. Characterizing the proceeding before CCI as one akin to the preliminary stages of a departmental proceeding, the court, in SAIL (supra), held that prima facie opinion formation was merely an administrative function and that inquiry into the information or complaint (received by CCI) commences after such opinion was formed, for which notice to the opposite party is not a pre-requisite, though it may seek information in that regard, in view of Regulation 17: 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 (Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er an inquiry, (but not necessarily so, in all cases) is received by the CCI, the initial steps it takes are not always towards, or in aid of adjudication. They are to ascertain fuller details and inquire into the veracity (or perhaps) seriousness of the contents of the information, to discern whether such investigation and further steps towards adjudication are necessary. It is important to flag this function, because a court or tribunal, which has adjudicatory functions, is seized of the lis or the dispute, when the suitor or litigant approaches it. The issuance of notice or summons, by the court, in exercise of compulsive jurisdiction (like in a suit, or civil proceeding, or by a tribunal, in an appeal before it) or in discretionary jurisdiction (like in writ proceedings) are judicial acts, necessarily in furtherance of the adjudicatory function which the court or tribunal performs. At the stage when CCI entertains and directs an inquiry, it does not perform any adjudicatory function; the function is merely administrative. This position has been reiterated in Competition Commission of India v Bharat Sanchar Nigam Ltd 2019 (2) SCC 521. 78. At the next stage, after CCI directs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining about competition issues. 80. In the discharge of investigative functions under the Act and regulations, a striking feature which can be noticed is that the bodies constituted under it (the CCI and the DG) are not concerned with any lis, in the sense of a dispute between two parties over a legal relationship, status or private property; it is rather, having regard to the peculiar remit of the Act, is [as stated in Excel Crop Care (supra)]: to ensure that there is a healthy competition in the market, as it brings about various benefits for the public at large as well as economy of the nation. In fact, the ultimate goal of competition policy (or for that matter, even the consumer policies) is to enhance consumer well-being. These policies are directed at ensuring that markets function effectively. Competition policy towards the supply side of the market aims to ensure that consumers have adequate and affordable choices. Another purpose in curbing anti-competitive agreements is to ensure level playing field for all market players that helps markets to be competitive. It sets rules of the game that protect the competition process itself, rather than competitors in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocating competition, in addition to issuing directions or orders against specific entities or companies with the aim of eliminating a practice found pernicious or one which constitutes a barrier to competition and fair dealing in the marketplace. 84. However, the above finding that the CCI is not a tribunal exercising exclusive judicial power, does not lead to the conclusion that its orders are any less quasijudicial- at the stage when they attain finality. They are, for the simple reason that the consequences are far reaching, to those entities and companies which are subjected to directions (cease and desist orders, directions to alter agreements, etc). The right to freedom of trade, to the extent that it impinges on the right of the entity to exercise free choice about contractual terms, or whom to associate with (in regard to association and merger) are undeniably implicated. These orders, however, are subject to appeal, to a tribunal (COMPAT). CCI is also amenable to judicial review under Article 226 of the Constitution of India as regards the directions it makes procedurally. For instance, if it can be shown that investigation has been launched without a reasoned prima f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tractual relationships and associations once it determines, with respect to the undesirable effect upon competition in the relevant market of a particular product or service. The term regulation is broad, and has many hues. Reference in this connection can also be made to the judgment in U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association and Ors. (2004) 5 SCC 430] where the court interpreted the word regulation in the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 and observed that: 20. ... 'Regulate' means to control or to adjust by Rule or to subject to governing principles. It is a word of broad impact having wide meaning comprehending all facets not only specifically enumerated in the Act, but also embraces within its fold the powers incidental to the Regulation envisaged in good faith and its meaning has to be ascertained in the context in which it has been used and the purpose of the statute. 88. It is hence plain that the expression regulate is adaptable enough to include the power to issue directions. [Also see Star India Private Limited v. Department of Industrial Policy and Promotion Ors. 2019 (2) SCC 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder for the targets of the agency s regulatory effort to conform their conduct to the policy that the agency is attempting to adopt. A change in agency policy adopted through adjudication can also come as quite a surprise to the first party to whom it is applied. Courts sometimes deem it unacceptable for the agency to penalize the first entity that violates a new policy announced through adjudication. The Administrative Procedure Act (APA) also creates differences between the two processes. The APA explicitly insists that an independent administrative law judge pre- sides over an adjudication a requirement not duplicated by the rulemaking processes.9This requirement, however, applies largely to the trial-level decision maker in an adjudication. The appeals process will eventually allow the agency itself to interject its policy concerns into the process. Likewise, even though ex-parte contact and influence by political entities is thought to be less appropriate in an adjudicatory proceeding than in rulemaking, once again, this applies largely to the initial triallevel determination and not to the appeals process. 90. Each state devices its legislation and policies to suit the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion; the power to attach after passing of an order on an application made for approval (by the Judicial Magistrate of First Class having jurisdiction) for a period not exceeding one month, one or more bank account(s) of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of the SEBI Act, or the rules/regulations framed thereunder; and the power to direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation. If SEBI, after due investigation, discerns that a person has violated (or is likely to violate) any provision of the SEBI Act, or any rules/regulations made there under, it is authorized under Section 11D of the SEBI Act, to pass an order requiring the person concerned, to cease and desist from committing or causing such violation. Chapter VIA of the SEBI Act provides for penalties and adjudication. Under it, a penalty can be levied, for failure to furnish information, return or report to the Board (Section 15A inserted with retrospective effect from 25.01.1995); a penalty c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are to be considered by SEBI are to be decided by majority of votes and in the event of equality of votes, the Chairperson would have a casting vote. 93. Speaking about the powers of the SEBI, the Supreme Court, in Clariant International Ltd. and Anr. vs. Securities Exchange Board of India 2004 (8) SCC 524, had remarked that: 77. The Board exercises its legislative power by making regulations, executive power by administering the regulations framed by it and taking action against any entity violating these regulations and judicial power by adjudicating disputes in the implementation thereof. The only check upon exercise of such wide ranging power is that it must comply with the Constitution and the Act. In that view of the matter, where an expert Tribunal has been constituted, the scrutiny at its end must be held to be of wide import. The Tribunal, another expert body, must, thus, be allowed to exercise its own jurisdiction conferred on it by the statute without any limitation. Later, in National Securities Depository Ltd. v Securities and Exchange Board of India 2017 (5) SCC 517 the court again said, about SEBI that The Board is indisputably an expert body. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and a group of consumers. Every direction, decision or order by the TRAI- made, in the course of its regulatory power, is subject to appeal to TDSAT (Section 14A (2)). 97. The composition of TDSAT is dealt with Section 14B. The Tribunal comprises of a Chairman and not more than two members to be appointed by the Central Government. These are to be selected by the Central Government in consultation with the Chief Justice of India [Section 14B(2); Section 14B(3)] confers the option of Bench formation of the TDSAT and the distribution of work. Section 14(c) of the TRAI Act states that the Chairperson should have been a former Judge of the Supreme Court or the Chief Justice of the High Court [Section 14C (a)]. As far as members are concerned, the essential qualification and experience is that the individual concerned should have held the post of Secretary to the State Government or any equivalent post of State Government for a period not less than two years or one well-versed in the field of technology, telecommunication, industry, commerce or administration. The term of office of TDSAT member is provided in Section 14D. For Chairperson, the tenure is not exceeding three year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the primary level is constituted in the States The State Electricity Regulatory Commissions, under Section 82(1). The Chairperson and members of the State Commissions are to be appointed by the concerned State Government on the recommendations of a Selection Committee under Section 85 by virtue of Section 82(5). Like in the case of the Central Commission, Section 89 follows the similar pattern. The tenure of Chairperson or members shall be for five years. The qualification of Chairperson and Members of the State Commission is provided under Section 84. They should be from amongst persons of integrity and standing with adequate knowledge and having shown capacity in, dealing with problems relating to engineering, finance, commerce, economics, law or management. The Chairperson can, however, be appointed from amongst those who were Judges of High Courts [Section 84(2)] subject to previous consultation with the concerned Chief Justice of that High Court. 101. The functions of the State Commission are outlined under Section 86 and they include determination of tariff for generation, supply, transmission and wheeling of electricity, wholesale, bulk or retail, within the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is executable as a decree of a Civil Court. Such powers to execute the decree are conferred upon the Tribunal itself. The Tribunal‟s decision and orders are appealable to the Supreme Court under Section 125, on the grounds specified under Section 100 of the CPC. (d) Airports regulation: the Airports Authority of India Act and the Airports Economic Regulatory Authority Act, 2008 105. The first regulation in the field of airport regulation is the Airports Authority Act, 1994; it establishes the Airports Authority of India (AAI), whose functions-under Section 12 to manage civil airports, civil enclaves and aeronautical communications. By Section 12 (2) and (3), the AAI is invested with manifold regulatory duties including providing for air traffic and air transport service in every airport. It has the overarching duty to plan, conceive and establish airports and provide every kind of regulatory direction in that regard; also provide technical services such as navigational aids, etc. Section 3 provides for constitution of the AAI; Section 3 (3) prescribes that the AAI shall be comprised of a Chairperson and eight members- all to be appointed by the Central Government. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or Additional Secretary to the Government of India or any equivalent post in the Central or State Government for a total period of not less than three years. Selection of individuals to these positions is by a committee, under Section 5, comprised of high ranking officers of the Central Government, including the Cabinet Secretary. Section 6 prescribes that the term of the Chairman and others is to be five years; the outer age limit for the chairperson is 65 years and the members is 62 years. 109. The functions of AERA include, under Section 13, determination of tariff for the aeronautical services, in all major airports, taking into consideration several factors, i.e. the capital expenditure incurred and timely investment in improvement of airport facilities; the service provided, its quality and other relevant factors; the cost for improving efficiency; economic and viable operation of major airports; revenue received from services other than the aeronautical services; the concession offered by the Central Government in any agreement or memorandum of understanding or otherwise; any other factor which may be relevant for the purposes of this Act. Different tariff structures m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date on which he enters upon his office . The age limit for Chairperson is 70 years; for member it is sixty-five years. Petroleum Regulation 112. The Petroleum and Natural Gas Regulatory Board Act, 2006 (hereafter as the PNGRB Act ) was framed to promote competitive markets and protect the interests of consumers by ensuring fair trade and competition among the entities. The Board under Section 11 of the PNGRB Act has to protect the interest of consumers by passing fair trade and competition among entities and through its regulations enable access to common carriers or contract carriers. To achieve those objectives, the Board has tariff framing authority : through regulations under Section 22(1). By virtue of Section 28, the PNGRB Board is empowered to entertain complaints or upon its satisfaction upon information, that anyone contravenes provisions of the Act or its directions or authorize the terms and conditions subject to which authorization is guaranteed to carriers and other service providers (under Section 15 and 19) or retail service obligations etc. It can entertain such complaints. These complaints and information can be the subject matter of an enquiry during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government having adequate experience in the energy sector especially in the matters relating to the Petroleum and Natural Gas or should be a person of an ability and standing, having adequate knowledge of or experience in dealing with matters relating to exploration, production, transmission pipelines, marketing or regulation of petroleum, petroleum products or natural gas, economics, commerce, law or management. The jurisdiction of the Appellate Tribunal as is spelt out by Section 33; any order or decision of the Board is appealable by any person aggrieved to the Tribunal. The appeal against any order of the Appellate Tribunal shall lie with the Supreme Court (Section 37) on grounds specified in Section 100 of the CPC. 115. It is evident from the above enumeration of powers conferred upon the TRAI, the SEBI, the Electricity Commissions, the AAI, the AERA the PNGRB, that a two stage pattern has evolved in regulation of various sectors of the economy: the telecom, the securities, the power, airports and petroleum sectors. At the first stage the legislation provides for a primary regulator: in most cases, apart from regulatory duties, the concerned body also possesses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese drastic actions may have the effect of decrees (when the directions or orders are made by appellate bodies). But the primary determinations are made by regulatory bodies. This model or pattern inures under the Competition Act, as well. 117. In the United States of America, courts- notably the US Supreme Court- have grappled with problems arising from regulatory adjudication. The clearest statement of the scope of such decision making- which resembles an adjudicatory outcome by courts- was made in Securities Exchange Commission v. Chenery Corp., 332 U.S. 194 (1947) arose from an order of the commission (SEC) refusing to approve a utility company's bankruptcy reorganization plan, due to that plan's favourable treatment of management's stock purchases during the reorganization period. The Commission originally had based its disapproval on its understanding of general corporation law principles. The Supreme Court initially struck down that decision as a misreading of the principles. On remand, the SEC reaffirmed its rejection of the reorganization plan. But this time SEC relied on its interpretation of the standards of the Public Utility Holding Company Act of 1935. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislative power which is a part of administrative process resembling enactment of law by the legislature whereas a quasi-judicial order comes from adjudication which is also a part of administrative process resembling a judicial decision by a court of law. 50. Applying the above test, price fixation exercise is really legislative in character, unless by the terms of a particular statute it is made quasijudicial as in the case of tariff fixation under Section 62 made appealable under Section 111 of the 2003 Act, though Section 61 is an enabling provision for the framing of regulations by CERC. If one takes tariff as a subject-matter, one finds that under Part VII of the 2003 Act actual determination/fixation of tariff is done by the appropriate Commission under Section 62 whereas Section 61 is the enabling provision for framing of regulations containing generic propositions in accordance with which the appropriate Commission has to fix the tariff. This basic scheme equally applies to the subject-matter trading margin in a different statutory context as will be demonstrated by discussion hereinbelow. 119. PTC India, (a Constitution Bench decision) as well as the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment, while acting as an Appellate Authority, had to act judicially and was entrusted with the judicial powers of the State to adjudicate upon rights of the parties in civil matters when there was a lis between the contesting parties, and so, the conclusion was that it acts as a tribunal and not as an executive body. Jaswant Sugar Mills (supra) held that the Conciliation Officer acting under clause 29 of a statutory order promulgated in 1954 under the U.P. Industrial Disputes Act, 1947, has to act judicially in granting or refusing permission to alter the terms of employment of workmen at the instance of the employer, but even so, he was not a tribunal, because he was not invested with the judicial power of the State, as he was empowered merely to lift the ban statutorily imposed on the employer's rights, and was not authorized to make a final order or binding decision in any dispute. Engineering Mazdoor Sabha representing Workmen employed under the Hind Cycles Ltd. v Hind Cycles Ltd., Bombay (1963) Suppl (1) SCR 625, referred to the trappings of a court and it was observed that sometimes a rough and ready test is applied in determining the status of an adjudicating body by en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d existed for a long time. The court held that: 87. The Constitution contemplates judicial power being exercised by both courts and Tribunals. Except the powers and jurisdictions vested in superior courts by the Constitution, powers and jurisdiction of courts are controlled and regulated by Legislative enactments. High Courts are vested with the jurisdiction to entertain and hear appeals, revisions and references in pursuance of provisions contained in several specific legislative enactments. If jurisdiction of High Courts can be created by providing for appeals, revisions and references to be heard by the High Courts, jurisdiction can also be taken away by deleting the provisions for appeals, revisions or references. It also follows that the legislature has the power to create Tribunals with reference to specific enactments and confer jurisdiction on them to decide disputes in regard to matters arising from such special enactments. Therefore it cannot be said that legislature has no power to transfer judicial functions traditionally performed by courts to Tribunals. 88. The argument that there cannot be `whole-sale transfer of powers' is misconceived. It is nobody&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tried by a higher court can be tried by a lower court or vice versa (A standard example is the variation of pecuniary limits of courts). Similarly while constituting Tribunals, the Legislature can prescribe the qualifications/eligibility criteria. The same is however subject to Judicial Review. If the court in exercise of judicial review is of the view that such tribunalisation would adversely affect the independence of judiciary or the standards of judiciary, the court may interfere to preserve the independence and standards of judiciary. Such an exercise will be part of the checks and balances measures to maintain the separation of powers and to prevent any encroachment, intentional or unintentional, by either the legislature or by the executive. 124. The leading authority relied upon by the Petitioners was the Madras Bar Association (supra) judgment. It would be essential to extract some of the observations and findings of the Supreme Court in that judgment, dealing with the transfer of judicial powers to tribunals. They are reproduced as under: 108 The position that Parliament had the power to amend the Constitution, and to create a court/tribunal to discharge fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sy were essentially comprised of Judicial Members, besides Accountant or Technical Members. To qualify for appointment as a Judicial Member, it was essential that the incumbent had held a judicial office in India for a period of 10 years, or had practiced as an Advocate for a similar period. It is the above qualification, which enabled the enactments to provide, by a fiction of law, that all the said Appellate Tribunals were discharging judicial proceedings . The next stage of appellate determination, has been traditionally vested with the High Courts. The income-tax legislation, the customs legislation, as well as, the central excise legislation uniformly provided, that in exercise of its appellate jurisdiction, the jurisdictional High Court would adjudicate appeals arising out of orders passed by the respective Appellate Tribunals. The said appeals were by a legislative determination, to be heard by benches comprising of at least two judges of the High Court. Adjudication at the hands of a bench consisting of at least two judges, by itself is indicative of the legal complications, insofar as the appellate adjudicatory role, of the jurisdictional High Court was concerned. It woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power is exercised exclusively by the Chief Justice, in the best interest of the administration of justice. Allowing the Central Government to participate in the aforestated administrative functioning of the NTT, in our view, would impinge upon the independence and fairness of the Members of the NTT. For the NTT Act to be valid, the Chairperson and Members of the NTT should be possessed of the same independence and security, as the judges of the jurisdictional High Courts (which the NTT is mandated to substitute). Vesting of the power of determining the jurisdiction, and the postings of different Members, with the Central Government, in our considered view, would undermine the independence and fairness of the Chairperson and the Members of the NTT, as they would always be worried to preserve their jurisdiction based on their preferences/inclinations in terms of work, and conveniences in terms of place of posting. An unsuitable/disadvantageous Chairperson or Member could be easily moved to an insignificant jurisdiction, or to an inconvenient posting. This could be done to chastise him, to accept a position he would not voluntarily accede to. We are, therefore of the considered view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enactments in question), again by a legislative mandate, the appeal was to be heard by a bench of at least two judges, of the jurisdictional High Court. One cannot lose sight of the fact, that hitherto before, the issues which will vest in the jurisdiction of the NTT, were being decided by a bench of at least two judges of the High Court. The onerous and complicated nature of the adjudicatory process is clear. We may also simultaneously notice, that the power of judicial review vested in the High Courts under Articles 226 and 227 of the Constitution has not been expressly taken away by the NTT Act. During the course of hearing, we had expressed our opinion in respect of the power of judicial review vested in the High Courts under Articles 226 and 227 of the Constitution. In our view, the power stood denuded, on account of the fact that, Section 24 of the NTT Act vested with an aggrieved party, a remedy of appeal against an order passed by the NTT, directly to the Supreme Court. Section 24 aforementioned is being extracted hereunder: 24. Appeal to Supreme Court.- Any person including any department of the Government aggrieved by any decision or order of the National Tax T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of judicial power, Parliament does not ensure, that the newly created court/tribunal, conforms with the salient characteristics and standards, of the court sought to be substituted. 137. (iv) Constitutional conventions, pertaining to constitutions styled on the Westminster model, will also stand breached, if while enacting legislation, pertaining to transfer of judicial power, conventions and salient characteristics of the court sought to be replaced, are not incorporated in the court/tribunal sought to be created. 138.(v) The prayer made in Writ Petition (C) No.621 of 2007 is declined. Company Secretaries are held ineligible, for representing a party to an appeal before the NTT. 139.(vi) Examined on the touchstone of conclusions (iii) and (iv) above, Sections 5, 6, 7, 8 and 13 of the NTT Act (to the extent indicated hereinabove), are held to be unconstitutional. Since the aforesaid provisions, constitute the edifice of the NTT Act, and without these provisions the remaining provisions are rendered ineffective and inconsequential, the entire enactment is declared unconstitutional . 125. In Madras Bar Association (supra) and R. Gandhi (supra), therefore, the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke of enactment of Article 324A (inserted by the forty second amendment to the Constitution) was permissible. The court held as follows: Though judicial review is a basic and essential feature of the Constitution and it cannot be abrogated without affecting the basic structure of the Constitution, but if any constitutional amendment made by Parliament takes away from the High Court the power of judicial review in any particular area and vests it in any other institutional mechanism or authority, it would not be violative of the basic structure doctrine, so long as the essential condition is fulfilled, namely, that the alternative institutional mechanism or authority set is no less effective than the High Court.. 128. The problems felt when the Administrative Tribunals were set up, i.e. complete exclusion of judicial review [under Article 226 of the Constitution by virtue of Article 323A (2) (b) and 323B (3) (b)] resulted in a reference to a larger bench of (seven judges); this led to the decision in L. Chandra Kumar (supra). The court, in L. Chandra Kumar (supra), held, inter alia, that: 90. In the years that have passed since the Report of the Malimath Committee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion the Tribunal concerned falls will serve two purposes. While saving the power of judicial review of legislative action vested in the High Courts under Article 226/227 of the Constitution, it will ensure that frivolous claims are filtered out through the process of adjudication in the Tribunal. The High Court will also have the benefit of a reasoned decision on merits which will be of use to it in finally deciding the matter. 92. It has also been contended before us that even in dealing with cases which are properly before the Tribunals, the manner in which justice is dispensed by them leaves much to be desired. Moreover, the remedy provided in the parent statutes, by way of an appeal by special leave under Article 136 of the Constitution, is too costly and inaccessible for it to be real and effective. Furthermore, the result of providing such a remedy is that the docket of the Supreme Court is crowded with decisions of Tribunals that are challenged on relatively trivial grounds and it is forced to perform the role of a First Appellate Court. We have already emphasised the necessity for ensuring that the High Courts are able to exercise judicial superintendence over the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt statutes following the settled principle that a Tribunal which is a creature of an Act cannot declare that very Act to be unconstitutional. In such cases alone, the concerned High Court may be approached directly. All other decisions of these Tribunals, rendered in cases that they are specifically empowered to adjudicate upon by virtue of their parent statutes, will also be subject to scrutiny before a Division Bench of their respective High Courts. We may add that the Tribunals will, however, continue to act as the only courts of first instance in respect of the areas of law for which they have been constituted. By this, we mean that it will not be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except, as mentioned, where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the concerned Tribunal. ************************** *************** 96. We are also required to address the issue of the competence of those who man the Tribunals and the question of who is to exercise administrative supervision over them. It has been urged that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. 129. It is thus clear that in Sampath Kumar (supra) and L. Chandra Kumar (supra), the issue which confronted the court was complete exclusion of judicial review; the High Courts‟ jurisdiction in service matters, under Article 226 of the Constitution was completely ousted. The Administrative tribunals were created under the Act, and by reason of Article 323A (2)(d) and Article 323B (3) (d), such jurisdiction of the courts was ousted. L. Chandra Kumar (supra) declared that the amendment which introduced those provisions was violative of the basic structure or essential features, inasmuch as the entire exclusion of such judicial review from the High Court, and its conferment on a body which was not an effective substitute, was impermissible. Resultantly, the amendments were declared unconstitutional; as a consequence, on the one hand, the tribunal‟s jurisdiction to determine the vires of rules (barring rules and subordinate legislation under the parent statute, i.e. the Administrative Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Associated Cement (supra) and also in Bhim Singh (supra). In the latter, after noticing Indira Nehru Gandhi v Raj Narain1975 Suppl SCC 1 and observations in Kesavananda Bharti v State of Kerala 1975 Supp. SCR 1, the court held that: This court has previously held that the taking away of the judicial function through legislation would be violative of separation of powers. As Chandrachud, J. noted in Indira Nehru Gandhi case (supra), the exercise by the legislature of what is purely and indubitably a judicial function is impossible to sustain in the context even of our co-operative federalism which contains no rigid distribution of powers but which provides a system of salutary checks and balances. [para. 689] This is because such legislation upsets the balance between the various organs of the State thus harming the system of accountability in the Constitution. Thus, the test for the violation of separation of powers must be precisely this. A law would be violative of separation of powers not if it results in some overlap of functions of different branches of the State, but if it takes over an essential function of the other branch leading to lapse in constitutional accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial shut down for specified periods, if the direction to stop trading is given. Undoubtedly, these result in serious civil consequences. In all these cases- as in the case of the Act, the remedy of appeal is available as a right; the appellate tribunals uniformly are chaired by a judicially trained person (former High Court Chief Justice or former Supreme Court judge) in a couple of tribunals, in addition, other members drawn from the legal field are necessary. However, as regards the primary regulator, i.e. the bodies such as TRAI, SEBI, Electricity Commissions, AAI, AERA, PNGRB the statutes do not mandate that the members concerned (including adjudicating officers under Section 15I of SEBI Act) should be legally qualified or possess judicial experience. 134. Gullapalli Nageswara Rao (supra) recognized the broad functionality test to determine whether a body or tribunal has a duty to act judicially; it held that: whether an Administrative Tribunal has a duty to act judicially should be gathered from the provisions of the particular statute and the rules made thereunder, and they clearly express the view that if an authority is called upon to decide respective rights of con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, it might have to record further evidence; in any case, it has to hear the parties on the report submitted to it. It is thereafter that the CCI or the SEBI issues directions or orders. 137. The overall and comprehensive picture which unfolds on a reading of the various relevant provisions of the Competition Act is that not all of the CCI‟s powers are quasi-judicial or judicial; when it considers a complaint or information and records a prima facie opinion, it acts administratively. It does not issue notice, but rather orders investigation, in the course of which the DG collects materials, including calling for records, statements, documents, etc. and also wherever needed, recording evidence on oath. At that stage, it is possible that one party or the other might seek cross-examination. Nevertheless, the stage is only one of investigation. The report furnished by the DG does not decide any lis, nor results in any adverse consequence. The report has to be considered by the CCI, after hearing the parties concerned (before which they are furnished with copies of the report). It is only after the report is submitted and a hearing given, that an order (a quasi-judicial one) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. I.5 Principles Governing Competition Law And Authority a) CCI should be a multi-member body comprised of eminent and erudite persons of integrity and objectivity in the fields of Judiciary, Economics, Law, International Trade, Commerce, Industry, Accountancy, Public Affairs and Administration. b) CCI should be independent and insulated from political and budgetary controls of the Government. The independent functioning of the CCI member need to be ensured by having appropriate provision for their removal only with the concurrence of the Supreme Court. c) CCI should separate the investigative, prosecutorial and adjudicative functions. d) The proceedings of CCI should be transparent, non-discriminatory and rule-bound. e) CCI should have a positive advocacy role in shaping policies affecting competition. To ensure the above, Competition Law should: (i) provide a system of checks and balances by ensuring due process of law with provisions for appeal and review. (ii) have extra-territorial reach. (iii) have punitive provisions for punishing the offenders besides other remedial methods (reformatory). 6.1.6 Competition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements in the manner specified by it or to abide by other orders, such as payment of costs etc. are equally important implications. Furthermore, the power to issue penalty after adjudication under Section 27(b) only reinforces the essential judicial nature and content of the powers outlined in Sections 3 and 4. 140. It was submitted, in the same vein that given the nature of adjudicatory functions for which the Act was conceived and brought into force, unlike other regulators, the CCI does not decide and apply pre-existing norms that dictate behaviour of an enterprise but rather adjudicates through regulation. In the submissions of one of the learned counsel, Mr. Lakshmikumaran, the CCI, in effect, regulates and does not apply existing norms because there are no existing norms and that the norms that do exist are of a general character. Necessarily, therefore, the task of the CCI is closer or rather even identical to those of adjudicating bodies, Tribunals or Courts. As a corollary, the personnel who man the CCI should be drawn predominantly from the legal field with legal expertise or judicial experience. Section 8 was attacked on the ground that it only provides an option of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it were. Even at this stage, the CCI may not proceed further and close the matter after hearing the parties. Conversely, if the DG in a given case reports that no further action or order is warranted after hearing the individual or the applicant as well as the parties who are alleged to be involved in the objectionable behaviour, the CCI can direct a further enquiry and thereafter proceed further in the matter with the hearing. It is only at this stage after the culmination of the investigation that the CCI enters into an adjudicatory phase. Undoubtedly, at this final stage, it decides the rights and liabilities of the parties. Given these overall realities, the question is, can it be said that the CCI‟s composition ought to be substantially or predominantly drawn from those possessing legal expertise or judicial experience as is urged. 142. In the previous segment of this section, this Court had juxtaposed powers conferred by the Parliament upon the CCI with the role discharged by various regulatory authorities SEBI, Electricity Commissions, AAI, AERA, PNGRB etc. In some cases, the primary regulatory body such as the SEBI and even the electricity commission are conferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the CCI must necessarily comprise of lawyers or those possessing judicial experience or those entitled to hold office as judges, to conform with the provisions of the Constitution. CCI‟s task as the primary regulator of marketplace and watchdog in regard to anti-competitive practices was conceived by the Parliament to be as a composite regulator and expert body which is also undoubtedly required to adjudicate at a stage. That stage, however, cannot be given such primacy as to hold that the CCI is per se or purely a judicial tribunal. As an adjudicatory body, there can be, no doubt, of course, that its orders are quasi-judicial and must be preceded by adherence to a fair procedure. As to what is a fair procedure has been elaborately dealt with by Section 26 and various regulations that mandate the kind of opportunity that various interested parties are to be given. Equally, in the course of such proceedings, the CCI is required to make procedural orders -which, a line of decisions require- are to be based on reasons. The final adjudicatory order, of course, has to contain elaborate reasoning. In that sense, the CCI is, no doubt, a Tribunal. But it is emphasized again that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved, it is by reason of the provisions of the Code of Civil Procedure that the civil courts had the right, prior to the enactment of the Debt Recovery Act, to decide the suits for recovery filed by the banks and financial institutions. This forum, namely, that of a civil court, now stands replaced by a banking tribunal in respect of the debts due to the bank. When in the Constitution Articles 323A and 323B contemplate establishment of a tribunal and that does not erode the independence of the judiciary, there is no reason to presume that the banking tribunals and the appellate tribunals so constituted would not be independent, or that justice would be denied to the defendants or that the independence of the judiciary would stand eroded. 147. Significantly, similar considerations prevailed in Jagdish Singh v Heeralal 2014 (1) SCC 479, when the Supreme Court held that the civil courts‟ jurisdiction is barred in cases arising under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. For these reasons, the challenge to the bar to jurisdiction of civil courts, contained in Section 61 fails. 148. The next challenge addr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment of such judicial personnel was optional. However, the court further held that: 106. In Madras Bar Association28 (MJ-II), the Constitution Bench, referring to the decision in Madras Bar Association29 (MJ-I) observed that members of tribunals discharging judicial functions could only be drawn from sources possessed of expertise in law and competent to discharge judicial functions. We are conscious of the fact that the case (MJ-I) dealt with a factual matrix where the powers vested in courts were sought to be transferred to the tribunal, but what is relevant is the aspect of judicial functions with all the 'trappings of the court' and exercise of judicial power, at least, in respect of same part of the functioning of the State Commission. Thus, if the Chairman of the Commission is not a man of law, there should, at least, be a member who is drawn from the legal field. The observations of the Constitution Bench in Madras Bar Association30 (MJ-II) constitutes a declaration on the concept of basic structure with reference to the concepts of separation of powers , rule of law and judicial review . The first question raised before the Constitution Bench as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. Objection was taken to Section 53D stating that whereas it envisages the Chairperson of a tribunal as a retired judge, there is no obligation that at least one of the other members ought to be a trained judicial personnel. The court is undoubtedly of the opinion that the Appellate Tribunal performs judicial functions; it hears and decides appeals from orders of CCI. However, the mandate that the Chairman should have been a Supreme Court judge or a Chief Justice of a High Court, in the opinion of this court, sufficiently guarantees the application of a judicial mind and, more importantly, application of judicial principles to the issues brought/agitated before that tribunal. This Court notices that the appellate tribunal provisions contained in regulatory enactments in various sectors (telecom, electricity, petroleum and natural gas, airports, securities etc.) follow an identical pattern. 152. With respect to the selection procedure contained in Section 8 (for members of CCI) the court perceives no infirmity in the impugned provision, having regard to the view taken previously, mandatorily, the CCI should have a judicial member, in keeping with the dicta in Madras Bar Associ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by one Dr. Raj Singh, Regional Director (Northern Region) of the Ministry of Corporate Affairs. This affidavit makes it clear that, acting in compliance with the directions of the Supreme Court in the aforesaid judgments, a Selection Committee was constituted to make appointments of Members of the NCLT in the year 2015 itself. Thus, by an Order dated 27.07.2015, (i) Justice Gogoi (as he then was), (ii) Justice Ramana, (iii) Secretary, Department of Legal Affairs, Ministry of Law and Justice, and (iv) Secretary, Corporate Affairs, were constituted as the Selection Committee. This Selection Committee was reconstituted on 22.02.2017 to make further appointments. In compliance of the directions of this Court, advertisements dated 10.08.2015 were issued inviting applications for Judicial and Technical Members as a result of which, all the present Members of the NCLT and NCLAT have been appointed. This being the case, we need not detain ourselves any further with regard to the first submission of Shri Rohatgi. 154. In this context, it is significant that the Constitution Bench judgment in the second case of Madras Bar Association v. Union of India 2015 (8) SCC 583 [hereafter th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the composition of such a Selection Committee was mandated in Direction No. (viii) of para 120 and this sub-para we reproduce once again hereinbelow: (viii) Instead of a five-member Selection Committee with Chief Justice of India (or his nominee) as Chairperson and two Secretaries from the Ministry of Finance and Company Affairs and the Secretary in the Ministry of Labour and Secretary in the Ministry of Law and Justice as members mentioned in Section 10FX, the Selection Committee should broadly be on the following lines: (a) Chief Justice of India or his nominee-Chairperson (with a casting vote); (b) A senior Judge of the Supreme Court or Chief Justice of High Court-Member; (c) Secretary in the Ministry of Finance and Company Affairs- Member; and (d) Secretary in the Ministry of Law and Justice-Member. 27. Notwithstanding the above, there is a deviation in the composition of Selection Committee that is prescribed Under Section 412(2) of the Act, 2013. The deviations are as under: (i) Though the Chief Justice of India or his nominee is to act as Chairperson, he is not given the power of a casting vote. It is because of the reason tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is now a binding precedent and, thus, binds the Respondent equally. The prime consideration in the mind of the Bench was that it is the Chairperson, viz. Chief Justice of India, or his nominee who is to be given the final say in the matter of selection with right to have a casting vote. That is the ratio of the judgment and reasons for providing such a composition are not far to seek. In the face of the all pervading prescript available on this very issue in the form of a binding precedent, there is no scope for any relaxation as sought to be achieved through the impugned provision and we find it to be incompatible with the mandatory dicta of 2010 judgment. Therefore, we hold that provisions of Section 412(2) of the Act, 2013 are not valid and direction is issued to remove the defect by bringing this provision in accord with sub-para (viii) of para 120 of 2010 judgment. 155. Having regard to the above discussion, it is, therefore, held that necessarily, the composition of the Committee, which selects from amongst names to fill the position of Chairperson and members of the Company Appellate Tribunal has to conform to the dicta in Madras Bar Association-I (supra) and Madr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court, do not in any manner detract from or undermine the express authority conferred upon the CCI. 158. As a matter of fact, by virtue of Section 11 of the Act, the tenure of its members is assured and protected. The procedure for removal of members or Chairman is spelt out in Section 11(3)(3); the safeguard provided is that in the event of a member acquiring official or other interest, likely to affect prejudicially her functions as a member or abusing her position, is rendered prejudicial to public interest, are matters exclusively to be decided by a reference made to the Supreme Court by the Central Government. This provision, in the opinion of the court, sufficiently entrenches the office of the Chairman and the members of the CCI and insulates them from arbitrary inroads by the executive. Re. Point No.3 Section 22(3) unconstitutional for the reasons urged by the petitioners Re. Point No.4 Revolving door policy vitiating any law, policy or practice rendered by the CCI 159. Both these points are taken up together because common arguments were addressed by all counsels on this aspect. Section 22(1) provides that the CCI would meet at such times and plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render their decisions objectively on the given facts and apply a pre-existing norm. This in turn means that each member of the tribunal (where plurality of members exist) applies her (or his) mind independently and arrive at decisions which could be common. In this broad spectrum, various permutations are possible. For example, in a 3 member tribunal, it is likely that each member may express a different opinion but all may agree on a common conclusion. On the other hand, two may agree upon a common opinion and express in it in one opinion and the third may differ for stated reasons. Equally, it is possible that there is complete unanimity on all aspects resulting in one common opinion or decision. Each potential decision is premised upon application of mind by every member who participated in the tribunal. Furthermore, a strong element of collegiality is necessary either in all stages of functioning and at least, at the stage of the decision making. This collegiality or collaborative process and requirement of application mind is entirely subverted if one member, Chairperson, senior member or any member characterized by any appellation is conferred a second or casting vote. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to function for several reasons. 164. As regards point No. 4, the most serious objection to Section 22(3) as a whole was that it places or permits the revolving door policy that enables members to participate in one or the other proceedings or desist from participation at their will. To better appreciate this practice, the court would rely upon a tabular chart prepared by one of the parties in that regard with respect to participation of one or the other members in the course of the hearing, which culminated in its final hearings: CCI Order dated Summary of the order Members present/signed 5.2.2013 6.2.2013 FINAL ARGUMENTS HEARD BY CCI HC Gupta Anurag Goel 7.2.2013 8.2.2013 Tata Motors was heard on 5.2.2013 M L Tayal Ashok Chawla R Prasad Geeta Gouri S N Dhingra 5 March 2013 (Vol IV, @ pg 798-802) CCI requested for additional information from the informant and the other OEMs (including Tata Motors). H C Gupta Anurag Goel M L Tayal Ashok Chawla Geeta Gouri S N Dhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M.L. Tayal (R Prasad (retired on 28.02.2013) and HC Gupta, who heard Tata Motors were not present for this ordinary meeting. Bunker, who was present at this meeting was not present during the oral submissions made by Tata and only joined the CCI on 25 March 2013) 25.8.201 [CCI FINAL ORDER] Anurag Goel Ashok Chawla M L Tayal (R Prasad (retired on 28.02.2013), HC Gupta (retired on 24.11.2013), Geeta Gouri (retired on 15.04.2014) and Dhingra (March 2014) who heard Tata Motors were not present for this ordinary meeting. Also, the members HC Gupta, Dhingra and Geeta Gouri considered the additional submissions filed by Tata Motors post the conclusion of the oral submissions. Bunker, was not present during the oral submissions made by Tata (only joined the CCI on 25 March 2013) considered the additional submissions filed by Tata Motors post the oral submissions.) 165. There can be no two opinions about the impropriety of a decision which is contrary to the principle that a tribunal or adjudicatory body is bound to render its decision, after hearing the parties; if the body comprises of one or several members, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be stretched to such levels as to render access to justice, an illusion, whereby a larger body comprising of several members hears the matter and the ultimate decision is rendered by a minority of such body or tribunal, for whatever reasons. 168. In Bharat Bank (supra), the fact situation was that the chairman of the tribunal was unable to attend the proceedings, since he was entrusted with another assignment. The argument made was two-fold, that the remaining two members had to be formally constituted as the tribunal; more crucially, it was contended that the award that was made included the participation of the chairman, who then returned. The Supreme Court held that the award was vitiated. In Automotive Tyre Manufacturers Association v. The Designated Authority Ors(2011) 2 SCC 258, the issue was that one Designated Authority under the Customs Tariff Act heard the parties; he was transferred; another official took charge. He issued notice to the parties and asked them to provide written submissions. The Supreme Court considered the submission that the parties were given notice to appear, and did not do so; it however, rejected it as unsubstantiated. In the light of these fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th where the objections of parties heard by one officer but the order of passed by another. Sri Salve, referring to certain passages in Local Government Board v. Alridge 1915 A.C. 120, Ridge v. Daldwin 1964 A.C. 40, Regina v. Race Relations Board. Ex parte Selvarajan 1975 1 WIR 1686 and in de Smith's Judicial Review of Administrative Action (Fourth Adn. p. 219-220) submitted that this was not necessarily so and that the contents of natural justice will vary with the nature of the enquiry, the object of the proceeding and whether the decision involved is an institutional' decision or one taken by an officer specially empowered to do it. Sri Divan, on the other hand pointed out that the majority judgment in Gullappalli Nageswara Rao v. ASRTC (1959) Supp. 1 S.C.R. 319 has disapproved of Alridge's case and that natural justice demands that the hearing and order should be by the same officer. This is a very interesting question and Alridge's case has been dealt with by wade (Administrative Law, 6th Edition) at pp. 507 et. seq.) We are of opinion that it is unnecessary to enter into a decision of this issue for the purposes of the present case. Here the issue is one of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er se does not amount to violation of principles of natural justice. 172. That proviso to Section 22(3) permits the possibility of the revolving door in the opinion of the court, does not result in its invalidity. It is well settled that the possibility of abuse of power is not a ground to hold the law, or provision of a law, arbitrary. In Sushil Kumar Sharma v Union of India and Ors. (2005) 6 SCC 281 it was observed as follows: 11. It is well settled that mere possibility of abuse of a provision of law does not per se invalidate a legislation. It must be presumed, unless contrary is proved, that administration and application of a particular law would be done not with an evil eye and unequal hand (see: A. Thangal Kunju Musaliar v. M. Venkatachalam Potti, Authorised Official and Income-Tax Officer and Anr.) (1956) 29 ITR 349 (SC) . 173. Again, in Budhan Choudhary Ors. v State of Bihar 1955 CriLJ 374, the Supreme Court repelled the contention holding that on the possibility of abuse of a provision by the authority, the legislation may not be held arbitrary or discriminatory and violative of Article 14 of the Constitution: 13. From the decided cases in India a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not result in any injustice to the Respondents or adversely impact the outcome of the Hon ble Commission in the matter. After the matter was heard, one new Member had joined the Commission, however, only those Members of the Commission who heard the matter and were present at the time of arguments, shall decide the matter in question. The application is, therefore, dismissed. 178. It appears that the parties who had raised this issue were satisfied that no prejudice would be caused to them in view of this order of the CCI. As far as the other parties are concerned, they did not raise the issue at all and were evidently not apprehensive about the consequences of the procedure adopted in this regard. 179. Having so concluded, this Court is nevertheless of the opinion that a hearing by a larger body and decision by a smaller number (for compelling reasons or otherwise) does lead to undesirable and perhaps at times avoidable situations. To address this, the court hereby directs that when all evidence (i.e. report, its objections/affidavits etc.) are completed, the CCI should set down the case for final hearing. At the next stage, when hearing commences, the membership of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government should seriously consider recruiting legal practitioners who regularly practise in the field of company law, competition, securities and other related fields, with sufficient experience (of over 7 years, as in the case of District Judges, under the Constitution) as technical members. This will eventually promote wider participation in CCI‟s decision making process and result in these lawyers‟ grooming for responsible positions in their later years: this can foster expertise which will be valuable to the legal and judicial system. Was the power exercised by the CCI to expand the scope of inquiry and notice under Section 26 (1) in an illegal and overbroad manner 181. The petitioners had impugned the expansion of scope of the initial inquiry. The facts here are that based on the complaint by the informant and supplementary materials, the CCI recorded its prima facie opinion that the complaints needed investigation by its order of 24.02.2011. On 19.04.2011, the DG conducted investigation into the allegations made by the informant and submitted his investigation report. That DG Report requested for permission to expand the scope of its investigation to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... car manufacturer as per list obtained from Society of Indian automobile manufacturer (SIAM) therefore requires investigation for verification in the larger interest of the consumers. It is therefore required that CCI may kindly issue necessary direction to initiate investigation against other car manufacturers. 183. The Commission in its order dated 26.04.2011 recorded as follows: ORDER The information was referred to DG on 08.03.2011 for investigation and submission of report within 60 days. 2. The DG vie not dated 19.04.2011 has requested for directions to initiate investigation against other car manufacturers, inter alia starting that the scope of investigation needs to widened in this case. 3. The Commission considered the DG's note in the ordinary meetingheld on 26.04.2011 and approved the request to initiate investigation against other car manufacturers also as mentioned in the note of DG dated 19.04.2011. 4. Commission further observed that whenever Commission orders of investigation in any case it need not be confined to the parties mentioned in the information. The investigation is ordered on certain issue and all the parties which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding jurisdiction of the Commission are not only contrary to the scheme of that but also do not capture the factual position in the correct perspective. Based on above discussion the contention raised by the OPs has no force and is liable to be rejected. 185. This Court is of the opinion that the argument with respect to illegality of the CCI‟s procedure, in expanding the scope of inquiry under Section 26 (1) is insubstantial. At the stage the CCI decides to act on a complaint, and directs investigation, it does not always have all information or material in respect of the general pattern or method adopted by parties that vitiates the marketplace. It is only the information given to it. Premised on that information, the DG is tasked to look into the matter. During the course of that inquiry, based on that solitary complaint or information, facts leading to pervasive practises that amount to abuse of dominant position on the part of one or more individuals or entities may be possibly unearthed. At that stage, the investigation is quasi inquisitorial, to the extent that the report given is inconclusive of the rights of the parties; however, to the extent that eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no material calling for action, it has to issue notice to the concerned parties (i.e. the complainant) before it proceeds to close the case [Sections 26 (5) and (6)]. On the other hand, if the DG‟s report recommends otherwise, it is obliged to proceed and investigate further [Sections 26 (7) and (8)]. Again Section 27 talks of different parties [ enterprise or association of enterprises or person or association of persons - per Section 27 (a)]. Likewise, the steps outlined in Section 26 are amplified in the procedure mandated by Regulation 20 and 21, which requires participation by the parties , in the event a report after DG‟s inquiry, which is likely to result in an adverse order, under Sections 27-34 of the Act. Consequently, the argument that a specific order by CCI applying its mind into the role played by each of them was essential before the DG could have proceeded with the inquiry, is unmerited and, therefore, rejected. Re Point No. 6 Is Section 27 (b) of the Act and the provision for penalties unconstitutional or the orders impugned arbitrary, for the reason that no separate hearing is provided, and the statute provides no guideline for exercise of dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group.] 188. It is evident- from the scheme of the Act, that after carrying out the investigation, the DG files the report before the CCI which is shared with the opposite parties. In the present case, the DG made his report. This report formed the basis of further proceedings before the CCI which held proceedings and hearings on various dates. The final order in this case was made after a series of final hearing, on 25.08.2014. The final order dealt with 14 opposite parties, and made a detailed analysis with respect to prevalent anti-competitive prices and also dealt with the arguments of the equipment manufacturers, such as the petitioners. There is a discussion with respect to the justification for imposition of penalty and the quantum. Having regard to these facts, it is now essential to consider whether the absence of a mandatory provision, which precedes the imposition of penalty under Section 27(b) renders it unconstitutional and arbitrary. 189. The common refrain of all petitioners on this aspect is that sans a mandated pre-pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es anti-competitive or impermissible dominant behaviour in the marketplace, but also ensure that such behaviour is appropriately sanctioned. In this regard, the court notices that Section 46 of the Act embodies a very salient principle, i.e. that at the initial stage, if an entity or an entity trader, manufacturer or dealer etc. makes full disclosure, it can be imposed with lesser penalty in the ultimate analysis of a finding with respect to objectionable behaviour either under Sections 3 or 4. Section 46 of the Act reads as follows: 46. Power to impose lesser penalty. The Commission may, if it is satisfied that any producer, seller, distributor, trader or service provider included in any cartel, which is alleged to have violated section 3, has made a full and true disclosure in respect of the alleged violations and such disclosure is vital, impose upon such producer, seller, distributor, trader or service provider a lesser penalty as it may deem fit, than leviable under this Act or the rules or the regulations: Provided that lesser penalty shall not be imposed by the Commission in cases where proceedings for the violation of any of the provisions of this Act or the rules or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sense lower in the scale, require a Show Cause Notice, whereas the determination of penalty under Section 27(b) is not necessarily preceded by separate Show Cause Notice. 192. A recent decision-albeit in the context of a case that concerned imposition of a penalty for not complying with the CCI‟s orders (under Section 43A) underscored the point that such penalties are not conditioned upon existence of a mental condition or mens rea; they are civil in nature. Therefore, in Competition Commission of India v Thomas Cook (India) Ltd. and Ors. 2018 (6) SCC 549 it was held that: There was no requirement of mens rea Under Section 43A or intentional breach as an essential element for levy of penalty. Section 43A of the Act does not use the expression the failure has to be willful or mala fide for the purpose of imposition of penalty. The breach of the provision is punishable and considering the nature of the breach, it is open to impose the penalty. 193. The Supreme Court quoted with approval its previous decision in Hindustan Steel Ltd. v State of Orissa AIR 1970 SC 253, that held that breach of a civil obligation which attracts penalty under the provisions of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty liability; a composite show cause notice for both is usually issued. Under the Central Excise Act, 1944, a composite show cause notice for duty and penalty is issued(by Sections 11A and other related provisions). In other enactments, such as for instance, Section 13 of the Foreign Exchange Management Act, 1999, any contravention of the Act, rules, regulations or directions (under the Act) attract serious penal consequences. The adjudicating officer can impose penalties equal to three times the amount involved in the contravention; yet the parent statute is silent about the procedure and the nature of hearing. Rule 4 (1) of the Rules requires the Adjudicating Authority to issue a notice to any person believed to have committed any contravention of Section 13 of FEMA, Rule 4 (2) requires the show-cause notice to indicate the nature of contravention alleged to have been committed. Rule 4 (3) provides that if the Adjudicating Authority is of the opinion that an enquiry should be held, it shall issue a notice, fixing a date for the appearance of that person either personally or through his legal practitioner. 196. The pattern or structure of the statute and its object, in every su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt : There seems to be an erroneous impression in certain quarters evidently influenced by the provisions in Article 311 of the Constitution particularly as they stood before the amendment of that article that every disciplinary proceeding must consist of two inquiries, one before issuing the show cause notice to be followed by another inquiry thereafter. Such is not the requirement of the principles of natural justice. Law may or may not prescribe such a course. In Associated Cement Companies Ltd v T.C Shrivastava Ors [1984] 3 S.C.R. 361,369, this Court held that neither under the ordinary law of the land nor under industrial law a second opportunity to show cause against the proposed punishment is necessary 199. Now, coming to the decisions cited by the petitioners. In S.L. Kapoor (supra), the issue was whether the authority was obliged to give opportunity of hearing by issuing a show cause notice, before superseding the municipal committee. The Supreme Court held that the silence of the statute did not preclude the obligation to follow a fair procedure of granting opportunity to the party likely to be affected, by the adverse action; in doing so, it follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unfair procedure (i.e. the absence of a second specific hearing before imposition of penalty) exposing Section 27 to the vice of arbitrariness and unconstitutionality. 201. Having concluded that Section 27 is not arbitrary or unreasonable, the court now proceeds to deal with the second submission of the learned counsel, which is that the provision lacks guidelines with respect to the scale of penalty that is to be imposed in any given case and that this very omission renders it vague and clothes CCI with uncanalized power. At the outset, this Court would quote and extract the relevant discussion in the concurring judgment of N.V. Ramana, J in Excel Crop. Care (supra), to the following effect: 84. It is well settled that the Competition Act, 2002 is a regulatory legislation enacted to maintain free market so that the Adam Smith's concept of invincible hands operate unhindered in the background.5 Further it is clear from the Statement of objects and reason that this law was foreseen as a tool against concentration of unjust monopolistic powers at the hands of private individuals which might be detrimental for freedom of trade. Competition law in India aims to achieve high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as has been noticed by the Wanchoo Committee, only to harass the Assessee. The approach of the Assessing Officer in this behalf must be fair and objective. (Emphasis supplied) Moreover in the case of Hindustan Steel Ltd. v. State of Orissa AIR 1970 SC 253 this Court made following observations- An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the Authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the Authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The aforesaid definition is not exhaustive. The authority should have regard to the entity's audited financial statements. Where audited financial statements are not available, the Commission may consider any other reliable records reflecting the entity's relevant turnover or estimate the relevant turnover based on available information. However the Tribunal is free to consider facts and circumstances of a particular case to calculate relevant turnover as and when it is seized with such matter. STEP 2: DETERMINATION of APPROPRIATE PERCENTAGE of PENALTY BASED ON AGGRAVATING AND MITIGATING CIRCUMSTANCES. 88. After such initial determination of relevant turnover, commission may consider appropriate percentage, as the case may be, by taking into consideration nature, gravity, extent of the contravention, role played by the infringer (ringleader? Follower?), the duration of participation, the intensity of participation, loss or damage suffered as a result of such contravention, market circumstances in which the contravention took place, nature of the product, market share of the entity, barriers to entry in the market, nature of involvement of the company, bona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrued in one way, would make them consistent with the Constitution and another interpretation would render them unconstitutional, the court would lean in favour of the former construction. 204. Again, later in Rt. Rev. Msgr. Mark Netto v State of Kerala (1979) 1 SCC 23 held that the court must make every effort to uphold the constitutional validity of a statute, even if that requires giving strained construction or narrowing down its scope. In Bharat Petroleum Corporation Ltd. v Maddula Ratnavalli and Ors in 2007 (6) SCC 81 it was held as follows: Therefore, there is a presumption in favour of constitutionality of a legislation or statutory rule unless ex facie it violates the fundamental rights guaranteed under Part III of the Constitution. If the provisions of a law or the rule is construed in such a way as would make it consistent with the Constitution and Another interpretation would render the provision or the rule unconstitutional, the Court would lean in favour of the former construction. 205. Following the salutary principle of constitutional interpretation, this Court is of the opinion that the soundness of discretion and the method adopted by the CCI ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the action. The Supreme Court stated as follows: the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained. xxx xxxxxxxxx 12. At the cost of repetition, we may notice, that this Court has consistently taken the view that recording of reasons is an essential feature of dispensation of justice. A litigant who approaches the Court with any grievance in accordance with law is entitled to know the reasons for grant or rejection of his prayer. Reasons are the soul of orders. Non-recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper the proper administration of justice. These principles are not only applicable to administrative or executive actions, but they apply with equal force and, in fact, with a greater degree of precision to judicial pronouncements. A judgment without reasons causes prejudice to the person against whom it is pronounced, as that litigant is unable to know the ground which weighed with the Court in rejecting his claim and also causes impediments in his t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained by other nations, in the course of their legislation with competition, the Act was introduced, with due deliberation. Recent decisions have emphasized the importance of the CCI in imbuing the market place with the culture of competition, and even underlined that sectoral regulators‟ decisions or regulations (within the frame works of their parent legislations) cannot foreclose enquiry and consequential action by the CCI in its overarching concerns with respect to market domination and anti-competitive behaviour of erring entities. In Competition Commission of India v Bharat Sanchar Nigam Ltd 2018 SCC OnLine SC 2678 this was emphasized and underlined in the following manner: 102. Obviously, all the aforesaid functions not only come within the domain of the CCI, TRAI is not at all equipped to deal with the same. Even if TRAI also returns a finding that a particular activity was anticompetitive, its powers would be limited to the action that can be taken under the TRAI Act alone. It is only the CCI which is empowered to deal with the same anti-competitive act from the lens of the Competition Act. If such activities offend the provisions of the Competition Act as well, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the CCI is competent to exercise its jurisdiction from the stand point of the Competition Act. However, having taken note of the skillful exercise which the TRAI is supposed to carry out, such a comment vis-a-vis TRAI may not be appropriate. No doubt, as commented by the Planning Commission in its report of February, 2007, a sectoral regulator, may not have an overall view of the economy as a whole, which the CCI is able to fathom. Therefore, our analysis does not bar the jurisdiction of CCI altogether but only pushes it to a later stage, after the TRAI has undertaken necessary exercise in the first place, which it is more suitable to carry out. 210. Parliamentary effort to innovate and legislate new market regulations, gained in the light of previous experience and teaching gained from the experience in other countries, led it to enact the Competition Act. The raison d etre of such laws is its objective of promoting competition, - and eliminating disparities that would ensue in the event of market dominance by a few, resulting in concentration of resources of the nation (which Article 39 of the Constitution of India, enjoins the State to avoid). Speaking of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that: The Court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry ; that exact wisdom and nice adaption of remedy are not always possible and that judgment is largely a prophecy based on meagre and uninterpreted experience . Every legislation, particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid. The courts cannot, as pointed out by the United States Supreme Court in Secretary of Agriculture v. Central Roig Refining Company [94 L Ed 381 : 338 US 604 (1950)] be converted into tribunals for relief from such crudities and inequities. There may even be possibilities of abuse, but that too cannot of itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E (prior to the amendment in 2017) is declared unconstitutional and void: however, this is subject to the final decision of the Supreme Court in the writ petitions challenging the Finance Act, 2017; (iii) All other provisions of the Competition Act are held to be valid subject to the following orders: (a) The CCI shall frame guidelines with respect to the directions contained in para 179 of this judgment, i.e. to ensure that one who hears decides is embodied in letter and spirit in all cases where final hearings are undertaken and concluded. In other words, once final hearings in any complaint or batch of complaints begin, the membership should not vary- it should preferably be heard by a substantial number of 7 or at least, 5 members. (b) The Central Government shall take expeditious steps to fill all existing vacancies in the CCI, within 6 months; (c) The CCI shall ensure that at all times, during the final hearing, the judicial member (in line with the declaration of law in Utility Users Welfare Association, (supra) is present and participates in the hearing; (d) The parties should in all cases, at the final hearing stage, address arguments, taking ..... X X X X Extracts X X X X X X X X Extracts X X X X
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