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2019 (9) TMI 567

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..... ithheld 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 dated 10.07.2015 to that extent. Such modification would, obviously, relate back to CCI s order, that is, the order dated 10.07.2015. The contention that the order of CCI had merged with the order passed by COMPAT is correct. However, the COMPAT order reaffirmed CCI s decision to levy penalty and that decision, having been sustained, cannot be considered as inoperative or non-existent for the period during which it was suspended on account of the stay order. The interest on such penalty being a statutory levy is required to be paid - the petitioner is required to pay interest on the delayed payment - Petition dismissed - decided against petitioner. - W.P.(C) 1100/2019 & CM APPL. 5026/2019 - - - Dated:- 11-9-2019 - MR VIBHU BAKHRU J. Advocates who appeared in this case: For the Petitioner: Mr. Udayan Jain, Mr. Kamal Sharma, Advocates. For the Respo .....

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..... nths 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 the aforesaid Regulations. CCI refutes the same and contends that the pendency of the appeal in COMPAT, in no manner, negates the liability of the petitioner to pay interest on account of delay in payment of penalty. It is further submitted that the CCI has acted within its powers in terms of the Recovery Regulations. 6. The only issue which falls for consideration of this Court is whether the petitioner is liable to pay interest to the CCI on account of delay in payment of penalty as levied upon it. Factual Background 7. In September 2013, information was filed with the CCI alleging that the petitioner, along with three other Public Sector General Insurance Companies National Insurance Company Ltd., New India Assurance Company Ltd. and Oriental Insurance Company Ltd. had indulged in cartelisation i .....

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..... 0% 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 mitigating factors, reduced the quantum of penalty from 2% of the average turnover to 1% of the relevant turnover. As a result, the total penalty imposed on the petitioner was reduced from ₹ 156.62 crores to ₹ 1.56 crores. A tabular statement of the aforesaid reduction in penalty, imposed on the said four companies, is set out below: S.no. Name of the Appellant Turnover being the premium share for 2010-11 Turnover being the premium share for 2011-12 Turnover being the premium share of 2012-13 Average Turnover for Three Years @1% of the Average turnover 1. National Insurance Co. Ltd. 7.89 .....

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..... 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 regulation, a demand notice is required to provide time of thirty days from the date of service of the demand notice to the enterprise concerned, to deposit .....

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..... aid 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 concerned: Provided further that where as a result of an order of the Competition Appellate Tribunal or t .....

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..... d 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 enhanced rates are also not payable for the period covered by the order of stay because the o .....

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..... 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 would not or ought not to have passed. There is nothing, wrong in an effort being ma .....

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