9911796707
TMI Blog2023 (5) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... in violation of provisions of section 6(2) of the Act. 2. Briefly, the Appellant ITC Limited (in short "ITC") is a public limited company within the meaning of the Companies Act, 2013 having its registered office at Kolkata and the Respondent is the Competition Commission of India (in short "CCI"), a statutory body formed under section 7 of the Act. The Appellant entered into a brand purchase agreement with Johnson & Johnson Pvt. Limited ("Seller No. 1") dated 12.2.2015 for the purchase of trade mark "Savlon" along with certain inventories, technical knowhow and other promotional material ("Savlon Agreement"). This purchase of the trade mark etc. is referred to as 'Transaction-I'. The Appellant on the same date 12.2.2015 entered into another brand purchase agreement with Johnson & Johnson Pte Limited ("Seller No. II") for the purchase of the trade mark 'Shower to Shower' along with attendant knowhow and their promotional material ("Shower to Shower Agreement"). This purchase is referred to as 'Transaction-II'. 3. The Appellant further submits that on 4.3.2011, the Ministry of Corporate Affairs, Government of India issued a notification under section 54 of the Act and vide this n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiving directions from the CCI, the Appellant filed its Form - I regarding the purchase of 'Savlon' and 'Shower to Shower' trademarks on 16.2.2017, which was done without prejudice to its belief and understanding that both the transactions relating to the purchase of two trademarks did not amount to a combination under Section 5 of the Act and was therefore not required to be notified under Section 6(2) of the Act. The Appellant has further stated that the CCI vide its order dated 22.3.2017 unconditionally approved the transactions under Section 31(1) of the Act finding that there was no 'appreciable adverse effect on competition' in the defined relevant markets, but thereafter issued a show cause notice dated 29.3.2017 to the Appellant under Section 43A of the Act directing the Appellant to file a response to the show cause notice for not filing the transactions under Section 6(2) for approval of the CCI. The Appellant has stated that it filed its response to the show cause notice and presented arguments before the CCI along with written submissions, and vide the impugned order dated 11.12.2017, its arguments were rejected by the CCI and the fine of Rs. 5 Lakhs only as penalty wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 2(h) and Section 5 of the Act suggests that only the acquisition of an enterprise as defined under the Act, would amount to a combination and a harmonious reading of Section 2(h), 2(l) and Section 5 makes it clear that purchase of trademarks alone would not tantamount to acquisition of an enterprise as envisaged under Section 5 of the Act. The Learned Counsel for Appellant has also contended that the inference of the CCI that the absence of non-complete clause regarding the said transactions to conduct the same business makes the Appellant liable for notifying the said transaction is not correct, because the transactions permitted the sellers to carry on the business associated with the acquired trademarks and no assets are amounting to a business or a unit or a division of the transferor were acquired. He has, therefore, contended that both the Transactions-I and -II did not contemplate acquisition of an enterprise as is required under Section 5 of the Act and hence there was no requirement for these transactions to be notified under the provisions of Section 6(2) of the Act. 8. The Learned Counsel for Appellant has referred to the notification dated 2.3.2011 issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision under Section 54 of the Act allows the Central Government to respond to various exigencies and difficulties that might arise in the implementation of the Competition Act and regarding giving exemption to any class of enterprise if such exemption is necessary in public interest or in the interest of the security of the state. In this connection, he has cited the judgment of Hon'ble Supreme Court in the matter of Kailash Nath vs. State of U.P & Ors. (AIR 1957 SC 790), wherein it is held that notification which is made using powers conferred by the statute has statutory force and validity. He has also referred to the judgment of Hon'ble Supreme Court in the matter of Collector of Central Excise, Bombay-1 and Anr. vs. M/s. Parle Exports Pvt. Ltd. (1991 1 SCC 345), wherein Hon'ble Supreme Court has held that while interpreting an exemption clause, liberal interpretation should be given and in favour of the subject of exemption. 11. Regarding the restrospective application of the De Minimis Exemption, the Learned Counsel for the Appellant has cited the judgment of Hon'ble Supreme Court in the matter of Government of India & Ors. vs. Indian Tobacco Association (2005 7 SCC 396) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion had been issued. 14. The Learned Counsel for Appellant has referred to the judgment of Hon'ble Supreme Court in the matter of Union of India and Ors vs. Indusind Bank Ltd. (2016 9 SCC 720) to point out that when substantive changes in law are made, then they are remedial in nature and cannot have retrospective effect. He has further pointed to the judgment of Hon'ble Supreme court in the matter of Shyamsunder and Anr. vs. Ram Kumar & Anr. [2001 8 SCC 24] to claim that if an enactment is expressed in a certain language, which is capable of interpretation as either having prospective or retrospective effect, then the interpretation should be construed as prospective only. To buttress his arguments, he has contended that in the new De Minimis Exemption Notification dated 27.3.2017, there is no mention that the said notification is retrospective in nature, and therefore, it would not be correct to construe its retrospective operation. Further, he has argued that the Press Release regarding the revised De Minimis notification does not have statutory force as that of the notification and therefore, cannot alter the statutory position prescribed by law. 15. Regarding the issue of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the issue of imposition of penalty may be considered and dealt with in view of the Ely Lilly judgment of the NCLAT and other matters may be left open. 18. Regarding the other contention of the Appellant that, in view of the De Minis Notification and exemption under item 3 of the Schedule I of the Combination Regulations, the said transactions were not to be notified because the ITC was under a bonafide belief that the transactions did not require to be notified under Section 6(2) since the Transactions had been held as not violating Section 6(1) is a question of law, which we will not deal in this judgment as the parties have pressed that only the question of imposition of penalty may be considered in this judgment. 19. We note that section 5 of the Act stipulates that only certain transactions, only such 'combinations' would require to be notified that exceed the thresholds as stated in section 5(a) (i) & (ii) of the Act. A perusal of 5 makes the following clear insofar as jurisdictional thresholds are concerned when considering the assets and turnover of the parties to the transaction or the those of the group of companies of which they are part :- JURISDICTIONAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in India or turnover of not more than rupees one thousand crores in India, from the provisions of section 5 of the said Act for a period of five years from the date of publication of this notification in the official gazette. Where a portion of an enterprise or division or business is being acquired, taken control of merged or amalgamated with another enterprise, the value of assets of the said portion or division or business and or attributable to it, shall be the relevant assets and turnover to be taken into account for the purpose of calculating the thresholds under section 5 of the Act. The value of the said portion or division or business shall be determined by taking the book value of the assets as shown, in the audited books of accounts of the enterprise or as per statutory auditor's report where the financial statement have not yet become due to be filed, in the financial year immediately preceding the financial year in which the date of the proposed combination falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards further accelerating India's economic growth. " (emphasis supplied) 22. Now follow the judgment of this Tribunal in the matter of Eli Lilly and Company Vs. CCI (TA(AT) Company Appeal No. 03 of 2017, wherein this Tribunal dealt with the issue of calculation of the assets and turnover of the company from which such assets and turnover are being acquired. The relevant part of the Eli Lilly judgment is as follows:- "26. The intention behind the Notification dated 04.03.2011 issued by the Central Government under Section 54 of the Act was to exempt certain transactions due to their small size. The intention of the Government is made clear by the Press Release dated 30.03.2017 where it is stated that "combinations falling within the threshold limits would not require to be filed before the Competition Commission of India. The reform is in pursuance of the Government's objective of promoting Ease of Doing Business in the country and is expected to make India a more attractive destination for Foreign Direct Investment. The notification is expected to enable greater freedom to industry in taking legitimate business decisions towards further accelerating India's econom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... left over with the seller after the acquisition will not have any role to play in the context of the business of the purchaser/acquirer after the acquisition. On this basis, this Tribunal set aside the order of CCI in the Eli Lilly case. 25. Following the judgment of this Tribunal in the Eli Lilly case, we are of the clear view that the principle laid down in this judgment will apply in the facts of the present case too. 26. We also take note of the judgment in the matter of Commissioner of Income Tax v Gold Coin Health Foods Pvt. Ltd. [(2008) 9 SCC 622] and also in the matter of Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Limited [(2015) 1 SCC 1], in which Hon'ble Supreme Court has held as follows:- "If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect." 27. We note that the relevant turnover attributable to the two trademark ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
