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TMI Blog2024 (10) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... f India (R2), Balmer Lawrie & Co. Ltd. (R3) and Ashok Travels and Tours (R4) has been closed in terms of Section 26(2) of the Act. 2. The Travel Agents Association of India (TAAI) is a company incorporated under the Companies Act, 1956 whereas the Department of Expenditure (Respondent No. 2) is the nodal department of the finance ministry of the central govt. of India, Balmer Lawrie & Co. Ltd. (Respondent No. 3) is a government company under the ministry of petroleum and natural gas, government of India and Ashok Travels and Tours (Respondent No. 4) is one of the divisions of the India Tourism Development Corporation, a Government of India undertaking. Both Respondent No. 3 and Respondent No. 4 are the exclusive travel agents, approved by Respondent No. 2. 3. The Appellant vide information dated 28.01.2020, under Section 19(1)(a) of the Act, approached Respondent No. 1 against the exclusionary market practices adopted by Respondent No. 2, in favour of the Respondent No. 3 and 4, for closing the market and denial of market access to the Appellant which is stated to be a company incorporated in the year 1952, an old Travel and Tourism Association having a membership of 2500 + compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to purchase of air tickets from authorised agents should have prior approval of the Secretary of the Administrative Ministry before referring the same to the Respondent No. 2" and then the Ministry of Road Transort and Highways issued a circular dated 28.02.2019 bearing No. N20011/29/2016-E.II reiterating strict compliance of air travel guidelines in terms of the original impugned OM 1. 9. The Appellant has alleged that the conduct of Respondent No. 2 constitutes an anti-competitive refusal to deal in terms of Section 3(4)(d) and Section 3(1) of the Act, made the Appellant to approach the Respondent No. 2 vide the present information for the second time as the information filed in the year 2010 was dismissed by the R1 without proper economic analysis on the adverse effect on competition. 10. It was thus prayed that an enquiry under Section 26(1) of the Act may be initiated against the R2 and 3 to ascertain whether the OMs issued by the R1 has caused an appreciable adverse effect on competition (AAEC) in the market in India. However, the information has been closed by the CCI in terms of Section 26(2) of the Act which has led to the filing of the present appeal. 11. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the same issue has already been decided on merit between the same parties in the first information submitted by the Appellant. In this regard, it is alleged that principle of res judicata is based on three maxims, namely, nemo debet lis vexari pro una et eadem causa which means no man should be vexed twice for the same cause, interest reublicae ut sit finis litium which means it is in the interest of the state that there should be an end to a litigation and res judicata pro veritate occipitur which means a judicial decision must be accepted as correct. It is also alleged that doctrine of res judicata is a fundamental concept based on public policy and private interest which has been conceived in the larger public interest which requires that every litigation must come to an end, hence, applies to all proceedings including the proceedings under the Competition Act, 2002. It is further alleged that the issue raised in the present case were the issues in the information case no. 4 of 2020 (first information) wherein the validity of the OM1 was challenged, whether the OM is an agreement between R2, 3 and 4 within the meaning of Section 2(b) of the Act, whether the OM 1 has adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitutes an enterprise within the meaning of section 3 of the Act when it engages in economic activity. An economic activity includes any activity, whether or not profit making that involves economic trade. It is also argued that since the procurement of air tickets through travel agent is an economic activity, therefore, Respondent No. 2 by way impugned OM1, by creating duopoly only in favour of Respondent No. 3 and 4 and foreclosing the above market for thousands of travel agents across India is controlling this economic activity through the impugned OMs which action is amenable to scrutiny under the Act. It is submitted that conclusion drawn by the Respondent No. 1 that the Respondent No. 2 is not an enterprises is ex-facie erroneous because it has only seen the official function of R2. It is further submitted that the buyer's choice is sacrosanct when it comes to public procurement as held by the CCI vide its order dated 20.12.2011 in Jindal Steel and Power Limited Vs. Steel Authority of India Limited, Case No. 11 of 2009. It is also submitted that since the Appellant has also challenged OM dated 19.07.2017 and 27.02.2018, therefore, the cause of action for filing the present i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) tie-in arrangement; (b) exclusive [dealing] agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale price maintenance, shall be an agreement in contravention of sub-section (1) if such agreement causes or is likely to cause an appreciable adverse effect on competition in India. [Provided that nothing contained in this sub-section shall apply to an agreement entered into between an enterprise and an end consumer.] Explanation.-For the purposes of this sub-section,- (a) "tie-in arrangement" includes any agreement requiring a purchaser of goods or services, as a condition of such purchase, to purchase some other distinct goods or services; (b) "exclusive dealing agreement" includes any agreement restricting in any manner the purchaser or the seller, as the case may be, in the course of his trade from acquiring or selling or otherwise dealing in any goods or services other than those of the seller or the purchaser or any other person, as the case may be;] (c) "exclusive distribution agreement" includes any agreement to limit, restrict or withhold the output or supply of any goods 6[or services] or allocate any area or market fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section 2(h) nor OM1 is an agreement between Respondent No. 2, 3 and 4. In this regard relevant observations made by the Respondent No. 1 in case no. 39 of 2010 are reproduced as under:- "9.1 It is obvious that the main objective of this OM is to rationalize the expenditure by taking advantage of competition among airlines. As per this OM a Central Government Official is free to procure air ticket directly from any airline or through Internet for official domestic visits. It is only when an official wants to utilize the services of travel agents it has been limited to the opposite parties, who are also required to ensure that the procurement of the ticket should be on the best bargain across all airlines. Thus the allegation of the informant that the government officials have no alternative but to purchase tickets only from the opposite parties, being factually incorrect, cannot be sustained. 9.2 In the present case, Government of India is the consumer of air ticketing services and a consumer is free to make a choice as far as selection of goods or services are concerned. This has also to be considered in view of direct accrual of benefit to the consumer i.e. Government of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market in this case is the air ticketing service market of domestic air travel. The policy of government has ensured competition by allowing free and fair environment in the relevant market. Thus, in the present case the Government of India being itself a consumer, cannot be said to be a dominant enterprise in the relevant market. The impugned O.M. has been issued apparently with a view to ensure economy in air travel expenses. Therefore, no case of contravention of section 4 of the Act is made out in this case against the Government of India or the opposite parties. The Commission has also taken into consideration various guiding factors as laid down in section 19(4) while taking its view that the opposite parties are not enjoying a dominant position in the relevant market. 10. In view of the aforegoing discussion the allegations made in the information do not fall within the mischief of either section 3 or section 4 of the Act. Therefore, the Commission is of the view that the information filed by the informant and the material as placed before commission do not provide basis for forming a prima facie opinion for referring the matter to the Director General to conduct the inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e services with a choice to select the entity to provide those services. Merely because it is a Government, there is nothing in law from prohibiting it to be a consumer. Government like any other person must have choice to choose the travel agencies with which it has to do the business. Nothing has been shown that Respondent Nos. 1 and 2 would cost more in case the Government takes their services. The basic principle is that every consumer must have choice to decide from whom it would receive the services. In that view, we do not find anything wrong with the questioned Government Memorandum. 12. As regards the finding that the Government is a consumer of air ticketing services, we are of the opinion that the approach of the CCI is correct. There is no reason why the Government cannot be termed as a consumer in these circumstances of the present matter, more particularly, when it is seeking the services for securing air tickets on the reasonable rates. 13. The argument that because the Government is not a "person"， therefore, it cannot be a consumer is obviously incorrect as has been rightly pointed out by the respondents. The definition of "person" is an inclusive defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lings are also cited namely Kuldeep Singh Vs. Government of NCT of Delhi reported in 2006 AIR (SC) 2652 and New Horizons Ltd. Vs. Union of India reported in 1995 (1) SCC 478. We have carefully seen these rulings and do not find anything in these rulings in support of the contention raised that the action is in any way contrary to Article 14 of the Constitution. All the rulings are entirely different on facts and cannot be applicable to the present facts. An administrative decision to avail of the services of Respondent Nos. 1 and 2 in the first place is not an agreement with Respondent Nos. 1 and 2 and secondly it is not a trading activity. It is also not distributing state largesse. At any rate, our task in this Tribunal would only be limited to decide as to whether the action on the part of the Government in passing the Government Memorandum is in contravention of any of the provisions of the Act. For the reasons given, we hold that the aforementioned Government Memorandum in no way contravenes any of the provisions under the Act, more particularly, Section 3 and Section 4 thereof. In that we do not find any infirmity in the order of the CCI and confirm the same. The appeal is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment for the purpose of the case. Reliance has been placed upon certain judgments of the Hon'ble Supreme Court and Hon'ble High Courts, to regard DOE as an enterprise. As per TAAI, DOE is an enterprise which is undertaking economic activity in the procurement of air ticket services. ......... 24. As per the definition, an enterprise means a person or department of government which is engaged in any activity relating to production, storage, supply, distribution, acquisition of control of any article or goods, or provision of services. 25. The Commission notes that the 'activity' in question necessarily needs to be an economic activity. The question in the present case therefore arises whether DOE, is engaged in an economic activity to be regarded as an enterprise under the provisions of Section 2(h) of the Act while issuing the impugned circulars. 26. As per the website of Ministry of Finance, the Commission notes that DOE performs the following functions: "The Department of Expenditure is the nodal Department for overseeing the public financial management system in the Central Government and matters connected with state finances. It is responsible for the implementa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission is of the view that as there is no vertical agreement between DOE, Balmer Lawrie and Ashok Travels under Section 3(4) of the Act and no case of contravention of provisions of the Act is made out under Section 3(4) of the Act. 29. The last issue is whether the purported agreement executed between DOE, Balmer Lawrie and Ashok Travels is covered under Section 3(1) of the Act. In this regard, the Commission observes that Office Memorandums and subsequent circulars are not in the nature of agreement pertaining to an economic activity as discussed above but are internal administrative decision of the Government to deal with a particular agency in the matter of securing air tickets. Such policy decisions of the Government emanating through circulars cannot be termed as an agreement under Section 2(b) of the Act and consequently not the kind of agreement envisaged under Section 3(1) of the Act. Accordingly, the Commission is of the view that no case of contravention of provisions of Section 3(1) of the Act is made out against the DOE, Balmer Lawrie and Ashok Travels. 30. In view of the foregoing, the Commission is of the opinion that there exists no prima facie case, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Constitution. ........ 8. We have perused the impugned policy whereby the State Government had directed the authorities concerned to purchase certain medicines only from public sector undertakings or their dealers. In our opinion, the impugned policy only directs that certain drugs are to be purchased from the specified manufacturers. This does not preclude the other manufacturers or their dealers from either manufacturing or selling their products to other customers. It is of common knowledge that the requirement of drugs is not the need of the Government hospitals and dispensaries only. As a matter of fact, the need of the Government hospitals and dispensaries must be only a fraction of the actual demand in the market which demand is open to be met by the manufacturers like the appellants. Monopoly as contemplated under Article 19(6) of the Constitution is something to the total exclusion of others. Creation of a small captive market in favour of a State owned undertaking out of a larger market can hardly be termed as creation of monopoly as contemplated under Article 19(6) of the Constitution, more so because this captive market consists only of State owned hospitals and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that by the impugned policy, there was no creation of any monopoly nor is there any violation of Articles 14, 19(1)(g) or 19(6) of the Constitution. In view of the above, we are of the opinion that these appeals should fail and the same are dismissed accordingly. No costs." 31. The Hon'ble Delhi High Court has also held in WP(C) No. 3380 of 2012 that :- "15. It is also relevant to note that the travel agency services availed by the respondents are not material given the overall volume of services required by nongovernment authorities. In this view, excluding the petitioner from business generated by the respondents would not disable the petitioner from carrying on its business. 16. As stated earlier, the petitioner has no vested right to insist that the respondents should avail its services. And, in the given circumstances, where the substantial business is generated by non-government authorities, the administrative decisions cannot be assailed on the ground of violating Article 19(1)(g) of the Constitution of India. 17. In the given circumstances, the writ petition and the application are dismissed. No order as to costs." 32. Thus, in view of the aforesaid facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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