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TMI Blog2022 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law. A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. A relief for breach of fundamental rights is independent from a relief sought aggrieved by abuse of dominance. Respondent No. 1/CCI was well within its jurisdiction to entertain information under S.19(1) of the Act, and order investigation on the basis of prima facie opinion. In the present case, there is no threat of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner No. 1 entered into a license agreement dated 20-12-2011 with the Respondent No. 2 granting an area of 96.04 Sq. Mts. at RGIA for Setting up and operating Airline Engineering Maintenance Office to provide line maintenance services for a period of three years. The said license agreement dated 20-12-2011 was extended vide agreement dated 28.1 1.2014 for a period of five years until 22-3-2019. 5. 1st Petitioner addressed a letter dated 22-2-2019 to Respondent No. 2 informing that the license agreement dated 28-11-2014 cannot be extended as space occupied by second respondent was required for ongoing expansion works at RGIA. 2nd Respondent addressed an email dated 25-2-2019 requesting the 1st Petitioner to extend the license agreement dated 28-11-2014 which was due to expire on 22-3-2019 by another five years. 1st Petitioner replied to the said email by referring to the letter dated 22-2-2019 stating that the license agreement cannot be extended. Subsequently, another email dated 11-3-2019 was addressed by 2nd Respondent to 1st Petitioner requesting the extension of the license agreement by another five years. 2nd Respondent also addressed letters to Ministry of Civil Aviation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ird-party service provides to operate businesses at RGIA. Respondent No. 2 alleged that the license agreement was not extended by Petitioner No. 1 to favour Petitioner No. 2 (subsidiary of GMR Air Cargo and Aerospace Engineering Limited (GACASEL) which in turn is a wholly owned subsidiary of Petitioner No. 1) which is also engaged in the business of providing Line Maintenance services. 9. Respondent No. 2 in its information alleged that Petitioner No. 1 abused its dominant position by a) denying market access to Respondent No. 2 by refusing to extend the market period which is contrary to S.4(2)(C) of the Act, 2002; b) by ousting Respondent No. 2 from the market from Line Maintenance Services and thereby adversely affecting competition in contravention to S.4(2)(b)(i) of the Act, 2002; c) by leveraging its dominant position in the upstream market to favour Petitioner No. 2 in the downstream market of providing Line Maintenance Services in violation of S.4(2)(e) of the Act, 2002; d) by creating a monopolistic environment to favour Petitioner No. 2 which will affect the consumers and the same is in contravention to S.4(2)(a)(i) of the Act, 2002. Therefore, it was alleged that Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) and S.4(2)(a)(i) of the Act, 2002. Respondent No. 1 directed the Director General to conduct investigation. 14. On 4-10-2019, Respondent No. 1 dealing with the application filed under S.33 of the Act, 2002 by Respondent No. 2 seeking interim reliefs, inter alia, to continue the business of Line Maintenance Services from the premises of RGIA directed the parties to appear on 17-10-2019 for a hearing on grant of interim reliefs. 15. Therefore, the Petitioners have filed the present writ petition challenging the orders dated 3-10-2019 and 4-10-2019. An interlocutory application LA. No. 1 of 2019 was filed by the Petitioners seeking interim stay of all further proceedings pursuant to the orders dated 3-10-2019 and 4-10-2019 pending disposal of the writ petition. This Court vide order dated 16-10-2019 granted interim stay of impugned orders dated 3-10-2019 and 4-10-2019. 16. Contentions of the Petitioners i. Respondent No. 1 could not have exercised its jurisdiction as W.P. No. 13298 of 2019 was pending before the High Court in which similar reliefs were claimed by Respondent No. 2. By passing the impugned orders, Respondent No. 1 has usurped the jurisdiction of High Court befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that Petitioner No. 2 was the dominant player in the downstream market. Respondent No. 1 failed to consider the market share of other competitors like AI SATS which also provide Line Maintenance Services. vi. Furthermore, the relevant geographic market determined by Respondent No. 1 is unsustainable as it failed to consider that Respondent No. 2 operates pan-India and relevant geographic market cannot be restricted to Line Maintenance Services at RGIA. vii. Further, Petitioner No. 1 did not create any hurdles by not granting requisite permissions to Respondent No. 2 and the said allegation is baseless. viii. There was no exclusionary motive on the part of Petitioner No. 1 to benefit Petitioner No. 2, which was already in the business of providing MRO services including Line Maintenance Services from 2010 and not from 2017 as alleged by Respondent No. 2. Therefore, it cannot be alleged that Petitioner No. 1 excluded Respondent No. 2 to benefit Petitioner No. 2. Further, Petitioner No. 2 is no longer in the business of providing Line Maintenance Services as the business of Petitioner No. 2 is merged into the business of GACASEL by virtue of order dated 26-7-2019 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... later deals with competition law effecting an entire market and consumers whereas the former deals with a commercial dispute between two private parties. The issues before this Court in W.P. No. 13298 of 2019 dealt with constitutional law and it could not have gone into the issues of competition law, the jurisdiction of which rests with Respondent No. 1. Therefore, it cannot be said that Respondent No. 1 usurped the jurisdiction of High Court. v. Reiterating the findings of the impugned order dated 3-10-2019 it was contended that a prima facie case was made out that Petitioner No. 1 abused its dominant position and the same requires investigation. vi. Further, the impugned order dated 4-10-2019 is only a notice directing the parties to appear. The Petitioners are given opportunity of hearing to oppose the interim reliefs claimed by Respondent No. 2. Therefore, the present writ petition is premature. 18. Contentions of Respondent No. 2 i. The impugned order dated 3-10-2019 is administrative in nature and does not determine any rights of the parties. It is in the nature of departmental proceedings and is based on a prima facie opinion. Therefore, at a premature stage High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 and the same is pending before this Court. 20. Before deciding the issues at hand, it is apposite to discuss the scope of CCI's (Respondent No. l) power and jurisdiction under S.26(1) of the Act, 2002 vis-a-vis the scope of interference by High Court under article 226 of Constitution of India. 21. In Steel Authority of India Ltd.'s case (supra), the Hon'ble Supreme Court explaining the scope of prima facie investigation held that an order passed under S.26(1) of the Act, is an administrative order which has no civil consequences. The relevant paragraphs are extracted below : "37. As already noticed, in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation nugatory. The entire purpose of such an investigation is to cover all necessary facts and evidence in order to see as to whether there are any anti-competitive practices adopted by the persons complained against. For this purpose, no doubt, the starting point of inquiry would be the allegations contained in the complaint. However, while carrying out this investigation, if other facts also get revealed and are brought to light, revealing that the "persons" or "enterprises" had entered into an agreement that is prohibited by Section 3 which had appreciable adverse effect on the competition, the DG would be well within his powers to include those as well in his report. Even when CCI forms prima facie opinion on receipt of a complaint which is recorded in the order passed under section 26(1) of the Act and directs the DG to conduct the investigation, at the said initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of the violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as afore referred. However, other decisions and orders, which are not directions simpliciter and determining the rights of the parties, should be well-reasoned analysing and deciding the rival contentions raised before the Commission by the parties. In other words, the Commission is expected to express prima facie view in terms of section 26(1) of the Act without entering into any adjudicatory or determinative process and by recording minimum reasons substantiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny violation of the Act would be found upon investigation and what would be the nature of violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act, which is to prevent practices having appreciable adverse effect on the competition. Therefore, at this stage, in the considered opinion of this Court, the issues and grounds raised in respect of anti-competitive practices as argued by the learned counsel for the appellants does not arise. The appellants are certainly entitled for opportunity of hearing as provided under the Statute and the present petitions/appeals are certainly premature. 21. In the light of the aforesaid, in order to achieve the object of the Act of 2002, the question of interference does not arise. The appellants do have a right to participate in the proceedings and/or under an obligation to produce all the material as desired during the enquiry by the Director General. The appellants want to crush the proceedings at a preliminary stage in a similar manner like quashing of FIR as prayed in a petition filed under section 482 of the Cr.P.C. Earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is wholly illegal. However, ordinarily the High Court should not interfere in such a matter." 22. The Hon'ble Supreme Court in the aforesaid ease has held that unless and until the show-cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first stage of initiating process under the CCI Act and the enquiry is yet to commence. The appellants do not want to participate in the enquiry for (he reasons best known to them. 23. The present case is not a case where the mala-fides are alleged against the Regulator, nor there is any jurisdictional infirmity. The order passed under section 26(1) is neither an adjudication, nor determinative, but merely an inquisitorial, departmental proceedings in the nature of a direction to the Director General to make an investigation. It is neither a judicial nor a quasi-judicial proceedings as held by the Hon'ble Supreme Court in the case of CCI v. SAIL. 24. Keeping in view sections 19 and 26 of the Act of 2002, the order is certainly administrative in nature and has been passed at a prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties at the appropriate stage, but it is characterized by an inherent robustness by which the proceedings may culminate in closure. 28. In the present case, earlier also there was an information submitted against the appellants and the matter is ended in closure (AIOVA case). The Director General after conducting an enquiry recommended closure by submitting an investigation report and the same was accepted by the CCI. Therefore, the appellants should not feel shy in participating in the enquiry, which is yet to commence by the Director general and all the grounds raised by the appellants shall be available before the Director General as well as before the CCI. The order passed under section 26(1) is only the starting point of the process and the appellants want to crush the process at the threshold and the CCI is not being permitted by the appellants to proceed ahead in the matter. 30. The Hon'ble Supreme Court in the case of CCI v. SAIL has held that the threshold requirement for establishing a prima facie case under section 26(1) is a low threshold and what constitutes a prima facie case at the stage of Section 26(1) must be gleaned from the stand point of setting the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mad 6549 refused to interfere in the investigation ordered under S.26(1) under article 226 and held as follows: "55. In the present case, perusal of the allegations raised by the 3rd respondent would reveal that there is a prima facie case that the TANGEDCO/writ petitioner enjoys dominant position in respect of electricity in the State of Tamil Nadu. This factum is not disputed. When the writ petitioner/TANGEDCO is in dominant position, the allegations set out in the complaint indicates certain abuses and therefore, the said abuse of dominant position warrants any further action or not, is to be investigated and all appropriate proceedings are to be allowed for the purpose of forming a final opinion. 56. This Court is not inclined to step-in to the nature of the allegations or its veracity or otherwise, which is yet to be investigated by the Director General under the provisions of the Competition Act. The allegations, which all are not vet investigated by the competent authority, it would be unnecessary for the Court to appreciate such allegations or made a finding, which would cause prejudice to either of the parties, either to proceed with the investigation or to form a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facie case. On the other hand, orders passed under section 26(2), 26(6) are final orders closing the matter by coming to a conclusion that no prima facie case exists even at the threshold view of the matter or when the Director General, after investigation, makes recommendation to the effect that there is no contravention and such recommendation is agreed by the Commission. Therefore, under both circumstances, a final order is passed closing the matter. On the other hand, after inquiry, if the Commission finds that there is a contravention, it will issue appropriate direction and impose penalty on the erring party. Thus, the said order is again a final order passed under section 27. 43. Now in this case, when the Competition Commission has proceeded to order investigation after forming an opinion that a prima facie case exists, the rights of the parties cannot be complained of being affected in any manner at this stage, because the order for investigation does not attract any civil consequences, inasmuch as it does not determine the issue raised against the parties finally. Although certain procedural lapses take place while arriving at such a prima facie opinion, that itself wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act, about possible violations of competition law are true. Once information is received under section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law. 27. It is also relevant to note that the scope of interference of High Courts under article 226 of the Constitution of India, in an order passed directing investigation under section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides. As held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Petitioners relying on Bhati Airtel (supra) contended that when matter was pending before another authority, CCI cannot direct investigation as it may lead to contrary findings. The said contention cannot be accepted. The decision of Bharti Airtel Ltd.'s case (supra), is distinguishable on facts. In the said case, the Court held that CCI cannot decide the issues pertaining to telecom sector as TRAI had exclusive jurisdiction. It was only after the issues pertaining to the telecom sector were decided, the CCI could have decided breaches of competition law. The relevant paragraphs of Bharti Airtel Ltd.'s case (supra), are extracted below: "104. We, therefore, are of the opinion that the High Court is right in concluding that till the jurisdictional issues are straightened and answered by TRAI which would bring on record findings on the aforesaid aspects, CCI is ill-equipped to proceed in the matter. Having regard to the aforesaid nature of jurisdiction conferred upon an expert regulator pertaining to this specific sector, the High Court is right in concluding that the concepts of "subscriber", "test period", "reasonable demand", " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2019. 33. Petitioners contended that any interim order passed in furtherance of order dated 4-10-2019 directing the Petitioners to appear to decide the interim reliefs will be contrary to orders dated 16-8-2019 passed in W.A. No. 677 of 2019. Petitioners contended that the Division Bench of this Court gave a categorical finding that the dispute between Petitioner No. 1 and Respondent No. 2 is commercial in nature and the relationship between them is of a licensor and licensee. Therefore, CCI/Respondent No. 1 cannot interfere with disputes arising out of contractual obligations. This Court does not see merit in the said contentions. The findings recorded in W.A. No. 677 of 2019 were pursuant to the material placed before the Division Bench based on which it was held that commercial disputes exist between the parties. The Bench therein did not have an occasion and also the material to determine whether the said contractual disputes effects competition in the market adversely. In any case, it is only after the investigation/inquiry is completed and parties are given an opportunity of hearing that CCI can decide whether the dispute is strictly commercial and raises no competition la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted party. Thus, keeping in mind the nature of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered view that the right of notice or hearing is not contemplated under the provisions of section 26(1) of the Act." 36. The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed questions of facts. 37. This Court has perused the order dated 3-10-2019. The said order is well-reasoned given that only a prima facie opinion was formed. Respondent No. 1 made it clear that no final opinion was expressed on the merits of the case. Therefore, according to this Court, the Director General shall complete investigation in accordance with law. Therefore, the present writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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