9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 1138 - AT - Law of CompetitionPenalty imposed by the Competition Commission of India (CCI) - Direction for release of the Fixed Deposit Receipts deposited by the Appellants - HELD THAT - The matter is remanded to CCI to examine the issue of penalty by affording an opportunity to the Appellant. Considering the submissions the application is allowed and the Ld. Registrar NCLAT may release the FDR alongwith interest accrued thereon in favour of the Appellant. Application disposed off.
1. ISSUES PRESENTED and CONSIDERED
- Whether the Fixed Deposit Receipts (FDRs) deposited by the appellants as security pending appeal should be released, given that the penalty imposed by the Competition Commission of India (CCI) is being reconsidered afresh after remand. - Whether the CCI exercised its discretionary power to impose the maximum penalty (10% of turnover) in a reasonable and lawful manner, including affording the appellants an opportunity to be heard before imposing the maximum penalty. - Whether the appeal against the penalty imposed by the CCI should be remanded back to the CCI for reconsideration of the quantum of penalty in accordance with law. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Release of Fixed Deposit Receipts (FDRs) deposited as security pending appeal Relevant Legal Framework and Precedents: The FDRs were deposited pursuant to an order of this Tribunal dated 17.09.2018, which stayed the operation of the penalty imposed by the CCI on condition of depositing the penalty amount in the form of FDRs in the name of the Registrar, NCLAT. The general legal principle is that such deposits are held as security pending the final disposal of the appeal and may be released if the underlying penalty is set aside, modified, or reconsidered. Court's Interpretation and Reasoning: Since the appeal against the penalty was remanded to the CCI for fresh consideration of the quantum of penalty, the penalty order is effectively under review. The appellant submitted that in light of the remand and the fact that the CCI is deciding the penalty afresh, the FDRs should be released. The CCI did not oppose the release of the FDRs. Application of Law to Facts: The Tribunal found it appropriate to allow the release of the FDRs along with the interest accrued thereon in favour of the appellants, given that the penalty is not finally determined and is under reconsideration by the CCI. Conclusion: The Tribunal allowed the application for release of the FDRs and directed the Registrar to release the same along with accrued interest. Issue 2: Exercise of discretionary power by the CCI to impose maximum penalty (10% of turnover) and procedural fairness Relevant Legal Framework and Precedents: Section 27(b) of the Competition Act empowers the CCI to impose a penalty up to 10% of the average turnover of the preceding three financial years. The discretion to impose penalty within this limit must be exercised reasonably and not arbitrarily. It is settled law that when imposing the maximum penalty, the authority must provide detailed reasons and afford the affected party an opportunity to be heard on the quantum of penalty. Court's Interpretation and Reasoning: The Tribunal observed that although the CCI has the power to impose a penalty up to 10%, the impugned order did not indicate whether the appellants were given an opportunity to address why the maximum penalty should not be imposed, nor did it provide detailed reasons for selecting the maximum penalty. The Tribunal emphasized that discretion must not be exercised in an indiscreet manner and that procedural fairness requires the affected party be heard before imposing an exemplary penalty. Key Evidence and Findings: The impugned order dated 31.05.2018 lacked any indication of the appellants being asked to explain or justify why the maximum penalty should not be imposed, and it did not assign detailed reasons for the quantum of penalty. Application of Law to Facts: Given the absence of procedural fairness and detailed reasoning, the Tribunal concluded that the exercise of discretion by the CCI was not reasonable in the facts and circumstances of the case. Treatment of Competing Arguments: While recognizing the CCI's discretionary power, the Tribunal balanced this against the principles of natural justice and reasonableness, finding that the CCI failed to comply with these requirements. Conclusion: The Tribunal held that the matter should be remanded to the CCI to reconsider the penalty after affording full opportunity to the appellants to be heard on the quantum of penalty. Issue 3: Remand of the penalty matter to the CCI for reconsideration Relevant Legal Framework and Precedents: The appellate authority has the power to remit matters back to the original adjudicating authority for reconsideration if the exercise of discretion or procedure is found to be flawed. Court's Interpretation and Reasoning: The Tribunal held that since the CCI did not exercise its discretion reasonably and failed to afford the appellants an opportunity to address the penalty quantum, the appeals should be remitted back to the CCI for fresh consideration of the penalty in accordance with law. Key Evidence and Findings: The Tribunal noted the absence of reasons and opportunity to the appellants in the impugned penalty order and the settled principle that discretion must be exercised judiciously and fairly. Application of Law to Facts: The Tribunal remitted the matter to the CCI without interfering with the merits of the case, directing the CCI to pass an appropriate order after giving full opportunity to the appellants. Treatment of Competing Arguments: The Tribunal acknowledged the CCI's discretion but emphasized the need for procedural fairness and reasoned decisions. Conclusion: The appeals were remitted back to the CCI for reconsideration of penalty after affording the appellants an opportunity to be heard. 3. SIGNIFICANT HOLDINGS "Though CCI is empowered to take turnover upto 10% but while taking up such percentage i.e. maximum as prescribed in the Act it was required for the CCI to elaborately assign reason for coming to the conclusion for maximum penalty. It may not be held that CCI in no case can impose higher penalty upto 10% but in such situation it would be required for the CCI to afford full opportunity to the concerned party to address the CCI as to why such higher penalty may not be imposed." "It is true that in respect of imposing penalty discretion has been given to the CCI, but at the same time it is settled that discretion may not be exercised indiscreet manner." "Without interfering with the merit of the case the appeals are remitted back to CCI to reconsider the penalty in view of observations given herein above and pass appropriate order in accordance with law after giving full opportunity to the appellants on the point of penalty." Core principles established include the necessity of reasoned orders when imposing maximum penalties under the Competition Act, the requirement to afford affected parties an opportunity to be heard on penalty quantum, and that discretion must be exercised judiciously and not arbitrarily. Final determinations:
|
