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2017 (4) TMI 1652 - HC - Law of CompetitionConstitutional validity of Regulation 35 and the proviso to Regulation 37(1) of the Competition Commission of India (General) Regulations 2009 as well as Regulation 6 of the Competition Commission of India (Lesser Penalty) Regulations 2009 - bid-rigging cartel in the market for Conveyor Belt Sector in India - commercial and confidential price sensitive information prior to submission of bids. HELD THAT - As is evident from the material available on record suo moto proceedings have been initiated under Section 26(1) of the Act and an order has been passed by CCI directing the Director General to investigate whether there is any contravention of Section 3 of the Act. The report by the Director General is yet to be submitted. Though the petitioners in the present petitions have challenged the validity of certain statutory Regulations it is apparent that their main grievance is regarding the letter dated 11.01.2016 whereby the CCI rejected the request of the petitioners for inspection of the records and supply of certified copies of the documents. A perusal of the letter dated 11.01.2016 shows that the request of the petitioners was rejected on the ground that (i) the information sought is confidential in terms of the provisions of the Act and the Regulations made thereunder and (ii) the matter has been referred to the Director General for investigation and the same is currently pending thus the request may be referred to the Director General directly in terms of the provisions of CCI (General) Regulations 2009. It is also a settled principle of law that the requirement of principles of natural justice must depend on the circumstances of the case the nature of the enquiry the rules under which the tribunal is acting the subject matter to be dealt with and the consequences that may visit a person after such enquiry from out of the decision pursuant to such enquiry - the respondents cannot be held to have committed any error in rejecting the request of the petitioners for inspection of the documents. Since the power to make subordinate legislation is derived from the enabling Act it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it. As held in Supreme Court Employees Welfare Association Vs. Union of India 1989 (7) TMI 333 - SUPREME COURT the validity of a subordinate legislation is open to question if it is ultra vires the constitution or the governing Act or repugnant to the general principles of the laws of the land or is so arbitrary or unreasonable that no fair minded authority could ever have made it. It was also held that the rules are liable to be declared invalid if they are manifestly unjust or oppressive or outrageous or directed to be unauthorized and/or violative of the general principles of law of the land or so vague that it cannot be predicted with certainty as to what it prohibited or so unreasonable that they cannot be attributed to the power delegated or otherwise disclose bad faith. Conclusion - Though delegated legislation can also be challenged as being unreasonable the unreasonableness is not to be judged in the same standard as unreasonableness of administrative action. The delegated legislation can be struck down unreasonable only if it is manifestly arbitrary or if so unreasonable that Parliament never intended to confer such power on the Regulator. It cannot be held that the impugned regulations are either arbitrary or unreasonable much less the same are contrary to the parent Act - the validity of the impugned Regulations upheld - petition dismissed.
Issues Involved:
1. Validity of Regulation 35 and the proviso to Regulation 37(1) of the Competition Commission of India (General) Regulations, 2009, and Regulation 6 of the Competition Commission of India (Lesser Penalty) Regulations, 2009. 2. Alleged contravention of Section 3 of the Competition Act, 2002, by the petitioners. 3. Denial of access to documents by the Competition Commission of India (CCI) on grounds of confidentiality. 4. Alleged violation of principles of natural justice and fundamental rights under the Constitution of India. Issue-Wise Detailed Analysis: 1. Validity of Impugned Regulations: The petitioners challenged the validity of Regulation 35 and the proviso to Regulation 37(1) of the Competition Commission of India (General) Regulations, 2009, and Regulation 6 of the Competition Commission of India (Lesser Penalty) Regulations, 2009, claiming they were arbitrary and unconstitutional. The court examined the presumption of constitutionality that applies to subordinate legislation and noted that such legislation can be challenged on grounds including lack of legislative competence, violation of fundamental rights, failure to conform to the statute, and manifest arbitrariness. The court found that the impugned regulations were not arbitrary or unreasonable and were consistent with the parent Act. Therefore, the validity of the regulations was upheld. 2. Alleged Contravention of Section 3 of the Competition Act, 2002: The CCI had passed an order directing an investigation into allegations of bid-rigging and cartelization in the conveyor belt sector, implicating the petitioners. The court noted that the formation of a prima facie opinion by the CCI under Section 26(1) is an administrative function, not an adjudicatory one, and does not require notice or hearing at this stage. The court referenced the Supreme Court's decision in Competition Commission of India v. SAIL, which clarified that the formation of a prima facie opinion does not entail civil consequences and is not subject to the principles of natural justice at this preliminary stage. 3. Denial of Access to Documents: The petitioners contended that the denial of access to documents by the CCI on grounds of confidentiality was arbitrary and illegal. The court reviewed the relevant provisions, including Section 57 of the Competition Act, which restricts the disclosure of information obtained by the CCI, and Regulation 35, which allows for confidential treatment of documents. The court concluded that the CCI's decision to deny access was consistent with the statutory framework, which allows the CCI to maintain confidentiality and reject requests for document inspection if deemed necessary. 4. Alleged Violation of Principles of Natural Justice and Fundamental Rights: The petitioners argued that the impugned regulations violated their fundamental rights under Articles 14, 19(1)(a), 19(1)(g), and 21 of the Constitution by denying them access to information necessary to defend themselves. The court reiterated that the principles of natural justice are not absolute and their application depends on the context and stage of the proceedings. The court found that at the stage of forming a prima facie opinion, the exclusion of natural justice principles was justified. Furthermore, the court held that the regulations did not violate the Constitution or the principles of natural justice, as the CCI's actions were in line with the statutory provisions and the need to maintain confidentiality. Conclusion: The court dismissed the writ petitions, upholding the validity of the impugned regulations and finding no error in the CCI's actions regarding the denial of document access and the investigation process. The court emphasized the administrative nature of the CCI's initial proceedings and the statutory framework supporting confidentiality in competition investigations.
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