2015 (3) TMI 1446 - HC - Law of Competition

Enterprise under Section 2(h) of the Competition Act 2002 or amenable to Hon ble Commission s jurisdiction and can be investigated under the Competition Act 2002 - DDA owing to its statutory functions being a State under Article 12 of the Constitution of India - functioning of DDA can be construed to be in violation of the Competition Act 2002 or not? Refusal to decide the issue of jurisdiction as a preliminary issue and directing the same to be decided at the time of final determination of the matter - HELD THAT - No direction was needed for CCI to at the time of final determination to consider the objection taken by appellants as to jurisdiction. There was no other question for adjudication in the writ petition. Had the learned Single Judge been of the opinion that the objection raised by the appellants of the jurisdiction of the CCI over the appellants was not to be decided as a preliminary issue and was to be dealt with at the time of final determination only as ordered by the CCI also on 1st May 2014 the writ petition would have been dismissed and there would have been no need for the learned Single Judge to issue a direction that the CCI will determine the issue of jurisdiction. If the CCI were to come to a conclusion that it has jurisdiction in the matter it will immediately proceed to decide the matter on merits . The very fact that the writ petition was not dismissed but was disposed of with the direction aforesaid read with the grievance urged in the petition leads to unequivocal conclusion that the direction in para no.5 of the order dated 21st January 2015 though not most happily worded is for the issue of a jurisdiction to be decided as a preliminary issue i.e. in the first instance and only if CCI were to hold that it has jurisdiction in the matter is the CCI to proceed with the decision on merits. It also cannot be held that the use of the words in para 5 of the order dated 21st January 2015 immediately proceed to decide the matter on merits negate the said intention. Neither the CCI in its order dated 4th February 2014 has so stated nor has the counsel for the respondent No.1 CCI argued that there is any impediment to the legal issues raised by the appellants to the jurisdiction of the CCI being decided in the first instance. Conclusion - The High Court clarified that the CCI must first decide the jurisdictional question as a preliminary issue. Only if the CCI concluded that it had jurisdiction should it proceed with the merits of the case - The order dated 23rd February 2015 of the learned Single Judge of dismissal of CM No.2982/2015 filed by the appellants for clarification of the order dated 21st January 2015 in the writ petition. Appeal allowed.

Summary

Issues Involved:

1. Whether the Delhi Development Authority (DDA) qualifies as an "Enterprise" under Section 2(h) of the Competition Act, 2002.
2. Whether the DDA is subject to the jurisdiction of the Competition Commission of India (CCI) under the Competition Act, 2002.
3. Whether the actions of the DDA violate the Competition Act, 2002.
4. Whether the CCI is required to determine the issue of jurisdiction as a preliminary issue before proceeding on the merits.

Issue-wise Detailed Analysis:

1. Qualification as an "Enterprise":
The primary question was whether the DDA, due to its statutory functions and status as a State under Article 12 of the Constitution of India, could be considered an "Enterprise" under Section 2(h) of the Competition Act, 2002. The appellants contended that the DDA, being a statutory body, should not fall under the definition of an "Enterprise" as per the Act. This classification was crucial because it determined whether the DDA's conduct could be scrutinized under the Competition Act.

2. Jurisdiction of CCI:
The appellants challenged the jurisdiction of the CCI to investigate the DDA, arguing that the DDA did not qualify as an "Enterprise" and was thus not amenable to the CCI's jurisdiction. The CCI, in its order dated 11th June 2013, had directed an investigation under Section 26(1) of the Act based on information alleging contravention of Section 4 of the Act by the DDA. The appellants sought a preliminary determination of this jurisdictional issue before any further proceedings.

3. Alleged Violation of the Competition Act:
The issue also encompassed whether the DDA's functioning, particularly under the Delhi Development Authority (Management and Disposal of Housing Estates) Regulations, 1968, constituted a violation of the Competition Act, 2002. The CCI had initiated an investigation based on allegations of contravention, which the appellants contested, arguing that their statutory functions should not be construed as anti-competitive practices.

4. Preliminary Determination of Jurisdiction:
The appellants filed a writ petition seeking a direction that the CCI should first determine its jurisdiction before proceeding on the merits of the case. The learned Single Judge, in the order dated 21st January 2015, directed the CCI to determine the issue of jurisdiction and, if it concluded that it had jurisdiction, to proceed immediately to decide the matter on merits. The appellants later sought clarification of this order, arguing that the CCI should issue a separate order on jurisdiction before requiring any response on merits. The CCI, however, interpreted the order as allowing it to address jurisdictional issues alongside merits.

The High Court clarified that the CCI must first decide the jurisdictional question as a preliminary issue. Only if the CCI concluded that it had jurisdiction should it proceed with the merits of the case. The court emphasized that the jurisdictional issue was a pure question of law and did not require the appellants to file a response to the Director General's report at this stage. The court's clarification aimed to ensure that the CCI adhered to the procedural sequence outlined in the order dated 21st January 2015, thus protecting the appellants' right to a fair hearing on the jurisdictional question before delving into the substantive allegations.