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TMI Blog2017 (4) TMI 1652X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 recording a prima facie opinion that the acts and conduct of the Opposite Parties (OP) mentioned therein is in contravention of Section 3 of the Act and thus directing the Director General (DG) to make an exhaustive investigation into the allegations. The petitioner No.1 in W.P.(C) No.1416/2016 i.e. Somi Conveyor Beltings Ltd. as well as the petitioner in W.P.(C) No.1969/2016 i.e. Premier Rubber Mills have been shown as OP-13 and OP-11 respectively. The allegation is that the Opposite Parties have been indulging in bid-rigging cartel in the market for Conveyor Belt Sector in India and indulged in exchange of the commercial and confidential price sensitive information among themselves prior to submission of bids. 3. The petitioners in both the writ petitions claim to be the manufacturers of conveyor belts. They were served with the notice dated 27.05.2015 issued by the Director General, Competition Commission of India/respondent No.3 herein calling upon to furnish the information/documents specified therein stating that in the investigation being conducted in Case No.DG/CC/IW/1/33/2013 in pursuance of the order of the Competition Commission of India under Section 26(1) of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be furnished. The said request was followed by reminders dated 08.12.2015, 11.12.2015 in which while explaining the reasons for seeking permission to inspect the records, the details of the information required have also been mentioned. 6. On 18.12.2015, the respondent No.3 issued a notice under Section 36(2) read with Section 41(2) of the Act calling upon the petitioner No.1 to submit its reply and clarification in respect of the copies of Ex.15 containing print out of e-mails relating to its company, which contained the details of discussion between the company and its competitor bidders regarding price and quantity in respect of tenders issued by PSUs/customers for supply of conveyor belts. In response to the same, the Managing Director of the petitioner No.1 filed his affidavit before CCI dated 27.12.2015. Ultimately by the impugned notice dated 11.01.2016, petitioner No.1 was informed that its request for inspection of records and supply of certified copies of documents cannot be acceded to since the said information based on which prima facie order for investigation has been passed by CCI is confidential in terms of the provisions of the Competition Act read with the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitutional. 9. It is also contended that the impugned Regulations are not in conformity with the provisions of the Act since Section 36 mandates that CCI shall be guided by the principles of natural justice. The further contention is that Section 57 of the Act mandates that information relating to any enterprise shall not disclosed without the previous permission in writing of the enterprise which means that there is no absolute embargo to furnish the information. Confidentiality under Regulation 35 and the proviso to Regulation 37 and Regulation 6 cannot override the mandate under Section 57. Hence, impugned Regulations are ultra vires Section 57 apart from being in violation of Section 36. 10. On facts, it is contended that the allegations being formation of cartel, it is necessary to provide the petitioner with all the documents, witness statement, etc. on record. Hence, an opportunity of inspection should have been granted at the very first instance. 11. At the outset, we may refer to Section 36 and Section 57 of the Competition Act, 2002 which read as under: "36. Power of Commission to regulate its own procedure. - (1) In the discharge of its functions, the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia (General) Regulations, 2009 (for short 'CCI General Regulations, 2009'). The impugned Regulation 35 and Regulation 37(1) may be reproduced hereunder: "35. Confidentiality. - (1) The Commission shall maintain confidentiality of the identity of an informant on a request made to it in writing. (2) Any party may submit a request in writing to the Commission or the Director-General, as the case may be, that a document or documents, or a part or parts thereof, be treated confidential. (3) A request under sub-regulation (2) may be made only if making the document or documents or a part or parts thereof public will result in disclosure of trade secrets or destruction or appreciable diminution of the commercial value of any information or can be reasonably expected to cause serious injury. (4) A request under sub-regulation (2) shall be accompanied with a statement setting out cogent reasons for such treatment and to the extent possible the date on which such confidential treatment shall expire. (5) Where such document or documents, or a part or parts thereof, form part of the party's written submissions, the party shall file a complete version with the words "restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd and secured in a sealed envelope or any other appropriate container, bearing the title, the docket number of the proceeding, the notation "confidential record under regulation 35" and the date on which confidential treatment expires. (14) If the Commission includes in any order or decision or opinion, information that has been granted confidential treatment under this regulation, the Commission shall file two versions of the order or decision or opinion. The public version shall omit the confidential information that appears in the complete version, be marked "subject to confidentiality requirements under regulation 35" on the first page, shall be served upon the parties, and shall be included in the public record of the proceeding. The complete version shall be placed in the confidential record of the proceeding as provided in sub-regulation (13). (15) Any person or party, including any officer or employee appointed by the Commission under sub-section (1) of section 17 of the Act and any expert or professional engaged by the Commission under sub-section (3) of section 17 of the Act or any expert called upon to assist the Commission under sub-section (3) of section 36 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntravention 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. 15. As held in Competition Commission of India v. SAIL; (2010) 10 SCC 744, formation of a prima facie opinion departmentally, i.e., by the Director General appointed by the Central Government to assist CCI does not amount to an adjudicatory function but is merely of administrative nature. At that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53-A of the Act. 38. In contradistinction, the direction under Section 26(1) after formation of a prima facie opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to one of its own wings departmentally and is without entering upon any adjudicatory process. It does not effectively determine any right or obligation of the parties to the lis. Closure of the case causes determination of rights and affects a party i.e. the informant; resultantly, the said party has a right to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations. 39. Wherever, in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) of the Act, as the case may be. This obviously means that wherever the legislature has intended that notice is to be served upon the other party, it has specifically so stated and we see no compelling reason to read into the provisions of Section 26(1) the requirement of notice, when it is conspicuous by its very absence. Once the proceedings before the Commission are completed, the parties have a right to appeal under Section 53-A(1)(a) in regard to the orders termed as appealable under that provision. Section 53-B requires that the Tribunal should give, parties to the appeal, notice and an opportunity of being heard before passing orders, as it may deem fit and proper, confirming, modifying or setting aside the direction, decision or order appealed against. xxx xxx xxx 78. Cumulative reading of these provisions, in conjunction with the scheme of the Act and the object sought to be achieved, suggests that it will not be in consonance with the settled rules of interpretation that a statutory notice or an absolute right to claim notice and hearing can be read into the provisions of Section 26(1) of the Act. Discretion to invite, has been vested in the Commission, by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment to assist the Commission, is one of the wings of the Commission itself) does not amount to an adjudicatory function but is merely of administrative nature. At best, it can direct the investigation to be conducted and report to be submitted to the Commission itself or close the case in terms of Section 26(2) of the Act, which order itself is appealable before the Tribunal and only after this stage, there is a specific right of notice and hearing available to the aggrieved/affected party. Thus, keeping in mind the nature of the functions required to be performed by the Commission in terms of Section 26(1), we are of the considered view that the right of notice or hearing is not contemplated under the provisions of Section 26(1) of the Act. xxx xxx xxx 93. We may also usefully note that the functions performed by the Commission under Section 26(1) of the Act are in the nature of preparatory measures in contrast to the decision- making process. That is the precise reason that the legislature has used the word "direction" to be issued to the Director General for investigation in that provision and not that the Commission shall take a decision or pass an order directing inqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inment of the fairness and it has its own limitations, it has further been held in Natwar Singh Vs. Director of Enforcement (supra): "26. Even in the application of the doctrine of fair play there must be real flexibility. There must also have been caused some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with and so forth. Can the courts supplement the statutory procedures with requirements over and above those specified? In order to ensure a fair hearing, courts can insist and require additional steps as long as such steps would not frustrate the apparent purpose of the legislation. xxx xxx xxx 29. It is thus clear that the extent of applicability of the principles of natural justice depends upon the nature of inquiry, the consequences that may visit a person after such inquiry from out of the decision pursuant to such inquiry. 30. The right to fair hearing is a guaranteed right. Every person before an authority exercising t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. Such a fair reading of the provision would not amount to supplanting the procedure laid down and would in no manner frustrate the apparent purpose of the statute. xxx xxx xxx 34. As noticed, a reasonable opportunity of being heard is to be provided by the adjudicating authority in the manner prescribed for the purpose of imposing any penalty as provided for in the Act and not at the stage where the adjudicating authority is required merely to decide as to whether an inquiry at all be held into the matter. Imposing of penalty after the adjudication is fraught with grave and serious consequences and therefore, the requirement of providing a reasonable opportunity of being heard before imposition of any such penalty is to be met. In contradistinction, the opinion formed by the adjudicating authority whether an inquiry should be held into the allegations made in the complaint are not fraught with such grave consequences and therefore the minimum requirement of a show-cause notice and consideration of cause shown would meet the ends of justice. A proper hearing always include, no doubt, a fair opportunity to those who are parties in the controversy for correcting or contradict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being in force. Further, Regulation 35 of General Regulations 2009 expressly provides that the commission shall maintain confidentiality of the identity of an informant, a document or documents or a part thereof on a request made by the informant. Such confidential treatment may be given by the CCI or DG, on being satisfied, to any other information or document or part thereof also in respect of which no request has been made by the informant or the party which has furnished such information or document. Though Regulation 37 enables a party to the proceedings to inspect the documents or records submitted during proceedings or to obtain copies of the same by making an application accompanied with the specified fees, the same is subject to the restriction on disclosure of information as provided under Section 57 of the Act. Thus, it is clear that the entitlement of a party to the proceedings to inspect the documents or to obtain copies of the same is not absolute and it is always open to CCI to reject permission for inspection or furnishing copies if it is of the view that the documents/information require confidential treatment. 19. Regarding the validity of the subordinate legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can also be a ground to question the subordinate legislation, it was observed by the Supreme Court in Indian Express Newspapers v. Union of India; (1985) 1 SCC 641: "77. In India arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. In India any enquiry into the vires of delegated legislation must be confined to the grounds on which plenary legislation may be questioned, to the ground that it is contrary to the statute under which it is made, to the ground that it is contrary to other statutory provisions or that it is so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. 78. That subordinate legislation cannot be questioned on the ground of violation of principles of natural justice on which administrative action may be questioned has been held by this Court in Tulsipur Sugar Co. Ltd. v. Notified Area Committee, Tulsipur [AIR 1980 SC 882 : (1980) 2 SCR 1111 : (1980) 2 SCC 295], Rameshchandra Kachardas Porwal v. State of Maharashtra [(1981) 2 SCC 722 : AIR 1981 SC 1127 : (1981) 2 SCR 866] and in Bates v. Lord Hailsham of St. Marylebone [(1972) 1 WLR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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