Director General Report not binding on CCI, Delhi High Court

The Delhi High Court has held that the report of the Director-General is not binding on the Competition Commission of India and the Commission can differ with the findings of the Report, including taking a decision to close a case.

. “.. There is no provision in the Act (Competition Act, 2002) which mandates that CCI must accept the DG’s report recommending that there are contraventions of the provisions of the Act. The DG’s report is not binding on CCI and it can differ with the DG’s findings and reject the same. If on examination of the DG’s investigation report indicating contraventions of the Act and CCI finds that there are no such contraventions; it is required to close the case..”, the Court has held.

. The Judgment was passed by a Single Judge Bench of Justice Vibhu Bakhru in a petition challenging an order passed by the Commission closing a complaint against Great Eastern Energy Corporation Ltd (GEECL) for contravention of Section 4 of the Competition Act.

. The petition was preferred by an employee of M/s SRMB Srijan Ltd. (SRMB), an energy-intensive industrial unit, which used Coalbed Methane Gas (CBM) for its activities. GEECL is engaged in the business of exploration, development, production, distribution, and sale of CBM.

. In May 2011, GEECL entered into a Gas Sale Purchase Agreement with SRMB. Subsequently, the petitioner filed information under Section 19(1)(a) alleging that GEECL had violated the provisions of Section 4(1) of the Act by imposing unfair and discriminatory conditions for the supply of CBM.

. The Commission considered the information, formed a prima facie view that GEECL was in a dominant position and directed the DG to investigate into the matter in terms of Section 26(1).

. The DG submitted a confidential version of its report and opined that the GEECL’s conduct was in contravention of Section 4(1) of the Act read with Section 4(2)(a)(i) of the Act.

. Subsequently, the Commission heard the parties but decided to close the case. Aggrieved by the same, the petitioner filed an appeal before the Competition Appellate Tribunal, which was dismissed on the ground that the appeal was not maintainable.

. The petitioner then moved the Delhi High Court after more than eight months of the dismissal of the appeal.

. It was the petitioner’s contention that the decision of the Commission to close the complaint was ex facie erroneous when the DG’s Report had established that there was a contravention of Section 4.

. The petitioner argued that the Commission had no power to summarily reject the DG report. Hence, the Commission should have directed further inquiry in terms of Section 26(8) .

. It was also claimed that the order of closure violated the principles of natural justice as no further opportunity was granted to the petitioner to contest the premise on which the DG’s report was rejected.

. The petitioner also defended his locus on the ground that he was the informant before the Commission and therefore, would qualify as an aggrieved person.

. GEECL defended the Commission’s order and argued that it did not suffer from any patent illegality or perversity. It was pointed out that the Commission had given sufficient reason for rejecting the DG’s report.

. After hearing the parties, the Court concluded that it was not incumbent upon the Commission to pass an order directing further inquiry under Section 26(8) of the Act in the event it did not agree with the report submitted by the DG.

. After perusing the scheme of the Act, the Court observed that as far as Section 26(8) was concerned, there was an express mandate to the Commission to inquire into the contraventions where the DG’s report recommends that there are contraventions and the Commission is also of the opinion that further inquiry is called for.

. However, in the event, the Commission was of the view that no further inquiry was required, it would not be necessary to direct the DG to conduct the same, the Court said.

. The contention that if the DG’s report recommends that there are contraventions of the Act, the Commission cannot close the case straightway, was without any merit, it said.

. “If the petitioner’s contention that it is mandatory for CCI to direct further investigation in the event it disagrees with the DG’s recommendation is accepted, it would imply that CCI can never disagree with the report submitted by the DG. This, clearly, is not the scheme of Sections 26 and 27 of the Act..If CCI is of the opinion that no further inquiry is necessary, it is required to form an opinion after hearing the concerned parties. If in its opinion the provisions of Section 3 and 4 of the Act have not been violated, CCI must close the case. However, if in its opinion such contraventions have been established, it may pass any or all of the orders under Section 27 of the Act.”

. The Court then considered the findings of the DG in the report and opined that it was his subjective opinion on various clauses and was thus flawed.

. “ The DG is required to submit an investigation report after investigating facts and making recommendations on the basis of a factual foundation. In the present case, the DG has considered various clauses of the GSPA (the Agreement) and has expressed its subjective opinion regarding the same. This, clearly, is not the only scope of the investigation as contemplated under Section 26(3) of the Act.”

. For this reason, the Court also rejected the petitioner’s contention that the case ought to be remanded for further inquiry.

. “ CCI was well within its jurisdiction to examine the DG’s subjective opinion and take an informed view after considering the submissions made by the concerned parties.” , it said.

. The Court thus concluded that the petition was unmerited and an abuse of the process of law.

. It noted that the petitioner was an employee of SRMB and had no authority to espouse its cause. The petition was dismissed with costs of Rs 50,000 to be paid to each respondent.

. The petitioner was represented by Senior Advocate Gourab Banerji with Advocates Saurav Agrawal, Anirudha Agarwala, Anshuman Chowdhury, Raka Chatterjee, and SP Mukherjee .

. GEECL was represented by Advocates Rajshekhar Rao, along with Ram Kumar, Vinayak Mehrotra, Dhruv Dikshit.

. CCI was represented Advocates Purnima Singh, Shibani Khuntia.

. Read the Judgment:

Director General Report not binding on CCI, Delhi High Court

Aditi

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