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TMI Blog2023 (12) TMI 1389X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the impleadment application of the Respondent No. 2, Builders Association of India, in an ongoing proceeding before the CCI titled, Suo Moto Case No. 2 of 2019, to investigate allegations of cartelisation and price manipulations of Grey Cement Manufacturers. The facts leading up to the passage of the impugned Order and the Petitioner's objections to it thereof are as follows: 2. The Petitioner, UltraTech Cement Limited, is a public company principally engaged in the business of manufacturing and marketing of grey cement, building and cement related products. The Respondent No. 1, Competition Commission of India (CCI) is a statutory authority constituted under the Competition Act, 2002. The Respondent No. 2, Builders Association of India, is an association of over 20,000 infrastructure development programmers and builders of real estate engaged in the purchasing of grey cements from grey cement manufacturing companies in the non-trade segment. 3. It is stated that CCI, prior to 01.07.2019, received multiple letters and emails from various participants in the market, including customer trade associations and dealers, alleging that the conduct of grey cement manufacturers had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to file their respective objections/suggestions to the Director General's report, along with their financial statements by 16.09.2022. The Order dated 26.07.2022 also directed them to appear for final hearing before the CCI on 29.09.2022 and 30.09.2022. The Petitioner in compliance of the Order dated 26.07.2022 passed by CCI, filed the confidential and non-confidential versions of its responses to the Director General's report on 14.09.2022 and 16.09.2022. 7. On 26.09.2022, this Hon'ble Court disposed off the writ petition filed by BAI, being Writ Petition No. 8958 of 2022, with the liberty to approach CCI to participate in the proceedings before it in accordance with Regulation 25 of the Competition Commission of India (General) Regulations 2009, which elaborated the power of CCI to permit a person or enterprise to take part in proceedings. On the same day, vide Order dated 26.09.2022, the CCI adjourned the final hearing of the Suo Moto Case. No 02 of 2019 to 29.09.2022 and 30.09.2022. 8. It is stated that before the first date of the final hearing dated 29.09.2022, BAI on 27.09.2022 filed an application before CCI in terms of Section 18 and Section 36 of the Competition Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of the enquiry to one of an adversarial nature despite being initiated on Suo Moto basis by the CCI. 12. It is also stated that CCI, by way of an earlier Order dated 29.12.2021, had rejected the impleadment application of BAI and that the impugned Order dated 05.07.2023 allowing its impleadment is tantamount to a de facto review of the Order dated 29.12.2021, despite there not being any change in facts or circumstances in the intervening period. Moreover, it is stated that the CCI passed the impugned Order dated 05.07.2023 by stating that BAI has a substantial interest in the outcome of the proceeding and its opinions are necessary for a meaningful enquiry without establishing as to how it has reached its satisfaction of the same. It is further stated that such a power of reviewing and recalling of its orders does not vest with CCI as Section 37 which grants CCI the power to do so has been expressly taken away by way of a repeal, and thereby, the passage of the impugned Order dated 05.07.2023 is a clear violation of the provisions of the Act. 13. It is further stated that Section 57 of the Act lays out that no information relating to any enterprise being obtained by CCI for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2023 would imply that BAI would be attending the final hearings before the CCI where the Petitioner would have to refer to certain 'marked' confidential information in order to put up an effective defence which goes against the veil of confidentiality and protection of parties' information without their express consent as given under Section 57 read with Regulation 35. It is stated that the provisions under Regulation 25, which provides for the procedure for impleading a third party to the proceedings, should be read harmoniously with Section 57 of the Act and Regulation 35 of the General Regulations in a manner which does not overshadow the rights provided under the former. It is therefore stated that Regulation 37 of the General Regulations 2009, which allows for third parties to inspect records upon demonstration of sufficient cause, shall still remain subject to the provisions of Section 57 of the Act, whose requirements were not fulfilled in the present case as elaborated above. 15. It is further stated by the Petitioner that the impugned Order being a wholly unreasoned Order, fails to satisfy the two-fold test provided under Regulation 25 of the General Regulation 2009 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 2009 after taking into consideration the detailed submissions made by BAI that it is the largest consumer of cement bearing direct impact of the anti-competitive practices in the grey cement industry and is thereby a necessary party with substantial interest for a meaningful enquiry. It is also contended that the action of impleadment does not impact the legal rights of the Petitioner whose interest is limited to providing inputs and information to CCI, facilitating the arrival of a just conclusion, but merely that of BAI as a party being impleaded. 19. The learned Counsel for the Respondents further states that the application of principles of natural justice is not absolute and depends on the nature of the duty to be performed by the authority based on facts and circumstances. Reliance has been placed on the Judgment of the Apex Court in Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744, which held that the CCI when passing an Order under Section 26(1) of the Act, based on information received under Section 19(1) of the Act, are not required to give notice to the informant, affected party or any other person at that stage, state that the ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving substantial interest in the proceeding outcome of the Suo Moto Case No. 2 of 2019 to seek right of audience before the CCI and present the consideration of its opinion, which is what was carried out by BAI in the present case and accepted by CCI. 22. Heard the learned Senior Counsel for the parties, and perused the material on record. 23. The Competition Act, 2002 operates with the objective of providing a legislative framework for prevention of practices with adverse effects on the competition in the country and work towards protecting the interests of consumers and to ensure freedom of trade in the market. It seeks to ensure fair competition in the country via the prohibition of trade practices which cause adverse effects and is facilitated through the establishment of a quasi- judicial body, Competition Commission of India, investigations through Director General for the Commission and vests the Commission with powers granted by the Act to levy penalty upon contravention of its provisions, ordering division of dominant enterprises and order demergers that adversely affect competition. Section 64 of the Competition Act 2002, gives the Commission power to make regulations c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en sufficient cause for not filing the information or the reference within such period after recording its reasons for condoning such delay.] (2) Without prejudice to the provisions contained in sub-section (1), the powers and functions of the Commission shall include the powers and functions specified in sub-sections (3) to (7). (3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:-- (a) creation of barriers to new entrants in the market; (b) driving existing competitors out of the market; (c) foreclosure of competition; (d) [benefits or harm] to consumers; (e) improvements in production or distribution of goods or provision of services; (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. (4) The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following factors, namely:-- (a) market share of the enterprise; (b) size and resources o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices; (h) categories of customers." 25. The procedure for inquiry as required under Section 19 is elaborated under Section 26 of the Act read with Regulation 21 of the General Regulation of 2009, which involves a prima facie opinion of the CCI based on the receipt of a reference, information received or suspicion arising out of its own knowledge, conduction of investigation by the Office of the Director General, including further investigation thereof by the said office or the CCI itself before. Section 26 of the Act and Regulation 21 of the General Regulation of 2009 read as under: "Section 26. Procedure for inquiry 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 informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral. (6) If, after consideration of the objections or suggestions referred to in sub-section (5), if any, the Commission agrees with the recommendation of the Director General, it shall close the matter forthwith and pass such orders as it deems fit and communicate its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (7) If, after consideration of the objections or suggestions referred to in sub-section (5), if any, the Commission is of the opinion that further investigation is called for, it may direct further investigation in the matter by the Director General or cause further inquiry to be made in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act. (8) If the report of the Director General referred to in 3[sub-section (3) and (3B)] recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act.]" "Regulation 21 of the General Regulation of 2009. 21. Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorized officer on further inquiries, as the case may be, the Secretary shall with the approval of the Chairperson fix the meeting of the Commission within seven days for consideration thereof. (7) If the report of the Director General mentioned under sub-regulation (1) finds contravention of any of the provisions of the Act, the Secretary shall obtain the orders of the Commission for inviting objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be (8) On consideration of the objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, or the report of further investigation or further inquiries, as the case may be, if the Commission is of the opinion that further inquiry is called for, the Secretary shall fix the meeting of the Commission for consideration thereof, after issue of notice as per regulation 22, to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (9) The Secretary shall keep the Director General informed of the dates of the meet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll other parties to the proceedings within ten days of the order." 27. It is contended by the learned Counsel for the Petitioner that the Order dated 05.07.2023 to implead BAI as a party to the proceedings under Suo Moto Case No. 2 of 2019 is improper as it fails to satisfy the conjunctive two-fold test given under Regulation 25 of 'substantial interest' and 'public interest' and that in absence of its satisfaction as reflected in the inadequacy of reasoning given in the impugned Order dated 05.07.2023 to that effect, the actions of the CCI in impleading BAI are illegal and unacceptable cannot be accepted. 28. It is trite law that Writ Courts while exercising its jurisdiction under Article 227 of the Constitution of India do not substitute the opinions arrived at by statutory bodies with their own, unless the decision arrived at by the statutory bodies are beyond their jurisdiction or there is a failure to exercise jurisdiction vested in them or the order passed is so perverse and illegal that it finds itself in contravention of Wednesbury principles. The nature and scope of the jurisdiction under Article 226 of the Constitution of India has been crystallised in several judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Rattan Singh, (1977) 2 SCC 491, the Apex Court has observed as under: "4. ........The ‗residuum' rule to which counsel for the respondent referred, based upon certain passages from American Jurisprudence does not go to that extent nor does the passage from Halsbury insist on such rigid requirement. The simple point is, was there some evidence or was there no evidence - not in the sense of the technical rules governing regular court proceedings but in a fair commonsense way as men of understanding and worldly wisdom will accept. Viewed in this way, sufficiency of evidence in proof of the finding by a domestic tribunal is beyond scrutiny. Absence of any evidence in support of a finding is certainly available for the court to look into because it amounts to an error of law apparent on the record." (emphasis supplied) 33. In the present case, the impugned Order passed under Regulation 25 of the General Regulations 2009, also brings attention to the submissions made by BAI ,including considerations and records of BAI as an association with the largest consumers of cement. The relevant portions of the submissions made by BAI as a part of the impugned Order dated 05.07.2023 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad evidence/ submissions/ analysis/ data/ information etc. The same is also in the interest of justice as well as for enabling effective adjudication/investigation of the present case. " 34. In view of the settled position of law, this Court is not inclined to substitute its conclusion to the one arrived at by the Board which is based on the material on record before the Commission. 35. The contention of the Petitioner that the conclusion arrived at by the CCI that impleading BAI would cause prejudice to them and that the conclusion arrived at by the CCI that their impleadment is essential for conducting a meaningful enquiry does not merit consideration. It is observed by the court that contentions of both sides has been recorded, reasons have been given by the CCI for arriving at the conclusion that making BAI a party to the proceedings of the Suo Moto Case No. 2 of 2019 is in consonance with the satisfaction of the two-fold test of bearing substantial interest in the outcome of the proceedings and is necessary in light of public interest. This Court does not deem it right to delve into the adequacy of the evidence noted by the CCI nor does it find the consideration of such evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the conclusions. We are, therefore, constrained to hold that the impugned orders challenged herein cannot be sustained." 38. The desirability and importance of orders to be reasoned is appreciated duly by this Court. However, this Court sees no merit in breaking down the adequacy of the reasoning unless it is prima facie malafide, perverse or arbitrary, as noted above. In the present case, the submissions made by BAI to CCI that it is an all India association of builders, the largest consumer of cement, and suffers a direct impact every time the cement manufacturers engage in anti-competitive practices is incorporated within the impugned Order dated 05.07.2023. "6. It was further submitted that BAI is an all-India association of builders and is directly and substantially affected by the anti-competitive conduct of the cement manufacturers. It was further submitted that BAI is the largest consumer of cement and, therefore, suffers a direct impact every time the cement manufacturers engage in anti-competitive and unfair practices. Further, BM stated that it has an insight into the entire cement manufacturing and construction industry and has time and again agitated aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of such record or document from any office. (3) The Commission may call upon such experts, from the fields of economics, commerce, accountancy, international trade or from any other discipline as it deems necessary to assist the Commission in the conduct of any inquiry by it. (4) The Commission may direct any person-- (a) to produce before the Director General or the Secretary or an officer authorised 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 authorised 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." 41. It is alleged by the learned Counsel for the Petitioner that the principle of Audi Alterum Partem, which forms the essence of natural justice, was not followed by CCI in the present case. It is contended that the Petitioner was neither g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules required the maker of a decision to give prior notice of the proposed decision to the persons affected by it and an opportunity to them to make representation. The second rule disqualified a person from judging a cause if he has direct pecuniary or proprietary interest or might otherwise be biased. The first principle is of great importance because it embraces a rule of fair procedure or due process. Generally speaking, the notion of fair hearing extends to the right to have notice of other side's case, the right to bring evidence and the right to argue. The premise on which the courts extended their jurisdiction against the administrative action was that the duty to give every victim a fair hearing was as much a principle of good administration as of good legal procedure." (emphasis supplied) 44. It is, therefore, a reiteration of the well-established principle that a fair procedure very much includes the presentation of an appropriate notice to all involved parties. However, the contention of the Petitioner that such a notice was not provided to the Petitioner prior to the passing of the impugned Order dated 05.07.2023 by the CCI cannot by accepted by this Court. As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Petitioner was in full knowledge of the Order dated 06.10.2022 which ordered for the disclosure of the non- confidential report of the Director-General to BAI. 46. The learned Counsel for the Petitioner has also argued that since competition law is a right in rem and not in personam, the CCI by impleading BAI as an interested party to be heard under Regulation 25 of the General Regulations 2009, including the right to lead evidence, give submissions, place analysis and data, furnish information and/or seek examination/ cross examination of witness/opposite parties, has converted itself into a bilateral dispute resolution forum between the Petitioner and BAI. It is further contended that the impugned Order dated 05.07.2023 which impleads BAI was passed ex-parte, despite the fact that the decision of CCI affected the rights of the Petitioner by doing so. At this juncture, the pointed question which arises from these contentions is whether the decision of impleadment of BAI by CCI affects the rights of the opposite parties involved in the proceedings of the Suo Moto Case No. 02 of 2019, keeping in mind the nature of proceedings under the competition law framework. 47. The CCI h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interests of the parties themselves in the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and Judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide : Black's Law Dictionary)." (emphasis supplied) 49. The Apex Court in Vidya Drolia v Durga Trading Corporation, (2021) 2 SCC 1, has held as under: "A judgment in rem determines the status of a person or thing as distinct from the particular interest in it of a party to the litigation; and such a judgment is conclusive evidence for and against all persons whether parties, privies or strangers of the matter actually decided. Such a judgment "settles the destiny of the res itself" and binds all persons claiming an interest in the property inconsistent with the judgment even though pronounced in their absence. By c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... av Mills Co. Ltd. v. CIT [(1965) 2 SCR 908 : AIR 1965 SC 1636] laid that (SCR pp. 921-22) "In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised. When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be constant endeavour and concern of this Court to introduce and maintain an element of certainty and continuity in the interpretation of law in the country. Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may incidentally tend to make law uncertain and introduce confusion which must be consistently avoided. That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order dated 26.09.2022, granted liberty to BAI to approach CCI to participate in the proceedings before Suo Moto Case No. 2 of 2019 in terms of Regulation 25 of the General Regulations 2009 which may be considered by CCI. It is only in view of this Order did BAI, on 27.09.2022, file a fresh application before CCI seeking permission to be impleaded as a party in terms of Section 18 and Section 36 of the Act read with Regulation 25 of the General Regulations 2009. This was finally accepted via the impugned Order dated 05.07.2023. 55. The application dated 27.09.2022 is therefore, not in the nature of a review application of a previous decision without any intervening facts and circumstances, but it is a fresh impleadment application filed in view of the liberty granted by this Hon'ble Court in its Order dated 26.09.2022. Moreover, the adequacy of the satisfaction of CCI at this juncture, keeping in mind the context of the case such as orders by this Hon'ble Court including the proceedings of the Suo Moto Case No. 2 of 2019 being at a different stage that before, cannot be interjected by this Court via its writ jurisdiction. The power of such a satisfaction is solely to be exercised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58. The impugned Order categorically mentions that in addition to the application for impleadment by BAI, the request made by BAI to allow the inspection of non-confidential record ought to be done in terms of Regulation 37(1) of the General Regulations 2009. The said provision is extracted below: "37. Inspection and certified copies of documents. - (1) Subject to the provisions of Section 57 and regulation 35, a party to any proceeding of an ordinary meeting of the Commission may on an application in writing in that behalf, addressed to the Secretary, be allowed to inspect or obtain copies of the documents or records submitted during proceedings on payment of fee as specified in regulation 50." 59. It is therefore clear that the impugned Order passed by CCI does not ensue the grant of confidential records of proceedings to BAI. Moreover, it is also clear that the grant of non-confidential information is also explicitly recorded to be done within the bounds of Regulation 37(1) which can only be exercised subject to conformity with the safeguards enumerated within Section 57 of the Act and Regulation 35 of the General Regulations 2009 as noted above. The contention of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... persons may, with the permission of the Appellate Tribunal, make an application under that sub-section for and on behalf of, or for the benefit of, the persons so interested, and thereupon, the provisions of rule 8 of Order 1 of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall apply subject to the modification that every reference therein to a suit or decree shall be construed as a reference to the application before the Appellate Tribunal and the order of the Appellate Tribunal thereon. Explanation.--For the removal of doubts, it is hereby declared that-- (a) an application may be made for compensation before the Appellate Tribunal only after either the Commission or the Appellate Tribunal on appeal under clause (a) of sub-section (1) of section 53A of the Act, has determined in a proceeding before it that violation of the provisions of the Act has taken place, or if provisions of section 42A or sub-section (2) of section 53Q of the Act are attracted; (b) enquiry to be conducted under sub-section (3) shall be for the purpose of determining the eligibility and quantum of compensation due to a person applying for the same, and not for examining afr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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