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Delhi HC Flooded With Challenges To CCI’s Order: Impact?

Published on Thu, Nov 27,2014 | 17:17, Updated at Thu, Nov 27 at 17:17Source : Moneycontrol.com 

By: Manas Chaudhuri, Partner - Khaitan & Co.

Comments on the decision dated 19 November 2014 of the Hon’ble High Court of Delhi in the matter of Rajkumar Dyeing and Printing Works Ltd vs. Competition Commission of India

This write-up is an attempt to highlight certain fundamental issues which, for some reasons, were not discussed either in the order of the Hon’ble Competition Appellate Tribunal or in the order of the Hon’ble High Court of Delhi.

The Hon’ble Competition Commission of India (the Commission) has prima facie grossly erred in interpreting the intent of Section 27 of the Competition Act.  Section 27 is a remedial provision of the Competition Act which enables the Commission to pass suitable final orders including a direction to the delinquent party to discontinue and not to repeat anti-competitive practice – popularly known as “cease and desist” order.  Any order passed under Section 27 is appealable before the Competition Appellate Tribunal within 60 days of receipt of the Order by the party in violation attributable to cartelisation or bid rigging (Section 3) or  abuse of dominant position by such party (Section 4 of the Act).  Section 27(a) talks about the direction relating to “cease and desist” and Section 27 (b) deals with the quantum of penalty in addition to any order of “cease and desist”.   The legislative intent of Section 27 is very unambiguous as it confers powers upon the Commission to pass all or any of the seven directives laid down in clauses (a) to (g) of this Section.  Thus, the entire Order is – in law – appealable within 60 days of the receipt of the Order by the party in breach.  In directing the party to file an undertaking of compliance relatable to “cease and desist” portion within 30 days by the Hon’ble Commission is in gross violation of the intent and construct of the law.  The statutory limitation period to file an appeal is 60 days which by written direction of the Hon’ble Commission in this instant case was distinguished and curtailed to 30 days and this act of the Commission in itself is sufficient to render the entire order a nullity in law.  Appeal before the Appellate Tribunal shall have to be against the entire final Order of the Commission.  Once a party agrees, for arguments’ sake, to abide by the condition of filing an undertaking of “cease and desist” portion of the Order, in law it means that it has voluntarily relinquished its statutory right to challenge the same in appeal.  Imposition of penalty is a follow on action of deterrence but “cease and desist” is a substantive directive. There exists, however, a gateway in the Act i.e., of rectification of the Order under Section 38, which could have been exercised within 30 days by the party and any adverse order of the Commission pursuant to such application could have been taken up as an additional ground of appeal before the Appeal Tribunal. Orders under Section 38 are appealable. Section 42 – which empowers the Commission to take penal action in cases of non-compliance of its orders, is unfortunately not appealable before the Competition Appellate Tribunal – a palpable defect in legislative drafting – forced the petitioner to knock at the doors of the Hon’ble High Court of Delhi and the ensuing debate emerged out of the Order of the Hon’ble High Court is an interesting development in the evolution of competition law jurisprudence in India.  We look forward to further developments in the matter including any appeal, if preferred by the Commission and orders which may be passed pursuant to such appeal.

 
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