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TMI Blog2016 (5) TMI 1625X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Commission that Respondent No. 5 had acted in contravention of Section 3, the finding recorded by the Jt. DG in paragraph 8.2.2 of his report about the alleged complicity of the appellants in the anti-competitive practices being carried on and the decisions taken by Respondent No. 5 could not have been made basis for passing an order under Section 27(b) or 27(g) and on that ground alone, the penalty imposed on Appellant No. 1 and the direction contained in the second part of paragraph 14 of the impugned order are liable to be set aside. The record produced before the Tribunal does not show that the Commission had, at any point of time, informed the appellants that it was intending to impose penalty on either of them under Clause (b) of Section 27 of the Act. Therefore, they did not get any opportunity to show that paragraph 5 of the order passed by the Commission under Section 26(1) and the conclusion recorded by the Jt. DG in paragraph 8.2.2 of his report were ultravires the provisions of the Act and also represent their cause against the proposed penalty. Thus, there is no escape from the conclusion that the penalty imposed on Appellant No. 1 is vitiated due to violation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. The CCI must comply with principles of natural justice and cannot exercise powers that interfere with statutory rights under other laws. The impugned order is set aside in so far as it relates to the imposition of penalty on Appellant No. 1 @ 10% of the average of his income of preceding three financial years - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... na, Divisional Sales Manager of M/s. Alkem Laboratories Limited, Kerala (the "Opposite Party") alleging, inter alia, contravention of the provisions of Section 4 of the Act in the matter. 2. to 2.4 *** *** *** *** 2.5 The facts of the case, as detailed above, reveal that the Opposite Party has refused to appoint the Informant as stockist because Informant purportedly failed to obtain NOC from AKCDA. Even if it can be said that the conduct of Opposite Party in refusing to deal with Informant emanated from its anxiety to avoid punitive action from AKCDA and to protect its business interest the same, nonetheless, falls foul of section 3(4)(d) read with section 3(1) of the Act. Furthermore, although the Informant has not made AKCDA party in this case the refusal of Opposite Party to appoint Informant as stockist essentially arises from the anticompetitive conduct of AKCDA requiring the pharmaceutical companies not to appoint any person as stockist unless he obtains NOC from the association. In Case No. 30 of 2011 the Commission has found such practice on behalf of AKCDA and AIOCD violative of section 3(3)(b) read with section 3(1) of the Act as it controlled and limited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following issues: "(i) Whether AKCDA (OP-3) is compelling the Pharma companies to seek "NOC" before appointment of new Stockists/Distributors. If reply is in affirmative, then whether the said conduct amounts to refusal to deal and hence hit by the provisions of the Competition Act, 2002. (ii) Whether the allegations of the IP against OP-2 (M/s. Alkem Laboratories Ltd.) regarding practice of the requirement of "NOC" from OP-3 (AKCDA) prior to appointment of stockists by pharmaceutical companies is substantiated by evidences. If so, whether such arrangement between OP-2 and OP-3 violates provisions of the Competition Act, 2002. (iii) Whether the IP has concealed/suppressed any material facts before the Commission at the time of filing the information against the OP-2. (iv) In the event of investigation concluding contravention of the provisions of the Competition Act, 2002, identification of persons who are responsible for the said conduct." 6. The Jt. DG analysed the documentary and oral evidence collected/recorded during investigation, recorded findings with reference to the four issues identified in Chapter-5 of the report and recorded the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch, 1973 and as amended at the one day general council of 21st February, 2007 and in terms of its Memorandum of Association, all affairs of the Association shall be managed by the respective Executive Committees at district and State levels elected democratically, once in 3 years. 8.2.1 As per the information furnished by AKCDA (OP-3) regarding it's State Executive Committee Members/office bearers of AKCDA during the period 11.08.2013 to 30.06.2016, the following are the elected members of the Executive committee of AKCDA: Sl. No. Names & Address Post Held Cell No./Mail IDs/PAN/DIN Details of all entities in which directors, partners, members, props, etc. 1. Shri A.N. Mohanakurup Poonam Medicals Mannath Lane, Thrissur -1, Poo PRESIDENT 09847051459 [email protected] ACRPM8835A Proprietor POONAM MEDICALS 2. Shri Thomas Raju Kaloor Medicals H.B. Building Opp. Indian Express, Kaloor P.O. Kochi - 682 017 SECRETARY 09447050438 [email protected] ACUPR8338J Proprietor KALOOR MEDIALS 3. Shri O.M. Abduljaleel Olappillil Medicals M.G. Road, Pallimmukku, Kochi 682 016 TREASURER 09349251390 [email protected] AAVPA1159R Proprietor OLAPPILLIL MED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in compliance with the orders of CCI dated 09.12.2013 in the case No. 30/2011, they have continued to indulge in the alleged anti-competitive conduct investigated in this report." 8. The investigation report was considered by the Commission in its meeting held on 23.04.2015 and it was decided that electronic copy thereof be forwarded to the parties and 11 individuals including the appellants to enable them to file their replies/suggestions/objections. The Commission also directed the opposite parties and the individuals to furnish their income details including income tax returns for the last three financial years and fixed 10.06.2015 as the date for oral hearing. The order passed on the basis of the decision taken in the meeting held on 23.04.2015 reads as under: "In the instant case, the Commission vide its Order dated 29th September, 2014 under Section 26(1) of the Competition Act, 2002 (Act) had directed the Director General (DG) to cause an investigation. Accordingly, the DG, after completing the investigation, has filed the investigation report. Today, the Commission considered the investigation report of the DG and decided to forward an electronic copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. With regard to these applications, the Commission decided to issue show cause notice to the Informant and M/s. Lividus Pharmaceuticals Pvt. Ltd. under Sections 45 and 43 of the Act, respectively. The Secretary is directed to inform, and issue notices, to the concerned parties for necessary compliance." 9. On the next date, i.e., 10.06.2015, the Commission passed three orders. By one order, the Commission directed that application dated 09.06.2015 received from S/Shri Sudeep P.M., K.A. Sundaran, Antony K.V. and Giri Nair for joining them as parties shall be heard on 18.06.2015. By the second order, the Commission directed that an opportunity be given to M/s. Lividus Pharmaceuticals Pvt. Ltd. to file its reply before passing an order under Section 43. In the third order, the Commission took cognisance of the replies/submissions received from Respondents Nos. 4 and 5 and issued certain directions to Respondents Nos. 4 and 5. The relevant portions of the second and third orders are reproduced below: "Second Order passed on 10.06.2015: "In the instant case, the Commission vide its Order dated 29th September 2014 under Section 26(1) of the Competition Act, 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an oral hearing before the Commission on 10th June 2015. The Opposite parties were also directed to furnish their audited balance sheet and profit and loss account/turnover for the last three financial years latest by 5th June 2015. The said individuals were also directed to furnish their income details including their income tax returns for the last three financial years latest by 5th June 2015. 2. On 23rd April 2015, the Commission had also considered the findings in the investigation report of the DG, regarding concealment/suppression of material facts by the Informant. In that regard, the Commission had decided to issue show cause notice to the Informant under Section 45 of the Act. Accordingly, show cause notice dated 13th May 2015 was issued to the Informant directing him to appear for an oral hearing on 10th June 2015. 3. Subsequently, the Commission has received the following submissions from the parties: a) reply/submission dated 4th June 2015 from OP-2 along with (i) balance sheet/profit and loss statements for the financial years 2011-12, 2012-13 & 2013-14 for OP-2; (ii) income tax return (ITRs) of Shri Johnson Matthew, DGM (Sales) of OP-2 and Shri T.K. Haridas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OP-3 has not filed its income details/profit and loss details/balance sheet for the last three financial years. Therefore, the Commission directed OP-1 to file his income tax returns for the last three financial years and OP-3 to file its income/turnover details including copies of its audited income and expenditure statement for the last three financial years. 7. The Secretary is directed to inform the concerned parties accordingly." (Underlining is ours) 10. In the meetings held on 18.06.2015 and 23.06.2015, the Commission passed the following orders: "Order dated 18.06.2015 In the instant matter, Shri Sudeep P.M., Shri K.A. Sundaran, Shri Antony K.V. and Shri Giri Nair have filed an application dated 9th June 2015 under General Regulation 25 of the Competition Commission of India (General) Regulations, 2009 requesting to the Commission to allow them to join as interveners in the case. The Commission considered the aforementioned application in its ordinary meeting held on 10th June 2015 and decided to hear the applicants on 18th June 2015. Today, the Commission heard the counsel for the interveners and decided to list the matter again on 25th June 2015.&quo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Informant. In that regard, the Commission had decided to issue show cause notice to the Informant under Section 45 of the Act. Accordingly, show cause notice dated 13th May 2015 was issued to the Informant directing him to appear for an oral hearing on 10th June 2015. 2. Accordingly, the Commission heard the counsel for the Informant and Opposite Parties on the investigation report on 10th June 2015. The Commission inter alia directed OP 2 to file certain details/information regarding its internal policy/process. Further, OP-3 and the Informant requested for additional time to file their reply/objections regarding the DG report and an oral hearing thereafter. The commission acceded the request of the Informant and Opposite Parties and decided to hear the parties on 4th August 2015. The Commission also directed the Informant to file his reply to the show cause notice dated 13th May 2015, latest by 10th July 2015. The Commission also directed OP-1 to file his income tax returns for the last three financial years and OP-3 to file its income/turnover details including copies of its audited income and expenditure statement for the last three financial years. 3. Subsequently, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Ltd. by requesting the stockists not to provide medicines and sales statement to Merck and also not to accept any new product. Further, vide the said email, Mr. A.N. Mohana Kurup communicated to Mr. J.S. Shinde that 95% of the stockists members complied with its request. 7.5 This undoubtedly shows that OP 3 has been exercising influence and controlling the supply of medicines by way of allocations the geographic market, or number of stockists in the market and enforcing such intervention by way of boycotts etc. This conduct of OP 3 results in restricting the provisioning of goods in the market, is in contravention of section 3(3)(b) read with section 3(1) of the Act. 7.6 Further, the e-mails exchanged between pharmaceutical companies and OP 3 clearly illustrate the prevalence of anti-competitive practice of requiring NOC. Vide e-mail dated 09.12.2014, M/s. Getwell Enterprises, a pharmaceutical company, sent the NOC received from one of its stockist to OP 3. Another email dated 10.12.2014 sent by Mr. A.N. Mohana President of OP 3 to M/s. Getwell Enterprises vide which OP 3 had requested M/s. Getwell Enterprises to send the names of the existing parties at Trivandrum to enable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the firms to drop stockistship so that the other stockists would resume purchase normally and would not cause shortage of life saving medicines in the market. Our customers in certain markets who were threatened by AKCDA started refusing to buy from the two firms. I explained about these difficulties to the office bearers of districts present in the meeting on the above date and requested them to desist from harming the two firms........... .......... ........... ......... ' 7.8 Further, the Commission has also perused the copies of the complaints dated 11.09.2014 and 08.11.2014 submitted by M/s. Sunanda Associates to Drug Controller of Kerala regarding the holding of stocks partly/non-supply of medicines by OP 2 even after they had received payment. Purportedly, the authorised representative of OP 2 i.e., Mr. T.K. Haridas has expressed that OP 3 had threatened him that OP 2 will be boycotted if supplies were made by it to M/s. Sunanda Associates. 7.9 These lead to inescapable conclusion that OP 3 has been indulging in the practice of mandatory NOC/clearance certificate from it before appointment of any new stockist. It has also been revealed that OP 3 has been t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of continued contravention with complete disregard to the mandate of the Commission and the Act. It is apparent from the evidence on record that OP 3 has no intention of complying with the law and has wilfully ignored the undertaking submitted by it on 21.02.2014 and its office bearers are actively involved in anti-competitive conduct even after filing the undertaking." 14. As a sequel to the aforesaid findings and conclusions, the Commission imposed penalty on Respondent No. 5 @ 10% of its income (Since Respondent No. 5 had furnished financial statement only for the year 2013-14, penalty of Rs. 4,35,778/- was imposed by taking into consideration the income of that financial year). The Commission also imposed penalty @ 10% of the income of Appellant No. 1 and directed him to deposit Rs. 50,203/- within sixty days. In addition to this, the Commission issued the following direction: "14. Additionally, the Commission directs OP 3 association to organize, in letter and in spirit, at least five competition awareness and compliance programmes over the next six months in State of Kerala for its members. OP 3 is further directed not to associate Mr. A.N. Mohana Kurup and Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission is justified in ignoring the fact that the DG has grossly violated principles of natural justice during the course of its inquiry by calling the 1st appellant as a witness against himself during the inquiry? E. Whether the Commission is justified in ignoring the fact that the investigation carried out by the DG is flawed on account of various procedural as well as material infirmities as the DG has violated principles of natural justice by not providing copy of the complaint and documents/affidavits furnished by certain persons, upon which the DG has relied, to the appellants, thereby disabling the appellants to cross-examine such persons to test their veracity apart from denying any opportunity for rebutting the allegations? F. Whether the Commission is justified in ignoring the fact that the order passed by the Commission dated 29.09.2014 directing investigation was also not supplied to the appellants which has resulted in grave miscarriage of justice as the ambit and extent of the investigative jurisdiction of the DG was not known to the appellants? AND whether the DG exceeded its jurisdiction of investigation? G. Whether the Commission lost sight the scope of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing direction: "On the next date, learned counsel or representative of the Commission shall produce all the order sheets of Case No. 28/2014 and show whether any notice was given to the appellants proposing to debar them from continuing as office bearers of All Kerala Chemists and Druggists Association for a period of two years." 19. In compliance of the aforesaid direction, Shri Jaiveer Shergill, learned counsel for the Commission produced a folder containing copies of the orders passed by the Commission. He also produced a compilation which contains the replies/objections and written submissions filed on behalf of Respondent No. 4, its officers and Respondent No. 5. 20. Shri Rajshekhar Rao, learned counsel for the appellants argued that the penalty imposed on Appellant No. 1 and the direction contained in the second part of paragraph 14 of the impugned order are liable to be quashed because the same are not only contrary to law but are vitiated due to blatant violation of principles of natural justice. Learned counsel argued that the deeming provision contained in Section 48(1) can be invoked only after a finding is recorded by the competent authority i.e. the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r indirectly, depriving the elected office-bearers of an association of their legitimate right to continue in the elective offices/posts for the particular period and exercise the powers and perform the functions of those offices/posts. Shri Rajshekhar Rao pointed out that despite the direction given by the Tribunal on 15.03.2016, no record has been produced on behalf of the Commission to show that any notice was given to the appellants to show cause against the direction proposed to be given to Respondent No. 5 not to associate them in the administration, management and the governance of the Association. Learned counsel also questioned the penalty imposed on Appellant No. 1 and argued that in exercise of the power vested in it under Section 27(b), the Commission could not have penalised Appellant No. 1 without giving him notice and opportunity of hearing. Learned counsel again emphasised that the direction given by the Commission to supply electronic copy of the investigation report with an opportunity to Appellant No. 1 to file his suggestions/objections and also file his income-tax return cannot be interpreted as a notice proposing imposition of penalty under Section 27(b) becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, and is responsible to the company at the time of contravention of the provisions of the Act or of any rule, regulation, order made or direction issued thereunder is deemed to be guilty of such contravention and is liable to be punished accordingly and the burden to prove that contravention of Section 3(3)(b) read with Section 3(1) had been committed by Respondent No. 5 without their knowledge or that they had exercised all due diligence to prevent Respondent No. 5 from committing such contravention squarely lay upon the appellants, which they failed to discharge. In support of this argument, Shri Shergill relied upon the judgment of the Supreme Court in Tamil Nadu Electricity Board v. Rasipuram Textile (P) Ltd. and Others - 2008 (17) SCC 285. 22. Ms. Rashmi Nandkumar, learned counsel for Respondent No. 2, argued that the appellants do not have the locus to challenge the direction contained in the second part of paragraph 14 of the impugned order because it mandates Respondent No. 5 not to associate the appellants with its affairs for a period of two years and no affirmative direction has been given by the Commission to deprive the appellants of their right to hold the offices/p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, then the same is placed before the Commission for consideration whether a prima facie case has been made out for investigation. In terms of Regulation 17, the Commission can hold preliminary conference for that purpose. The Commission can invite the information provider and such other person, as may be considered necessary for the preliminary conference. Section 26(1) read with Regulation 18 provides that if the Commission forms an opinion that there exists a prima facie case, then it is required to issue direction to the Director General to cause an investigation to be made into the matter. The detailed procedure for conducting investigation is contained in Section 41 read with Section 36 and Regulations 20, 21, 35, 41, 42 and 45. In terms of Regulation 41, the Director General can determine the manner in which the evidence may be adduced. In the proceedings before him in terms of Regulation 41(2), the Director General can 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 sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Evidence Act applicable for the purpose of investigation by the Director General, subject, of course, to clause (2) of Regulation. 45. In terms of clause (4), the Director General can call for the parties to lead evidence by way of affidavit or lead oral evidence in the matter. In terms of clause (5), the Director General can give an opportunity to the other party or parties to cross-examine the person giving the evidence. Clause (6) empowers the Director General to entrust the task of recording evidence to any officer or person designated for the said purpose. Regulation 42 provides that the Director General can, for sufficient reasons, order that any particular fact or facts may be supported by an affidavit. Various clauses of this Regulation prescribe the mode and manner in which the affidavit required to be filed under clause (1) is to be prepared. On completion of investigation, the Director General is required to submit his report to the Commission. Clause (4) of Regulation 20 provides that the report shall contain his findings on each of the allegations made in the information or reference, as the case may be, together with all evidences or documents or statements or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commission in discharging of its functions under the Act. Section 36(2) lays down that the Commission shall have, for the purposes of discharging its functions under the Act, the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 in respect of the matters relating to summoning and enforcing the attendance of any person and examining him on oath; requiring the discovery and production of documents; receiving evidence on affidavit; issuing commissions for the examination of witnesses or documents and requisitioning any public record or document or copy of such record or document from any office. Under Section 36(3), the Commission is empowered to call upon experts, from the fields of economics, commerce and accountancy. Under Section 36(4), the Commission can issue direction to any person to produce books of accounts or other documents in his custody or under the control before the Director General and to furnish to him or Secretary of the Commission such other information as may be in his possession in relation to trade carried on by such person as may be required for the purposes of the Act. At the end of this exercise, the Commission can pass ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter-VI of the Act and corresponding regulations is akin to the procedure required to be followed by the Civil Court for deciding a suit except that the Director General and the Commission are not bound by the technicalities of the procedure contained in the Code of Civil Procedure, 1908 and rules embodied in the Evidence Act except to the extent indicated in the Act. 48. The above survey of various provisions of the Act and the Regulations shows that even while amending the Act by Act 39 of 2007 and Act 39 of 2009, Parliament consciously decided to retain provisions relating to adjudicatory functions of the Commission in their full vigour and the mere fact that by virtue of substituted Section 22, the business of the Commission is required to be transacted in its meetings and the business would necessarily include exercise of adjudicatory functions/powers, cannot lead to an inference that while deciding the allegations contained in the information filed or reference made under Section 19(1)(a) and passing orders under Sections 27, 33, 39, 42, 42A, 43, 43A, 44 and 45, the Commission exercises purely administrative power or discharge administrative functions or that while passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: Provided that in case any agreement referred to in section 3 has been entered into by any 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 each year of the continuance of such agreement or ten per cent of its turnover for each year of the continuance of such agreement, whichever is higher. *** (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any; *** (g) pass such other order or issue such directions as it may deem fit: Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position. Under Clause (b), the Commission can impose penalty upto of 10% of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to the agreements referred to in Section 3 or abuse referred to in Section 4. Proviso to this clause lays down that if any agreement referred to in section 3 has been entered into by a cartel than the Commission can impose penalty of upto three times of profit for each year of continuance of an agreement or 10% of the turnover for each of the year of the continuance of such agreement, whichever is higher on every producer, seller, distributor, trader or service provider who is a party to an agreement entered into by a cartel. In terms of Clause (d), the Commission can direct that the agreements found to be in contravention of Section 3 shall stand modified to the extent and in the manner as may be specified in the order. Clause (e) lays down that the Commission can direct the enterprises concerned to abide by such other orders as the Commission may pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combination. Section 44 provides for imposition of penalty on a person, who is a party to a combination and makes false statement in any material particular, or knowing it to be false, or omits to state any material particular knowing it to be material. The extent of penalty which can be imposed under this section is rupees fifty lakh to one crore. Section 45 empowers the Commission to punish any person who fails to provide necessary information or documents, omits to state any material fact knowing it to be material, or wilfully alters, suppresses or destroys any document which is required to be furnished. Section 46 confers power upon the Commission to impose lesser penalty than the one specified in the preceding sections. 28. Section 48(1) lays down that where a person committing contravention of any of the provisions of the Act or of any rule, regulations, order made or direction issued thereunder is a company, every person who, at the time of contravention was incharge of and was responsible to the company for the conduct of its business as well as the company shall be deemed to be guilty of contravention and shall be liable to be proceeded against and punished accordingly. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of the provisions of the Act or of any rule, regulation or order made or direction issued thereunder by the company unless a finding is recorded by the competent authority that the company has in fact contravened the provisions of the Act. 30. In the present case, investigation into the role of the persons incharge of and responsible to Respondent No. 5 for the conduct of its affairs was initiated by the Commission at the threshold i.e. while passing order dated 29.09.2014 under Section 26(1) of the Act and Jt. DG returned a finding in paragraph 8 of his report that the appellants are equally complicit in the practices being carried on and the decisions being taken by Respondent No. 5, which were found to be contrary to the provisions of the Act. This exercise was ex facie contrary to the plain language of Section 48 of the Act. That apart, in the absence of a determination by the Commission that Respondent No. 5 had acted in contravention of Section 3, the finding recorded by the Jt. DG in paragraph 8.2.2 of his report about the alleged complicity of the appellants in the anti-competitive practices being carried on and the decisions taken by Respondent No. 5 could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;company' means any body corporate and includes a firm or other association of individuals; and (b) 'director', in relation to a firm, means a partner in the firm." 12. In terms of the aforesaid provision, therefore, it was obligatory on the part of the complainant not only to make requisite averments in the complaint petition but also to prove that any of the Directors who had been prosecuted for alleged commission of the aforementioned offence was incharge of and was otherwise responsible for the conduct or the affairs of the Company. 13. We have noticed hereinbefore that how the learned trial Judge has dealt with the entire aspect. Learned trial Judge has misconstrued and misinterpreted the provisions of Section 49A of the Act. 14. In terms of sub-section (1) of Section 49-A, it is for the complainant to prove that the Director of the Company at the time when the theft was committed was in charge of and/or was responsible for the conduct of its business. Only in the event such an averment is made and sufficient and cogent evidence is brought on record to prove the said allegations, the proviso appended to Section 49-A would be attracted; meaning thereb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years cannot be construed as a notice proposing imposition of penalty under Section 27(b). As a matter of fact, by then the stage had not reached for issuing a notice to Appellant No. 1 because the Commission had not recorded a finding that Respondent No. 5 had contravened the particular sub-sections of Section 3 of the Act and he, being incharge of the affairs of Respondent No. 5, was liable to be punished with the help of Section 48(1). 34. The record produced before the Tribunal does not show that the Commission had, at any point of time, informed the appellants that it was intending to impose penalty on either of them under Clause (b) of Section 27 of the Act. Therefore, they did not get any opportunity to show that paragraph 5 of the order passed by the Commission under Section 26(1) and the conclusion recorded by the Jt. DG in paragraph 8.2.2 of his report were ultravires the provisions of the Act and also represent their cause against the proposed penalty. Thus, there is no escape from the conclusion that the penalty imposed on Appellant No. 1 is vitiated due to violation of the principles of natural justice. 35. The question which remains to be considered is whether the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anti-competitive shall stand modified is in tune with the objects of the Act and the scheme of Sections 3 and 4 thereof. Under Clause (e), the Commission can issue direction for ensuring compliance of the orders passed by it. It will, therefore, be reasonable to say that Clause (g) of Section 27 should be interpreted keeping in view the language of the preceding clauses. If Clause (g) is interpreted as conferring unbridled power upon Commission to pass any order or issue any direction as it may deem fit, then the provision will become prone to the challenge of unconstitutionality and it is settled law that if a provision of the statute is capable of two constructions, then the Court should not adopt the one which makes it constitutionally infirm. 37. We are also convinced that in exercise of power vested in it under Section 27(g), the Commission cannot make an order or issue a direction which would directly or indirectly impinge upon the provisions of other statutes. The election to the offices of the President and the Secretary of Respondent No. 5 and such like bodies are governed by the provisions contained in the Travancore Cochin Literary, Scientific and Charitable Societies R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving them an effective opportunity to defend against the proposed direction. If the offending direction had not been stayed by the Tribunal, Respondent No. 5 would have been left without the President and the Secretary for a period of two years and it would have become a headless body. We have no doubt that the Commission did not ponder over the unwarranted consequences of the direction given by it, else it would not have given the impugned direction. 39. The order passed by the Tribunal dismissing the appeal filed by AKCDA (Appeal No. 17 of 2016) has no bearing on the present case because the only issue raised by the appellant in that case was whether the Commission was justified in holding it guilty of having acted in contravention of Section 3(3)(b) read with Section 3(1) of the Act and the same was answered in affirmative. The question whether the Commission could penalise the appellants by invoking Section 27(g) and that too without giving them action-oriented notice and opportunity of hearing was neither raised nor considered by the Tribunal. Therefore, dismissal of the appeal filed by AKCDA cannot be relied upon for denying relief to the appellants. 40. In the result, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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