NISSAN Motors and Hyundai Motor v. Competition Commission of India (W.P.Nos.31808 & 31809 of 2012)

Update: Division bench of the Madras High Court remands order to the Single Judge stating no statutory remedy is available under Section 53-B of the Act

Nissan Motors India v. Competition Commission of India (W.A. 1021/2014) (Madras High Court, Division Bench, order dated 06.08.2014)

Appeal was filed against the order of the Single Judge dated 30.06.2014 wherein the writ petition was dismissed on the grounds of maintainability. The Division Bench stated that no appeal remedy was available under Section 53-B against the proceedings challenged in the writ petition (i.e. order of the Commission dated 26.4.2011, widening the scope of the DG’s investigation and notice of Additional DG dated 4.5.2011 seeking information from Hyundai). The Division Bench observed as follows:
“3. On a plain reading of the provisions of Section 53-B of the Act and as also fairly submitted by both the parties, it is clear that no appeal remedy is available under the said provisions against the proceedings dated 26.4.2011 and 4.5.2011, which are the subject matters in the writ petition.
4. Thus we set aside the order dated 30.6.2014 and hold that no statutory appeal is accordingly available under the provisions of the Act and remand the matter to the learned single Judge to consider the case on merit. We make it clear that we are not making any observation on any of the issue raised by the petitioner or under consideration in the writ petition.”

High Court of Judicature at Madras, Dated: 30.06.2014, Justice V. Dhanapalan

Facts:

The Informant (Shamsher Kataria) filed information under Section 19 of the Competition Act, 2002 (‘Act’) against three car companies, viz., (1) M/s.Honda Siel Cars India Ltd. (2) Volkswagen India Ltd. and (3) Fiat India Automobiles Ltd., alleging anti-competitive methods/agreements and abuse of dominant position by the said 3 companies (Case No.03/2011). The Competition Commission of India (“CCI”) passed an order dated 24.02.2011 under Section 26(1) of the Act against the said three car manufacturers and the Director General (“DG”) was directed to submit its investigation report (“DG Report”) within a period of 60 days from the date of communication of the said order. The CCI by its order dated 26.04.2011 (referring to the DG’s note dated April 19, 2011) approved the DG’s request to widen the scope of investigation to include other manufacturers. The 3rd respondent, Additional Director General (“Additional DG”) issued a notice dated 04.05.2011, under Section 36(2) read with Section 41(2) of the Act, to the Managing Director of Hyundai Motor seeking information for the investigation and further directing that in case, information was not submitted by the due date, the petitioner may be liable for penal provisions under the Act. The DG Report arrived at the conclusion that the petitioner had contravened the provisions of the Act.

The Petitioner alleged that CCI was not justified in granting 9 extensions due to which the Report was submitted after a 15 month delay. The Petitioners also sought to quash the proceedings as the same is without jurisdiction, without authority of law, illegal, unconstitutional and in violation of principles of natural justice. Further, Nissan Motors alleged that the CCI’s order dated 26.04.2011 referring to the DG’s note, dated April 19, 2011 requesting widening of the scope of investigation to include other manufacturers, is completely silent on the reasoning for including other car manufacturers.  Further the said DG note was not served upon the Petitioner. The Petitioner also contended that it had filed an application under Section 36(1) of the Act before the CCI seeking inter alia, an opportunity for oral hearing, however due to various circumstances the Petitioner was not heard.

Judgment of the Court:

The Court opined that for a writ petition to be maintainable, the issue therein needs to attract any one of the following 3 elements (1) violation of fundamental rights; (2) violation of principles of natural justice; and (3) ultra vires of the provisions of the Act or the statute.

Violation of fundamental rights: The petitioner alleged that the impugned proceeding dated 26.04.2011 vide Case No.03/2011 was violative of Article 19(1)(g) and consequently Article 21 of the Constitution of India.

The Court observed that while the proceeding of the CCI dated 26.04.2011 approved the request for initiation of investigation against other car manufacturers, the proceeding of the Additional DG dated 04.05.2011 was a notice, calling upon the writ petitioner, to furnish the information sought for therein. By the said proceedings, the right of the petitioners to practise any profession or to carry on any occupation, trade or business was not taken away by the respondents and, at the same time, they were also not deprived of their life or personal liberty. The Court thus held that there was no violation of fundamental rights of the petitioners by the impugned proceedings.

Violation of principles of natural justice: The petitioners alleged that the CCI vide order dated 28.05.2013 directed the opposite parties to file additional information and accordingly the petitioners filed the information and requested for personal hearing, but they were refused such hearing. The Court referred to the proceedings before the CCI and noted that vide order dated 04.09.2012, CCI sent soft copy of the DG report to the informant and 17 car manufacturers, including the petitioners and asked parties to file their reply within 4 weeks and appear for oral hearing on the dates mentioned. On the respective dates fixed for Nissan and Hyundai’s hearing, they requested additional time to reply which was granted by the CCI and were further directed to appear before the CCI for oral hearing on 12.12.2012, thereby making clear that no further adjournment would be given. On 12.12.2012, petitioners’ counsels were not prepared to argue and applications were made for cross-examination of witnesses and file affidavits, which the CCI allowed. On the next date of hearing, Hyundai made application seeking to defer further proceedings and dispense with personal appearance since writ petition was filed in the Madras High Court. As stay was not granted by the High Court, petitioner’s prayer was rejected. On 04.02.2013, Nissan was heard. On 08.02.2013, the CCI considered Hyundai’s application informing that Madras High Court had granted interim stay; Nissan Motors also filed copy of order of Madras High Court granting interim stay. Considering the above series of events, the Court held that sufficient opportunities for personal hearing was afforded to the petitioners, hence it cannot be said that there was violation of principles of natural justice.

Ultra vires the provisions of the Act or the statute: The petitioners alleged that CCI had no jurisdiction to cause or entertain a proceeding under Section 26 of the Act, as he had not received any information within the ambit of Section 19, to inquire into any alleged contravention stipulated under Sections 3 and 4 and, as such, the proceeding of CCI dated 26.04.2011, and, the notice, dated 04.05.2011, of the Additional DG, issued under Section 36(2) read with Section 41(2) of the Act, were ultra vires the provisions of the Act. It was also their case that the procedure adopted by the respondents was not in conformity with Regulations 16 and 18 of the Competition Commission of India (General) Regulations, 2009 (“ General Regulations”).

The Court examined Sections 3, 4, 19, 26, 36(2) and 41(2) of the Act and Regulation 16 and 18 of the General Regulations. The Court observed that the prayer/complaint of the informant was not only against the 3 opposite parties in the information, but the other contravening vehicle manufacturers as well. Further, as per Section 19(1), the CCI has the power to inquire into any alleged contravention of the provisions of Section 3(1) or Section 4(1) either on its own motion or on receipt of any information from any person, consumer or their association or trade association or on a reference made to it by the Central Government or a State Government or a statutory authority. Moreover, under Section 36(4), the CCI has the power to direct any person to produce before the DG or the Secretary or an officer authorised by it, such books or other documents in the custody or under the control of such person so directed, being documents relating to any trade, the examination of which may be required for the purposes of the Act and also to furnish to the DG or the Secretary or any other officer authorised by it with regard to the trade or such  other  information  as  may be in his possession in relation to the trade carried on by such person. The Court noted that impugned proceeding dated 26.04.2011 was only an inter-communication between CCI and the DG and it did not specify any particular entity for the action to be taken. Also, the proceeding of Additional DG, dated 04.05.2011, was only a notice, calling for certain details from the petitioner so as to ensure transparency, by which the petitioners were not estopped from carrying on their trade or business. Therefore, the Court held that the impugned proceedings were absolutely intra vires, but not ultra vires the provisions of the Act or the statute.

The Court noted that the learned counsel for the parties had produced copy of the order passed by the Competition Appellate Tribunal (“Tribunal”) in (1) Excel Crop Care Limited, (2) United Phosphorous Limited and (3) Sandhya Organic Chemicals (P) Limited, from which it was explicit that the nature of grievances put forth by the petitioners could be dealt with by the alternative forum, namely, the Tribunal.

The Court finally held that a writ petition under Article 226 of the Constitution of India should not be entertained when the statute itself provides for efficacious alternative remedy under the Act, unless exceptional circumstances, such as, violation of fundamental rights, violation of principles of natural justice and ultra vires the rule of law, are made out.  However, this does not debar the High Court from granting the appropriate relief to a citizen under peculiar and special facts, notwithstanding the existence of alternative remedy and the existence of special circumstances are required to be noticed before issuance of the direction by the High Court, while invoking the jurisdiction under Article 226.  Also, when the issue relates to enforcement of a right or obligation under the statute and specific remedy is provided under the statute, the High Court should not normally entertain a writ petition and interfere with the decision made by the authorities.  Similarly, if a statute confers a right and in the same breath provides for a remedy for enforcement of such right, the remedy provided by the statute is an exclusive one. Therefore, if a statute imposes a duty on one party to do a certain thing, it creates a right in such persons, who would be injured by its contravention.

In the instant case, in the absence of any infringement of the fundamental rights or the principles of natural justice or the rule of law, the questions raised by the petitioners on merits, as to locus standi of CCI in passing the order impugned dated 26.04.2011; unexplained delay by the DG in conducting the investigation; and competency of the quorum of the CCI, were all matters to be looked into by the Tribunal under Section 53-B of the Act, in the manner as contemplated.

The Court was of the view that the petitioners were to approach only the Tribunal to exhaust their statutory remedy under Section 53-B of the Act. Accordingly, the writ petitions were dismissed, as not maintainable. The Court further held that it was open for the petitioners to approach the competent forum viz., the Tribunal, for redressal of their grievances, if they so desire, within a period of 6 weeks from the date of receipt or production of a copy of this order, and, till such time, the parties to these proceedings should maintain status quo as on date.

Analysis

The decision of the Court can be divided into two parts (a) maintainability of the writ petition and (b) competent forum for enforcement of remedy.

Although the Madras High Court appeared to be proceeding in the right direction by holding that no relief under the writ jurisdiction pursuant to Article 226 should be granted when an equally efficacious remedy under the specified legislation has been provided, there appears to be some ambiguity in Paragraph 39 of the judgment. The Court observed that the parties should approach only the Tribunal under Section 53-B of the Act to exhaust their statutory remedy. The Court went on to state that it was open for the petitioners to approach the competent forum viz., the Tribunal, for redressal of their grievances, if they so desire, within a period of 6 weeks from the date of receipt of the order of the Court and till such time, the parties to the proceedings should maintain status quo.

Section 53-B prescribes the procedure for appeal to the Tribunal. Appeal will lie only against decision/direction/order referred to in Section 53-A(1) of the Act. In CCI v. SAIL (2010) 10 SCC 744, the Supreme Court held that no appeal will lie from any decision, order or direction of the Commission which is not made specifically appealable under Section 53A(1)(a) of the Act. The CCI has not passed its final decision in Case No.03/2011 yet. Should the latter part of the order be construed as enabling the petitioners to approach the Tribunal directly upon the expiry of 6 week status quo period it would result in the order of the High Court to be ultra vires the Supreme Court in CCI v. SAIL to that extent. Further, the Court has also not elaborated on its reasons for imposing the status quo period. It is also unclear whether the CCI can pass its final order in Case No.03/2011 during the 6 weeks status quo period. The above decision may thus put the regulator in a fix on the future course of action to be taken in Case No.03/2011.


Author: Ann Minu Jose
Photo by Länsmuseet Gävleborg/ CC BY-NC-ND 2.0

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