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COMPAT Appeals: Regulations & Act Disconnect?

Published on Mon, Apr 02,2012 | 12:55, Updated at Mon, Apr 02 at 18:49Source : Moneycontrol.com 

By: Karan Talwar, NUJS, Kolkata

The Competition Appellate Tribunal (hereinafter “COMPAT”) is the appellate body to the Competition Commission of India (hereinafter “CCI”) established under Section 53-A of the Competition Act, 2002 (hereinafter “the Act”). The COMPAT, vide Section 53-A(a) is empowered to hear and dispose of appeals against any direction, decision or order of the CCI, passed or made under certain designated sections of the Act.

One such provision is Section 31, under which the CCI can pass a variety of orders, directions and decisions on ‘combinations’, the understanding of which is provided under Section 5 of the Act. Thus, appeals may be filed before the COMPAT on any order, direction or decision of the CCI pertaining to combinations.

Who Can File An Appeal To The COMPAT On Matters Pertaining To Combinations?

It is widely accepted through a catena of judgments that the right to file an appeal before any appellate body is a creature of statute, and is not an inherent right. This right must be regulated solely by the relevant provisions of the statute in question. In the case of decisions, orders or directions of the CCI under the Act, the provision regulating appeals to the COMPAT is Section 53-B of the Act. This Section enumerates the entities which can file appeals to the COMPAT on maters specified under Section 53(a).

These entities are (i) The Central Government, (ii) The State Government, (iii) A local authority, (iv) An enterprise or (v) Any person, who is aggrieved by any direction, decision or order referred to in clause (a) of section 53A. A plain reading of the fifth entity suggests that any third person, who was not a ‘party’ to the combination before the CCI, can file an appeal against the decision of the CCI on the combination, provided that the requirement of being ‘aggrieved’ by the CCI’s decision on the combination is satisfied.

It is thus evident that the right to appeal on matters of a combination is not restricted to the parties entering into a combination. Third persons can file appeals, provided they can establish that they were ‘aggrieved’ by the CCI’s decision on a combination between two or more other entities. It is pertinent to note that the Act does not define the term ‘aggrieved’. Further, there has not been any case of the CCI or the COMPAT which interprets the term ‘aggrieved’ under Section 53-B.

This issue of interpretation can be resolved, however, through reliance on other decided cases which have expounded the meaning of the term ‘aggrieved’ in similarly worded provisions of other enactments, which deal with the right to appeal under those enactments. In the Supreme Court case of Northern Plastics v. Hindustan Photo Films(1997)4SCC452, the Court laid down a test to determine whether a person was ‘aggrieved’ by the Collector of Custom’s decision under Section 129-A of the Customs Act, 1962, and was entitled to an appeal. The court held that the complainant would have to demonstrate that it had a ‘direct legal interest’ in the said decision, and was not complaining on a mere general interest.

Although the above discussion is contentious and needs to be authoritatively decided in a case dealing with competition law, there is a more pressing issue which needs to be resolved. The issue is that of a clear conflict between Section 53-B of the Act and Regulation 29 of the CCI (Procedure In Regard To The Transaction Of Business Relating To Combinations) Regulations, 2011 (hereinafter “Combination Regulations”).

The Conflict Between Section 53-B And Regulation 29 –

The Combination Regulations solely deal with various matters pertaining to combinations. Regulation 29 deals with the right to appeal to the COMPAT on matters pertaining to combinations. It provides a similar list of entities that can file appeals to the appellate body as Section 53-B, but with one important distinction. It states that ‘any person, who is party to proceedings on matters relating to a combination and is aggrieved….may file an appeal’. Regulation 29 thus stipulates that no third parties can file appeals before the COMPAT on matters pertaining to combinations, under any conditions. Regulation 29 conflicts with Section 53-B as it narrows down the list of entities that can file appeals before the COMPAT. 

The Way Forward –

Under Section 64 of the Act, the CCI can make regulations provided they are consistent with the Act. It seems a foregone conclusion that when the matter of the conflict between Regulation 29 and Section 53-B is placed for determination before the CCI or COMPAT or the High Court or Supreme Court, the parent act will supersede the delegated legislation. There are two points however which suggest that this decision may not be as straightforward as it seems. First, it must be noted that the regulations in question were placed before Parliament under Section 64(3), and were approved by the Parliament without any modifications.

This suggests that the Parliament was mindful of the conflict between the provisions but chose to pass the regulations, suggesting the intent to have Regulation 29 govern appeals to the COMPAT on matters of combinations. The second point to be noted flows from the first. It suggests that Regulation 29 may still be upheld, on the application of the principle of generaliaspecialibus non derogant (A special legislation overrides a general enactment).

The argument is that Regulation 29 is a specialized provision regulating appeals to the COMPAT exclusively on the matter of combinations, whereas Section 53-B is a general provision dealing with not only combinations, but also with appeals on matters of anti-competitive agreements and abuse of dominant positions. Thus, Regulation 29 may prevail over Section 53-B, only on the issue of appeals to the COMPAT on matters of combinations.

It remains to be seen how the judicial authorities will resolve this conflict as and when it arises before an appropriate forum.

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