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| Is competition commission of India a jinxed body |
| Kumkum Sen / Aug 02, 2010, 00:10 IST |
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The Competition Commission of India's (CCI) current jinx appears to be a serious one. Most quasijudicial bodies encounter resistance and hostility at the start up stage, notably DRT and NCLT. But, the CCI’s involvement in a raging legal battle with its own appellate body within months of becoming operational is unprecedented. While there have been spats between SEBI and TDSAT in the past this is the first instance of an appeal by a regulator against an Appellate Tribunal.
One of the first complaints before the CCI, was by Jindal Steel & Power Limited (Jindal), informing the Steel Authority of India Limited (SAIL) had entered into an anti-competitive agreement with Indian Railways on supply of Rails in breach of Sections 3(4) and 4(1) of the Competition Act, (‘Act’) which deal with exclusive arrangements and tie ups that can or are likely to cause appreciable adverse effect on competition. Notice was issued and SAIL called upon to provide certain comments and documents which SAIL did, but its request for extension of time to make further submissions was not granted. CCI proceeded on the basis of the material available on record, to form an opinion that there existed a prima facie case, and referred the matter to the director general (DG) for investigation.
The grievance in the appeal is two-fold, that the request for time was reasonable given the volumi-nous records of SAIL. Further, the Commission did not record any reason in arriving at a decision that there was a prima facie case based on SAIL’s interim reply and referring the same to the Director General (DG) for investigation.
Jindal opposed the maintaina-bility of the Appeal on the ground that the CCI was a necessary party. But Jindal did not seek impleadment of CCI, which it could have and instead sought dismissal of the appeal for nonjoinder. Even though the Code of Civil Procedure (CPC) does not apply to quasi-judicial proceedings, the principles of Order 1, Rule 10 could have been adopted. Instead it was the CCI which sought impleadment as a body corporate, on the premise that it was capable of suing or being sued under Section 7(2) of the Act. Section 7(2) provides for the right to sue and be sued by, in the context of its right to acquire hold, and dispose of property and to enter into contracts and not in the exercise of its duties, powers and functions. This is perhaps the weakest link in the validity of CCI’s stance.
The Appellate Tribunal in dealing with the maintainability, relied upon and interpreted the provisions of Sections 26 to 28 of the Act which provide inter alia powers of the CCI. The Appellate Tribunal relied on Sections 53A and 53B which provide for disposal of appeals against decisions and orders passed by the CCI under various Sections of the Act, including but not limited Section 31(1) to hold that the direction for investigation amounted to a decision, and whether conclusive or otherwise, could be appea-led from. Reliance was placed on the landmark decision of the Sup-reme Court in the case of Mohinder Singh vs. Chief Election Commissioner, that a statutory functionary’s orders must be validated by reasons.
It was submitted by the Counsel for CCI that if appeals are permitted to by filed by extending Section 53(A) relating to directions or to a process, it may open a flood gate of litigation encouraging litigants to file appeals and thereby scuttling investigative procedures altogether. To draw an analogy, there is an increasing trend in litigants resorting to criminal proceedings to settle personal; Yet Courts are loath to stall investigations and trials, that interventions would render nugatory the purpose of these processes.
Therefore the Supreme Court has to lay down the law on various critical issues which will determine the future functioning of the CCI. The key issue is that of jurisdiction and powers. Is the CCI bound to afford an opportunity to the accused party to be head before directing investigation? The Act does not provide for the same though it refers to powers of summoning. But the Appellate Tribunal has relying on Regulation (3)(5) (cc) has left the question open that while no such requirement exists, CCI initially did afford such opportunity to SAIL, and having done so, it was bound by principles of natural justice to give extension. With due respect, such a view, without going into the issue of whether any resultant prejudice was caused, is an uncomfortable proposition.
The other critical query is whether CCI is bound to record reasons for directing an investigation. Investigation is an inquisitory process, providing access to valuable proprietary information. As in case of other highly sensitive economic offences, it should be possible and desirable to record reasons, disclosed only under specific situations. Finally, should the CCI have embroiled itself in the litigation process; most emphatically not, and the Apex Court provides the reasons.
Kumkum Sen is a partner in Rajinder Narain & Co. and can be reached at Kumkumsen@rnclegal.com
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