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TMI Blog2022 (10) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ram Polali, learned counsel for 2nd respondent. Facts of the Case :- 3. Petitioner No. 1 is a company exclusively involved in the maintenance, financing, development and operation of Rajiv Gandhi International Airport, Hyderabad (RGIA) by virtue of a concession agreement dated 20-12-2004 entered into between itself and the Government of India. Clause 3.2.2 of the said concession agreement granted exclusive rights to the 1st Petitioner to grant third party service providers rights to carry out activities and business to maintain and operate RGIA. Respondent No. 2 is one such third party service provider which provides Maintenance, Repair & Overhaul (MRO) services including Line Maintenance Services to aircrafts landing at RGIA. According to the 2nd Respondent, Line Maintenance Services can only be provided from the premises of RGIA. 4. Pursuant to the concession agreement, Petitioner No. 1 entered into a license agreement dated 20-12-2011 with the Respondent No. 2 granting an area of 96.04 Sq. Mts. at RGIA for Setting up and operating Airline Engineering Maintenance Office to provide line maintenance services for a period of three years. The said license agreement dated 20-12-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed vide order dated 16-8-2019 and upheld the order dated 2-7-2019. 8. While the proceedings were pending in W.P. No. 13298 of 2019, Respondent No. 2 filed information under S.19(1) of the Competition Act, 2002 (hereinafter 'the Act 2002') before the Competition Commission of India ((hereinafter referred to as CCI for brevity)/Respondent No. 1 on 7-10-2019. In the said information, Respondent No. 2 alleged that by virtue of the concession agreement dated 20-12-2004, Respondent No. 1 was in dominant position in the market of providing Line Maintenance Services at RGIA. Respondent No. 2 alleged that all third-party service providers providing MRO services including the Line Maintenance Services are subject to the control of Petitioner No. 1 as the same can only be provided from RGIA's premises and Petitioner No. 1 has discretion in granting licenses to such third-party service provides to operate businesses at RGIA. Respondent No. 2 alleged that the license agreement was not extended by Petitioner No. 1 to favour Petitioner No. 2 (subsidiary of GMR Air Cargo and Aerospace Engineering Limited (GACASEL) which in turn is a wholly owned subsidiary of Petitioner No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titors (third party service providers) and they cannot enter the relevant market of providing Line Maintenance Services without being present RGIA's premises. Respondent No. I also noted that Petitioner No. 1 denied market access to Respondent No. 2 by not extending the license agreement. Respondent No. 1 further noted that the allegations by Respondent No. 2 that Petitioner No. 1 is trying to poach its clients and employees suggests exclusionary motive. 13. Respondent No. 2 is a significant market player in providing line maintenance services and denial of market access along with alleged exclusionary motive of Petitioner No. 1 suggests that it tried to eliminate competition to favour Petitioner No. 2. Therefore, Respondent No. 1 noted that the allegations along with the material placed before it, prima facie, suggests that Petitioner No. 1 contravened S.4(2)(b)(i), S.4(2)(e) and S.4(2)(a)(i) of the Act, 2002. Respondent No. 1 directed the Director General to conduct investigation. 14. On 4-10-2019, Respondent No. 1 dealing with the application filed under S.33 of the Act, 2002 by Respondent No. 2 seeking interim reliefs, inter alia, to continue the business of Line Maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , any determination of issues by Respondent No. 1 will amount to determination of issues already pending in W.P. No. 13298 of 2019. v. The impugned order dated 3-10-2019 suffers from errors apparent on the face of the record as it failed to consider and note the order dated 16-8-2019 in W.A. No. 677 of 2019. The said impugned order determined Petitioner No. 1's dominant position and market shares of the players relying on wrong facts. Respondent No. 1 only took into account figures in relation to foreign airlines and not domestic airlines to determine market share of the competitors. Further, Respondent No. 1 considered downstream market share of providing Line Maintenance Services based on number of airlines (customers) and not the number of flights serviced by the competitors. Had Respondent No. 1 considered number of flights to consider market share it would reach a conclusion that Petitioner No. 2 was the dominant player in the downstream market. Respondent No. 1 failed to consider the market share of other competitors like AI SATS which also provide Line Maintenance Services. vi. Furthermore, the relevant geographic market determined by Respondent No. 1 is unsustainabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and is based on prima facie opinion and requires no adjudication. The said order is not a final order on merits and causes no prejudice to the Petitioners. Further, S.26(1) does not contemplate an opportunity of hearing before directing investigation. Therefore, at such a preliminary stage cannot interfere with an order directing investigation under Article 226. Reliance was placed on CCI v. SAIL Steel Authority of India Ltd. (2010) 10 SCC 744. iii. Respondent No. 1 is statutorily obligated under S.18 to eliminate practices having adverse impact on competition and is obligated to promote and sustain competition along with protecting the interests of the consumers. Therefore, the impugned order dated 3-10-2019 was passed in exercise of the said jurisdiction. iv. The reliefs claimed in W.P. No. 13298 of 2019 have no bearing on the proceedings before Respondent No. 1 as the later deals with competition law effecting an entire market and consumers whereas the former deals with a commercial dispute between two private parties. The issues before this Court in W.P. No. 13298 of 2019 dealt with constitutional law and it could not have gone into the issues of competition law, the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction of this Court under article 226 of the Constitution of India. 1st respondent lacks jurisdiction. On the other hand, the respondents contended that the impugned orders were passed under S.26(1) by prima facie determining the existence of possible abuse of dominant position by the 1st Petitioner. The Respondents contended that the reliefs claimed in W.P. No. 13298 of 2019 has no bearing on the proceedings before Respondent No. 1 as the latter deals with competition law issues and the former dealt with violation of Articles 14 and 19 along with violation of principles of natural justice. Therefore, the main question before this Court is whether the order dated 3-10-2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No. 2 in W.P. No. 13298 of 2019 and the same is pending before this Court. 20. Before deciding the issues at hand, it is apposite to discuss the scope of CCI's (Respondent No. l) power and jurisdiction under S.26(1) of the Act, 2002 vis-a-vis the scope of interference by High Court under article 226 of Constitution of India. 21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es a direction or interim order which is at the preliminary stage and of preparatory nature without recording findings which will bind the parties and where such order will only pave the way for final decision, it would not make that direction as an order or decision which affects the rights of the parties and therefore, is not appealable." 22. In Excel Crop Case Ltd. v. CCI (2017) 8 SCC 47, the Supreme Court held that investigation ordered under S.26(1) of the Act, cannot be interfered with, as the proceedings are only at the preliminary stage. It is only after the investigation that the CCI can reach a conclusion whether competition law was breached. Therefore, an order directing investigation cannot be interfered with. The relevant paragraph is extracted below : "45. If the contention of the appellants is accepted, it would render the entire purpose of investigation nugatory. The entire purpose of such an investigation is to cover all necessary facts and evidence in order to see as to whether there are any anti-competitive practices adopted by the persons complained against. For this purpose, no doubt, the starting point of inquiry would be the allegations contained in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2010) 4 SCC 785 : (2010) 3 SCC (Civ) 725 : (2010) 2 SCC (Cri) 1201 : (2010) 2 SCC (L&S) 133], wherein this Court was primarily concerned with the High Court dismissing the appeals without recording any reasons. The Court also examined the practice and requirement of providing reasons for conclusions, orders and directions given by the quasi-judicial and administrative bodies. *** 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts under article 226 of the Constitution of India. It is relevant to note that the said decision of the Division Bench was upheld by the Supreme Court vide order dated 9-08-2021 in SLP(C) No. 11558 of 2021. The relevant paragraphs are extracted below: 19. The Hon'ble Supreme Court has held that in order to avoid anti-competitive agreements, which causes harm to consumers by fixing the prices, limits outputs or allocating the markets, the Indian Parliament has enacted Competition Act, 2002. The competition law enforcement deals with anti-competitive practices and in those circumstances, once the CCI forms a prima facie opinion on receipt of a complaint which is given under section 26(1) of the Act of 2002, directs the Director General to conduct an investigation, at that initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act, which is to prevent practices having appreciable adverse effect on the competition. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance. 15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet. 16. No doubt, in some very rare and exceptional cases the High Court can quash a charge sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter." 22. The Hon'ble Supreme Court in the aforesaid ease has held that unless and until the show-cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants want this Court to hold that the appellants have not committed breach of the statutory provisions as contained under the Act of 2002. In the considered opinion of this Court, unless and until a detailed enquiry is conducted by the CCI, the question of giving a finding in respect of the violation of the statutory provisions, does not arise. 27. Keeping in view the law laid down by the Hon'ble Supreme Court in the case of CCI v. SAIL, the order passed under section 26(1) does not set into motion an unstoppable process that necessarily culminates into an adjudication against the entity against whom an enquiry is initiated. In fact, Section 26 of the Act of 2002 read as a whole, discloses a comprehensively and thoughtfully construed, stepwise scheme which contemplates not only a fair hearing to the concerned parties at the appropriate stage, but it is characterized by an inherent robustness by which the proceedings may culminate in closure. 28. In the present case, earlier also there was an information submitted against the appellants and the matter is ended in closure (AIOVA case). The Director General after conducting an enquiry recommended closure by submitting an inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence.' In the aforesaid case, the Hon'ble Supreme Court has placed reliance upon its earlier judgment delivered in the case of Martin Burn Ltd. v. R.N. Banerjee, reported in (1958) SCR 534. Keeping in view the aforesaid definition of prima facie case and after going through the material on record, this Court is of the opinion that the CCI has rightly exercised its jurisdiction based upon the prima facie information on receipt of a complaint and therefore, in the considered opinion of this Court, the quashment of the same does not arise.' 24. Similarly, the Madras High Court in TANGEDCO v. Competition Commission of India 2021 SCC OnLine Mad 6549 refused to interfere in the investigation ordered under S.26(1) under article 226 and held as follows: "55. In the present case, perusal of the allegations raised by the 3rd respondent would reveal that there is a prima facie case that the TANGEDCO/writ petitioner enjoys dominant position in respect of electricity in the State of Tamil Nadu. This factum is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under the Competition Act." 25. The Madras High Court in MRF Limited v. Ministry of Corporate Affairs 2022 SCC OnLine Mad 50 has held as follows: "42. A reading of the above provision shows that on receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter. As rightly observed by the learned single Judge, an order for investigation passed under section 26(1) is a preliminary order and does not give room for conclusion on the allegation made against the erring party except for forming an opinion with regard to the existence of a prima facie case. On the other hand, orders passed under section 26(2), 26(6) are final orders closing the matter by coming to a conclusion that no prima facie case exists even at the threshold view of the matter or when the Director General, after investigation, makes recommendation to the effect that there is no contravention and such recommendation is agreed by the Commission. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight or obligation of the parties to the lis. The direction issued under section 26(1) being inquisitorial, preparatory and preliminary in nature, the same does not affect the rights of any party, because it is departmental in nature and does not cause any prejudice giving rise to civil consequences. Moreover, the order going to be passed by the Commission under section 26(2) being a final order putting an end to the information received in any one of the specified modes, is only appealable. Therefore, the issue No. (ii) is also answered against the appellant." 26. From the above decisions, it is clear that an order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. A relief for breach of fundamental rights is independent from a relief sought aggrieved by abuse of dominance. Respondent No. 1/CCI was well within its jurisdiction to entertain information under S.19(1) of the Act, and order investigation on the basis of prima facie opinion. 31. The Petitioners relying on Bhati Airtel (supra) contended that when matter was pending before another authority, CCI cannot direct investigation as it may lead to contrary findings. The said contention cannot be accepted. The decision of Bharti Airtel Ltd.'s case (supra), is distinguishable on facts. In the said case, the Court held that CCI cannot decide the issues pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not only arise out of the telecom licences granted to the service providers, the service providers are governed by the TRAI Act and are supposed to follow various regulations and directions issued by TRAI itself." 32. In the present case, there is no threat of contrary findings as breach of principles of natural justice by one party towards other has little or no bearing on abuse of dominance which effects the entire market. Further, the said contention loses its relevance as W.P. No. 13298 of 2019 was withdrawn and the same was recorded in order dated 2-1-2020. Therefore, given that no parallel proceedings are pending at this juncture, this Court cannot interfere with the investigation ordered vide order dated 3-10-2019. 33. Petitioners contended that any interim order passed in furtherance of order dated 4-10-2019 directing the Petitioners to appear to decide the interim reliefs will be contrary to orders dated 16-8-2019 passed in W.A. No. 677 of 2019. Petitioners contended that the Division Bench of this Court gave a categorical finding that the dispute between Petitioner No. 1 and Respondent No. 2 is commercial in nature and the relationship between them is of a licensor an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l function. At that stage, it does not condemn any person and therefore, application of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (the Director General, being appointed by the Central Government 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." 36. The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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