2021 (7) TMI 1398 - KARNATAKA HIGH COURT

Allegation of involvement in alleged anti-competitive practices and conduct - deep discounting - preferential listing - sale of private label brands through preferential sellers - exclusive tie-ups - violation of Section 3(1) r/w Section 3(4) of Competition Act - Section 26(1) of the Competition Act, 2002 - HELD THAT:- The record of the case reveals that respondent No. 2 - Delhi Vyapar Mahasangh filed an information on 24.10.2019 to CCI under Section 19(1)(a) of the Act of 2002 against both the appellants alleging that the appellants are involved in alleged anti-competitive practices and conduct, such as deep discounting, preferential listing, sale of private label brands through preferential sellers and exclusive tie-ups, alleged to be in violation of Section 3(1) read with Section 3(4) of the Act of 2002. The CCI based upon the information received by it, has passed an order dated 13.1.2020 in Case No. 40/2019 directing an investigation under Section 26(1) of the Act of 2002 by the Director General.

In the considered opinion of this Court, the CCI certainly have a jurisdiction to take appropriate steps to curb the anti competitive practices and a detailed mechanism is provided under the Act itself to ensure that no anti competitive practices are undertaken. The appellants, it appears, do not want to participate at all in the proceedings initiated by the CCI and do not want the CCI to proceed ahead in accordance with law. This Court really fails to understand as to why the appellants do not want to participate in the enquiry, in which the appellants will have an opportunity to produce the material before the Director General on the basis of which, after hearing the appellants and after following the due process of law, the Director General shall be able to conduct an enquiry.

In order to achieve the object of the Act of 2002, the question of interference does not arise. The appellants do have a right to participate in the proceedings and/or under an obligation to produce all the material as desired during the enquiry by the Director General. The appellants want to crush the proceedings at a preliminary stage in a similar manner like quashing of FIR as prayed in a petition filed under Section 482 of the Cr.P.C. Earlier, almost in every criminal case, petitions were filed for quashment of the First Information Report (FIR) and in those circumstances, the Hon'ble Supreme Court has laid down parameters for quashment of the criminal proceedings/FIR in the case of State of Haryana and others v. Bhajan Lal and others, [1990 (11) TMI 386 - SUPREME COURT] - Hon'ble Supreme Court in the the case has held that unless and until the show cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first stage of initiating process under the CCI Act and the enquiry is yet to commence. The appellants do not want to participate in the enquiry for the reasons best known to them.

The present case is not a case where the mala fides are alleged against the Regulator, nor there is any jurisdictional infirmity. The order passed under Section 26(1) is neither an adjudication, nor determinative, but merely an inquisitorial, departmental proceedings in the nature of a direction to the Director General to make an investigation. It is neither a judicial nor a quasi judicial proceedings.

It is apparent from a reading of the CCI order dated 13.1.2020 that the prima facie case was in existence and keeping in view the prima facie case, an enquiry has been ordered by passing an order under Section 26(1) of the Act of 2002 by the CCI. In the considered opinion of this Court, the learned Single Judge was justified in holding that the order passed by the CCI does not warrant an interference - The issue relating to deep discounting, preferential listing and exclusive tie-ups will be looked into in depth at the time of enquiry by the Director General only when various agreements executed by the appellants are brought to the notice of the Director General. At this stage, the petitions/appeals filed are premature and deserves to be dismissed. The learned Single Judge was justified in holding that the order passed by the CCI under Section 26(1) is an administrative order and the findings arrived at by the learned Single Judge does not warrant an interference.

The order was passed by the CCI on 6.11.2018 directing closure of the case under Section 26(2) of the Act of 2002. The present order has been passed by the CCI under Section 26(1) of the Act of 2002 on 13.1.2021, meaning thereby after a lapse of considerable long time it has been passed and in a competitive market various agreements are executed, new practices are adopted every day and merely because some other issue has been looked into by the CCI earlier, it does not mean that on the ground of res judicata the CCI cannot look into any information subsequently against the appellants. The principle of res judicata has no application in the matter under the Act of 2002 in the peculiar facts and circumstances of the case. The market place is by its very nature a constantly evolving and dynamic space - In the considered opinion of this Court, an expert body cannot be crippled or hamstrung in their efforts by application of technical rules of procedure.

In the considered opinion of this Court, by no stretch of imagination, the process of enquiry can be crushed at this stage. In case, the appellants are not at all involved in violation of any statutory provisions of Act of 2002, they should not feel shy in facing an enquiry - The writ petitions filed against the order dated 13.1.2021 and the present writ appeals are nothing but an attempt to ensure that the action initiated by the CCI under the Act of 2002 does not attain finality and the same is impermissible in law as the Act of 2002 itself provides the entire mechanism of holding an enquiry, granting an opportunity of hearing, passing of a final order as well as appeal against the order passed by the CCI. In the considered opinion of this Court, the present writ appeals filed by the appellants are devoid of merits and substance, hence, deserve to be dismissed and are accordingly, dismissed.