Delhi High Court
Premier Rubber Mills vs Union Of India & Ors. on 11 April, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Pronounced on: April 11, 2017
+ W.P.(C) 1416/2016 & CM No.6194/2016 (stay)
SOMI CONVEYOR BELTINGS LTD. & ANR. ..... Petitioners
Through: Mr.T.S. Ramanathan, Adv.
Versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr.Ravi Prakash, CGSC with
Ms.Rimali Batra, Adv. for R-1.
Mr.Sanjay Jain, ASG with Mr.Prashanto Chandra
Sen, Mr.Prasenjit Sen, Mr.Shivanshu Singh and
Mr.Udyan Verma, Mr.Vidur Mohan, Advs. for
CCI/R-2 & 3.
+ W.P.(C) 1969/2016
PREMIER RUBBER MILLS ..... Petitioner
Through: Mr.T.S. Ramanathan, Adv.
Versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr.Ravi Prakash, CGSC with
Ms.Rimali Batra, Adv. for R-1.
Mr.Anupam Singh, Adv. for CCI/R-2.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE JAYANT NATH
JUDGMENT
: Ms.G.ROHINI, CHIEF JUSTICE
1. These two writ petitions have been filed with a common prayer to
declare Regulation 35 and the proviso to Regulation 37(1) of the
Competition Commission of India (General) Regulations, 2009 as well as
Regulation 6 of the Competition Commission of India (Lesser Penalty)
Regulations, 2009 as illegal and unconstitutional.
2. As could be seen from the material available on record, the
Competition Commission of India (CCI) passed an order dated 06.11.2013
under Section 26(1) of the Competition Act, 2002 recording a prima facie
opinion that the acts and conduct of the Opposite Parties (OP) mentioned
therein is in contravention of Section 3 of the Act and thus directing the
Director General (DG) to make an exhaustive investigation into the
allegations. The petitioner No.1 in W.P.(C) No.1416/2016 i.e. Somi
Conveyor Beltings Ltd. as well as the petitioner in W.P.(C) No.1969/2016
i.e. Premier Rubber Mills have been shown as OP-13 and OP-11
respectively. The allegation is that the Opposite Parties have been indulging
in bid- rigging cartel in the market for Conveyor Belt Sector in India and
indulged in exchange of the commercial and confidential price sensitive
information among themselves prior to submission of bids.
3. The petitioners in both the writ petitions claim to be the
manufacturers of conveyor belts. They were served with the notice dated
27.05.2015 issued by the Director General, Competition Commission of
India/respondent No.3 herein calling upon to furnish the
information/documents specified therein stating that in the investigation
being conducted in Case No.DG/CC/IW/1/33/2013 in pursuance of the order
of the Competition Commission of India under Section 26(1) of the
Competition Act, 2002 (hereinafter referred to as the Act), they are arrayed
as the opposite parties and that the information/documents were called for in
exercise of the duties and powers conferred under Section 42(2) read with
Section 36(2) of the Act.
4. In response to the same, the petitioners vide letters dated 10.06.2015
and 12.06.2015 respectively furnished the information on certain points and
sought extension of time at least by 60 days for collection of information on
other points. By letter dated 18.06.2015, the respondent No.3 while
furnishing a copy of the order dated 06.11.2013 passed under Section 26(1)
of the Act called upon the petitioners to submit their explanation as to why
their act and conduct should not be treated in contravention of Section 3 of
the Act latest by 30.06.2015. It was also stated that no further extension
could be granted. The petitioners, in their replies though furnished some
more information, requested to grant further time to furnish the balance
information and to enable them to effectively participate in the enquiry.
5. Subsequently, the petitioner made an application dated 08.12.2015
through its counsel seeking permission to inspect the record/documents
forming part of the record in Suo Moto Case No.6/2013 regarding
cartelisation in the conveyor belt sector. It is pleaded in the said application
that the Managing Director of the petitioner No.1, Sh.O.P. Bhansali who is
having technical knowledge in his field of operations and business has
difficulty in communicating and conversing in English and since his
knowledge of English and his ability to communicate in English is very
limited, he has requested his Advocate to inspect the files on his behalf and
brief him on the contours of the present inquiry and investigation. In terms
of Regulations 37 and 50 of the Competition Commission of India (General)
Regulations, 2009, requisite fee was also enclosed and a request was made
to permit the petitioner's Advocate to inspect the files so that Sh.Bhansali
can effectively participate in the summons issued to him. The earlier request
to provide all the relevant materials, documents, information, etc. on the
basis of which the prima facie order dated 06.11.2013 has been passed
against the petitioner No.1 along with a copy of all the meetings of the
Commission/orders of the Commission in the said case are also required to
be furnished. The said request was followed by reminders dated 08.12.2015,
11.12.2015 in which while explaining the reasons for seeking permission to
inspect the records, the details of the information required have also been
mentioned.
6. On 18.12.2015, the respondent No.3 issued a notice under Section
36(2) read with Section 41(2) of the Act calling upon the petitioner No.1 to
submit its reply and clarification in respect of the copies of Ex.15 containing
print out of e-mails relating to its company, which contained the details of
discussion between the company and its competitor bidders regarding price
and quantity in respect of tenders issued by PSUs/customers for supply of
conveyor belts. In response to the same, the Managing Director of the
petitioner No.1 filed his affidavit before CCI dated 27.12.2015. Ultimately
by the impugned notice dated 11.01.2016, petitioner No.1 was informed that
its request for inspection of records and supply of certified copies of
documents cannot be acceded to since the said information based on which
prima facie order for investigation has been passed by CCI is confidential in
terms of the provisions of the Competition Act read with the relevant
Regulations. Thereafter, by letter dated 27.01.2016, the respondent No.3
while providing some of the documents called upon the petitioner No.1 to
submit its reply by 08.02.2016 by way of an affidavit signed by the
Managing Director of the petitioner No.1 company.
7. Hence, the present writ petitions contending that the action of the
respondents in denying access to documents, evidence, information, etc. in
possession of CCI and the Director General on the ground of confidentiality
is arbitrary and illegal. It is contended by the petitioners that the entire
investigation and inquiry by CCI pursuant to the order dated 06.11.2013 is
without any jurisdiction and legal basis and therefore, the order dated
06.11.2013 and the consequential investigation is liable to be set aside. It is
also contended that there is no information at all against the petitioners to
form a prima facie opinion required under the Act and that the order dated
06.11.2013 has not specified any reasons to hold a prima facie case qua the
petitioners.
8. So far as the validity of the impugned Regulations is concerned, the
contention is that the same are arbitrary and in violation of Articles 14,
19(1)(a), 19(1)(g) and 21 of the Constitution of India to the extent that they
do not provide the information/documents in the possession of CCI and
Director General to the parties to an inquiry and investigation to present
their views and defend their position. Placing reliance upon the judgment of
this Court in LPA No.733/2014, it is contended that the investigation by the
Director General would amount to commencement of trial/inquiry and
therefore, the parties are entitled to defend themselves and that the
information available with the Director General cannot be denied to a person
who is alleged to have contravened the provisions of an Act on the ground
of confidentiality. The action of the respondents in denying access to the
petitioner to the information/documents available with the Director General
is contrary to the very scheme of the Act which contemplates that the parties
have a right to present their views before the Director General and which
will be taken into consideration for submitting the report of the Director
General. The impugned Regulations to the extent of depriving the
fundamental rights of the parties to have access of information are,
therefore, liable to be declared as unconstitutional.
9. It is also contended that the impugned Regulations are not in
conformity with the provisions of the Act since Section 36 mandates that
CCI shall be guided by the principles of natural justice. The further
contention is that Section 57 of the Act mandates that information relating to
any enterprise shall not disclosed without the previous permission in writing
of the enterprise which means that there is no absolute embargo to furnish
the information. Confidentiality under Regulation 35 and the proviso to
Regulation 37 and Regulation 6 cannot override the mandate under Section
57. Hence, impugned Regulations are ultra vires Section 57 apart from
being in violation of Section 36.
10. On facts, it is contended that the allegations being formation of cartel,
it is necessary to provide the petitioner with all the documents, witness
statement, etc. on record. Hence, an opportunity of inspection should have
been granted at the very first instance.
11. At the outset, we may refer to Section 36 and Section 57 of the
Competition Act, 2002 which read as under:
"36. Power of Commission to regulate its own procedure. -
(1) In the discharge of its functions, the Commission shall be
guided by the principles of natural justice and, subject to the
other pro visions of this Act and of any rules made by the
Central Government, the Commission shall have the powers to
regulate its own procedure.
(2) The Commission shall have, for the purposes of discharging
its functions under this Act, the same powers as are vested in a
Civil Court under the Code of Civil Procedure, 1908 (5 of
1908), while trying a suit, in respect of the following matters,
namely:-
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the examination of witnesses
or documents;
(e) requisitioning, subject to the provisions of sections
123 and 124 of the Indian Evidence Act, 1872 (1 of
1872), any public record or document or 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 authorized 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 authorized 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.]
57. Restriction on disclosure of information. - No
information relating to any enterprise, being an
information which has been obtained by or on behalf of
85[the Commission or the Appellate Tribunal] for the
purposes of this Act, shall, without the previous
permission in writing of the enterprise, be disclosed
otherwise than in compliance with or for the purposes of
this Act or any other law for the time being in force."
12. In exercise of the power conferred by Section 64 of the Competition
Act, 2002, the CCI made the Competition Commission of India (General)
Regulations, 2009 (for short 'CCI General Regulations, 2009'). The
impugned Regulation 35 and Regulation 37(1) may be reproduced
hereunder:
"35. Confidentiality. - (1) The Commission shall maintain
confidentiality of the identity of an informant on a request
made to it in writing.
(2) Any party may submit a request in writing to the
Commission or the Director-General, as the case may be,
that a document or documents, or a part or parts thereof, be
treated confidential.
(3) A request under sub-regulation (2) may be made only if
making the document or documents or a part or parts thereof
public will result in disclosure of trade secrets or destruction
or appreciable diminution of the commercial value of any
information or can be reasonably expected to cause serious
injury.
(4) A request under sub-regulation (2) shall be accompanied
with a statement setting out cogent reasons for such
treatment and to the extent possible the date on which such
confidential treatment shall expire.
(5) Where such document or documents, or a part or parts
thereof, form part of the party‟s written submissions, the
party shall file a complete version with the words
"restriction of publication claimed" in red ink on top of the
first page and the word „confidential‟ clearly and legibly
marked in red ink near the top on each page together with a
public version, which shall not contain such document or
documents or part or parts thereof.
(6) The public version of such written submissions shall be
an exact copy of the confidential version with the omissions
of the confidential information being indicated in a
conspicuous manner, as stipulated in sub-regulation (5).
(7) [omitted by notification dated 31.03.2011]
(8) On receipt of a request under sub-regulation (2), the
Commission or the Director General, as the case may be, if
satisfied, shall direct that the document or documents or a
part or parts thereof shall be kept confidential for the time
period to be specified:
Provided that the Commission or the Director General, as
the case may be, if satisfied, may give such confidential
treatment to any other information or document or part
thereof also in respect of which no request has been made by
the party which has furnished such information or the
document.
(9) The Commission or the Director-General, as the case
may be, may also consider the following while arriving at a
decision regarding confidentiality: -
(a) the extent to which the information is known to
outside public;
(b) the extent to which the information is known to the
employees, suppliers, distributors and others involved in
the party‟s business;
(c) the measures taken by the party to guard the secrecy
of the information;
(d) the ease or difficulty with which the information
could be acquired or duplicated by others.
(10) In case the Director-General has rejected the request of
the party made under sub-regulation (2), the party may
approach the Commission for a decision regarding
confidential treatment.
(11) Where the Director-General or the Commission has
rejected the request for confidential treatment of a document
or documents or a part or parts thereof and has informed the
party of its intention, such document or documents or part or
parts thereof shall, subject to sub-regulation (13), not be
treated as confidential.
(12) [omitted by notification dated 31.03.2011]
(13) The document or documents or a part or parts thereof
that have been granted confidential treatment under this
regulation shall be segregated from the public record and
secured in a sealed envelope or any other appropriate
container, bearing the title, the docket number of the
proceeding, the notation "confidential record under
regulation 35" and the date on which confidential treatment
expires.
(14) If the Commission includes in any order or decision or
opinion, information that has been granted confidential
treatment under this regulation, the Commission shall file
two versions of the order or decision or opinion. The public
version shall omit the confidential information that appears
in the complete version, be marked "subject to
confidentiality requirements under regulation 35" on the first
page, shall be served upon the parties, and shall be included
in the public record of the proceeding. The complete version
shall be placed in the confidential record of the proceeding
as provided in sub-regulation (13).
(15) Any person or party, including any officer or employee
appointed by the Commission under sub-section (1) of
section 17 of the Act and any expert or professional engaged
by the Commission under sub-section (3) of section 17 of
the Act or any expert called upon to assist the Commission
under sub-section (3) of section 36 of the Act privy to the
contents of the document or documents or a part or parts
thereof that have been granted confidential treatment under
this regulation shall maintain confidentiality of the same and
shall not use or disclose or deal with such confidential
information for any other purpose other than the purposes of
the Act or any other law for the time being in force:
Provided that breach of confidentiality by any officer or
employee of the Commission appointed under sub-section
(1) of section 17 of the Act shall constitute a ground for
initiation of disciplinary proceedings under the relevant rules
or regulations, as the case may be:
Provided further that breach of confidentiality by any
expert or professional engaged by the Commission under
sub-section (3) of section 17 of the Act or any expert called
upon to assist the Commission under sub-section (3) of
section 36 of the Act shall be sufficient ground for
termination of the engagement or contract, as the case may
be."
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:
Provided further that no request for inspection or certified
copies of internal documents shall be allowed.
xxx xxx xxx"
13. We may also refer to Regulation 6 of the Competition Commission of
India (Lesser Penalty) Regulations, 2009 (for short 'CCI Lesser Penalty
Regulations, 2009').
"6. Confidentiality. - Notwithstanding anything contained
in the Competition Commission of India (General)
Regulations, 2009, the Commission shall treat as
confidential the identity of the applicant or the information
obtained from it and shall not disclose the identity or the
information obtained unless -
(a) the disclosure is required by law; or
(b) the applicant has agreed to such disclosure in writing; or
(c) there has been a public disclosure by the applicant."
14. As is evident from the material available on record, suo moto
proceedings have been initiated under Section 26(1) of the Act and an order
has been passed by CCI directing the Director General to investigate
whether there is any contravention of Section 3 of the Act. The report by
the Director General is yet to be submitted. Though the petitioners in the
present petitions have challenged the validity of certain statutory
Regulations, it is apparent that their main grievance is regarding the letter
dated 11.01.2016 whereby the CCI rejected the request of the petitioners for
inspection of the records and supply of certified copies of the documents. A
perusal of the letter dated 11.01.2016 shows that the request of the
petitioners was rejected on the ground that (i) the information sought is
confidential in terms of the provisions of the Act and the Regulations made
thereunder and (ii) the matter has been referred to the Director General for
investigation and the same is currently pending, thus, the request may be
referred to the Director General directly in terms of the provisions of CCI
(General) Regulations, 2009.
15. As held in Competition Commission of India v. SAIL; (2010) 10
SCC 744, formation of a prima facie opinion departmentally, i.e., by the
Director General appointed by the Central Government to assist CCI does
not amount to an adjudicatory function but is merely of administrative
nature. At that stage, it does not condemn any person and therefore,
application of audi altrem partem is not called for. The relevant excerpts
from CCI Vs. SAIL may be reproduced hereunder for ready reference:-
"31. xxx xxx xxx
(1) xxx xxx xxx
(2) Neither any statutory duty is cast on the Commission to
issue notice or grant hearing, nor can any party claim, as a
matter of right, notice and/or hearing at the stage of
formation of opinion by the Commission, in terms of
Section 26(1) of the Act that a prima facie case exists for
issuance of a direction to the Director General to cause an
investigation to be made into the matter.
However, the Commission, being a statutory body
exercising, inter alia, regulatory jurisdiction, even at that
stage, in its discretion and in appropriate cases may call
upon the party(s) concerned to render required assistance or
produce requisite information, as per its directive. The
Commission is expected to form such prima facie view
without entering upon any adjudicatory or determinative
process. The Commission is entitled to form its opinion
without any assistance from any quarter or even with
assistance of experts or others. The Commission has the
power in terms of Regulation 17(2) of the Regulations to
invite not only the information provider but even "such other
person" which would include all persons, even the affected
parties, as it may deem necessary. In that event it shall be
"preliminary conference", for whose conduct of business the
Commission is entitled to evolve its own procedure.
xxx xxx xxx
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 facie case justifying passing of
such a direction to the Director General, it can close the matter
and/or pass such orders as it may deem fit and proper. In other
words, the order passed by the Commission under Section 26(2)
is a final order as it puts an end to the proceedings initiated
upon receiving the information in one of the specified modes.
This order has been specifically made appealable under Section
53-A of the Act.
38. In contradistinction, the direction under Section 26(1)
after formation of a prima facie opinion is a direction
simpliciter to cause an investigation into the matter. Issuance of
such a direction, at the face of it, is an administrative direction
to one of its own wings departmentally and is without entering
upon any adjudicatory process. It does not effectively determine
any right or obligation of the parties to the lis. Closure of the
case causes determination of rights and affects a party i.e. the
informant; resultantly, the said party has a right to appeal
against such closure of case under Section 26(2) of the Act. On
the other hand, mere direction for investigation to one of the
wings of the Commission is akin to a departmental proceeding
which does not entail civil consequences for any person,
particularly, in light of the strict confidentiality that is expected
to be maintained by the Commission in terms of Section 57 of
the Act and Regulation 35 of the Regulations.
39. Wherever, in the course of the proceedings before the
Commission, the Commission passes a direction or interim
order which is at the preliminary stage and of preparatory
nature without recording findings which will bind the parties
and where such order will only pave the way for final decision,
it would not make that direction as an order or decision which
affects the rights of the parties and therefore, is not appealable.
xxx xxx xxx
"69. In light of the above principles, let us examine whether in
terms of Section 26(1) of the Act read with the Regulations in
force, it is obligatory upon the Commission to issue notice to
the parties concerned (more particularly the affected parties)
and then form an opinion as to the existence of a prima facie
case, or otherwise, and to issue direction to the Director General
to conduct investigation in the matter.
70. At the very outset, we must make it clear that we are
considering the application of these principles only in light of
the provisions of Section 26(1) and the finding recorded by the
Tribunal in this regard.
71. The intimation received by the Commission from any
specific person complaining of violation of Section 3(4) read
with Section 19 of the Act, sets into motion, the mechanism
stated under Section 26 of the Act. Section 26(1), as already
noticed, requires the Commission to form an opinion whether
or not there exists a prima facie case for issuance of direction to
the Director General to conduct an investigation. This section
does not mention about issuance of any notice to any party
before or at the time of formation of an opinion by the
Commission on the basis of a reference or information received
by it. Language of Sections 3(4) and 19 and for that matter, any
other provision of the Act does not suggest that notice to the
informant or any other person is required to be issued at this
stage. In contradistinction to this, when the Commission
receives the report from the Director General and if it has not
already taken a decision to close the case under Section 26(2),
the Commission is not only expected to forward the copy of the
report, issue notice, invite objections or suggestions from the
informant, the Central Government, the State Government,
statutory authorities or the parties concerned, but also to
provide an opportunity of hearing to the parties before arriving
at any final conclusion under Sections 26(7) or 26(8) of the Act,
as the case may be. This obviously means that wherever the
legislature has intended that notice is to be served upon the
other party, it has specifically so stated and we see no
compelling reason to read into the provisions of Section 26(1)
the requirement of notice, when it is conspicuous by its very
absence. Once the proceedings before the Commission are
completed, the parties have a right to appeal under Section 53-
A(1)(a) in regard to the orders termed as appealable under that
provision. Section 53-B requires that the Tribunal should give,
parties to the appeal, notice and an opportunity of being heard
before passing orders, as it may deem fit and proper,
confirming, modifying or setting aside the direction, decision or
order appealed against.
xxx xxx xxx
78. Cumulative reading of these provisions, in conjunction
with the scheme of the Act and the object sought to be
achieved, suggests that it will not be in consonance with the
settled rules of interpretation that a statutory notice or an
absolute right to claim notice and hearing can be read into the
provisions of Section 26(1) of the Act. Discretion to invite, has
been vested in the Commission, by virtue of the Regulations,
which must be construed in their plain language and without
giving it undue expansion.
79. It is difficult to state as an absolute proposition of law
that in all cases, at all stages and in all events the right to notice
and hearing is a mandatory requirement of principles of natural
justice. Furthermore, that non-compliance therewith, would
always result in violation of fundamental requirements vitiating
the entire proceedings. Different laws have provided for
exclusion of principles of natural justice at different stages,
particularly, at the initial stage of the proceedings and such laws
have been upheld by this Court. Wherever, such exclusion is
founded on larger public interest and is for compelling and
valid reasons, the courts have declined to entertain such a
challenge. It will always depend upon the nature of the
proceedings, the grounds for invocation of such law and the
requirement of compliance with the principles of natural justice
in light of the above-noticed principles.
xxx xxx xxx
83. The provisions of Section 26(1) clearly indicate
exclusion of principles of natural justice, at least at the initial
stages, by necessary implication. In cases where the conduct of
an enterprise, association of enterprises, person or association
of persons or any other legal entity, is such that it would cause
serious prejudice to the public interest and also violates the
provisions of the Act, the Commission will be well within its
jurisdiction to pass ex parte ad interim injunction orders
immediately in terms of Section 33 of the Act, while granting
post-decisional hearing positively, within a very short span in
terms of Regulation 31(2). This would certainly be more than
adequate compliance with the principles of natural justice.
xxx xxx xxx
91. The jurisdiction of the Commission, to act under this
provision, does not contemplate any adjudicatory function. The
Commission is not expected to give notice to the parties i.e. the
informant or the affected parties and hear them at length, before
forming its opinion. The function is of a very preliminary
nature and in fact, in common parlance, it is a departmental
function. At that stage, it does not condemn any person and
therefore, application of audi alteram partem is not called for.
Formation of a prima facie opinion departmentally (the Director
General, being appointed by the Central Government to assist
the Commission, is one of the wings of the Commission itself)
does not amount to an adjudicatory function but is merely of
administrative nature. At best, it can direct the investigation to
be conducted and report to be submitted to the Commission
itself or close the case in terms of Section 26(2) of the Act,
which order itself is appealable before the Tribunal and only
after this stage, there is a specific right of notice and hearing
available to the aggrieved/affected 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.
xxx xxx xxx
93. We may also usefully note that the functions performed
by the Commission under Section 26(1) of the Act are in the
nature of preparatory measures in contrast to the decision-
making process. That is the precise reason that the legislature
has used the word "direction" to be issued to the Director
General for investigation in that provision and not that the
Commission shall take a decision or pass an order directing
inquiry into the allegations made in the reference to the
Commission.
xxx xxx xxx
97. The above reasoning and the principles enunciated,
which are consistent with the settled canons of law, we would
adopt even in this case. In the backdrop of these determinants,
we may refer to the provisions of the Act. Section 26, under its
different sub-sections, requires the Commission to issue various
directions, take decisions and pass orders, some of which are
even appealable before the Tribunal. Even if it is a direction
under any of the provisions 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 aforereferred. 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 substantiating the formation
of such opinion, while all its other orders and decisions should
be well reasoned."
16. It is also a settled principle of law that the requirement of principles of
natural justice must depend on the circumstances of the case, the nature of
the enquiry, the rules under which the tribunal is acting, the subject matter to
be dealt with and the consequences that may visit a person after such
enquiry from out of the decision pursuant to such enquiry. [Vide : Natwar
Singh Vs. Director of Enforcement; (2010) 13 SCC 255]. While observing
that the duty of adequate disclosure is only an additional procedural
safeguard in order to ensure the attainment of the fairness and it has its own
limitations, it has further been held in Natwar Singh Vs. Director of
Enforcement (supra):
"26. Even in the application of the doctrine of fair play there
must be real flexibility. There must also have been caused some
real prejudice to the complainant; there is no such thing as a
merely technical infringement of natural justice. The
requirements of natural justice must depend on the
circumstances of the case, the nature of the inquiry, the rules
under which the tribunal is acting, the subject-matter to be dealt
with and so forth. Can the courts supplement the statutory
procedures with requirements over and above those specified?
In order to ensure a fair hearing, courts can insist and require
additional steps as long as such steps would not frustrate the
apparent purpose of the legislation.
xxx xxx xxx
29. It is thus clear that the extent of applicability of the
principles of natural justice depends upon the nature of inquiry,
the consequences that may visit a person after such inquiry
from out of the decision pursuant to such inquiry.
30. The right to fair hearing is a guaranteed right. Every
person before an authority exercising the adjudicatory powers
has a right to know the evidence to be used against him. This
principle is firmly established and recognised by this Court
in Dhakeswari Cotton Mills Ltd. v. CIT [AIR 1955 SC 65 :
(1955) 1 SCR 941] . However, disclosure not necessarily
involves supply of the material. A person may be allowed to
inspect the file and take notes. Whatever mode is used, the
fundamental principle remains that nothing should be used
against the person which has not been brought to his notice. If
relevant material is not disclosed to a party, there is prima facie
unfairness irrespective of whether the material in question arose
before, during or after the hearing. The law is fairly well settled
if prejudicial allegations are to be made against a person, he
must be given particulars of that before hearing so that he can
prepare his defence. However, there are various exceptions to
this general rule where disclosure of evidential material might
inflict serious harm on the person directly concerned or other
persons or where disclosure would be breach of confidence or
might be injurious to the public interest because it would
involve the revelation of official secrets, inhibit frankness of
comment and the detection of crime, might make it impossible
to obtain certain clauses of essential information at all in the
future (see R. v. Secy. of State for Home Deptt., ex p H [1995
QB 43 : (1994) 3 WLR 1110 : (1995) 1 All ER 479 (CA)] ).
31. The concept of fairness may require the adjudicating
authority to furnish copies of those documents upon which
reliance has been placed by him to issue show-cause notice
requiring the noticee to explain as to why an inquiry under
Section 16 of the Act should not be initiated. To this extent, the
principles of natural justice and concept of fairness are required
to be read into Rule 4(1) of the Rules. Fair procedure and the
principles of natural justice are in-built into the Rules. A
noticee is always entitled to satisfy the adjudicating authority
that those very documents upon which reliance has been placed
do not make out even a prima facie case requiring any further
inquiry. In such view of the matter, we hold that all such
documents relied on by the authority are required to be
furnished to the noticee enabling him to show a proper cause as
to why an inquiry should not be held against him though the
Rules do not provide for the same. Such a fair reading of the
provision would not amount to supplanting the procedure laid
down and would in no manner frustrate the apparent purpose of
the statute.
xxx xxx xxx
34. As noticed, a reasonable opportunity of being heard is to
be provided by the adjudicating authority in the manner
prescribed for the purpose of imposing any penalty as provided
for in the Act and not at the stage where the adjudicating
authority is required merely to decide as to whether an inquiry
at all be held into the matter. Imposing of penalty after the
adjudication is fraught with grave and serious consequences
and therefore, the requirement of providing a reasonable
opportunity of being heard before imposition of any such
penalty is to be met. In contradistinction, the opinion formed by
the adjudicating authority whether an inquiry should be held
into the allegations made in the complaint are not fraught with
such grave consequences and therefore the minimum
requirement of a show-cause notice and consideration of cause
shown would meet the ends of justice. A proper hearing always
include, no doubt, a fair opportunity to those who are parties in
the controversy for correcting or contradicting anything
prejudicial to their view.
xxx xxx xxx
48. On a fair reading of the statute and the Rules suggests
that there is no duty of disclosure of all the documents in
possession of the adjudicating authority before forming an
opinion that an inquiry is required to be held into the alleged
contraventions by a noticee. Even the principles of natural
justice and concept of fairness do not require the statute and the
Rules to be so read. Any other interpretation may result in
defeat of the very object of the Act. Concept of fairness is not a
one-way street. The principles of natural justice are not
intended to operate as roadblocks to obstruct statutory inquiries.
Duty of adequate disclosure is only an additional procedural
safeguard in order to ensure the attainment of the fairness and it
has its own limitations. The extent of its applicability depends
upon the statutory framework.
49. Hegde, J. speaking for the Supreme Court propounded:
"In other words, they (principles of natural justice) do not
supplant the law of the land but supplement it" (see A.K.
Kraipak v. Union of India [(1969) 2 SCC 262] ). Its essence is
good conscience in a given situation; nothing more but nothing
less (seeMohinder Singh Gill v. Chief Election Commr. [(1978)
1 SCC 405] )."
17. In the light of the settled principles of law noticed above, we are of
the view that the respondents cannot be held to have committed any error in
rejecting the request of the petitioners for inspection of the documents.
18. It may also be added that Section 26 of the Act provides for the
procedure for inquiry by CCI under Section 19 i.e., inquiry into anti
competitive agreements and abuse of an enterprise of its dominant position.
Section 36 further empowers CCI to regulate its own procedure for the
purpose of discharging its functions under the Act however, CCI shall be
guided by the principles of natural justice and in respect of the matters
specified in sub section 2 of Section 36 relating to recording evidence, CCI
is conferred with the same powers as are vested in a Civil Court under CPC,
1908 while trying a Suit. However, Section 57 of the Act makes it clear that
no information relating to any enterprise being information which has been
obtained by CCI for the purpose of the Act shall be disclosed otherwise than
in compliance with or for the purposes of the Act or any other law for the
time being in force. Further, Regulation 35 of General Regulations 2009
expressly provides that the commission shall maintain confidentiality of the
identity of an informant, a document or documents or a part thereof on a
request made by the informant. Such confidential treatment may be given
by the CCI or DG, on being satisfied, to any other information or document
or part thereof also in respect of which no request has been made by the
informant or the party which has furnished such information or document.
Though Regulation 37 enables a party to the proceedings to inspect the
documents or records submitted during proceedings or to obtain copies of
the same by making an application accompanied with the specified fees, the
same is subject to the restriction on disclosure of information as provided
under Section 57 of the Act. Thus, it is clear that the entitlement of a party
to the proceedings to inspect the documents or to obtain copies of the same
is not absolute and it is always open to CCI to reject permission for
inspection or furnishing copies if it is of the view that the
documents/information require confidential treatment.
19. Regarding the validity of the subordinate legislation is concerned, the
law is well settled that there is presumption in favour of constitutionality or
validity and the burden is upon him who attacks it to show that it is invalid.
However, a piece of subordinate legislation does not carry the same degree
of immunity which is enjoyed by a statute passed by a competent
Legislature. Subordinate legislation may be questioned on any of the
grounds on which plenary legislation is questioned. In addition it may also
be questioned on the ground that it does not conform to the statute under
which it is made or that it is contrary to some other statute.
20. Since the power to make subordinate legislation is derived from the
enabling Act, it is fundamental that the delegate on whom such a power is
conferred has to act within the limits of authority conferred by the Act.
Rules cannot be made to supplant the provisions of the enabling Act but to
supplement it. As held in Supreme Court Employees' Welfare Association
Vs. Union of India; (1989) 4 SCC 187, the validity of a subordinate
legislation is open to question if it is ultra vires the constitution or the
governing Act or repugnant to the general principles of the laws of the land
or is so arbitrary or unreasonable that no fair minded authority could ever
have made it. It was also held that the rules are liable to be declared invalid
if they are manifestly unjust or oppressive or outrageous or directed to be
unauthorized and/or violative of the general principles of law of the land or
so vague that it cannot be predicted with certainty as to what it prohibited or
so unreasonable that they cannot be attributed to the power delegated or
otherwise disclose bad faith. It was further explained by a Constitution
Bench of the Supreme Court in Shree Sitaram Sugar Company Ltd. v.
Union of India; (1990) 3 SCC 223 that the power delegated by statute is
limited by its terms and subordinate to its objects and that the delegate must
act in good faith, reasonably, intra vires the power granted, and on relevant
consideration of material facts. It was also added that all the decisions of the
delegate, whether characterized as legislative or administrative or quasi
judicial, must be in harmony with the constitution and other laws of the land
and that they must be reasonably related to the purposes of the enabling
legislation.
21. Regarding the question as to whether arbitrariness can also be a
ground to question the subordinate legislation, it was observed by the
Supreme Court in Indian Express Newspapers v. Union of India; (1985) 1
SCC 641:
"77. In India arbitrariness is not a separate ground since it will
come within the embargo of Article 14 of the Constitution. In
India any enquiry into the vires of delegated legislation must be
confined to the grounds on which plenary legislation may be
questioned, to the ground that it is contrary to the statute under
which it is made, to the ground that it is contrary to other
statutory provisions or that it is so arbitrary that it could not be
said to be in conformity with the statute or that it offends
Article 14 of the Constitution.
78. That subordinate legislation cannot be questioned on the
ground of violation of principles of natural justice on which
administrative action may be questioned has been held by this
Court in Tulsipur Sugar Co. Ltd. v. Notified Area Committee,
Tulsipur [AIR 1980 SC 882 : (1980) 2 SCR 1111 : (1980) 2
SCC 295], Rameshchandra Kachardas Porwal v. State of
Maharashtra [(1981) 2 SCC 722 : AIR 1981 SC 1127 : (1981) 2
SCR 866] and in Bates v. Lord Hailsham of St.
Marylebone [(1972) 1 WLR 1373 : (1972) 1 A11 ER 1019 (Ch
D)]. A distinction must be made between delegation of a
legislative function in the case of which the question of
reasonableness cannot be enquired into and the investment by
statute to exercise particular discretionary powers. In the latter
case the question may be considered on all grounds on which
administrative action may be questioned, such as, non-
application of mind, taking irrelevant matters into
consideration, failure to take relevant matters into
consideration, etc, etc. On the facts and circumstances of a case,
a subordinate legislation may be struck down a arbitrary or
contrary to statute if it fails to take into account very vital facts
which either expressly or by necessary implication are required
to be taken into consideration by the statute or, say, the
Constitution. This can only be done on the ground that it does
not conform to the statutory or constitutional requirements or
that it offends Article 14 or Article 19(1)(a) of the Constitution.
It cannot, no doubt, be done merely on the ground that it is not
reasonable or that it has not taken into account relevant
circumstances which the Court considers relevant."
22. Reiterating the above noticed principles of law, the grounds upon
which a subordinate legislation can be challenged are summed up in State of
T.N. v. P.Krishnamurthy & Ors.; (2006) 4 SCC 517 as under:
(a) Lack of legislative competence to make the sub-ordinate
legislation.
(b) Violation of Fundamental Rights guaranteed under the
Constitution of India.
(c) Violation of any provision of the Constitution of India.
(d) Failure to conform to the Statute under which it is made or
exceeding the limits of authority conferred by the enabling Act.
(e) Repugnancy to the laws of the land, that is, any enactment.
(f) Manifest Arbitrariness/unreasonableness (to an extent where
the Court might well say that the legislature never intended to
give authority to make such rules).
23. As held in the above decisions, though delegated legislation can also
be challenged as being unreasonable, the unreasonableness is not to be
judged in the same standard as unreasonableness of administrative action.
The delegated legislation can be struck down unreasonable only if it is
manifestly arbitrary or if so unreasonable that Parliament never intended to
confer such power on the Regulator.
24. For the aforesaid reasons, we are unable to hold that the impugned
regulations are either arbitrary or unreasonable, much less, the same are
contrary to the parent Act.
25. Accordingly, we uphold the validity of the impugned Regulations and
the writ petitions shall stand dismissed.
CHIEF JUSTICE
JAYANT NATH, J.
APRIL 11, 2017
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