Interglobe Aviation Limited vs The Secretary Competition ...
2010 Latest Caselaw 4696 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI
13 & 16
+             W.P.(C) 6805/2010 & CMs 13466-67/2010

       INTERGLOBE AVIATION LIMITED                   ..... Petitioner
                    Through Mr. N.K. Kaul, Senior Advocate with
                    Mr. Amit Kapur with
                    Mr. Amitesh Kumar, Ms. Ponnam Verma and
                    Ms. Manpreet Kaur, Advocates.
           versus

       THE SECRETARY COMPETITION COMMISSION
       OF INDIA AND ORS.                           ..... Respondents
                     Through Ms. Maneesha Dhir with
                     Ms. Preeti Dalal, Advocate.

                     W.P.(C) 6808/2010 & CMs 13471-72/2010

       FEDERATION OF INDIAN AIRLINES                              ..... Petitioner
                    Through: Mr. Amit Kapur with
                    Ms. Ponnam Verma, Advocate.
           versus

       THE SECRETARY COMPETITION COMMISSION
       OF INDIA AND ORS.                           ..... Respondents
                     Through Ms. Maneesha Dhir with
                     Ms. Preeti Dalal, Advocate.

       CORAM: JUSTICE S. MURALIDHAR

         1. Whether reporters of the local news papers
            be allowed to see the order?
         2. To be referred to the Reporter or not?
         3. Whether the order should be reported in the Digest?
                               ORDER

06.10.2010

1. Both writ petitions challenge an order dated 16th June 2010 passed by the

Competition Commission of India (`CCI') under Section 26(1) of the

Competition Act, 2002 (`CA').

2. The background to the present petitions is that by an order dated 13 th

February 2009, the Monopolies and Restrictive Trade Practices Commission

(`MRTP Commission') took cognizance, under Section 11(1) of the

Monopolies and Restrictive Trade Practices Act, 1969 (`MRTP Act'), of

reports in the print and visual media that airline operators, including the

Petitioners herein, had collectively increased air fares and withdrawn the

promotional fares as a result of which additional costs were imposed on the

consumer and competition in the industry was reduced. The MRTP

Commission formed a prima facie opinion that the alleged practice was a

restrictive trade practice as defined under Section 33(1)(d) and 33(1)(j) of

the MRTP Act. Consequently in exercise of its powers under Regulation 18

of the Monopolies and Restrictive Trade Practices Commission Regulations,

1991 (`MRTP Regulations'), the MRTP Commission ordered a preliminary

investigation into the matter by the Director General (Investigation &

Registration) [`DG(I&R)'] and further directed that the copy of the

information/material collected should be submitted to the Commission

within sixty days thereafter. The case was registered as `Restrictive Trade

Practices Enquiry No. 5 of 2009' (`RTPE').

3. On 27th April 2009 the Office of the DG(I&R) sent letters to the

Petitioners asking them to furnish information and documents to enable the

DG(I&R) to undertake the necessary investigation. The subject matter of the

said communication was ―Restrictive Trade Practices - Investigation under

Section 11(1) of the MRTP Act, 1969.‖ The Petitioner Inter Globe Aviation

Ltd. (`IAL') replied to the said letter on 29th May 2009 providing certain

information. Likewise some of the other Petitioners also replied to the said

notice.

4. On 28th August 2009 a notification was issued by the Ministry of

Corporate Affairs, Government of India repealing the MRTP Act with effect

from 1st September 2009. On 14th October 2009 the President promulgated

the Competition (Amendment) Ordinance, 2009 amending Sections 66(1),

66(3), 66(4) and 66(5) of the CA. This later was enacted as the Competition

(Amendment) Act, 1999 (`CAA 1999'). On 4th March 2010 the RTPE Case

No. 5 of 2009 was transferred by the DG(I&R) to the CCI under Section

66(6) of the CA. Thereafter on 10th June 2010 the CCI passed the impugned

order under Section 26(1) of the CA stating that the case had been received

on transfer under Section 66(6) of the CA from the Office of the DG(I&R),

MRTP Commission. The order recorded a summary of some of the

responses received to the notice dated 24 th April 2009. In para 26 of the

impugned order it was observed that ―at this stage the matter was transferred

to the Commission‖ under section 66 (6) CA and was considered by the CCI

at its meeting on 10th June 2010. The CCI then stated in its impugned order

that ―there exists a prima-facie case for making reference to DG to make an

investigation into the matter. After completing the investigation, the DG

shall submit his report within 90 days of the communication of the

Commission's order.‖

5. On 19th July 2010, a notice was sent by the DG(I&R) under Section 41

read with Section 36(2) CA to the Petitioner seeking information. On 20th

August 2010 the Petitioner IAL wrote to the Secretary, CCI requesting for

copies of the information/documents as also the order passed by the CCI on

the basis of which investigations were initiated. On 30 th August 2010 the

Petitioner IAL inspected the file of RTPE No. 5 of 2009 and requested the

Secretary, CCI to provide copies of the inspected information/documents.

This was provided on 6th September 2010 by the DG(I&R) stating that a

reply must be filed by 10th September 2010. Further time was granted by the

CCI to the Petitioners on 13th September 2010 to file a reply failing which

the Petitioners would face penal action under Section 43 read with Section

45 CA. On 15th September 2010 the IAL obtained a copy of the impugned

order dated 16th June 2010 of the CCI. A further seven days time to file a

reply was given by the CCI on 22nd September 2010. On 1st October 2010

the present petitions were filed in this Court.

6. The Court has heard the submissions of Mr. N.K. Kaul, the learned Senior

counsel as well as Mr. Amit Kapur, learned counsel appearing for the

Petitioners.

7. The first submission is that the CCI had no jurisdiction whatsoever to deal

with RTPE No. 05 of 2009 because this was a matter pending before the

erstwhile MRTP Commission. It is submitted that under Section 66 (3) CA

all matters which were pending before the MRTP Commission have to be

transferred to the Competition Appellate Tribunal (`CAT') whereas in the

instant case the matter was erroneously transferred by the DG(I&R) to the

CCI under Section 66(6) CA. The submission is that since the MRTP

Commission had suo motu taken cognizance of the alleged restrictive trade

practice under Section 11(1) of the MRTP Act, and further directed the

DG(I&R) to investigate and submit a report to it, this was a matter pending

before the MRTP Commission. Therefore, even if the investigation by the

DG(I&R) was incomplete on the date of the repeal of the MRTP Act

followed by the notification of the amended Section 66 of the CA, the matter

had to be necessarily placed before the CAT for further directions to the

DG(I&R).

8. In order to appreciate the above submission, a reference may be made to

Section 11 of the MRTP Act as well as Section 66 of the CA. These

provisions read as under:

Section 11 MRTP Act

―11. Investigation by Director General before issue of process in certain cases. The Commission may, before issuing any process requiring the attendance of the person against whom an inquiry (other than an inquiry upon an application by the Director General) may be made under section 10, by an order, require the Director General to make, or cause to be made, a preliminary investigation in such manner as it may direct and submit a report to the Commission to enable it to satisfy itself as to whether or not the matter requires to be inquired into.

(2) The Director General may, upon his own knowledge or information or on a complaint made to him, make, or cause to be made, a preliminary investigation in such manner as he may think fit to enable him to satisfy himself as to whether or not an application should be made by him to the Commission under [***] section 10.

(3) For the purpose of conducting the preliminary investigation under sub-section (1), or sub-section (2), as the case may be, the Director General or any other person making the investigation shall have the same powers as may be exercised by an Inspector under sub-section (2) of section 44.

(4) Any order or requisition made by a person making an investigation under sub-section (1), or sub-section (2), shall be enforced in the same manner as if it were an order or requisition made by an Inspector appointed under section 240 or section 240A

of the Companies Act, 1956 (1 of 1956), and any contravention of such order or requisition shall be punishable in the same manner as if it were an order or requisition made by an Inspector appointed under the said section 240 or section 240.‖

Section 66 CA

―66. Repeal and saving. (1) The Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) is hereby repealed and the Monopolies and Restrictive Trade Practices Commission established under sub-section (1) of section 5 of the said Act (hereafter referred to as the repealed Act) shall stand dissolved:

[***]

(1A) The repeal of the Monopolies and Restrictive Trade Practices Act, 1969(54 of 1969) shall, however, not affect,--

(a) the previous operation of the Act so repealed or anything duly done or suffered thereunder; or

(b) any right, privilege, obligation or liability acquired, accrued or incurred under the Act so repealed; or

(c) any penalty, confiscation or punishment incurred in respect of any contravention under the Act so repealed; or

(d) any proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, confiscation or punishment as aforesaid, and any such proceeding or remedy may be instituted, continued or enforced, and any such penalty, confiscation or punishment may be imposed or made as if that Act had not been repealed.

(2) On the dissolution of the Monopolies and Restrictive Trade Practices Commission, the person appointed as the Chairman of the Monopolies and Restrictive Trade Practices Commission and every other, person appointed as Member and Director General of Investigation and Registration, Additional, Joint, Deputy, or

Assistant Directors General of Investigation and Registration and any officer and other employee of that Commission and holding office as such immediately before such dissolution shall vacate their respective offices and such Chairman and other Members shall be entitled to claim compensation not entitled to claim compensation not exceeding three months' pay and allowances for the premature termination of term of their office or of any contract of service:

Provided that the Director General of Investigation and Registration, Additional, Joint, Deputy or Assistant Directors General of Investigation and Registration or any officer or other employee who has been, immediately before the dissolution of the Monopolies and Restrictive Trade Practices Commission appointed on deputation basis to the Monopolies and Restrictive Trade Practices Commission, shall, on such dissolution, stand reverted to his parent cadre, Ministry or Department, as the case may be:

Provided further that the Director-General of Investigation and Registration, Additional, Joint, Deputy or Assistant Directors- General of Investigation and Registration or any officer or other employee who has been, immediately before the dissolution of the Monopolies and Restrictive Trade Practices Commission employed on regular basis by the Monopolies and Restrictive Trade Practices Commission, shall become, on and from such dissolution, the officer and employee, respectively, of the Competition Commission of India or the Appellate Tribunal, in such manner as may be specified by the Central Government, with the same rights and privileges as to pension, gratuity and other like matters as would have been admissible to him if the rights in relation to such Monopolies and Restrictive Trade Practices Commission had not been transferred to, and vested in, the Competition Commission of India or the Appellate Tribunal, as the case may be, and shall continue to do so unless and until his employment in the Competition Commission of India or the Appellate Tribunal, as the

case may be, is duly terminated or until his remuneration, terms and conditions of employment are duly altered by the Competition Commission of India or the Appellate Tribunal, as the case may be:

Provided also that notwithstanding anything contained in the Industrial Disputes Act, 1947(14 of 1947), or in any other law for the time being in force, the transfer of the services of any Director General of Investigation and Registration, Additional, Joint, Deputy or Assistant Directors General of Investigation and Registration or any officer or other employee, employed in the Monopolies and Restrictive Trade Practices Commission, to the Competition Commission of India or the Appellate Tribunal, as the case may be shall not entitle such Director General of Investigation and Registration, Additional, Joint, Deputy or Assistant Directors General of Investigation and Registration or any officer or other employee any compensation under this Act or any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority:

Provided also that where the Monopolies and Restrictive Trade Practices Commission has established a provident fund, superannuation, welfare or other fund for the benefit of the Director General of Investigation and Registration, Additional, Joint, Deputy or Assistant Directors General of Investigation and Registration or the officers and other employees employed in the Monopolies and Restrictive Trade Practices Commission, the monies relatable to the officers and other employees whose services have been transferred by or under this Act to the Competition Commission of India or the Appellate Tribunal, as the case may be, shall, out of the monies standing, on the dissolution of the Monopolies and Restrictive Trade Practices Commission to the credit of such provident fund, superannuation, welfare or other fund, stand transferred to, and vest in, the Competition Commission of India or the Appellate Tribunal, as the case may

be, and such monies which stand so transferred shall be dealt with by the said Commission or the Tribunal, as the case may be, in such manner as may be prescribed.

(3) All cases pertaining to monopolistic trade practices or restrictive trade practices pending (including such cases, in which any unfair trade practice has also been alleged), before the Monopolies and Restrictive Trade Practices Commission shall, on the commencement of the Competition (Amendment) Act, 2009, stand transferred to the Appellate Tribunal and shall be adjudicated by the Appellate Tribunal in accordance with the provisions of the repealed Act as if that Act had not been repealed.

Explanation.-- For the removal of doubts, it is hereby declared that all cases referred to in this sub-section, sub-section (4) and sub-section (5) shall be deemed to include all applications made for the losses or damages under section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as it stood before its repeal;

(4) Subject to the provisions of sub-section (3), all cases pertaining to unfair trade practices other than those referred to in clause (x) of sub-section (1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of1969) and pending before the Monopolies and Restrictive Trade Practices Commission immediately before the commencement of the Competition (Amendment) Act, 2009, shall, on such commencement, stand transferred to the National Commission constituted under the Consumer Protection Act, 1986 (68 of 1986) and the National Commission shall dispose of such cases as if they were cases filed under that Act:

Provided that the National Commission may, if it considers appropriate, transfer any case transferred to it under this sub- section, to the concerned State Commission established under section 9 of the Consumer Protection Act, 1986 (68 of 1986)and

that State Commission shall dispose of such case as if it was filed under that Act.

Provided further that all the cases relating to the unfair trade practices pending, before the National Commission under this sub- section, on or before the date on which the Competition (Amendment) Bill, 2009 receives the assent of the President, shall, on and from that date, stand transferred to the Appellate Tribunal and be adjudicated by the Appellate Tribunal in accordance with the provisions of the repealed Act as if that Act had not been repealed.

(5) All cases pertaining to unfair trade practices referred to in clause (x) of sub-section (1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969(54 of 1969) and pending before the Monopolies and Restrictive Trade Practices Commission shall, on the commencement of the Competition (Amendment) Act, 2009, stand transferred to the Appellate Tribunal and the Appellate Tribunal shall dispose of such cases as if they were cases filed under that Act.

(6) All investigations or proceedings, other than those relating to unfair trade practices, pending before the Director General of Investigation and Registration on or before the commencement of this Act shall, on such commencement, stand transferred to the Competition Commission of India, and the Competition Commission of India may conduct or order for conduct of such investigation or proceedings in the manner as it deems fit.

(7) All investigations or proceedings, relating to unfair trade practices, other than those referred to in clause (x) of sub-section (1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) and pending before the Director General of Investigation and Registration on or before the commencement of this Act shall, on such commencement, stand transferred to the National Commission constituted under the

Consumer Protection Act, 1986 (68 of1986) and the National Commission may conduct or order for conduct of such investigation or proceedings in the manner as it deems fit.

Provided that all investigations or proceedings, relating to unfair trade practices pending before the National Commission, on or before the date on which the Competition (Amendment) Bill, 2009 receives the assent of the President shall, on and from that date, stand transferred to the Appellate Tribunal and the Appellate Tribunal may conduct or order for conduct of such investigation or proceedings in the manner as it deems fit.

(8) All investigations or proceedings relating to unfair trade practices referred to in clause (x) of sub-section (1) of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969), and pending before the Director General of Investigation and Registration on or before the commencement of this Act shall, on such commencement, stand transferred to the Competition Commission of India and the Competition Commission of India may conduct or order for conduct of such investigation in the manner as it deems fit.

(9) Save as otherwise provided under sub-sections (3) to (8), all cases or proceedings pending before the Monopolies and Restrictive Trade Practices Commission shall abate.

(10) The mention of the particular matters referred to in sub- sections (3) to (8)shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 (10 of 1897) with regard to the effect of repeal.‖

9. The order dated 30th August 2009 passed by the MRTP Commission is

traceable to Section 11(1) of the MRTP Act. Indeed the MRTP Commission

took notice of the reports and directed the DG(I&R) to make a preliminary

investigation and submit a report. To that extent, the learned counsel for the

Petitioners are right that in the impugned order dated 16th June 2010 the CCI

has erroneously observed that the DG(I&R) MRTP Commission undertook

the investigation under Section 11(2) of the MRTP Act. Nothing much

however turns on this.

10. Once the MRTP Commission directed the DG(I&R) to undertake

investigations, the matter could no longer be said to be pending before the

MRTP Commission. The investigation undertaken by the DG(I&R) was

obviously incomplete and there was no occasion for the DG(I&R) to place

any report of investigation before the MRTP Commission in terms of

Section 11(1) of the MRTP Act.

11. Turning to Section 66 of the CA, which is a repeal and savings clause, it

appears that the opening words of Section 66(3) is ―all cases‖ pending

before the MRTP Commission shall, on the commencement of the CAA

2009 stand transferred to the CAT, and ―shall be adjudicated by the

Appellate Tribunal in accordance with the provisions of the repealed Act as

if that Act had not been repealed.‖ It is plain that only `cases' which were

pending before the MRTP Commission for `adjudication' as on the date of

the repeal of the MRTP Act and the commencement of the CAA 2009 would

stand transferred to the CAT for ―adjudication‖. The word ―cases‖ and the

word ―adjudication‖ are indicative of the types of matters pending before the

MRTP Commission which were meant to be transferred to the CAT.

12. Under the MRTP Act, the MRTP Commission combined in itself both

the inquisitorial as well as adversarial/adjudicatory functions. In its

inquisitorial role, the MRTP Commission was empowered to refer matters of

investigation to the DG(I&R) which was, in a sense, its extended arm. At

this stage it was meant to be a fact or information gathering exercise. If on

the basis of such information gathered and placed before it by the DG(I&R),

the MRTP Commission came to a prima facie view that there was restrictive

trade practice or unfair trade practice, as the case may be, then it can proceed

further in the matter. It was at that stage, after forming the prima facie view,

that the matter can proceed to get crystallized into a case' it is possible that

on the report of the DG(I&R), the MRTP Commission forms an opinion that

there is no need to proceed further. In that event there will be no `case'.

13. In the considered view of this Court, as far as the present Petitioners are

concerned, the investigations against them by the DG(I&R) remained

incomplete and the matter did not crystallize into a `case' before the MRTP

Commission, which could be stated to be pending as on the date of the CAA.

Consequently there is no merit in the contention that as far as the Petitioners

are concerned, it was incumbent on the DG(I&R) of the CCI to transfer the

cases straight to the CAT and not to the CCI.

14. A comparison of Section 66(3) CA with Section 66 (6) CA shows the

contrast between the kinds of matters before the MRTP Commission and the

DG(I&R). While Section 66(3) CA talks of `cases' pending before the

MRTP Commission, Section 66(6) CA talks of `all investigations or

proceedings' pending before the DG(I&R). The expression ―all

investigations or proceedings‖ is meant to encompass even investigations

and proceedings before the DG(I&R) which remained incomplete as of the

date of the CAA 1999.

15. It was sought to be urged by Mr. Kaul that Section 66(6) CA was meant

to cover only such cases where the DG(I&R) took suo motu notice under

Section 11(2) of the MRTP Act and investigations were incomplete at the

time of the CAA 2009. There is nothing in the language of Section 66(6) CA

to suggest this. The resultant position is that all investigations and

proceedings which were pending before the DG(I&R), MRTP Commission

as on the date of CAA 2009, whether by way of a reference made to it by the

MRTP Commission under Section 11(1) or taken up by the DG(I&R) suo

motu under Section 11(2) of the MRTP Act, would stand transferred to the

CCI in terms of Section 66(6) of the CA. That is what has happened in the

present case. There is, therefore, no illegality in the action of the DG, CCI in

transferring the investigation pending before the DG(I&R), MRTP

Commission to the CCI.

16. Before concluding this part, it may be observed that the organizational

structure which was envisaged under the MRTP Act with the MRTP

Commission combining in itself both the inquisitorial and adversarial

functions has undergone a significant change in the CA. There is now a two-

tier structure with the CCI performing a partly inquisitorial function and a

partly quasi-adjudicatory function. The CAT, however, performs an

appellate adjudicatory function. The interpretation placed on the provisions

by this Court is in light of this altered structure under the CA.

17. It was urged that the CCI was acting unreasonably in declining to

provide the Petitioners with the information sought for the purposes of filing

replies. A reference was made to a communication dated 1st October 2010

received from the Assistant Director General of CCI by the IAL stating that

IAL's insistence on obtaining complete information/documents from the

CCI for responding to the queries raised was not justified and that it should

file its reply within five days failing which penal action would be initiated.

18. This Court only wishes to observe that it will be open to the Petitioners

to file replies before the CCI, within the time granted by the CCI, on the

basis of whatever information is available with them. If any of the

Petitioners suffer any prejudice on account of the non-furnishing of any

information to them by the CCI, they could well raise such a contention

before the CCI which will then deal with such contention and pass orders

thereon before proceeding to take any action in terms of Section 43 read

with Section 45 CA. In any event, for any alleged violation of the procedure

by the CCI it is not as if the Petitioners would be without a remedy. Such a

situation is taken care of within the four corners of the CA itself.

19. It was finally urged that the Petitioners should be granted some more

time to file replies to the show cause notice of the CCI. It is for the

Petitioners to make that request to the CCI which will consider such request

on its merits before proceeding to take any further action under Sections 43

read with Section 45 CA.

20. This court finds no ground having been made out by the Petitioners for

interdicting the proceedings before the CCI.

21. The writ petitions are dismissed with the above observations but in the

circumstances with no orders as to costs.

S. MURALIDHAR, J.

OCTOBER 06, 2010 akg