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2019 (9) TMI 567

..... on account of delay in payment of penalty as levied upon it? - HELD THAT:- It is clear from the plain reading of Regulation 5 of the Recovery Regulations, that simple interest at the rate of one and one half per cent for every month, or part of the month, commencing from the date immediately after expiry of the period mentioned in the demand notice, is payable. The contention that since the order passed by CCI had been stayed, there was no delay in making the penalties, is unsustainable. The said issue is no longer res integra - In the STATE OF RAJASTHAN & ANR. VERSUS J.K. SYNTHETICS LTD. & ANR. [2011 (7) TMI 1300 - SUPREME COURT], the Supreme Court had examined several other decisions and had authoritatively reiterated the position that wherever an interim order or stay is granted, the beneficiary of the interim order is bound to pay interest on the amount withheld or not paid by virtue of the interim order unless the final order indicates otherwise. It is material to note that the CCI had found the petitioner to be falling foul of Section 3 of the Act. This finding was not disturbed by COMPAT. The COMPAT had merely reduced the penalty and had modified CCI’s order da .....

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..... violating the provisions of Section 3 of the Act. The petitioner had filed an appeal in Competition Appellate Tribunal (hereafter COMPAT ) challenging the imposition of the aforesaid penalty. On 05.10.2015, COMPAT granted an interim stay on the order dated 10.07.2015 and subsequently, by an order dated 16.12.2016, reduced the penalty imposed on the petitioner. During the pendency of the appeal, a demand notice dated 01.10.2015 was issued to the petitioner to pay the penalty within a period of thirty days, failing which the petitioner would be liable to pay interest at the rate of 1.5% per month. By way of demand notices dated 17.01.2017 and 14.11.2018 (which are impugned in the present petition), the CCI had called upon the petitioner to pay a sum of ₹ 32,76,000/- as interest on account of delay of fourteen months in depositing the penalty. 5. The petitioner contends that the aforesaid demand notices are illegal inasmuch as they are contravention of Regulation 5 of the Recovery Regulations ). It is submitted that the demand notice was served on the petitioner during the pendency of the appeal in COMPAT and thus, the petitioner is not liable to pay the interest in terms of th .....

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..... subject to the aforesaid companies depositing 10% of the penalty with the Registry of COMPAT. 13. In the meanwhile, a demand notice dated 01.10.2015 was issued to the petitioner, calling upon it to pay the penalty of ₹ 1,56,62,00,000/- as imposed by the order dated 10.07.2015 within a period thirty days. It was further stated that the failure to deposit the aforesaid amount within the stipulated time period would attract simple interest at the rate of 1.5% per month on the principal amount and the petitioner would be liable to pay the same. It is stated that the said notice was received by the petitioner on 07.10.2015. 14. The petitioner replied to the aforesaid demand notice on 13.10.2015, stating that COMPAT had stayed the order dated 10.07.2015 subject to deposit of 10% of the penalty amount and a sum of ₹ 15,662 crores was being deposited by the petitioner in pursuance to the said order. 15. The aforesaid appeal was disposed of by an order dated 09.12.2016, whereby the COMPAT held the aforesaid companies, including the petitioner, guilty of bid rigging and thus constituting contravention of Section 3 of the Act . However, the Tribunal after considering the mitigati .....

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..... e of payment of penalty notwithstanding the pendency of an appeal before the appellate court. In the aforesaid matter, by an order dated 8.08.2018, it was held that the petitioner is liable to pay the interest in terms of the demand notice issued by the CCI. 20. Aggrieved, the petitioner filed the present petition. 21. As observed hereinbefore, the only question that arises for consideration of this Court is whether the demand of interest on the penalty imposed by CCI, is sustainable. Submissions 22. Mr. Udayan Jain, the learned counsel appearing for the petitioner submitted that COMPAT had stayed the order imposing penalty, subject to the condition of depositing 10% of the said amount. The petitioner had complied with the said condition and therefore, the demand notice dated 01.10.2015 issued by CCI was unsustainable. He submitted that if the said demand is ignored - since it was contrary to the orders of COMPAT - there was no demand of penalty outstanding against the petitioner. He referred to Regulation 3(3) of the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011 (the Recovery Regulations) and contended that in terms of the said regulati .....

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..... of Rajasthan and Anr. v. J.K. Synthetics Limited : (2011) 12 SCC 518 in support of his contention that interest was liable to be paid even for the period when the demand had been stayed, if the interim stay of the demand is ultimately vacated. He contended that the petitioner was not absolved of its payment liability solely for the reason that it had preferred an appeal against the said demand. Reasons and Conclusion 26. At the outset, it is relevant to refer to Regulation 5 of the Recovery Regulations, which reads as under:- Interest on penalty. 5. If the amount specified in any demand notice is not paid within the period specified by the Commission, the enterprise concerned shall be liable to pay simple interest at one and one half per cent, for every month or part of a month comprised in the period commencing from the day immediately after the expiry of the period mentioned in demand notice and ending with the day on which the penalty is paid: Provided that the Commission may reduce or waive the amount of interest payable by the enterprise concerned if it is satisfied that default in the payment of such amount was due to circumstances beyond the control of the enterprise concer .....

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..... on revising the rates and fails in his attack upon the validity of the Notification and yet he is relieved of the obligation to pay the late payment surcharge for the period of stay, which he is liable to pay according to the statutory terms and conditions of supply - which terms and conditions indeed form part of the contract of supply entered into by him with the Board. We do not think that any such unfair and inequitable proposition can be sustained in law....... It is equally well settled that an order of stay granted pending disposal of a writ petition/suit or other proceeding comes to an end with the dismissal of the substantive proceeding and that it is the duty of the court in such a case to put the parties in the same position they would have been but for the interim orders of the court. Any other view would result in the act or order of the court prejudicing a party (Board in this case) for no fault of its and would also mean rewarding a writ petitioner in spite of his failure. We do not think that any such unjust consequence can be countenanced by the courts. As a matter of fact, the contention of the consumers herein, extended logically should mean that even the enhance .....

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..... e interim order passed by the Court merges into a final decision. The validity of an interim order, passed in favour of a party, stands reversed in the event of final decision going against the party successful at the interim stage. Unless otherwise ordered by the Court, the successful party at the end would be justified with all expediency in demanding compensation and being placed in the same situation in which it would have been if the interim order would not have been passed against it. The successful party can demand (a) the delivery of benefit earned by the opposite party under the interim order of the court, or (b) to make restitution for what it has lost; and it is the duty of the court to do so unless it feels that in the facts and on the circumstances of the case, the restitution would far from meeting the ends of justice, would rather defeat the same. Undoing the effect of an interim order by resorting to principles of restitution is an obligation of the party, who has gained by the interim order of the Court, so as to wipe out the effect of the interim order passed which, in view of the reasoning adopted by the court at the stage of final decision, the court earlier wou .....

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