TMI Blog2015 (3) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... estigation is concerned is also not adjudicatory and of a preliminary/department/administrative nature only, with the person/enterprise informed/referred against being not condemned at that stage also. We have already noticed above that ordering investigation against anyone does not amount to condemning that person/enterprise. We therefore hold that the challenge by the appellant to the order dated 1st July, 2013 of the CCI on the ground of the same having been passed without giving any opportunity of hearing to the appellant, which is the enterprise informed against, has no merit. Resultantly, the appeal is dismissed. - Decided against the appellant. - LPA No. 857/2013 - - - Dated:- 3-9-2014 - MR. RAJIV SAHAI ENDLAW, J. For the Appellant : Mr. Amitabh Kumar with Ms. Divya Chaturvedi and Mr. Sameer Agarwal, Advs. For the Respondent : Mr. Rajeev Saxena Adv. for CCI. Ms. Anuradha Mukherjee with Mr. Abhijit Mittal, Advs. JUDGEMENT Rajiv Sahai Endlaw, J. - This intra-court appeal impugns the judgment dated 2nd September, 2013 (as corrected on 3rd September, 2013) of the learned Single Judge of this Court of dismissal of W.P.(C) No.4602/2013 filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing on 21st August, 2014. 5. On 21st August, 2014, the counsel for the appellant informed that though the witnesses of the appellant had been cross examined by the respondent no.3/informant in terms of the order dated 1st July, 2013 but the respondent no.2 DG was yet to submit its report to the respondent no.1 CCI. The counsel further contended that since the Competition Act is still at is nascent stage, the issue as arises for consideration in this appeal be decided since it repeatedly arises before the respondent no.1 CCI. It was his further contention that the appeal cannot be said to have become infructuous because if the appellant succeeds and it is held that the appellant ought to have been heard before the respondent no.1 CCI, in exercise of powers under Section 26(7) referred back the matter to the respondent no.2 DG for allowing such cross examination, the entire proceedings conducted by the respondent no.2 DG thereafter would be non est and of no avail. Though we suggested to the counsel for the appellant that since, what was directed vide order dated 1st July, 2013 of the respondent no.1 CCI which is impugned in these proceedings has already happened, we can disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the meaning of Section 19(1) of the Act to the respondent no.1 CCI, of the appellant having indulged in contravention of the provisions of Section 3(1)/4(1) of the Act. The respondent no.1 CCI vide order dated 28th December, 2011, in exercise of powers under Section 26(1) of the Act, passed an order stating that on the basis of the information furnished by the respondent No.3/informant, there existed a prima facie case against the appellant and accordingly directed investigation to be conducted by the respondent no.2 DG. Notice was also issued to the appellant, of the application of the respondent no.3/informant under Section 33 of the Act for interim relief. The respondent no.2 DG also, in exercise of investigative powers under Section 41 and Section 36 (2) of the Act, sought certain information from the appellant. (b) The respondent no.1 CCI, vide order dated 8th February, 2012 dismissed the application of the respondent no.3/informant for interim relief. The appellant, in the meanwhile submitted the information sought by the respondent no.2 DG. (c) The respondent no.2 DG submitted a report dated 3rd December, 2012 to the respondent no.1 CCI inter alia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine the witnesses of the appellant. 10. In accordance with the order dated 1st July, 2013, the respondent no.2 DG on 15th July, 2013 issued summons to the witnesses of the appellant for being cross examined by the respondent no.3/informant. 11. The appellant then filed the writ petition from which this appeal arises, challenging the order dated 1st July, 2013 on the ground that the same had been passed without issuing notice to and without hearing the appellant. 12. For proper appreciation of the legal question which arises for consideration, it is apposite to set out herein below Section 19(1) and Section 26 in entirety, of the Act:- 19. Inquiry into certain agreements and dominant position of enterprise - (1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on its own motion or on - (a) receipt of any information, in such manner and accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or (b) a reference made to it by the Central Government or a State Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (7) If, after consideration of the objections or suggestions referred to in sub Section (5), if any, the Commission is of the opinion that further investigation is called for, it may direct further investigation in the matter by the Director General or cause further inquiry to be made in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act. (8) If the report of the Director General referred to in sub-Section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act. 13. The learned Single Judge dismissed the writ petition, finding /observing/holding:- (a) that neither Section 26(1) provides for any opportunity of hearing to the person against whom information in terms of Section 19 is received nor Section 26(7) provides for any such hearing to such a person before further investigation is directed by the CCI; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (i) if the law does not mandate issuance of notice to the affected party before directing investigation to be made by the DG, there is no reason to imply such a notice before directing further investigation in exercise of powers under Section 26(7); (j) as far as the affected party is concerned, there is no difference between direction for investigation or direction for further investigation since any further investigation by the DG would only be in continuation of the investigation carried out earlier; (k) the order directing further investigation cannot prejudicially affect the person against whom information is provided or a reference is made; an order of this nature does not visit the person against whom information is provided or a reference is made with any civil consequences nor does it impair any legal right of such a person; thus the principles of audi alteram partem would have no application at this stage; and, (l) Regulation 41(5) of the 2009 Regulations supra also empowers the CCI and the DG to direct evidence of a party to be led and if deem necessary, grant an opportunity to the other party to cross examine the person giving the evidence; the CCI vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd suggestions to such documents. 71. The intimation received by the Commission from any specific person complaining of violation of Section 3(4) read with Section 19 of the Act, sets into motion, the mechanism stated under Section 26 of the Act. Section 26(1), as already noticed, requires the Commission to form an opinion whether or not there exists a prima facie case for issuance of direction to the Director General to conduct an investigation. This section does not mention about issuance of any notice to any party before or at the time of formation of an opinion by the Commission on the basis of a reference or information received by it. Language of Sections 3(4) and 19 and for that matter, any other provision of the Act does not suggest that notice to the informant or any other person is required to be issued at this stage. In contradistinction to this, when the Commission receives the report from the Director General and if it has not already taken a decision to close the case under Section 26(2), the Commission is not only expected to forward the copy of the report, issue notice, invite objections or suggestions from the informant, the Central Government, the State Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enquired from the counsel for the appellant whether not it would be illogical to hold that though while ordering investigation, no opportunity of hearing is required to be given to the person ordered to be investigated against, such a person is required to be heard before further investigation is ordered. The only answer of the counsel for the appellant was that the legislature itself having provided so, the CCI cannot go against the law of which it is the creation. 20. Though we can think of another answer, i.e. that though it may not be necessary to give an opportunity of hearing before the CCI forms a prima facie opinion and orders investigation but once the DG on investigation has found the information to be wrong and the person/enterprise informed/referred against of being not guilty of any contravention, such person, before further investigation has a right of hearing, but we find the Courts to have held otherwise. 21. The Supreme Court in Sri Bhagwan Samardha Sreepada Vallabha Venkata Vishwandadha Maharaj v. State of Andhra Pradesh [1999] 5 SCC 740, in the context of Section 173(8) of the Code of Criminal Procedure, 1973 (and which saves the power of the Magistrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law that the Magistrate, while directing further investigation or the Sessions Judge while exercising jurisdiction under Section 319 of the Cr.P.C. is required to hear the accused. It was held that the accused has no right to be heard at that stage and thus the question of hearing him at that stage does not arise. Similarly, in Pritish v. State of Maharashtra [2002] 1 SCC 253 even in relation to a proceeding under Section 340 of the Cr.P.C., it was held that a person complained against has no right to be heard in the inquiry, whether he should be tried for the offence or not but such a legal right is envisaged only when the Magistrate summons him - then he has a right to participate in the pre-trial inquiry and to satisfy the Magistrate that he is entitled to be discharged. 24. The position in law is thus quite clear. There is no right of the accused to be heard, before the Magistrate or the Sessions Judge directs further investigation, even where the investigation carried out has found him to be not guilty. What needs to be determined is, whether the language of Section 26 carves out an exception to the said general proposition of law. 25. The Supreme Court, in Steel Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposition of unnecessary directions or impediments which are not postulated in the plain language of the section itself and that natural justice is a term which may have a different connotation and dimension depending upon the facts of the case; (k) by carving out a distinction in para 87 of the judgment between inquisitorial and adjudicatory functions; (L) by holding in para 91 of the judgment that jurisdiction of the CCI under Section 26(1) does not contemplate any adjudicatory function and the CCI is not expected to give notice to the informant or the affected parties and hear them at length before forming its opinion, as the function is of a very preliminary nature and in fact in common parlance, it is a departmental function; at that stage CCI does not condemn any person and therefore application of audi alteram partem is not called for and that formation of a prima facie opinion departmentally (DG being one of the wings of the CCI) does not amount to an adjudicatory function but is merely of administrative nature and so, keeping the nature of function performed in terms of Section 26(1), the right of notice or hearing cannot be held to be contemplated under Section 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainment of the facts and circumstances of the case; iii. discovery of the suspected offender; iv. collection of evidence relating to commission of offence and which evidence may consist of examination of various persons including the accused and search of places or seizure of things considered necessary for the investigation and to be produced at the trial; and, v. formation of the opinion as to whether on the material collected there is a case to place the accused for trial. Even in Steel Authority of India Limited (supra), it was held that the power of investigation is inquisitorial in nature. 'Further investigation' cannot also be anything but inquisitorial. Thirdly, just like requiring giving of an opportunity of hearing to the person/enterprise informed/referred against at the stage of Section 26(1) was held by the Supreme Court to lead to delays, defeating the function to be performed by the CCI, similarly the giving of an opportunity of hearing to the person/enterprise informed/referred against at the stage of Section 26(7) would also lead to delays defeating the function to be performed by the CCI. The stage of Section 26(7), is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in place of or in Section 26(5) requiring the CCI to besides inviting objections from the Central Government/State Government/Statutory Authority, also from the person/enterprise referred against. Not only so, the question of the person/enterprise informed/referred against having any 'objection' or 'suggestion' when the Report of the DG is in its favour i.e. of there being no contravention, does not arise. 'Objection' or 'suggestion' at that stage, can only be of the informant or the referring Government/Statutory Authority, inspite of whose information /reference of contravention of the Act, DG has found otherwise. Besides the said reason given by the learned Single Judge, as we have noticed above, under the general law, the accused has no right of hearing at that stage. Thus, the legislature, when used the words 'parties concerned' in Section 26(5) cannot be said to have meant the person/enterprise informed/referred against, which is in the position of an accused in the said investigation. The consideration under Section 26(7) thus, of the objections/suggestions has to be of the objections/suggestions of the informant/referring Gov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute, cannot alter or vary the meaning of the statute itself, where it is unambiguous. A good discussion on the said aspect is also to be found in a decision of England and Wales High Court (Chancery Division) in BDW Trading Ltd. v. South Anglia Housing Ltd. MANU/UKCH/0234/2013 where, quoting Maxwell on interpretation of Statutes, it was inter alia held that Regulations made under a Statute provide a parliamentary or administrative contemporanea expositio of the statute but do not decide or control its meaning: to allow this would be to substitute the rule making authority for the judges as interpreters and would disregard the possibility that the regulation relied upon was misconceived or ultra vires. 31. Yet another facet which may be noticed is that Section 26(7), besides the expression further investigation also uses the expression further inquiry either by the DG or by the CCI itself. The Supreme Court, in Steel Authority of India Limited (supra) has held that 'investigation' is distinct from 'inquiry' inasmuch as investigation by the DG is only in terms of the directive of the CCI and it is only after the 'investigation' that the 'inquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedure to be followed after the Section 26(1) stage, is as under:- (I) If the report of the DG referred to in Section 26(3) recommends that there is no contravention, the CCI is to invite objections either from the referring Government/Statutory Authority if the proceedings under Section 26(1) were commenced on such reference or from the informant if the proceedings under Section 26(1) were commenced on receipt of information and formation of a prima facie opinion thereon. [Section 26(5)] (II) CCI on consideration of the aforesaid objections, may agree with the report of the DG and close the case (see para 24 of Steel Authority of India Limited). [Section 26(6)] (III) However if the CCI on the basis of the material collected by the DG and the objections, forms an opinion different from that of the DG, the nature of the proceedings changes from 'investigation' to adjudicatory and it is such proceeding which has been labelled by the Supreme Court in Steel Authority of India Limited (supra) as 'inquiry' and of which inquiry notice will have to be issued to the person/enterprise informed/referred against. (IV) However CCI, if on the basis of the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the test of maintainability of appeal thereagainst as provided in Section 53A(1) of the Act. The said provision though provides for appeal against a direction/decision under Section 26(2) and (6) i.e. the decision of the CCI on receipt of reference/information that there is no prima facie case and the decision of the CCI on consideration of the report of the DG of no contravention and the objections and suggestions invited thereon, of closure of the case, but not against directions under Section 26(7) for further investigation. For this reason also we are of the opinion that direction for further investigation under Section 26(7) is not in exercise of adjudicatory but of preliminary/departmental/administrative/inquisitorial functions. 38. We find that the same learned Single Judge who has authored the judgment impugned before us, has also dealt with the procedure to be followed by the CCI and the DG, in Grasim Industries Ltd. v. Competition Commission of India 206 [2014] DLT 42 and though the impugned judgment was cited before him but observed that the impugned judgment had no application to the issue involved in Grasim Industries Ltd. (supra). We however refrain from dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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