Citations: 2020 Latest Case law 662 SC
Case Type: Civil In the Supreme Court of India Civil Appellate Jurisdiction Civil
Case No: Civil Appeal No. 3100
Decided On: 15 December, 2020
Appellant: Samir Agrawal
Respondent: Competition Commission of India & Ors
Bench: Rohinton Fali Nariman, Navin Sinha, K.M. Joseph
Statutes Referred:
Section 19 in the Competition Act, 2002
Section 26(2) in the Competition Act, 2002
Section 53T in the Competition Act, 2002
Section 3 in the Competition Act, 2002
Section 3(1) in the Competition Act, 2002
Cases Referred:
Telefonaktiebolaget lm Ericsson v. Competition Commission of India,
Walmart India Private Limited v. Central Vigilance Commission
Competition Commission of India v. Steel Authority of India and Another
Alkem Laboratories Limited and Others v. Competition Commission of India and
Others
Facts:
Samir Agrawal, an independent legal practitioner, had filed an information before the CCI alleging that the other parties (OPs), cab aggregators Ola and Uber, made useof algorithms to facilitate price fixing between them and therefore the drivers, thus violating Section 3 of the Act. The CCI closed the matter stating that there didn’t seem to be any clear case.
The commission was of the view that the worth for every ride was fixed algorithmically by processing user generated data and there was no indication of any understanding or arrangement between the OPs and their respective drivers to repair prices and affect the competition. The appellant, aggrieved with the CCI’s decision to shut the matter, preferredo file an appeal before the NCLAT assailing the impugned order on several grounds.
Issues Involved:
Who has the locus standi to approach the Competition Commission of India (“CCI”) against the anti-competitive practice of an enterprise that’s violative of provisions of 5 the Competition Act, 2002 (“the Act”)?
The difficulty that has often arisen in litigation under the Act is whether or not only an individual or an entity that has suffered some harm on account of the anti-competitive practice have a proximate cause to approach the CCI or can a person or entity with the knowledge of such an anti-competitive practice approach the Commission as a whistle-blower informant.
The lack of locus standi on the part of the informant has often been raised as a preliminary defence by the accused parties in anti-competition cases in an effort to possess the complaint dismissed at the edge. The Hon’ble Supreme Court in the judgement which was dated December 15 2020 in Samir Agarwal vs Competition Commission of India & Ors.
Observations/Obiter Dicta:
- With the question of the Informant’s locus standi out of the way, one more important aspect needs to be decided, and that is the submission of Shri Rao, that in any case, a person like the Informant cannot be said to be a “person aggrieved” for the purpose of sections 53B and 53T of the Act. Shri Rao relies heavily upon Adi Pherozshah Gandhi (supra), in which section 37 of the Advocates Act, 1961 came up for consideration, which spoke of the right of appeal of “any person aggrieved” by an order of the disciplinary committee of a State Bar Council. It was held that since the Advocate General could not be said to be a person aggrieved by an order made by the disciplinary committee of the State Bar Council against a particular advocate, he would have no locus standi to appeal to the Bar Council of India. In so saying, the Court held:
- “From these cases it is apparent that any person who feels disappointed with the result of the case is not a “person aggrieved”. He must be disappointed of a benefit which he would have received if the order had gone the other way. The order must cause him a legal grievance by wrongfully depriving him of something. It is no doubt a legal grievance and not a grievance about material matters but his legal grievance must be a tendency to injure him. That the order is wrong or that it acquits someone who he thinks ought to be convicted does not by itself give rise to a legal grievance….” (page 491)
- It must immediately be pointed out that this provision of the Advocates Act, 1961 is in the context of a particular advocate being penalized for professional or other misconduct, which concerned itself with an action in personam, unlike the present case, which is concerned with an action in rem. In this context, it is useful to refer to the judgment in A. Subash Babu v. State of A.P., (2011) 7 SCC 616, in which the expression “person aggrieved” in section 198(1)(c) of the Code of Criminal Procedure, 1973, when it came to an offence punishable under section 494 of the Indian Penal Code, 1860 (being the offence of bigamy), was under consideration. It was held that a “person aggrieved” need not only be the first wife, but can also include a second “wife” who may complain of the same. In so saying, the Court held:
- “ Even otherwise, as explained earlier, the second wife suffers several legal wrongs and/or legal injuries when the second marriage is treated as a nullity by the husband arbitrarily, without recourse to the court or where a declaration sought is granted by a competent court. The expression “aggrieved person” denotes an elastic and an elusive concept. It cannot be confined within the bounds of a rigid, exact and comprehensive definition. Its scope and meaning depends on diverse, variable factors such as the content and intent of the statute of which the contravention is alleged, the specific circumstances of the case, the nature and extent of complainant’s interest and the nature and the extent of the prejudice or injury suffered by the complainant. Section 494 does not restrict the right of filing complaint to the first wife and there is no reason to read the said section in a restricted manner as is suggested by the learned counsel for the appellant. Section 494 does not say that the complaint for commission of offence under the said section can be filed only by the wife living and not by the woman with whom the subsequent marriage takes place during the lifetime of the wife living and which marriage is void by reason of its taking place during the life of such wife. The complaint can also be filed by the person with whom the second marriage takes place which is void by reason of its taking place during the life of the first wife.”
- Clearly, therefore, given the context of the Act in which the CCI and the NCLAT deal with practices which have an adverse effect on competition in derogation of the interest of consumers, it is clear that the Act vests powers in the CCI and enables it to act in rem, in public interest. This would make it clear that a “person aggrieved” must, in the context of the Act, be understood widely and not be constructed narrowly, as was done in Adi Pherozshah Gandhi (supra). Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the Act, having been committed by an enterprise. By this sub-section, clearly, therefore, “any person” who makes an application for compensation, under sub-section (1) of section 53N of the Act, would refer only to persons who have suffered loss or damage, thereby, qualifying the expression “any person” as being a person who has suffered loss or damage. Thus, the preliminary objections against the Informant/Appellant filing Information before the CCI and filing an appeal before the NCLAT are rejected.
An instructive judgment of this Court reported as Competition Commission of India v. Steel Authority of India, (2010) 10 SCC 744 dealt with the provisions of the Act in some detail and held:
- As already noticed, in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima facie case justifying passing of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end 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.” (page 768) “101. The right to prefer an appeal is available to the Central Government, the State Government or a local authority or enterprise or any person aggrieved by any direction, decision or order referred to in clause (a) of Section 53-A [ought to be printed as 53-A(1)(a)]. The appeal is to be filed within the period specified and Section 53-B(3) further requires that the Tribunal, after giving the parties to appeal an opportunity of being heard, to pass such orders, as it thinks fit, and send a copy of such order to the Commission and the parties to the appeal.
- Section 53-S contemplates that before the Tribunal a person may either appear “in person” or authorise one or more chartered accountants or company secretaries, cost accountants or legal practitioners or any of its officers to present its case before the Tribunal. However, the Commission’s right to legal representation in any appeal before the Tribunal has been specifically mentioned under Section 53-S(3). It provides that the Commission may authorise one or more of chartered accountants or company secretaries or cost accountants or legal practitioners or any of its officers to act as presenting officers before the Tribunal. Section 53-T grants a right in specific terms to the Commission to prefer an appeal before the Supreme Court within 60 days from the date of communication of the decision or order of the Tribunal to them.
- . The expression “any person” appearing in Section 53- B has to be construed liberally as the provision first mentions specific government bodies then local authorities and enterprises, which term, in any case, is of generic nature and then lastly mentions “any person”. Obviously, it is intended that expanded meaning be given to the term “persons” i.e. persons or bodies who are entitled to appeal. The right of hearing is also available to the parties to appeal.
- competition in derogation of the interest of consumers, it is clear that the Act vests powers in the CCI and enables it to act in rem, in public interest. This would make it clear that a “person aggrieved” must, in the context of the Act, be understood widely and not be constructed narrowly, as was done in Adi Pherozshah Gandhi (supra). Further, it is not without significance that the expressions used in sections 53B and 53T of the Act are “any person”, thereby signifying that all persons who bring to the CCI information of practices that are contrary to the provisions of the Act, could be said to be aggrieved by an adverse order of the CCI in case it refuses to act upon the information supplied. By way of contrast, section 53N(3) speaks of making payment to an applicant as compensation for the loss or damage caused to the applicant as a result of any contravention of the provisions of Chapter II of the Act, having been committed by an enterprise. By this sub-section, clearly, therefore, “any person” who makes an application for compensation, under sub-section (1) of section 53N of the Act, would refer only to persons who have suffered loss or damage, thereby, qualifying the expression “any person” as being a person who has suffered loss or damage. Thus, the preliminary objections against the Informant/Appellant filing Information before the CCI and filing an appeal before the NCLAT are rejected.
Rationale:
- NCLAT Ruling:
Restrictive Interpretation of Locus Standi under Section 19(1) (a) The NCLAT, after hearing the appellant, sided with the CCI on all grounds and dismissed the appeal. It held that there was no merit within the appeal because it didn’t find any legal infirmity within the CCI’s ruling. However, before delving into the merits of the appeal, the tribunal out rightly rejected the appellant’s locus standi to initiate and maintain an action against the alleged contravention of Act.
The restrictive standard of locus standi set by the tribunal raises grave concerns not just for whistle-blower informants but also for the commission and other stakeholders.This is often because whistle-blower informants have brought several useful information to the CCI’s notice within the past and have helped it nab offenders and maintain a good and competitive market.
From a clear reading of Section 19(1)(a) of the Act, it are often inferred that the commission reserves the proper to discuss any possible anti-competitive activity either on its own motion or on receiving information from ‘any person’, ‘consumer’ or ‘their association or trade association.’ However, the tribunal erred in interpreting 10 Section 19(1)(a) of the Act and restricted the scope of ‘any person’ under the said provision.
It held that an individual approaching the CCI with an information under Section 19(1)(a) can do so as long as he has suffered from any wrong . It further stated that the other interpretation of the supply would let people with oblique motives target certain enterprises. it had been held that the appellant had not suffered any quite wrong at the hands of the OPs, i.e., Ola and Uber, and as a result, he didn’t have any locus standi within the matter.
The tribunal’s restrictive locusstandi requirement not only impedes the rights of whistle-blower informants but also goes against the bare provisions of the Act and sets a nasty precedent in law. Furthermore, the tribunal’s interpretation of Section 19(1) (a) counters the judicial rulings on the locus standi requirements.
Most notably, the choice of the Competition Appellate Tribunal (COMPAT), the NCLAT’s predecessor, on the difficulty of locus standi in Shri Surendra Prasad v. Competition 11 Commission of India et al. .
The erstwhile COMPAT analysed the legislative intent behind Sections 18 and 19 read with Section 26(1) of the Act and ruled that there’s no specific qualification or condition which must be fulfilled by a person so as to file an information under Section 19(1)(a) of the Act.
2. Misplaced Fear Regarding Vexatious Litigation:
As the preamble to and Section 18 of the Act, the CCI is entrusted with the duty of maintaining fair competition within the market, safeguarding consumer interests and preventing all anti-competitive activities. It’s up to the commission to pursue all reasonable means to fulfil its duties and obligations.
As discussed within the previous segment, a clear reading of Section 19(1) (a) of the Act shows the clear and conclusive mandate provided to the CCI, which is to discuss any anti-competitive act delivered to its notice by an informant.
If the knowledge has substance and clear 12 points to any contravention of the provisions of the act, then the locus standi of the informant doesn’t matter. Moreover, as per Section 26(1) of the Act, if the knowledge doesn’t convince the CCI to make a clear opinion against the accused, it reserves the liberty to not order an investigation and dismiss the knowledge.
An equivalent was discussed and upheld in Competition Commission of India v. Steel Authority of India and Another by the Supreme Court. Additionally, the Act provides the commission with a safeguard from litigation within the sort of Section 45.
The COMPAT, in Alkem Laboratories Limited et al. v. Competition Commission of India et al., upheld the commission’s powers under Section 45 which empowers it to impose penalties up to INR 1 crore on informants who furnish false information, omit material facts or wilfully alter documents.
Therefore, it are often concluded that the tribunal’s concern regarding motivated and unscrupulous action by whistle-blower informants is misplaced.
3. Counters Legislative Intent and Restricts CCI’s Mandate
The word ‘information’ in Section 19(1)(a) of the Act replaced the sooner used ‘complaint’ through the Competition (Amendment) Act 2007. This was a results of the advice of the 44th committee on Finance which stated in its report that the term ‘information’ would be more inclusive and have a wider meaning.
This was done to reinforce the role of the CCI as a regulatory body and expand its scope. It’s 14 pertinent to notice that the broader scope of the term ‘information’ vis-à-vis ‘complaint’ was discussed and upheld in Walmart India Private Limited v. Central Vigilance Commission by the Delhi supreme court .
Thereon note, the tribunal’s interpretation of Section 19(1)(a) seems to counter the legislative intent behind the Act because it restrains the common public from approaching the CCI and successively restrains the scope of the commission.
Moreover, the CCI rulings are in rem and not in personam, i.e., the commission’s duty as a regulatory body is towards the market at large and isn’t concerned with the proper of any single person or enterprise. In Telefonaktiebolaget lm Ericsson v. Competition Commission of India, the Delhi Supreme Court stated that the target of the Act is to stop anti-competitive conduct within the market and not necessarily to grant relief to a specific informant who approaches the commission under Section 19.
Therefore, the CCI’s role as a regulatory body cares with the greater 15 good of the economy and therefore the tribunal’s locus standi requirement is sure to impede it from realizing an equivalent additionally, the NCLAT’s decision is problematic because it blatantly ignores the importance of whistle-blower informants as stakeholders in curbing anti-competitive practices.
As per the CCI’s Annual Report of 2018-19, the knowledge received from the overall public under Section 19(1)(a) of the Act has been extremely important to the CCI in identifying and punishing competition violators, and has accounted for an outsized chunk of its investigations.
Similarly, in additional mature competition jurisdictions just like the UK and Canada, whistle-blower informants are encouraged to report anti-competitive activities and aid the authorities in identifying violators. Therefore, the tribunal’s decision to exclude whistle-blower informants may be a step backwards and against international best practices.
Judgement:
The Commission executes various functions including regulatory, inquisitorial and adjudicatory. The powers conferred by the legislature upon the Commission under Sections 27(d) and 31(3) are of wide magnitude and of great ramifications. The Commission has the jurisdiction even to direct that an agreement entered into between the parties shall stand modified to the extent and within the manner, as could also be specified.
Similarly, where it’s of the opinion that the mixture has, or is probably going to possess, an appreciable adverse effect on competition but such adverse effect are often eliminated by appropriate changes to such combination, the Commission is empowered to direct such modification.”
Obviously, when the CCI performs inquisitorial, as against adjudicatory functions, the doors of approaching the CCI and therefore the appellate authority, i.e., the NCLAT, must be kept wide open publicly interest, so on sub serve the high public purpose of the Act Coming now to the merits, we’ve already began the concurrent findings of fact of the CCI and therefore the NCLAT, wherein it’s been found that Ola and Uber don’t facilitate cartelization or anti-competitive practices between drivers, who are independent individuals, who act independently of every other, so on attract the appliance of section 3 of the Act, as has been held by both the CCI and therefore the NCLAT.
We, hence find no reason to interfere with these findings. As a result, the appeal is disposed of in terms of this judgment.
Conclusion:
The NCLAT has taken a particularly conservative approach in interpreting the locus standi of whistle-blower informants. The rationale behind such an interpretation seems misplaced given the plain and straightforward language of the concerned provision.
The ruling on locus standi is regressive given the dynamic nature of markets which the CCI seeks to manage. Whistle-blower informants have helped the CCI keep pace with the rapidly changing markets by bringing in information regarding contraventions of the act which have triggered investigations.
They need been a stakeholder in maintaining and sustaining robust competition within the markets. The ruling not only restricts the rights of such informants but also clips the CCI’s wings.
It contrary to the legislative intent behind the provisions of the Act and downplays the mandate of the CCI as an expert regulatory body tasked with maintaining healthy and fair competition. it might be within the best interests of all stakeholders that this narrow interpretation of locus standi is overruled by a bigger bench or through an appeal before the upper courts.
Prepared by Anushka Choudhary