Supreme Court of India
COMPETITION COMMISSION OF INDIAversusSTEEL AUTHORITY OF INDIA LTD. & ANR.
- Citation
- 2010 INSC 587
- Decided
- 9 September 2010
- Disposal
- Case Partly allowed
- Bench
- S H KAPADIA
Holding
Directions issued by the Competition Commission under s.26(1) to investigate a prima facie case are not appealable under s.53A, no statutory right to notice or hearing exists at that stage, the Commission is a necessary or proper party before the Tribunal, and interim restraint orders under s.33 may be granted ex parte only in exceptional circumstances with proper reasoning.
Summary
The Competition Commission of India (CCI) received a complaint that Steel Authority of India Ltd (SAIL) had abused its dominant position by entering an exclusive supply agreement with Indian Railways. The CCI formed a prima facie view and directed the Director General to investigate under s.26(1) of the Competition Act, 2002, while denying SAIL's request for an extension of time. SAIL appealed the order to the Competition Appellate Tribunal, which held the appeal maintainable and ordered the CCI to be impleaded. The Supreme Court held that a direction to investigate under s.26(1) is not appealable under s.53A, that no statutory right to notice or hearing exists at the prima facie stage, that the CCI is a necessary or proper party before the Tribunal, and that interim restraint orders under s.33 may be passed ex parte only in exceptional circumstances with recorded reasons. The Court modified the Tribunal’s order, directed the CCI to proceed in accordance with the Act, and partially allowed the appeal.
Issues considered
- Whether directions issued by the Commission under s.26(1) forming a prima facie opinion are appealable under s.53A(1)(a).
- Whether any party is entitled to notice or a hearing at the stage of forming a prima facie opinion under s.26(1).
- Whether the Commission is a necessary or proper party in proceedings before the Competition Appellate Tribunal.
- At what stage and how the Commission may exercise powers under s.33 to pass temporary restraint orders.
- Whether the Commission must record reasons for forming a prima facie opinion under s.26(1).
- What procedural directions, if any, the Court should issue to ensure compliance with the Act’s scheme.
Legislation cited
- Code of Civil Procedure, 1908s. Order 1, r.10, s. Order 43, r.4(1)
- Competition Act, 2002s. 19, s. 26(1), s. 26(2), s. 26(6), s. 26(7), s. 33, s. 538, s. 53A(1)(a), s. 53B, s. 57
Subjects
Competition lawAbuse of dominant positionAppealabilityNatural justiceInterim restraint orderProcedural fairnessCompetition Commission of IndiaCompetition Appellate Tribunal
Judgment
[2010] 11 S.C.R. 112
A COMPETITION COMMISSION OF INDIA
v.
STEEL AUTHORITY OF INDIA LTD. & ANR.
(Civil Appeal No. 7779 OF 2010)
SEPTEMBER 9, 2010
B
[S.H. KAPADIA, CJI, K.S.PANICKER RADHAKRISHNAN
AND SWATANTER KUMAR, JJ.)
Competition Act, 2002:
c
ss. 19,26(1), 53-A(1) - Proceedings before the
Competition Commission - Appealable order - Information
furnished to the Commission alleging abuse by a Public
Sector Company of its dominant position and depriving others
of fair competition - Direction issued by the Commission in
0
terms of s.26(1) - HELD: Taking a prima facie view and
issuing a direction to Director General for investigation would
not be an order appealable uls 53-A - Interpretation of
statutes - Maxim, 'expressum tacit cessare taciturn' and 'est
E boni judicis ampliare justiciam, non-jurisdictionem' -
Applicability of - Code of Civil Procedure, 1908 - Or. 43,
rr.4(1AJ.
s.26(1) - Power of Commission - Ambit and scope of-
Party claiming issuance of notice - HELD: Neither any
F statutory duty is cast on the Commission to issue notice/grant
hearing nor can any party claim, as a matter of right notice
and/or hearing at s.26(1) stage.
ss. g3-A and 53-B - Appeal before Competition
G Appellate Tribunal - Party - HELD: Competition Commission
shall be a necessary party where inquiry has been initiated
by it suo motu - In all other cases, it shall be a proper party
in the proceedings before the Appellate Tribunal -
Competition Commission of India (General) Regulations,
H 112
COMPETITION COMMISSION OF INDIA v. STEEL 113
AUTHORITY OF INDIA LTD.
2009 - Regulations 14(4) and 51 - Code of Civil Procedure, A
1908 - Or.1,r.10.
s. 33 - Power of Commission to grant interim orders -
HELD: 'During inquiry', if the Commission is satisfied that an
act in contravention of the stated provision has been
8
committed, continues to be committed, or is about to be
committed, it may temporarily restrain any party without giving
notice to such party - The Legislature has intentionally used
the words 'not only ex-parte' but also 'without notice to such
party' - However, this power has to be exercised by the
Commission sparingly and under compelling and exceptional C
circumstances, after recording its satisfaction that a case
exists for the restraint order - Wherever Commission has
passed interim order, it shall hear the affected party, thereafter
as soon as possible - Competition Commission of India
(General) Regulations, 2009 - Regulation 18(2) and 31 (2). D
s.33 - 'During inquiry' - Connotation of - HELD: Inquiry
is commenced when the Commission, in exercise o'f its
powers u/s 26(1) issues a direction to the Director General.
E
s.26(1) - Formation of prima facie opinion - Recording
of reasons - HELD: Commission is expected to record at
least some reasons even while forming a prima facie view -
. However, while passing directions and order dealing with the
rights of parties in its adjudicatory and determinative capacity,
it is required of the Commission to pass speaking orders. F
Object of the Act - Explained - Keeping in view the
objective of the Act and various functions performed by the
Commission under the Act, directions issued in order to
achieve the object of the Act and to ensure its proper G
implementation - The said directions shall remain in force
till appropriate regulations in that regard are framed by the
competent authority - Legislation - Administrative Law -
Delegated/subordinate Legislation - Need for - Meanwhile,
H
114 SUPREME COURT REPORTS (2010] 11 S.C.R.
A directions issued by Court through judicial pronouncement to
remain in force.
\
.. Words and Phrases:
Words 'or', 'and', 'any' - Connotation of
B
Expressions 'inquiry' and 'investigation' - Connotation of
An information was furnished to the Competition
Commission of India (Commission) that respondent no.
C 1(SAIL) entered into an exclusive supply agreement with
Indian Railways for supply of rails and, thus, it was
alleged, SAIL abused its dominant position in the market
and deprived others of fair competition. The Commission
registered the information and directed the informant to
file an affidavit in support of the information supplied by
D it. A notice was issued to SAIL enclosing the information
submitted by the informant, asking it to submit its reply
within two weeks. SAIL requested for six weeks time. The
Commission declined extension and, by its order dated
8.12.2009, formed the opinion that prima facie case
E existed against SAIL. It directed the Director General to
make investigation into the matter in terms of s.26(1) of
the Competition Act, 2002. SAIL was granted liberty to file
its reply before the Director General. However, SAIL filed
an interim reply before the Commission along with an
F application that it should be heard before any interim
order was passed by the Commission. On 22.11.2009, the
Commission reiterated its earlier order directing the
Director General for investigation and granting liberty to
SAIL to file its reply before the Director General. SAIL filed
G an appeal before the Competition Appellate Tribunal
(Tribunal) challenging the order dated 8.12.2009. The
Commission filed an application before the Tribunal
seeking impleadment in the appeal, and also questioned
the maintainability of the appeal on the ground that the
H
COMPETITION COMMISSION OF INDIA v. STEEL 115
AUTHORITY OF INDIA LTD.
direction simpliciter to conduct investigation was not an A
order appealable within the meaning of s.53-A of the Act.
The Tribunal, inter alia, held that the Commission was
neither a necessary party nor was it a proper party in the
appeal; and that the appeal against the order dated
8.12.2009 was maintainable. B
In the instant appeal filed by the Commission, the
following questions arose for consideration.
Q.1Whether the directions passed by the
Commission in exercise of its powers u/s 26(1) of the Act C
forming a prima facie opinion would be appealable in
terms of Section· 53A(1) of the Act?
Q.2What is the ambit and scope of power vested with
the Commission u/s 26(1) of the Act and whether the o
parties, including the informant or the affected party, are
entitled to notice or hearing, as a matter of right, at the
preliminary stage of formulating an opinion as to the
existence of the prima facie case? ,.-
Q.3Whether the Commission would be a necessary, E
or at least a proper, party in the proceedings before the
Tribunal in an appeal preferred by any party?
Q.4At what stage and in what manner the
Commission can exercise powers vested in it u/s 33 of F
the Act to pass temporary restraint orders? and
Q.5Whether it is obligatory for the Commission to
record reasons for formation of a prima facie opinion in
terms of s. 26(1) of the Act?
G
Q.6What directions, if any, need to be. issued by the
Court to ensure proper compliance in regard to
procedural requirements while keeping in mind the
scheme of the Act and the legislative intent? Also to
ensure that the procedural intricacies do not hamper in H
116 SUPREME COURT REPORTS [2010] 11 S.C.R.
A achieving the object of the Act, i.e., free market and
competition.
Partly allowing the appeal, the Court
HELD: 1.1 In terms of s. 53A(1 )(a) of the Competition
B Act, 2002, an appeal shall lie only against such directions,
decisions or orders passed by the Commission before
the Tribunal which have been specifically stated under the
provisions of s. 53A(1)(a). The orders, which have not
been specifically made appealable, cannot be treated
C appealable by implication. Taking a prima facie view and
issuing a direction to the Director General for
investigation would not be an order appealable u/s 53A.
Thus, the appeal preferred by SAIL ought to have been
dismissed by the Tribunal as not maintainable. [para 21]
D [149-F-G]
1.2 Right of appeal is neither a natural nor inherent
right vested in a party. It is substantive statutory right
regulated by the statute creating it. In absence of any
E specific provision creating a right in a party to file an
appeal, such right can neither be assumed nor inferred
in favour of the party. It is a creation of statute and it does
require application of rule of plain construction. Such
provision should neither be construed too strictly nor too
liberally; if given either of these extreme interpretations,
F it is bound to adversely affect the legislative object as
well as hamper the proceedings before the appropriate
forum. [para 32 and 34] [165-F-H; 166-A; 164-G-H; 165-A]
Maria Cristina De Souza Sadder vs. Amria Zurana
G Pereira Pinto (1979) 1 SCC 92; M. Ramnarain Private
Limited v. State Trading Corporation of India Limited, 1983
(3) SCR 25 = (1983) 3 SCC 75; and Gujarat Agro Industries
Co. Ltd. v. Municipal Corporation of the City of Ahmedabad
=
1999 (2) SCR 895 (1999) 4 sec 468 - relied on.
H
COMPETITION COMMISSION OF INDIA v. STEEL 117
AUTHORITY OF INDIA LTD.
Kondiba Dagadu Kadam vs. Savitribai Sopan Gujar A
=
1999 ( 2) SCR 728 (1999) 3 SCC 722; and Kashmir Singh
vs. Harnam Singh 2008 (3) SCR 763 = 2008 AIR SC 1749;
Shiv Shakti Co-op. Housing Society, Nagpur vs. Swaraj
Developers 2003 (3) SCR 762 = (2003) 6 SCC 659- referred
to B
The Law Commission of India, 183rd Report; Mimansa
Sutras by Jaimini - referred to.
1.3 The Tribunal has been vested with the power to
hear and dispose of appeals against any direction issued C
or decision made or order passed by the Commission in
exercise of its powers under the provisions mentioned
in s. 53A of the Act. The order passed by the Commission
u/s 26(2) is a final order as it puts an end to the
proceedings initiated upon receiving the information in D
one of the specified modes. This order has been
specifically made appealable u/s 53A of the Act. [para 24-
25] [160-A-E]
1.4 The provisions of s.53A(1 )(a) use the expression E
'any direction issued or decision made or order passed
by the Commission'. There is no occasion for the court
to read and interpret the word 'or' in any different form
as that would completely defeat the intention of the
legislature. It is a settled principle of law that the words
'or' and 'and' may be read as vice versa but not normally.
F
The language of the Section is clear and the statute does
not demand that the court should substitute 'or' or read
this word interchangeably for achieving the object of the
Act. On the contrary, the objective of the Act is more than
clear that the legislature intended to provide a very limited G
right to appeal. [para 27, 28, and 29] [162-A-E; 163-B-C]
Super Cassettes Industries Ltd. vs. State of UP. 2009
(14) SCR 627 =(2009)10 SCC 531; and Municipal
H
118 SUPREME COURT REPORTS [2010] 11 S.C.R.
A Corporation of Delhi vs. Tek Chand Bhatia 1980 ( 1 ) SCR
910 = (1980) 1 sec 158 - relied on
Green v. Premier Glynrhonwy Slate Co. (1928) 1 KB 561
p. 568; and Mersey Docks and Harbour Board v. Henderson
Bros. (1888) 13 AC 595; - referred to.
8
1.5 The direction uls 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
C 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 tis.
[para 25) [160-C-E]
0 Automec Sri v. Commission of the European
Communities (1990) ECR 11-00367 - referred to.
1.6 The Tribunal was not right in holding that the use
of the words 'any' and 'or' were the expressions of wide
magnitude and that 'any' being an adjective qualifies the
E nouns under the relevant provisions, i.e. directions,
decisions and orders, all were appealable without
exception. The expression 'any', in fact, qualifies each of
the three expressions 'direction issued or decision made
or order passed'. It cannot be said that it signifies any one
F of them and, particularly, only 'direction issued'. All these
words have been used by the legislature consciously and
with a purpose. It has provided for complete mechanism
ensuring their implementation under the provisions of the
Act. [para 39-40) [169-A-D]
G
1.7 The provisions of s.26 and 53A of the Act clearly
depict the legislative intent that the framers never desired
that all orders, directions and decisions should be
appealable to the Tribunal. Under s.26(1) the Commission
H
COMPETITION COMMISSION OF INDIA v. STEEL 119
AUTHORITY OF INDIA LTD.
is expected to make a decision by formation of a prima A
facie opinion and issue a direction to cause an
investigation to be made by the Director General and after
receiving the report has to take a final view in terms of
s.26(6) and, even otherwise, it has the discretion to form
an opinion and even close a case u/s 26(2). Having B
enacted these provisions, the legislature, in its wisdom,
made only the order u/s 26(2) and 26(6) appea!able u/s 53A
of the Act. Thus, it specifically excludes the opinion/
decision of the authority u/s 26(1 rand even an order
passed u/s 26(7) directing further inquiry, from being c
appealable before the Tribunal. Therefore, it wbuld
neither be permissible nor advisable to make these
provisions appealable against the legislative mandate.
[para 40] [169-C-F]
1.8 Expressum facit cessare taciturn - Express D
mention of one thing implies the exclusion of other.
(Expression precludes implication). This doctrine has
been applied by this Court in various cases to enunciate
the principle that expression precludes implication. The
first and primary rule of construction is that intention of E
the legislature is to be found in the words used by the
legislature itself. The true or legal meaning of an
enactment is derived by construing the meaning of the
word in the light of the discernible purpose or object
which comprehends the mischief and its remedy to which F
an enactment is directed. It is always important for the
court to keep in mind the purpose which lies behind the
statute while interpreting the statutory provisions. The
appropriate interpretation of s.53A(1 )(a) would be t~at no
other direction, decision or order of the Commission is G
appealable except those expressly stated in it. The maxim
est boni judicis ampliare justiciam, non-jurisdictionem
finds application here. [para 42-44] [170-B-E; 171-A,-C]
Union of India vs. Tulsiram Patel, 1985 (2) Suppl'.
: , H
'
120 SUPREME COURT REPORTS (2010] 11 S.C.R.
A SCR 131 =AIR 1985 SC 1416; State of Himachal Pradesh
vs. Kai/ash Chand Mahajan 1992 (1) SCR 917 =AIR 1992 SC
1277 and Padma Sundara Rao v. State of T.N. 2002 (2)
SCR 383 =AIR 2002 SC 1334 - referred to.
1.9 Section 538(1) itself is an indicator of the
8
restricted scope of appeals that shall be maintainable
before the Tribunal; it provides that the aggrieved party
has a right of appeal against 'any direction, decision or
order referred to in s.53A(1 )(a).' One of the parties before
the Commission would, in any case, be aggrieved by an
C order where the Commission grants or declines to grant
extension of time. Such orders cannot be held to be
appealable within the meaning and language of s.53A of
the Act and also on the principle that they are not orders
which determine the rights of the parties. No appeal can
D lie against such an order. Still, the parties are not
remediless as, when they prefer an appeal against the
final order, they can always take up grounds to challenge
the interim orders/directions passed by the Commission
in the memorandum of appeal. SuchI an approach would
E be in consonance with the procedural law prescribed in
0.43, r. 1-A CPC and even in other provisions thereof.
[para 44-45) [171-C-D; F-H; 172-A]
2.1 Neither any statutory duty is cast on the
F Commission to issue notice or grant hearing, nor any
party can claim, as a matter of right, notice and/or hearing
at the stage of formation of opinion by the Commission,
in terms of s.26(1) of the Act, that a prima facie case exists
for issuance of a direction to the Director General to
G cause an investigation to be made into the matter. The
provisions of s.19 do not suggest that any notice is
required to be given to the informant, affected party or any
other person at that stage. [para 11 and 21) [149-H; 150-
A-B; 145-C-D]
H 2.2 However, the Commission, being a statutory body
COMPETITION COMMISSION OF INDIA v. STEEL 121
AUTHORITY OF INDIA LTD.
exercising, inter alia, regulatory jurisdiction, even at that A
stage, in its discretion and in appropriate cases may call
upon the concerned party(s) to render required
assistance or produce requisite information, as per its
directive. [para 21] [150-C]
B
2.3 The principle of audi alteram partem, as
commonly understood, means 'hear the other side or
hear both sides before a decision is arrived at'. The
principle is largely understood as integral part of
principles of natural justice. It is expected of a tribunal or C
any quasi-judicial body to ensure compliance of these
principles before any order adverse to the interest of the
party can be passed. However, the exclusion of the
principles of natural justice is also an equally known
concept and the legislature has the competence to enact
laws which specifically exclude the application of D
principles of natural justice in larger public interest and
for valid reasons. Generally, compliance or otherwise, of
these principles can be classified mainly under three
categories: first, where application of principles of natural
justice is excluded by specific legislation; second, where E
the law contemplates strict compliance to the provisions
of principles of natural justice and default in compliance
thereto can result in vitiating not only the orders but even
the proceedings taken against the delinquent; and third,
where the law requires compliance to these principles of F
natural justice, but an irresistible conclusion is drawn by
the competent court or forum that no prejudice has been
caused to the delinquent and the non-compliance is with
regard to an action of directory nature. The cases may
fall in any of these categories and, therefore, the court G
.has to examine the facts of each case in the light of the
IAct or the Rules and Regulations in force in relation to
~uch a case. [para 48-49] [172-G-H; 173-A-H; 174-A]
Cooper v. Wands Worth Board of Works (1863), 14 C.B.
H
122 SUPREME COURT REPORTS [2010] 11 S.C.R.
A (N.S.) 180; and Errington v. Minister of Health (1935) 1 KB
249 - referred to.
2.4 Issue of notice to a party at the initial stage of the
proceedings, which are not determinative in their nature
and substance, can hardly be implied; wherever the
8
legislature so desires it must say so specifically. From the
provisions of the Act, and some of the Regulations, it is
· obvious that wherever the legislature has intended that
notice is to be served upon the other party, it has
C specifically so stated and there is no compelling reason
to read into the provisions of s.26(1) the requirement of
notice, when it is conspicuous by its very absence. [para
51 and 58] (177-E; 175-A-C]
~.5 The provisions of s.26(1) clearly indicate
D exclusion of principles of natural justice, at least at the
initial stages, by necessary implication. In cases where
the conduct of an enterprise, association of enterprises,
person or association of persons or any other legal
entity, is such that it would cause serious prejudice to the
E public interest and also violates the provisions of the Act,
the Commission will be well within its jurisdiction to pass
ex parte ad interim injunction orders immediately in terms
of s. 33 of the Act, while granting post decisional hearing·
positively, within a very short span in terms of Regulation
F 31 (2). This would certainly be more than adequate
compliance to the principles of natural justice. The
application of the principle of natural justice, therefore,
would depend upon the nature of the duty to be
performed by the authority under the statute. Decision in
G this regard is, in fact, panacea to the rival contentions
which may be raised by the parties in a given case. [para
61 and 63] [179-G-H; 180-A-D; 181-C-E]
Delhi Transport Corporation vs. Delhi Transport
Corporation Mazdoor Congress (1991) Supp1 SCC 600;
H
COMPETITION COMMISSION OF INDIA v. STEEL 123
AUTHORITY OF INDIA LTD.
Union of India v. W.N. Chadha 1992 (3) Suppl. SCR 594 = A
(1993) Supp 4 SCC 260; Maneka Gandhi v. Union of India
(1978) 1 SCC 48; State of Punjab v. Gurdayal 1980 (1)
SCR 1071 =AIR 1980 SC 319; Raj Restaurant and Anr. v.
Municipal Corporation of Delhi (1982) 3 SCC 338; Canara
Bank vs. Debasis Das 2003 ( 2 ) SCR 968 = (2003) 4 SCC B
557; M. Krishna Swami vs. Union of India 1992 ( 1 ) Suppl.
SCR 53 = (1992) 4 SCC 605 - referred to.
Azienda Colori Nazionali - AGNA S.P.A. v Commission
of the European Communities, (1972) ECR 0933 - referred C
to.
2.6 Besides, the jurisdiction of the Commission to act
u/s 26(1) does not contemplate any adjudica~ry function.
The Commission is not expected to give notice to the
parties, i.e. the informant or the affected parties and hear D
them at length, before forming its opinion. The function
is of a very preliminary nature and in fact, lin common
parlance, it is a departmental function. At t~at stage, it
does not condemn any person. and, therefore,! application
of audi alteram partem is not called for. Formation of a E.
prima facie opinion departmentally (Director General,
being appointed by the Central Government t«1> 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 F
investigation to be conducted and report to be submitted
to the Commission itself or close the case in terms of s.
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/ G
affected party. The functions performed by the
Commission u/s 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
H
124 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A General for investigation in that provision and not that the
· Commission shall take a decision or pass an order
directing inquiry into the allegations made in the
reference to the Commission. [para 66-67) [183-H; 184-A-
D; 185-8-C]
B
2.7 Cumulative reading of the relevant 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
C a statutory notice or an absolute right to claim notice and
hearing can be read into the provisions of s.26(1) of the
Act. Discretion to invite, has been vested in the
Commission, by virtue of the Regulations, which must be
construed in their plain language and without giving it
undue expansion. Thus, keeping in mind the nature of
D the functions required to be performed by the
Commission in terms of s. 26(1 ), the Court is of the
considered view that the right of notice of hearing is not
contemplated under the provisions of s. 26(1) of the Act.
[para 59 and 66) [177-H; 178-A-B; 184-D-E]
E
3.1 The Commission, in cases where the inquiry has
been initiated by the Commission suo moto, shall be a
necessary party and in all other cases the Commission
shall be a proper party in the proceedings before the
F Competition Tribunal. The presence of the Commission
before the Tribunal would help in complete adjudication
and effective and expeditious disposal of matters. Being
an expert body, its views would be of appropriate
assistance to the Tribunal. Thus, the Commission in the
G proceedings before the Tribunal would be a necessary
or a proper party, as the case may be. [para 21) [150-G-
H; 151-A-B]
3.2 The concept of necessary and proper parties is
an accepted norm of civil law and its principles can safely
H be applied to the proceedings before the Tribunal to a
COMPETITION COMMISSION OF INDIA v. STEEL 125
AUTHORITY OF INDIA LTD.
limited extent. The procedure for entertaining the appeals A
is specified u/s 53-B of the Act. The expression 'any
person' appearing in s. 538 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 B
'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. The provisions
clearly indicate that the Commission being a body c
corporate, is expected to be party in the proceedings
before the Tribunal as it has a legal right of
representation. Absence of the Commission before the
Tribunal will deprive it of presenting its views in the
proceedings. Thus, it may not be able to effectively 0
exercise its right to appeal in terms of s. 53 of the Act.
(para 72 and 75] (188-H; 189-A; 190-B-D]
3.3 Furthermore, in view of provisions of Regulations
14(4) and 51, the Commission can be a necessary or a
proper party in the proceedings before the Tribunal. The E
Commission, in terms of s.19 read with s.26 of the Act, is
entitled to commence proceedings suo moto and adopt
its own procedure for completion of such proceedings.
Thus, the principle of fairness would demand that such
party should be heard by the Tribunal before any orders F
adverse to it are passed in such cases.The Tribunal has
taken the view that in cases where proceedings initiated
suo moto by the Commission, the Commission is a
necessary party. Even otherwise, as a normal rule, the
applicant/informant is dominus litis and has the right to G
control the proceedings, but at the same time, such
applicant is required to notify all other parties against
whom the applicant wishes to proceed. Even if an
applicant fails to join a party the court has the discretion
to direct joining of such party as the question of H
126 SUPREME COURT REPORTS [2010] 11 S.C.R.
A impfeadment has to be decided on the touchstone of
Or.1,r,10 CPC, which provides that a necessary or proper
party may be added. [para 75 and 80] [190-D-G; 192-F-G]
Udit Narain Singh Malpaharia v. Addi. Member, Board of
B Revenue, Bihar, 1963 Suppl. SCR 676 =AIR 1963 SC 786;
Ramesh Hirachand Kundanmal v. Municipal Corporation of
Greater Bombay 1992 ( 2 ) SCR 1 = (1992) 2 SCC 524 -
referred to.
3.4 In the proceedings, which are initiated by the
C Commission suo moto, it shall be dominus litis of such
proceedings while in other cases, the Commission being
a regulatory body would be a proper party discharging
inquisitorial, regulatory as well as adjudicatory functions
and its presence before the Tribunal would be proper.
D The purpose is always to achieve complete, expeditious
and effective adjudication. The Commission would be a
necessary and/or a proper party in the proceedings
before the Tribunal. [para 81] [192-H; 193-A-D]
E Brahm Dutt v. Union of India (2005) 2 SCC 431 -
referred to.
4.1 During an inquiry and where the Commission is
satisfied that the act is in contravention of the provisions
stated in s. 33 of the Act, it may issue an order temporarily
F restraining the party from carrying on such act, until the
conclusion of such inquiry or until further orders without
giving notice to such party, where it deems it necessary.
. This power has to be exercised by the Commission
sparingly and under compelling and exceptional
G circumstances. The Commission, while recording a
reasoned order inter alia should : (a) record its
satisfaction (which has to be of much higher degree than
formation of a prima facie view u/s 26(1) of the ActrTn
clear terms that an act in contravention of the stated
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COMPETITION COMMISSION OF !NOIA v. STEEL 127
AUTHORITY OF !NOIA LTD.
provisions has been committed and continues to be A
committed or is about to be committed; (b) It is necessary
to issue order of restraint and (c) from the record before
the Commission, it is apparent that there is every
likelihood of the party to the /is, suffering irreparable and
irretrievable damage or there is definite apprehension that B
it would have adverse effect on competition in the market.
The three ingredients that there has to be application of
mind of higher degree and definite reasons having nexus'
to the necessity for passing such an order· need be
stated. Further, it is required that the case of t.he c
informant-applicant should also be stronger than a mere
prima facie case. Once these ingredients are satisfied and
where the Commission deems it necessary, it can pass
such an order without giving notice to the other party. The
scope of this power is limited and is expected to be
0
. exercised in appropriate circumstances. [para 21 and 87]
[151-C-H; 197-G-H; 198-A-B]
4.2 The power u/s 33 of the Act to pass temporary
restraint order can only be exercised by the Commission
when it has formed primci facie opinion and directed E
investigation in terms of s. 26(1) of the Act, as is evident
from the language of this provision read with Regulation
18(2) of the Regulations. [para 21] [152-A-B]
4.3 A bare reading of s.33 shows that the most F
significant expression used by the legislature in this
provision is 'during inquiry'. The word 'inquiry' has not
been defined in the Act. However, Regulation 18(2)
explains that 'inquiry' shall be deemed to have
commenced when direction to the Director General is G
issued to conduct investigation in terms of Regulation
18(2). Thus, the law shall presume that an 'inquiry' is
commenced when the Commission, in exercise of its
powers u/s 26(1) of the Act, issues a direction to the
Director General. Once the Regulations have explained
H
128 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A 'inquiry' it will not be permissible to give meaning to this
· expression contrary to the statutory explanation. The
Tribunal erred in holding that the inquiry commences as
soon as the aspects highlighted in sub-section (1) of s.19
are fulfilled and brought to the notice of the Commission.
B It is obvious that Regulation 18(2) was not brought to the
hotice of the Tribunal which resulted in error of law,
particularly, when examined in the light of other
provisions and scheme of the Act as well. [para 83 and
91] [194-A-D; 201-F-G]
c 4.4 Inquiry and investigation are quite
distinguishable, as is clear from various provisions of the
Act as well as the scheme framed thereunder. Both these
expressions cannot be treated as synonymous. They are
distinct, different in expression and operate in different
D areas. The Director General is expected to conduct an
investigation only in terms of the directive of the
Commission and thereafter, inquiry shall be deemed to
have commenced, which continues with the submission
of the report by the Director General, unlike the
E investigation under the MRTP Act, 1969, where the
Director General can initiate investigation suo motu. Then
the Commission has to consider such report as well as
consider the objections and submissions made by other
party. Till the time final order is passed by the
F Commission in accordance with law, the inquiry under
this Act continues. [para 83] [194-D-G]
4.5 Once the inquiry has begun, then alone the
Commission is expected to exercise its powers vested u/
G s 33 of the Act. That is the stage when jurisdiction of the
Commission can be invoked by a party for passing of an
ex parte order. Even at that stage, the Commission is
required to record a satisfaction that there has been
contravention of the provisions mentioned u/s 33 and that
such contravention has been committed, continues to be
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COMPETITION COMMISSION OF !NOIA v. STEEL 129
AUTHORITY OF INDIA LTD.
committed or is about to be committed. This satisfaction A
has to be understood differently from what is required
while expressing a prima facie view in terms of s.26(1) of
the Act. The former is a definite expression of the
satisfaction recorded by the Commission upon due
application of mind while the latter is a tentative view at B
that stage. Prior to any direction, it could be a general
examination or enquiry of the information/reference
received by the Commission, but after passing the
direction the inquiry is more definite in its scope and may
be directed against a party. Once such satisfaction is c
recorded, the Commission is vested with the power and
the informant is entitled to claim ex parte injunction'. The
legislature has intentionally used the words not only 'ex
parte' but also 'without notice to such party'. Again for
that purpose, the Commission has to apply its mind, D
whether or not it is necessary to give such a notice. [para
83] [194-G-H; 195-A-D]
4.6 The intent of the rule is to grant ex parte
injunction, but it is more desirable that upon passing an
order, as contemplated u/s 33, it must give a short notice E
to the other side to appear and to file objections to the
continuation or otherwise of such an order. Regulation
31 (2) of the Regulations clearly mandates such a
procedure. Wherever the Commission has passed interim
order, it shall hear the parties against whom such an F
order has been made, thereafter; as soon as possible. The
expression 'as soon as possible' appearing in Regulation
31 (2) has some significance and it will be obligatory upon
the fora dealing with the matters to ensure compliance
·to this legislative mandate. Restraint orders may be G
passed in exercise of jurisdiction in terms of s. 33 but it
must be kept in mind that the ex parte restraint orders
can have far reaching consequences and, therefore, it will
be desirable to pass such order in exceptional
circumstances and deal with these matters most H
130 SUPREME COURT REPORTS [2010] 11 S.C.R.
A expeditiously. [para 83) [195-D-G]
Morgan Stanley Mutual Funds v. Kartick Das 1994 (1)
Suppl. SCR 136 = (1994) 4 SCC 225 - referred to.
5.1 In consonance with the settled principles of
B administrative jurisprudence, the Commission is
expected to record at least some reasons even while
forming a prima facie view. However, while passing
directions and orders dealing with the rights of the parties
in its adjudicatory and determinative capacity, it is
C required of the Commission to pass speaking orders,
upon due application of mind, responding to all the
contentions raised before it by the rival parties. [para 21)
[152-C-D]
0 5.2 By practice adopted in all courts and by virtue of
judge-made law, the concept of reasoned judgment has
become an indispensable part of basic rule of law and in
fact, is a mandatory requirement of the procedural law.
Clarity of thoughts leads to clarity of vision and therefore,
E proper reasoning is foundation of a just and fair decision.
[para 69) [187-E-F]
Assistant Commissioner, C. T.D. WC. v. Mis Shukla &
Brothers 2010 (4) SCR 627 =JT 2010 (4) SC 35; Gurdial
Singh Fijji vs. State of Punjab [1979) 2 SCC 368 - referred
F to.
Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR
120 - referred to.
5.3 Section 26, under its different sub-sections,
G 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 m~rits by the
H
COMPETITION COMMISSION OF INDIA v. STEEL 131
AUTHORITY OF INDIA LTD.
Commission, it is expected that the same would be A
supported by some reasoning. At the stage of forming a
prima facie view, as required u/s 26(1) of the Act, the
Commission may not really record detailed reasons, but
must express its mind in no uncertain terms, by
recording minimum reasons, that it is of the view that a B
prima facie case exists, requiring issuance of direction for
inve~tigation to the Director General. Such view should
be recorded with reference to the information furnished
to the Commission. Such opinion should be formed on
the basis of the records, including the information c
furnished and reference made to the Commission under
the various provisions of the Act. [para 70) [187-G-H; 188-
A-D]
6.1 The main objective of competition law is to
promote economic efficiency using competition as one D
of the means of assisting the creation of market
responsive to consumer preferences. The advantages of
perfect competition are three-fold: allocative efficiency,
which ensures the effective allocation of resources;
productive efficiency, which ensures that costs of E
production are kept at a minimum; and dynamic
efficiency, which promotes innovative practices. These
factors by and large have been accepted all over the
world as the guiding principles for effective
implementation of competition law. The Act and the F
Regulations framed thereunder clearly indicate the
legislative intent of dealing with the matters related to
contravention of the Act, expeditiously and even in a time
bound programme. Keeping in view the nature of the
controversies arising under the provisions of the Act and G
larger public interest, the matters should be dealt with
and taken to the logical ends of pronouncement of final
orders without any undue delay. In the event of delay, the
very purpose and object of the Act is likely to be
frustrated and the possibility of great damage to the open H
•
132 SUPREME COURT REPORTS [2010] 11 S.C.R.
A market and resultantly, country's economy cannot be
rules out. [para 5 and 7) [138-8-D; 139-F-H]
6.2 The Commission performs various functions
including regulatory, inquisitorial and adjudicatory. The
powers conferred by the Legislature upon the
8
Commission u/ss 27(d) and 31 (3) are of wide magnitude
and of serious ramifications. The Commission has the
jurisdiction even to direct that an agreement entered into
between the parties shall stand modified to the extent and
in the manner, as may be specified. Similarly, where it is
C of the opinion that the combination has, or is likely to
have, an appreciable adverse effect on competition but
such adverse effect can be eliminated by suitable
modification to such combination, the Commission is
empowered to direct such modification. These powers of
D the Commission, read with other provisions, certainly
require issuance of certain directions in order to achieve
the object of the Act and to ensure its proper
implementation. The following directions are, therefore,
issued which shall remain in force till appropriate
E regulations in that regard are framed by the competent
authority:
(A) Regulation 16 prescribes limitation of 15 days for
the Commission to hold its first ordinary meeting to
F consider whether prima facie case exists or not and in
cases of alleged anti-competitive agreements and/or
abuse of dominant position, the opinion on existence of
prima facie case has to be formed within 60 days. Though
the time period for such acts of the Commission has been
G specified, still it is expected of the Commission to hold
. its meetings and record its opinion about existence or
otherwise of a prima facie case within a period much
shorter than the stated period.
(8) All proceedings, including investigation and
H inquiry should be completed by the Commission/Director
COMPETITION COMMISSION OF INDIA v. STEEL 133
AUTHORITY OF INDIA LTD.
General most expeditiously and while ensuring that the A
time taken in completion of such proceedings does not
adversely affect any of the parties as well as the open
market in purposeful implementation of the provisions of
the Act.
B
(C) Wherever during the course of inquiry the
Commission exercises its jurisdiction to pass interim
orders, it should pass a final order in that behalf as
expeditiously as possible and in any case not later than
60 days.
c
(D) The Director General in terms of Regulation 20 is
expected to submit his report within a reasonable time.
No inquiry by the Commission can proceed any further
in absence of the report by the Director General in terms
of Section 26(2) of the Act. The reports by the Director D
General should be submitted within the time as directed
by the Commission but in all cases not later than 45 days
from the date of passing of directions in terms of s. 26(1)
of the Act.
E
(E) The Commission as well as the Director General
shall maintain complete 'confidentiality' as envisaged u/
s 57 of the Act and Regulation 35 of the Regulations.
Wherever the 'confidentiality' is breached, the aggrieved
party certainly has the right to approach the Commission
for issuance of appropriate directions in terms of the
F
provisions of the Act and the Regulations in force. [para
93] [202-F-H; 203-A-H; 204-A]
6.3 In the considered view of the Court, the scheme
and essence of the Act and the Regulations are clearly G
suggestive of speedy and expeditious disposal of the ·
matters. Thus, it will be desirable that the Competent
Authority frames Regulations providing definite time
frame for completion of investigation, inquiry and final
disposal of the matters pending before the Commission. H
134 SUPREME COURT REPORTS [2010) 11 S.C.R.
A Till such Regulations are framed, the period specified by
this Court shall remain in force and the Court expects all
the authorities concerned to adhere to the period
specified. (para 94] (204-B-C]
7. The Commission, vide its order dated 8th
0
December, 2009, had, for reasons stated therein, declined
the extension of time to SAIL. This order of the
Commission cannot be stated to be without jurisdiction
or suffering from any apparent error of law. However, the
C Tribunal, in exercise of its judicial discretion, had
interfered with the said order and granted further time to
SAIL unconditionally. This Court would not interfere in
the exercise of the discretion by the Tribunal except to
the extent of imposition of cost. Therefore, SAIL is
directed to pay cost of Rs. 25,000/- to the informant for
D seeking extension pf time. The cost shall be conditional,
whereafter, the additional reply filed by SAIL would be
taken on record and the Commission shall apply its mind
to form a prima facie view in terms of s. 26(1) of the Act, if
the report of the Director General has not been received
E as yet. In the event the report prepared by the Director
General during the period 8th December, 2009 to 11th
January, 2010 has been received, the Commission shall
proceed in accordance with the provisions of the Act and
the principles of law enunciated in this judgment giving
F proper notice to the informant as well as to SAIL and pass
appropriate orders. The order dated 15.2.2010 passed by
the Tribunal is modified. The Commission shall proceed
with the case in accordance with law and the prinCiples
enunciat.ed supra. [para 91 and 95] (201-A-B; G-H; 202-
G A-C; 204-D]
Case Law Reference:
(1990) ECR 11-00367 referred to para 26
(1928) 1 KB 561 p. 568 referred to para 28
H
COMPETITION COMMISSION OF INDIA v. STEEL 135
AUTHORITY OF INDIA LTD.
(1888) 13 AC 595 referred to para 28 A
1980 (1) SCR 910 relied on para 28
2009 (14) SCR 627 relied on para 30
(1979) 1 sec 92 relied on para 33
B
1983 (3) SCR 25 relied on para 34
1999 (2) SCR 895 relied on para 34
1999 (2) SCR 728 referred to para 34
c
2008 (3) SCR 763 referred to para 34
I
2003 (3) 'SCR 762 referred to para 36
1985 (2) Suppl. SCR 131 referred to para 42
1992 (1) SCR 917 referred to para 42 D
I
2002 (2) SCR 383 referred to para 42
(1863), 14 C.B. (N.S.) 180 referred to para 49
(1935) 1 KB 249 referred to para 49 E
(1991) Supp1 sec 600 referred to para 60
1992 (3) Suppl. SCR 594 referred to para 60
(1978) 1 sec 48 referred to para 61
F
1980 (1) SCR 1071 referred to para 61
(1982) 3 sec 338 referred to para 62
2003 (2) SCR 968 referred to para 63
G
1992 (1) Suppl. SCR 53 referred to para 64
(1972) ECR 0933 referred to para 65
2010 (4) SCR 627 referred to para 68
[19791 2 sec· 368 referred to para 69 H
136 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 1974 ICR 120 referred to. Para 69
1963 Suppl. SCR 676 referred to. Para 78
1992 (2) SCR 1 referred to Para 80
(2005) 2 sec 431 referred to Para 81
B
1994 (1) Suppl. SCR 136 referred to. Para 86
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7779 of 2010.
c From the Judgment & Order dated 15.02.2010 of the
Competition Appellate Tribunal, New Delhi in Appeal No. 1 of
2009.
Gopal Subramaniam, SG, Tarun Gulati, Suhail Nathani,
o Neil Hildreth, Samir Gandhim, Rahul Rai, Sparsh Bhargava,
Kishore Kuna!, Rony John, Praveen Kumar, Shahi Mathews for
the Appellant.
H.N. Salve, R.F. Nariman, Jagdeep Dhankhar, P.S. Shroff,
E Ruchi A. Mahajan, Harman Singh Sandhu, Jai Mohan, Chetna
Rai, (for Suresh A. Shroff & Co.), Sunil Kumar Jain, Aneesh
Mittal, K.P.S. Channi for the Respondents.
The Judgment of the Court was delivered by
F SWATANTER KUMAR, J. 1. The application for leave to
appeal is allowed.
2. The decision of the Government of India to liberalize its
economy with the intention of removing controls persuaded the
Indian Parliament to enact laws providing for checks and
G balances in the free economy. The laws were required to be
enacted, primarily, for the objective of taking measures to avoid
anti-competitive agreements and abuse of dominance as well
as to regulate mergers and takeovers which result in distortion
of the market. The earlier Monopolies and Restrictive Trade
H
COMPETITION COMMISSION OF INDIA v. STEEL 137
AUTHORITY OF INDIA LTD. (SWATANTER KUMAR, J.]
Practices Act, 1969 was not only found to be inadequate but A
also obsolete in certain respects, particularly, in the light of
international economic developments relating to competition
law. Most countries in the world have enacted competition laws
to protect their free market economies- an economic system
in which the allocation of resources is determined solely by B
supply and demand. The rationale of free market economy is
that the competitive offers of different suppliers allow the buyers
to make the best purchase. The motivation of each participant
in a free market economy is to maximize self-interest but the
result is favourable to society. As Adam Smith observed: "there , c
is an invisible hand at work to take care of this".
3. As far as American law is concerned, it is said that the
Sherman Act, 1890, is the first codification of recognized
common law principles of competition law. With the progress
of time, even there the competition law has attained new D
dimensions with the enactment of subsequent laws, like the
Clayton· Act, 1914, the Federal Trade Commission Act, 1914
and the Robinson-Patman Act, 1936. The United Kingdom, on
the other hand, introduced the considerably less stringent
Restrictive Practices Act, 1956, but later on more elaborate E
legislations like the Competition Act, 1998 and the Enterprise
Act, 2002 were introduced. Australia introduced its current
Trade Practices Act in 1974.
4. The overall intention of competition law policy has not F
changed markedly over the past century. Its intent is to limit the
role of market power that might re£ult from substantial
concentration in a particular industry. The major concern with
.monopoly and similar kinds of concentration is not that being
big is necessarily undesirable. However, because of the control G
exerted by a monopoly over price, there are economic
efficiency losses to society and product quality and diversity
may also be affected. Thus, there is a need to protect
competition. The primary purpose of competition law is to
remedy some of those situations where the activities of one firm
H
138 SUPREME COURT REPORTS [2010] 11 S.C.R.
A or two lead to the breakdown of the free market system, or, to
prevent such a breakdown by laying down rules by which rival
businesses can compete with each other. The model of perfect
competition is the 'economic model' that usually comes to an
economist's mind when thinking about the competitive markets.
B
5. As far as the objectives of competition laws are
concerned, they vary from country to country and even within a
country they seem to change and evolve over the time.
However, it will be useful to refer to some of the common
C objectives of competition law. The main objective of competition
law is to promote economic efficiency using competition as one
of the means of assisting the creation of market responsive to
consumer preferences. The advantages of perfect competition
are three-fold: allocative efficiency, which ensures the effective
allocation of resources, productive efficiency, which ensures that
D costs of production are kept at a minimum and dynamic
efficiency, which promotes innovative practices. These factors
by and large have been accepted all over the world as the
guiding principles for effective implementation of competition
law.
E
6. In India, a High Level Committee on Competition Policy
and Law was constituted to examine its various aspects and
make suggestions keeping in view the competition policy of
India. This Committee made recommendations and submitted
F its report on 22nd of May, 2002. After completion of the
consultation process, the Competition Act, 2002 {for short, the
'Act') as Act 12 of 2003, dated 12th December, 2003, was
enacted. As per the statement of objects and reasons, this
enactment is India's response to the opening up of its
G economy, removing controls and resorting to liberalization. The
natural corollary of this is that the Indian market should be
geared to face competition from within the country and outside.
The Bill sought to ensure fair competition in India by prohibiting
trade practices which cause appreciable adverse effect on the
competition in market within India and for this purpose
H
COMPETITION COMMISSION OF INDIA v. STEEL 139
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
establishment of a quasi judicial body was considered essential. A
The other object was to curb the negative aspects of
competition through such a body namely, the 'Competition
Commission of India' (for short, the 'Commission') which has
the power to perform different kinds of functions, including
passing of interim orders and even awarding compensation and B
imposing penalty. The Director General appointed under
Section 16(1) of the Act is a specialized investigating wing of
the Commission. In short, the establishment of the Commission
and enactment of the Act was aimed at preventing practices
having adverse effect on competition, to protect the interest of c
the consumer and to ensure fair trade carried out by other
participants in the market in India and for matters connected
therewith or incidental thereto.
7. The various provisions of the Act deal with the
establishment, powers and functions as well as discharge of D
adjudicatory functions by the Commission. Under the scheme
of the Act, this Commission is vested with inquisitorial,
investigative, regulatory, adjudicatory and to a limited extent
even advisory jurisdiction. Vast powers have been given to the
Commission to deal with the complaints or information leading E
to invocation of the provisions of Sections 3 and 4 read with
Section 19 of the Act. In exercise of the powers vested in it
under Section 64, the Commission has framed Regulations
called The Competition Commission of India (General)
Regulaticms, 2009 (for short, the 'Regulations'). The Act and the F
Regulations framed thereunder clearly indicate the legislative
intent of dealing with the matters related to contravention of the
Act, expeditiously and even in a time bound programme.
Keeping in view the nature of the controversies arising under
the provisions of the Act and larger public interest, the matters G
should .be dealt with and taken to the logical end of
pronouncement of final orders without any undue delay. In the
event of delay, the very purpose and object of the Act is likely
to be frustrc;-~ed and the possibility of great damage to the open
market and resultantly, country's economy cannot be ruled out.
H
140 SUPREME COURT REPORTS (2010] 11 S.C.R.
A The present Act is quite contemporary to the laws presently in
force in the United States of America as well as in the United
Kingdom. !n other words, the provisions of the present Act and
Clayton Act, 1914 of the United States of America, The
Competition Act, 1988 and Enterprise Act, 2002 of the United
B Kingdom have somewhat similar legislative intent and scheme
of enforcement. However, the provisions of these Acts are not
quite pari materia to the Indian legislation. In United Kingdom,
the Office of Fair Trading is primarily regulatory and adjudicatory
functions are performed by the Competition Commission and
c the Competition Appellate Tribunal. The U.S. Department of
Justice Antitrust Division in United States, deals with all
jurisdictions in the field. The competition laws and their
enforcement in those two countries is progressive, applied
rigorously and more effectively. The deterrence objective in
D these anti-trust legislations is clear from the provisions relating
to criminal sanctions for individual violations, high upper limit
for imposition of fines on corporate entities as well !lS extradition
of individuals found guilty of formation of cartels. This is so,
despite the fact that there are much larger violations of the
provisions in India in comparison to the other two countries,
E where at the very threshold, greater numbers of cases invite the
attention of the regulatory/adjudicatory bodies. Primarily, there
are three main elements which are intended to be controlled
by implementation of the provisions of the Act, which have been
specifically dealt with under Sections 3, 4 and 6 read with
F Sections 19 and 26 to 29 of the Act. They are anti-competitiva
agreements, abuse of dominant position and regulation of
combinations which are likely to have an appreciable adverse
effect on competition. Thus, while dealing with respective
contentions raised in the present appeal and determining the
G impact of the findings recorded by the Tribunal, it is necessary
for us to keep these objects and background in mind.
8. Jindal Steel & Powers Ltd. (for short the 'informant')
invoked the provisions of Section 19 read with Section 26(1)
H of the Act by providing information to the Commission alleging
COMPETITION COMMISSION OF INDIA v. STEEL 141
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
that M/s. Steel Authority of India Ltd. (for short 'SAIL') had, inter A
alia, entered into an exclusive supply agreement with Indian
Railways for supply of rails. The SAIL, thus, was alleged to have
abused its dominant position in the market and deprived others
of fair competition and therefore, acted contrary to Section 3(4)
(Anti-competitive Agreements) and Section 4(1) (Abuse of B
dominant position) of the Act. This information was registered
by the Commission and was considered in its meeting held on
27th October, 2008 on which date the matter was deferred at
the request of the informant for furnishing additional information.
During the course of hearing, it was also brought to the notice c
of the Commission that a petition being Writ Petition (C}
No.8531 of 2009, filed by the informant against the Ministry of
Railways, was also pending in the High Court of Delhi at New
Delhi. Vide order dated 10th November, 2009 the Commission
directed the informant to file an affidavit with respect to the D
information furnished by it. The Commission also directed SAIL
to submit its comments in respect of the information received
by the Commission within two weeks from the date of the said
meeting and the matter was adjourned till 8th December, 2009.
On 19th November, 2009 a notice was issued to SAIL
E
enclosing all information submitted by the informant. When the
matter was taken up for consideration by the Commission on
8th December, 2009, the Commission took on record the
affidavit filed by the informant on 30th November, 2009 in terms
of the earlier order of the Commission, but SAIL requested
extension of six weeks time to file its comments. Finding no F
justification in the request of the 'SAIL, the Commission, vide
its order dated 8th December, 2009, declined the prayer for
extension of time. In this order, it also formed the opinion that
prima facie case existed against SAIL, and resultantly, directed
the Director General, appointed under Section 16(1) of the Act, G
to make investigation into the matter in terms of Section 26(1)
of the Act. It also granted liberty to SAIL to file its views and
comments before the Director General during the course of
investigation. Despite these orders, SAIL filed an interim reply
before the Commission along with an application that it may H
142 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A be heard before any interim order is passed by the
Commission in the proceedings. On 22nd December, 2009 the
Commission only reiterated its earlier directions made to the
Director General for investigation and granted liberty to SAIL
to file its reply before the Director General. The correctness of
B the directions contained in the order dated 8th December,
2009 was challenged by SAIL before the Competition Appellate
Tribunal (for short, the 'Tribunal'). The Commission filed an
application on 28th January, 20~ 0 before the Tribunal seeking
impleadment in the appeal filed by SAIL. It also filed an
c application for vacation of interim orders which had been
issued by the Tribunal on 11th January, 2010, staying further
proceedings before the Director General in furtherance of the
directions of the Commission dated 8th December, 2009. It will
be useful to refer to the order passed by the Commission on
D 8th December, 2009 at this stage itself which reads as under:
''The meeting was held under the chairmanship of
Sh. H.C. Gupta, Member.
2. The case was earlier considered by the Commission
E in its meetings held on 4.11.2009 and 10.11.2009. In the
meeting of the Commission held on 10.11.2009, Mr.
Suman Kr. Dey, VP and Head Legal and Mrs. Pallavi
Shroff, Advocate (along with their fellow advocates)
appeared before the Commission on behalf of the
F informant and made detailed admissions. As per decision
taken during the meeting held on 10.11.2009, informant/
his counsel was directed to file an affidavit regarding the
current status of the writ petition filed in the Delhi high
Court, particular indicating its admission or otherwise and
as to whether any other order has been passed by the
G
Hon'ble High Court, in the matter so far. SAIL was also
requested to furnish their views/comments in the matter
within 2 weeks time.
3. In the meeting of the Commission held on
H 08.12.2009, the Commission took on .record the affidavit
COMPETITION COMMISSION OF INDIA v. STEEL 143
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
filed by the informant on 30.11.2009 regarding the current A
status of the writ petition filed in the Delhi High Court and
certified copies of all the orders passed by the Hon'ble
High Court, in the matter, till date. However, SAIL did not
file its reply within the stipulated time and requested to
allow extension of time from 3.12.2009 for a further period B
of six weeks. The Commission considered the above
request of SAIL. However, the Commission did not allow
any further extension.
4. The case was discussed in detail. After considering
the details filed by the informant with the information and C
the entire relevant material/record available in this context
as well as detailed submission made by the advocates of
the informant before the Commission on 10.11.2009.
Commission is of the opinion that there exists a prima facie
case. Therefore, the Commission decided that the case D
be referred to Director General for investigation in the
matter.
5. Secretary was accordingly directed to refer the case
to DG for investigation and submission of the report within E
45 days of the receipt of orders of the Commission. SAIL
informed that they may furnish their views/comments in the
matter to the DG."
9. As already noticed, the legality of this order was
F
questioned before the Tribunal by SAIL on one hand, while, on
the other hand the Commission had pressed its application for
impleadment. In the application for impleadment it was averred
by the Commission that it is a necessary and proper party for
adjudication of the matter before the Tribunal and therefore, it
should be impleaded as a party and be heard in accordance G
with law. Emphasis was also placed on Section 18 of the Act
to contend that powers, functions and duties of the Commission
were such that it would always be appropriate for the
Commission to be impleaded as a party in appeals filed before
the Tribunal. It was also averred .in the application that H
144 SUPREME COURT REPORTS [2010] 11 S.C.R.
A intervention of the Commission at the appellate proceedings
would not prejudice anybody. The very maintainability of the
appeal before the Tribunal was also questioned by the
Commission on the ground that the order under appeal before
the Tribunal was a direction simp/iciter to conduct investigation
B and thus was not an order appealable within the meaning of
Section 53A of the Act. The Tribunal in its order dated 15th
February, 2010, inter alia, but significantly held as under:
(a) The application of the Commission for
impleadment was dismissed, as in the
c opinion of the Tribunal the Commission was
neither a necessary nor a proper party in the
appellate proceedings before the Tribunal.
Resultantly, the application for vacation of
stay also came to be dismissed.
D
(b) . It was held that giving of reasons is an
essential element of administration of justice.
A right to reason is, therefore, an
indispensable part of sound system of
E judicial review. Thus, the Commission is
directed to give reasons while passing any
order, direction or taking any decision.
(c) The appeal against the order dated 8th
December, 2009 was held to be
F maintainable in terms of Section 53A of the
Act. While setting aside the said order of the
Commission and recording a finding that
there was violation of principles of natural
justice, the Tribunal granted further time to
G SAIL to file reply by 22nd February, 2010 in
addition to the reply already filed by SAIL.
10. This order of the Tribunal dated 15th February, 2010
is impugned in the present appeal.
H
COMPETITION COMMISSION OF INDIA v. STEEL 145
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
11. The informant, i.e. the person who wishes to complain A
to the Commission constituted under section 7 of the Act, would
make such information available in writing to the Commission.
Of course, such information could also be received from the
Central Government, State Government, Statutory authority or
on its own knowledge as provided under Section 19(1)(a) of B
the Act. When such information is received, the Commission
is expected to satisfy itself and express its opinion that a prima
facie case exists, from the record produced before it and then
to pass a direction to the Director General to cause an
investigation to be made into the matter. This direction, c
normally, could be issued by the Commission with or without
assistance from other quarters including experts of eminence.
The provisions of Section 19 do not suggest that any notice is
required to be given to the informant, affected party or any other
person at that stage. Such parties cannot claim the right to D
notice or hearing but it is always open to the Commission to
call any 'such person', for rendering assistance or produce such
records, as the Commission may consider appropriate.
12. The Commission, wherever, is of the opinion that no
prima facie case exists justifying issuance of a direction under E
Section 26(1) of the Act, can close the case and send a copy
of that order to the Central Gover'nment, State Government,
Statutory Authority or the parties concerned in terms of Section
26(2) of the Act. It may be noticed that this G:ourse of action can
be adopted by thefcommission in cases of receipt of reference F
from sources othe~ than of its own knowledge and without calling
for the report from Director General.
I
I
13. In terms of Section 26(3), the Director General is
supposed to take up the investigation and submit the report in G
accordance with law and within the time stated by the
Commission in th~ directive issued under Se.ction 26(1). After
the report is submitted, there is a requirement and in fact
specific duty on the Commission to issue notice to the affected
parties to reply with regard to the details of the information and
i H
146 SUPREME COURT REPORTS [2010] 11 S.C.R.
A the report submitted by the Director General and thereafter·
permit the parties to submit objections and suggestions to such
documents. After consideration of objections and suggestions,
if the Commission agrees with the recommendations of the
Director General that there is no offence disclosed, it shall close
B the matter forthwith, communicating the said order to the
person/authority as specified in terms of Section 26(6) of the
Act. If there is contravention of any of the provisions of the Act
and in the opinion of the Commission, further inquiry is needed,
then it shall conduct such further inquiry into the matter itself or
c direct the Director General to do so in accordance with the
provisions of the Act.
14. In terms of Section 26(7), the Commission is vested
with the power to refer the matter to the Director General for
further investigation, or even conduct further inquiry itself, if it
D so chooses. The Commission, depending upon the nature of
the contravention. shall, after inquiry, adopt the course specified
under Sections 27 and 28 of the Act in the case of abuse of
dominant position and the procedure under Sections 29 to 31
of the Act in the case of combinations. The Commission is
E vested with powers of wide magnitude and serious
repercussions as is evident from the provisions of Sections
27(d), 28 and 31(3) of the Act. The Commission is empowered
to direct modification of agreements insgfar as they are in
contravention of Section 3, divisioQ,of-ail enterprise enjoying
F dominant position, modificationOf combinations wherever it
deems necessary and to ensure that there is no abuse or
contravention of the statutory provisions. We may notice that
the provisions relating to combinations have been duly notified
vide Notifications dated 12th October 2007 and 15th May,
G 2009 respectively. However, in the facts of the present case,
these provisions do not fall for consideration of the Court.
15. For conducting inquiry and passing orders, as
contemplated under the provisions of the Act, the Commission
is entitled to evolve its own procedure under Section 36(1) of
H
COMPETITION COMMISSION OF INDIA v. STEEL 147
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
the Act. However, the Commission is also vested with the A
powers of a Civil Court in terms of Section 36(2) of the Act,
though for a limited purpose. After completing the inquiry in
accordance with law, the Commission is required to pass such
orders as it may deem appropriate in the facts and
circumstances of a given case in terms of Sections 26 to 31 B
of the Act.
16. Having referred to the background leading to the
enactment of competition law in India and the procedure that
the Commission is expected to follow while deciding the C
matters before it and facts of the case, now it will be
appropriate for this Court to refer to the submissions made in
light of the facts of this case. According to the Commission (the
appellant herein), the directions passed in the order dated 8th
December, 2009 under Section 26(1) of the Act are not
appealable and further there is no requirement in law to afford D
an opportunity of hearing to the parties at the stage of
formulating an opinion as to the existence of a prima facie
case. It is also the contention of the Commission that in an
appeal before the Tribunal it is the necessary party and that the
Commission is not expected to state reasons for forming an E
opinion at the prima facie stage.
17. On the contrary, according to SAIL (the respondent
herein), the principles of natural justice have been violated by
the Commission while declining to grant extension of time to F
file its reply and that the direction in referring the matter to
Director General was passed in undue haste.
18. The informant placed reliance upon Regulation 30(2)
of the Regulations which empowers the Commission to pass
such orders as it may deem fit on the basis of the facts G
available, where a party refuses to assist or otherwise does not
provide necessary information within the stipulated time.
Further, according to the informant there was no valid reason
submitted by the SAIL which would justify grant of extension and
H
148 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A as such the order passed by the Commission on merits was
not liable to be interfered.
19. We may also notice that learned counsel appearing
for the parties had addressed the Court on certain allied issues
B which may not have strictly arisen from the memorandum of
appeal, but the questions raised were of public importance and
are bound to arise before the Commission, as well as the
Tribunal in all matters in which the proceedings are initiated
before the Commission. Thus, we had permitted the parties to
argue those allied issues and, therefore, we would proceed to
C record the reasons while dealing with such arguments as well.
20. In order to examine the merit or otherwise of the
contentions raised by the respective ·parties, it will be
appropriate for us to formulate .the following points for
D determination:-
(1) Whether the directions passed by the
Commission in exercise of its powers under
Section 26(1) of the Act forming a prima
facie opinion would be appealable in terms
E
of Section 53A( 1) of the Act?
(2) What is the ambit and scope of power
vested with the Commission under Section
26(1) of the Act and whether the parties,
F including the informant or the affected party,
are entitled to notice or hearing, as a matter
of right, at the preliminary stage of
formulating an opinion as to the existence of
the prima facie case?
G
(3) Whether the Commission would be a
necessary, or at least a proper, party in the
proceedings before the Tribunal in an appeal
preferred by any party?
H (4) At what stage and in what manner the
COMPETITION COMMISSION OF INDIA v. STEEL 149
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
Commission can exercise powers vested in A
it under Section 33 of the Act to pass
temporary restraint orders?
(5) Whether it is obligatory for the Commission
to record reasons for formation of a prima 8
facie opinion in terms of Section 26(1) of the
Act?
(6) What directions, if any, need to be issued by
the Court to ensure proper compliance in
regard to procedural requirements while C
keeping in mind the scheme of the Act and
the legislative intent? Also to ensure that the
procedural intricacies do not hamper in
achieving the object of the Act, i.e., free
market and competition. D
21. We would prefer to state our answers to the points of
law argued before us at the very threshold. Upon pervasive
analysis of the submissions made before us by the learned
counsel appearing for the parties, we would provide our E
conclusions on the points noticed supra as follows:
(1) In terms of Section 53A(1 )(a) of the Act
appeal shall lie only against such directions,
decisions or orders passed by the
Commission before the Tribunal which have F
been specifically stated under the provisions
of Section 53A(1 )(a). The orders, which have
not been specifically made appealable,
cannot be treated appealable by implication.
For example taking a prima facie view and G
issuing a direction to the Director General for
investigation would not be an order
appealable under Section 53A.
(2) Neither any statutory duty is cast on the
H
150 SUPREM!= COURT REPORTS [201 O] 11 S.C.R.
A Commission to issue notice or grant hearing,
nor any party can claim, as a matter of right,
notice and/or hearing at the stage of
formation of opinion by the Commission, in
terms of Section 26(1) of the Act that a prima
B facie case exists for issuance of a direction
to the Director General to cause an
investigation to be made into the matter.
However, the Commission, being a statutory
body exercising, inter alia, regulatory
c jurisdiction, even at that stage, in its
discretion and in appropriate cases may call
upon the concerned party(s) to render
required assistance or produce requisite
information, as per its directive.
D
The Commission is expected to form such
prima facie view without entering upon any
adjudicatory or determinative process. The
Commission is entitled to form its opinion
E without any assistance from any quarter or
even with assistance of experts or others.
The Commission has the power in terms of
Regulation 17 (2) of the Regulations to invite
not only the information provider but even
F 'such other person' which would include all
persons, even the affected parties, as it may
deem necessary. In that event it shall be
'preliminary conference', for whose conduct
of business the Commission is entitled to
evolve its own procedure.
G
(3) The Commission, in cases where the inquiry
has been initiated by the Commission suo
moto, shall be a necessary party and in all
other cases the Commission shall be a
H proper party in lhe proceedings before the
COMPETITION COMMISSION OF INDIA v. STEEL 151
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
Competition Tribunal. The presence of the A
Commission before the Tribunal would help
in complete adjudication and effective and
expeditious disposal of matters. Being an
expert body, its views would be of
appropriate assistance to the Tribunal. Thus, B
the Commission in the proceedings before
the Tribunal would be a necessary or a proper
party, as the case may be.
(4) During an inquiry and where the
Commission is satisfied that the act is in C
contravention of the provisions stated in
Section 33 of the Act, it may issue an order
temporarily restraining the party from carrying
on such act, until the conclusion of such
inquiry or until further orders without giving D
notice to such party, where it deems it
necessary. This power has to be exercised
by the Commission sparingly and under
compelling and exceptional circumstances.
The Commission, while recording a E
reasoned order inter alia should : (a) record
its satisfaction (which has to be of much
higher degree than formation of a prima facie
view under Section 26(1) of the Act) in clear
terms that an act in contravention of the F
stated provisions has been committed and
continues to be committed or is about to be
committed; (b) It is necessary to issue order
of restraint and (c) from the record before the
Commission, it is apparent that there is G
every likelihood of the party to the /is,
suffering irreparable and irretrievable
damage or there is definite apprehension
that it would have adverse effect on
competition in the market. H
152 SUPREME COURT REPORTS (2010] 11 S.C.R.
A The power under Section 33 of the Act to
pass temporary restraint order can only be
exercised by the Commission when it has
formed prima facie opinion and directed
investigation in terms of Section 26(1) of the
B Act, as is evident from the language of this
provision read with Regulation 18(2) of the
Regulations.
(5) In consonance with the settled principles of
administrative jurisprudence, the
c Commission is expected to record at least
some reason even while forming a prima
facie view. However, while passing
directions and orders dealing. witb_the rights
of the parties in its adjudicatory and
D determinative capacity, it is required of the
Commission to pass speaking orders, upon
due application of mind, responding to all the
contentions raised before it by the rival
parties.
E
Submissions made and findings in relation to Point No.1
22. If we examine the relevant provisions of the Act, the
legislature, in its wisdom, has used different expressions in
regard to exercise of jurisdiction by the Commission. The
F Commission may issue directions, pass orders or take
decisions, as required, under the various provisions of the Act.
The object of the Act is demonstrated by the prohibitions
contained in Sections 3 and 4 of the Act. Where prohibition
under Section 3 relates to anti-competition agreements there
G Section 4 relates to the abuse of dominant position. The
regulations and control in relation to combinations is dealt with
in Section 6 of the Act. The power of the Commission to make
inquiry into such agreements and the dominant position of an
entrepreneur, is set into motion by providing information to the
H Commission in accordance with the provisions of Section 19
COMPETITION COMMISSION OF INDIA v. STEEL 153
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
of the Act and such inquiry is to be conducted by the A
Commission as per the procedure evolved by the legislature
under Section 26 of the Act. In other words, the provisions of
Sections 19 and 26 are of great relevance and the discussion
on the controversies involved in the present case would revolve
on the interpretation given by the Court to these provisions. B
23. Thus, we may reproduce provisions of Section 19 and
26 which read as under:
"19. Inquiry into certain agreements and dominant
position of enterprise.-(1) The Commission may C
inquire into any alleged contravention of the provisions
contained in subsection (1) of section 3 or sub-section (1)
of section 4 either on its own motion or on-
(a) receipt of any information, in such manner and D
accompanied by such fee as may be determined by
regulations,/ from any person, consumer or their
association or trade association; or
(b) a reference made to it by the Central Government or a
State Government or a statutory authority.
E
(2) Without prejudice to the provisions contained in sub-
section (1 ), the powers and functions of the Commission
shall include the powers and functions specified in sub-
sections (3) to (7) .. F
(3) The Commission shall, while determining whether an
agreement has an appreciable adverse effect on
competition under section 3, have due regard to all or any
of the following factors, namely:-
G
(a) creation of barriers to new entrants in the market;
(b) driving existing competitors out of the market;
H
154 SUPREME COURT REPORTS [2010] 11 S.C.R.
A (c) foreclosure of competition by hindering entry into the
market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of goods or
B provision of services;
(f) promotion of technical, scientific ~'nd economic
1
development by means of production orl distribution of
goods or provision of services. ·
C·
(4) The Cqmmission shall, while inquiring whether an
enterprise enjoys a dominant position or not under section
4, have due regard to all or any of the following factors,
namely:-
D (a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
E (d) economic power of the enterprise including commercial
advantages over competitors;
(e) vertical integration of the enterprises or sale or service
network of such enterprises;
F (f) dependence of consumers on the enterprise;
(g) monopoly or dominant position whether acquired as a
result of any statute or by virtue of being a Government
company or a public sector undertaking or otherwise;
G
(h) entry barriers including barriers such as regulatory
barriers, financial risk, high capital cost of entry, marketing
entry barriers, technical entry barriers, economies of scale,
high cost of substitutable goods or service for consumers;
H (i) countervailing buying power; ·
COMPETITION COMMISSION OF INDIA v. STEEL 155
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
0) market structure and size of market; A
(k) social obligations and social costs;
(/) relative advantage, by way of the contribution to the
economic development, by the enterprise enjoying a
dominant position having or likely to have an appreciable B
adverse effect on competition;
(m) any other factor which the Commission may consider
relevant for the inquiry.
(5) For determining whether a market constitutes a C
"relevant market" for the purposes of this Act, the
Commission shall have due regard to the "relevant
geographic market" and "relevant product market".
(6) The Commission shall, while determining the "relevant D
geographic market", have due regard to all or any of the
following factors, namely:-
(a) regulatory trade barriers;
(b) local specification requirements; E
(c) national procurement policies;
(d) adequate distribution facilities;
(e) transport costs; F
(f) language;
(g) consumer preferences;.
(h) need for secure or regular supplies or rapid after-sales G
services.
(7) The Commission shall, while determining the "relevant
product mark~t", have due regard to all or any of the
following factors, namely:- H
156 SUPREME COURT REPORTS [201 O] 1-1 S.C.R.
A (a) physical characteristics or end-use of goods;
(b) price of goods or service;
(c) consumer preferences;
B (d) exclusion of in-house production;
(e) existence of specialised producers;
(f) classification of industrial products.
c 26. Procedure for inquiry under section 19
(1)0n·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
D case, it shall direct the Director General to cause an
investigation to be made into the matter:
Provided that if the subject matter of an information
received is, in the opinion of the Commission, substantially
E the same as or has been covered by ~ny previous
information received, then the new information may be
clubbed with the previous information.
(2) Where on receipt of a reference from the Central
Government or a State Government or a statutory authority
F
or information received under section 19, the Commission
is of the opinion that there exists no prima facie case, it
shall close the matter forthwith and pass such orders as it
deems fit and send a copy of its order to the Central
Government or the State Government or the statutory
G authority or the parties concerned, as the case may be.
(3) The Director General shall, on receipt of direction under
sub-section (1), submit a report on his findings within such
period as may be specified by the Commission.
H
COMPETITION COMMISSION OF INDIA v. STEEL 157
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
(4) The Commission may forward a copy of the report A
referred to in sub section (3) to the parties concerned:
Provided that in case the investigation is caused to be
made based on reference received from the Central
Government or the State Government or the statutory 8
authority, the Commission shall forward a copy of the report
referred to in subsection (3) to the Central Government or
the State Government or the statutory authority, as the case
may be.
(5) If the report of the Director General referred to in sub- C
section (3) recommends that there is no contravention of
the provisions of this Act, the Commissi0n shall invite
objections or suggestions from the Central Government or
the State Government or the statutory authority or the
parties concerned, as the case may be, on such report of D
the Director General.
(6) If, after consideration of the objections and suggestions
referred to in sub section (5), if any, the Commission
agrees with the recommendation of the Director General,
E
it shall close the matter forthwith and pass such orders as
it deems fit and communicate its order to the Central
Government or the State Government or the statutory
authority or the parties concerned, as the case may be.
(7) If, after consideration of the objections or suggestions F
referred to in sub section (5), if any, the Commission is of
the opinion that further investigations is called for, it may
direct further investigation in the matter by the Director
General or cause further inquiry to be made by in the matter
or itself proceed with further inquiry in the matter in G
accordance with the provisions of1 this Act.
\
(8) If the report of the Director General referred to in sub-
section (3) recommends that there is contravention of any
of the provisions of this Act, and the Commission is of the
I H
'
158 SUPREME COURT REPORTS [2010] 11 S.C.R.
A opinion that further inquiry is called for, it shall inquire into
such contravention in accordance with the provisions of
this Act."
24. The Tribunal has been vested wiih the power to hear
and dispose of appeals against any direction issued or
8
decision made or order passed by the Commission in exercise
of its powers under the provisions mentioned in Section 53A
of the IA.ct. The appeals preferred before the Tribunal under
Sectior:i 53A of the Act are to be he<;1rd and dealt with by the
Tribunal as per the procedure spelt out under Section 538 of
C the Act. It will be useful to refer to both these provisions at this
stage itself, which read as under:- •
' I
I
"~3A. Establishment of Trib1,mal. - (1) The Central
Government shall, by notification, establish an Appellate
D Tribunal to be known as Competition Appellate Tribunal,
(a) to hear and dispose of appeals against any direction
is9ued or decision made or order passed by the /
Commission under sub-sections (2) and (6) of section 26,
E
section 27, section 28, section 31, section 32, section 33,
section 38, section 39, section 43, section 43A, section
44, section 45 or section 46 of this Act;
(b) to adjudicate on claim for compensation that may arise
F from the findings of the Commission or the orders of the ·
Appellate Tribunal in an appeal against any finding of the
Commission or under section 42A or under subsection(2)
of section 53Q of this Act, and pass orders for the
recovery of compensation under section 53N of this Act.
G
(2) The Headquarter of the Appellate Tribunal shall be at
such place as the Central Government may, by notification,
specify.
538. Appeal to Appellate Tribunal. - (1) The Central
H Government or the State Government or a local authority
COMPETITION COMMISSION OF INDIA v. STEEL 159
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
or enterprise or any person, aggrieved by any direction, A
decision or order referred to in clause (a) of section 53A
may prefer an appeal to the Appellate Tribunal.
(2) Every appeal under sub-section (1) shall be filed within
a period of sixty days from the date on which a copy of
8
the direction or decision or order made by the Commission
is received by the Central Government or the State
Government or a local authority or enterprise or any person
referred to in that sub-section and it shall be in such form
and be accompanied by such fee as may be prescribed:
c
Provided that the Appellate Tribunal may entertain an
appeal after the expiry of the said period of sixty days if it
is satisfied that there was sufficient cause for not filing it
within that period.
D
(3) On receipt of an appeal under sub-section (1 ), the
Appellate Tribunal may, after giving the parties to the
appeal, an opportunity of being heard, pass such orders
thereon as it thinks fit, confirming, modifying or setting
aside the direction, decision or order appealed against.
E
(4) The Appellate Tribunal shall send a copy of every order
made by it to the Commission and the parties to the
appeal. ·
(5) The appeal filed before the Appellate Tribunal under F
sub-section (1) shall be dealt with by it as expeditiously as
possible and endeavour shall be made by it to dispose of
the appeal within six months from the date of receipt of the
appeal."
25. As already noticed, in exercise of its powers, the G
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
H
160 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 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
8 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
C the specified modes. This order has been specifically made
appealable under Section 53A of the Act. 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
D departmentally and is without entering upon any adjudicatory
process. It does not effectively determine any right or obligation
of the parties to the /is. 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
E 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
F the Commission in terms of Section 57 of the Act and
Regulation 35 of the Regulations.
26. Wherever, in the course of the proceedings before the
Commission, the Commission passes a direction or interim
order which is at the preliminary stage and of preparatory nature
G
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. At this
H stage the case of Automec Sri v. Commission of the
COMPETITION COMMISSION OF INDIA v. STEEL 161
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
European Communities ((1990) ECR 11-00367] can be noted, A
where the Court of First Instance held as under:-
"42. As the Court of Justice has consistently held, any
measure the legal effects of which are binding on, and
capable of affecting the interests of, the applicant by 8
bringing about a distinct change in his legal position is an
act or decision against which an action for annulment may
be brought under Article 173. More specifically, in the case
of acts or decisions adopted by a procedure involving
several stages, in particular where they are the culmination C
of an internal pro9edure, an act is open to review only if it
is a measure definitively laying down the position of the
institution on t~ conclusion of that procedure, and not a
provisional measure intended to pave the way for that final
decision Gudgment in Case 60/81 IBM v. Commission
(1981] ECR 2639, at p. 2651, paragraph 8 et seq.). It D
follows that the fact that the contested act is a preparatory
measure constitutes one of the barriers to the admissibility
of an action for annulment which the Court may consider
of its own motion, as the Court of Justice acknowledged
in its judgment in Case 346/87 Bossi v. Commission E
[1989] ECR 303, especially at p.332 et seq."
27. The provision·s of Sections 26 and 53A of the Act
clearly depict the legislative intent that the framers never
desired that all orders, directions and decisions should be F
appealable to the Tribunal. Once the legislature has opted to
specifically state the order, direction and decision, which would
be appealable by using clear and unambiguous language, then
the normal result would be that all other directions, orders etc.
are not only intended to be excluded but, in fact, have been G
excluded from the operation of that provision. The presumption
is in favour of the legislation. The legislature is deemed to be .
aware of all the laws in existence and the consequences of the
laws enacted by it. When other orders have been excluded
from the scope of appellate jurisdiction, it will not be permissible
H
162 SUPREME COURT REPcDRTS [2010) 11 S.C.R.
A to include such directions or orders by implication or with
reference to other prpvisions which hardly have any bearing on
the matter in issuej and thus make non-appealable orders
appealable. The p~ovisions of ~ection 53A(1 )(a) use the
expression 'any dir¢ction issued' or decision made or order
B passed by the Comnjlission'. There is no occasion for the Court
to read and interpre~ the word 'or·.: in any different form as that
would completely d$feat the intention of the legislature. The
contention raised b¢fore us is that the word 'or' is normally
disjunctive and 'and1 is normally conjunctive, but at the same
c time they can be rea~ vice versa. The respondent argued that
the expression 'any direction issued' should be read disjunctive
and that gives a complete right to a party to prefer an appeal
under Section 53A, against a direction for investigation, as that
itself is an appealable right independent of any decision or
order which may be made or passed by the Commission.
0
28. It is a settled principle of law that the words 'or' and
'and' may be read as vice versa but not normally. "You do
sometimes read 'or' as 'and' in a statute. But you do not do it
I •
unless yqu are obhg13d because 'or' does not generally mean
E 'and' and 'and' doe$ not generally mean 'or' ..... " [Green v.
Premier Glynrhonwyl Slate Co. (1928) 1 KB 561 p. 568)]. As
pointed out by Lord ~alsbury, the reading of 'or' as 'and' is not
to be resorted to, "unless some other part of the same statute
or the clear intention: of it requires that to be done." [Mersey
F Docks and Harbour $oard v. Henderson Bros. (1888) 13 AC
595 at 603)]. The Cowrt adopted with approval Lord Halsbury's
principle and in fa¢t went further by cautioning against
substitution of cor)junctions in the case of Municipal
Corporation of Delh/1 vs. Tek Chand Bhatia [(1980) 1 SCC
G 158], where the Court held as under:-
1
"11 ....... As Lorp Halsbury L.C. observed in Mersey
Docks & Harbouk Board v. Henderson [LR (1888) 13 AC
603), the readingiof "or" as "and" is not to be reso11ed to
"unless some othf:H part of the same statute or the clear
H
COMPETITION COMMISSION OF INDIA v. STEEL 163
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
intention of it requires that to be done". The substitution of A
conjunctions, however, has been sometimes made without
sufficient reasons, and it has been doubted whether some
of the cases of turning "or" into "and" and vice versa have
not gone to the extreme limit of interpretation."
B
29. To us, the language of the Section is clear and the
statute does not demand that we should substitute 'or' or read
this word interchangeably for achieving the object of the Act.
On the contrary, the objective of the Act is more than clear that
the legislature intended to provide a very limited right to appeal. C
The orders which can be appealed against have been
specifically stipulated by unambiguously excluding the
provisions which the legislature did not intend to make
appealable under the provisions of the Act. It is always expected
of the Court to apply plain rule of construction rather than trying
to read the words into the statute which have been specifically D
omitted by the legislature.
30. We may usefully refer to similar interpretation given by
this Court in the case of Super Cassettes Industries Ltd. vs.
State of UP. [(2009)10 SCC 531), wherein the Court was E
dealing with cancellation of a notice issued under Section 9(2)
of the U.P. Imposition of Ceiling of Land Holdings Act, 1960,
requiring submission of a statement by the tenure holder for
determination of surplus land in accordance with law. Sub-
section (1) of Section 13 of the said Act read as under:- F
"13. Appeals-(1) Any party aggrieved by an order under
sub-section (2) of Section 11 or Section 12, may, within
thirty days of the date of the order, prefer an appeal to the
Commissioner within whose jurisdiction the land or any
part thereof is situate." G
31. The State of UP through its Collector had preferred an
appeal under Section 13 of the Act against an order passed
by the authority cancelling the notice which had been issued
under Section 9(2) of the Act. The contention raised was that H
164 SUPREME COURT REPORTS [2010) 11 S.C.R.
A the said order amounted to an order being passed under
Section 11 (2) of the Act. An order passed under Section 11 (2)
of the Act in furtherance of the statement prepared by the tenure
holder was final and conclusive and could not be called in
question in any court of law. The Court while interpreting the
B provisions of Section 13(1) held that it is only the specific order
passed under Section 11 (2) and Section 12 of the Act which
could be appealed against and while applying its rule held as
·under:-
"23. It is well known that right of appeal is not a natural or
c inherent right. It cannot be assumed to exist unless
expressly provided for by statute . Being a creature of
statute, remedy of appeal must be legitimately traceable
to the statutory provisions ...... .
----
D )()()( )()()( )()()( )()()(
31. Section 13 provides a right of appeal to a party
aggrieved by an order under Sub-section (2) of Section
11 or Section 12 and no other. In other words, any order
passed by the Prescribed Authority other than the order
E
under-Section (2) of· Section 11 or Sectio[! 12 is not
_appealable. From a'ny reckoning, the order dated
December 17, 2003 is neither an order under Sub-section
(2) of Section 11 nor an order under Section 12. Act 1960
does not make the order of the Prescribed Authority
F canceling the notice issued under Section 9(2) amenable
to appeal. Such order does not fall within the ambit of
Section 13." ·
32. We find that the view taken by the Court in this case
G squarely applies to the case in hand as well. Right to appeal
is a creation of statute and it does require application of rule
of plain construction. Such provision should neither be
construed too strictly nor too liberally, if given either of these
extreme interpretations, it is bound to adversely affect the
H
COMPETITION COMMISSION OF INDIA v. STEEL 165
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
legislative object as well as hamper the proceedings before the A
appropriate forum.
33. In the case of Maria Cristina De Souza Sadder vs.
Amria Zurana Pereira Pinto [(1979) 1 SCC 92], this Court held
as under: B
"5 ... It is no doubt well-settled that the right of appeal
is a substantive right and it gets vested in a litigant no
sooner the /is is commenced in the Court of the first
instance, and such right or any remedy in respect thereof
will not be affected by any repeal of the enactment C
conferring such right unless the repealing enactment either
expressly or by necessary implication takes away such
right or remedy in respect thereof."
34. The principle of 'appeal being a statutory right and no o
party having a right to file appeal except in accordance with the
prescribed procedure' is now well settled. The right of appeal
may be lost to a party in face of relevant provisions of law in
appropriate cases. It beiog creation of a statute, legislature has
to decide whether the right to appeal should be unconditional
E
or conditional. Such law does not violate Article 14 of the
Constitution. An appeal to be maintainable must have its
genesis in the authority of law. Reference may be made to M.
Ramnarain Private Limited v. State Trading Corporation of
India Limited, [(1983) 3 SCC 75] and Gujarat Agro Industries
Co. Ltd. v. Municipal Corporation of the City of Ahmedabad
F
[(1999) 4 sec 468]. Right of appeal is neither a natural nor
inherent right vested in a party. It is substantive statutory right
regulated by the statute creating it. The cases of Kondiba
Dagadu Kadam vs. Savitribai Sopan Gujar [(1999) 3 SCC
722] and Kashmir Singh vs. Harnam Singh [2008 AIR SC G
1749] may be referred to on this point. Thus, it is evident that
the right to appeal is not a right which can be assumed by
logical analysis much less by exercise of inherent jurisdiction.
It essentially should be provided by the law in force. In absence
of any specific provision creating a right in a party to file an H
166 SUPREME COURT REPORTS [2010] 11 S.C.R.
A appeal, such right can neither be assumed nor inferred in favour
of the party.
35. A statute is stated to be the edict of Legislature. It
expresses the will of Legislature and the function of the Court
8 is to interpret the document according to the intent of those who
made it. It is a settled rule of construction of statute that the
provisions should be interpreted by applying plain rule of
construction. The Courts normally would not imply anything which
is inconsistent with the words expressly used by the statute. In
other words, the Court would keep in mind that its function is
C jus dTcere, not jus dare. The right of appeal being creation of
the statute and being a statutory right does not invite
unnecessarily liberal or strict construction. The best norm would
be to give literal construction keeping the legislative intent in
mind.
D
36. This Court in the case of Shiv Shakti Co-op. Housing
Society, Nagpur vs. Swaraj Developers [(2003) 6 SCC 659],
·while referring to the principles for interpretation of statutory
provisions, held as under:
E
"19. It is a well-settled principle in law that the Court cannot
read anything into a statutory provision which is plain and
unambiguous. A statute is an edict of the legislature. The
language employed in a statute is the determinative factor
of legislative intent. Words and phrases are symbols that
F
stimulate mental references to referents. The object of
interpreting a statute is to ascertain the intention of the
legislature enacting it. (See Institute of Chartered
Accountants of India v. Price Waterhouse.) The intention
of the legislature is primarily to be gathered from the
G language used, which means that attention should be paid
to what has been said as also to what has not been said.
As a consequence, a construction which reqllires for its
support, addition or substitution of words or which results
in rejection of words as meaningless has to be avoided.
H As observed in Crawford v. Spooner Courts cannot aid the
, COMPETITION COMMISSION OF INDIA v. STEEL 167
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
legislatures' defective phrasing of an Act, we cannot add A
or mend, and by construction make up deficiencies which
are left there. (See State of Gujarat v. Dilipbhai Nathjibhai
Patel). It is contrary to all rules of construction to read words
into an Act unle.ss it is absolutely necessary to do so. [See
' 'Stock v. Frank,Jones (Tipton) Ltd.] Rules of interpretation B
do not permit)Courts to do so, unless the provision as it
, .~tands is me~hingless or of a doubtful meaning. Courts are
not entitled t~ read words into an Act of Parliament unless
Clear reason for it is to be found within the four corr.ers of
the Act itself. (Per Lord Loreburn, L. C. in Vickers Sons c
and Maxim Ltd. v. Evans, quoted in Jumma Masjid v.
Kodimaniandra Deviah."
37. The Law Commission of India, in its 183rd Report,
/
while dealing with the ne~d for providing principles of
interpretation of statute as regards the extrinsic aids of 0
interpretation in General Clauses Act, 1897, expressed the view
that a statute is a will of legislature conveyed in the form of text.
Noticing that the process of interpretation is as old as language,
it says that the rules of interpretation were evo,ved at a very
early stage of Hindu civilization and culture and the same were E
given by 'Jajmini', the author of Mimamsat Sutras; originally
meant for shrutis, they were employed for the interpretation of
Smritis as well. While referring to the said historical
background, the Law Commission said:
: I
F
'\It is well settled principle of law that as the statute is ~n
edict· of the Legislature., the conventional way of
interpreting or construing a ~tatute is to seek the intention
of legislature. The intention ofl Jegislature assimilates two
aspects; one aspect carries th~ concept of 'meaning', i.e., G
wha~ the word means and another aspect conveys the
concept of 'purpose' and 'object' or the 'reason' or 'spirit'
pervading through the statute. The process of construction,
therefore, combines both the literal and purposive
approaches. However, necessity of interpretation would
H
\ 168 SUPREME COURT REPORTS [2010) 11, S.C.R.
i
A arise only where the language of a statutory provision is .
ambiguous, not clear or where two views are possible or.,'
1
where the provision gives a different meaning defeating
the object of the statute. If the language is clear and
unambiguous, no need of interpretation would arise. In this
B regard, a Constitution Brnch of five Judges of the
Supreme Court in R.S. Na')ak v. A.R. Antulay, AIR 1984
SC 684 has held:
"... lf the words of the Statute are clear and unambiguous,
it is the plainest duty of the Court to give effect to the natural
c meaning of the words used in the provision. The question
of construction arises only in the event of an ambiguity or
the plain meaning of the words used in the Statute would
be self defeating."
D Recently, again Supreme Court in Grasim Industries Ltd.
v. Collector of Customs, Bombay, (2002) 4 SCC 297 has
followed the same principle and observed:
"Where the words are clear and there is no obscurity, and
there is no ambiguity and the intention of the legislature is
E
clearly conveyed, there is no scope for Court to take upon
itself the task of amending or altering the statutory
provisions."
38. Thus, the Court can safely apply rule of plain
F construction and legislative intent in light of the object sought
to be achieved by the enactment. While interpreting the
provisions of the Act, it is not necessary for the Court to implant,
or to exclude the words, or over emphasize language of the
provision where it is plain and simJi)le. The provisions of the Act
G should be permitted to have their full operation ~ather than
causing any impediment in their application by unnecessarily
1
· ~xpanding the scope of the provisions by implication.
39. We are unable to per~uade ourselves to agree with
H ~he reas9ning given and view taken by the Tri~unal in thi~ regard,
. COMPETITION COMMISSION OF INDIA v. STEEL 169
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
in the impugned order. Even though the Tribunal referred to the A
dictum of the Court in the case of Tek Chaod Bhatia (supra),
it still concluded that the use of the words 'any' and 'or' were
the ·expressions of wide magnitude and that 'any' being an
adjective qualifies the nouns under the relevant provisions, i.e.
directions, decisions and orders, all were appealable without 8
exception.
40. The expression 'any', in fact, qualifies each of the three
expressions 'direction issued or decision made or order
passed'. It cannot be said that it signifies any one of them and, C
particularly, only 'direction issued'. All these words have been
used by the legislature consciously and with a purpose. It has
provided for complete mechanism ensuring their
implementation under the provisions of the Act, for example,
under Section 26(1) the Commission is expected to make a
decision by formation of a prima facie opinion and issue a D
direction to cause an investigation to be made by the Director
General and after receiving the report has to take a final view
in terms of Section 26(6) and even otherwise, it has the
discretion to form an opinion and even close a case under
Section 26(2). Having enacted these provisions, the legislature E
· in its wisdom, made only the order under Section 26(2) and
26(6) appealable under Section 53A of the Act. Thus. it
. specifically excludes the opinion/decision of the authority under
Section 26(1) and even an order passed under Section 26(7)
directing further inquiry, from being appealable before the F
Tribunal. Therefore, it would neither be permissible nor
advisable to make these provisions appealable against the
legislative mandate.
41. The existence of such excluding provisions, in. fact, G
exists in different statutes. Reference can even be made to the
provisions of Section 1DOA of the Code of Civil Procedure,
where an order, which even may be a judgment, under the
provisions of the Letters Patent of different High Courts and are
appealable within that law, are now excluded from the scope
H
170 SUPREME COURT REPORTS [2010] 11 S.C.R.
A of the appealable orders. In other words, instead of enlarging
the scope of appealable orders under that provision, the Courts
have applied the rule of plain construction and held that no
appeal would lie in conflict with the provisions of Section 1OOA
of the Code of Civil Procedure.
B
42. Expressum facit cessare taciturn - Express mention
of one thing implies the exclusion of oth~r. (Expression
precludes implication). This doctrine has been applied by this
Court in various cases to enunciate the principle that expression
C precludes implication. [Union of India vs. Tulsiram Patel, AIR
1985 SC 1416]. It is always safer to apply plain and primary
rule of construction. The first and primary rule of construction
is that intention of the legislature is to be found in the words
used by the legislature itself. The true or legal meaning of an
enactment is derived by construing the meaning of the word in
D the light of the discernible purpose or object which
comprehends the mischief and its remedy to which an
enactment is directed. [State of Himachal Pradesh vs. Kai/ash
Chand Mahajan (AIR 1992 SC 1277) and Padma Sundara
Rao v. State of T.N. (AIR 2002 SC 1334)].
E
43. It is always important for the Court to keep in mind the
purpose which lies behind the statute while interpreting the
statutory provisions. This was stated by this Court in Padma
Sundara Rao's case (supra) as under:-
F "11 .... The first and primary rule of construction is
that the intention of the legislation must be found in the
words used by the legislature itself. The question is not
what may be supposed and has been intended but what
has been said. "Statutes should be construed, not as
G theorems of Euclid", Judge Learned Hand said, "but words
must be construed with some imagination of the purposes
which lie behind them". (See Lenigh Valley Coal Co. v.
Yensavage,218 FR 547). The view was reiterated in
Union of India v. Filip Tiago De Gama of Vedem Vasco
H De Gama (AIR 1990 SC 981)."
COMPETITION COMMISSION OF INDIA v. STEEL 171
AUTHORITY OF INDIA LTD. (SWATANTER KUMAR, J.]
44. Applying these principles to the provision$ of Section A
53A(1)(a), we are bf the considered view that the ~ppropriate
interpretation of this provision would be that no other dire~tion,
decision or order of the Commission is appealable e~cept
those expressly stated in Section 53A(1)(a). The maxim est
boni judicis ampliare justiciam, non-jurisdictionem finds 8
application here. Right to appeal, being a statutory right, is
controlled strictly by the provision and the procedure prescribing
such a right. To read into the language of Section 53A that every
direction, order or decision of the Commission would be
appealable will amount to unreasonable expansion of the c
provision, when the language of Section 53A is clear and
unambiguous. Section 538(1) itself is an indicator of the
restricted scope of appeals that shall be maintainable before
the Tribunal; it provides that the. aggrieved party has a right of
appeal against 'any direction, decision or order referred to in
0
Section 53A(1 )(a).' If the legislature intended to enlarge the
scope and make orders, other than those, specified in Section
53A(1)(a), then the language of Section 538(1) ought to have
been quite distinct from the one used by the legislature.
45. One of the parties before the Commission would, in E
any case, be aggrieved by an order where the Commission
grants or declines to grant extension of time. Thus, every such
order passed by the Commission would have to be treated as
appealable as per the contention raised by the respondent
before us as well as the view taken by the Tribunal. In our view, F
such orders cannot be held to be appealable within the meaning
and language of Section 53A of the Act and also on the
principle that they are not orders which determine the rights of
the parties. No appeal can lie against such an order. Still the
parties are not remediless as, when they prefer an appeal G
against the final order, they can always take up grounds to
challenge the interim orders/directions passed by the
Commission in the memorandum of appeal. Such an approach
· would be in consonance with the procedural law prescribed in
H
172 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A Order XLlll Rule 1A and even other provisions of Code of Civil
Procedure.
46. The above approach will subserve the purpose of the
Act in the following manner :
B First, expeditious disposal of matters before the
Commission and the Tribunal is an apparent legislative intent
1 from the bare reading of the provisions of the Act and more
particularly the Regulations framed thereunder. Second, if every
direction or recording of an opinion are made appealable then
C certainly it would amount to abuse of the process of appeal.
Besides this, burdening the Tribunal with appeals against non-
appealable orders would defeat the object of the Act, as a
prolonged litigation may harm the interest of free and fair
market and economy. Finally, we see no ambiguity in the
D language of the provision, but even if, for the sake of argument,
we assume that the provision is capable of two interpretations
then we must accept the one which will fall in line with the
legislative intent rather than the one which defeat the object of
·the Act.
E
47. For these reasons, we have no hesitation in holding
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. Thus, the appeal preferred
by SAIL ought to have been dismissed by the Tribunal as not
F maintainable.
Submissions made and findings in relation to Point Nos.2
&5
G 48. The issue of notice arid hearing are squarely covered
under the ambit of the principles of natural justice. Thus, it will
not be inappropriate to discuss these issues commonly under
the same head. The. prtnciple of ctudi a/teram partem, as
commonly understood, means 'hear the other side or hear both
sides before a decision is arrived at'. It is founded on the ruie
H
COMPETITION COMMISSION O~
!NOIA v. STEEL 173
AUTHORITY OF INDIA LTD. [SWAtANTER KUMAR, J.]
that no one should be condem~ed or\deprived of his right even A
in quasi judicial proceedings unless h~ has been granted liberty
of being heard. ·
49. In cases of Cooper v. Wands Worth Board of Works
[(1863), 14 C.B. (N.S.) 180) and Errington v. Minister of Health, 8
((1935) 1 KB 249),\ the Courts in the United Kingdom had
enunciated this printi:iple in the early times. This principle was
adopted under vario~s legal systems including India and was
applied with some limitations even to the field of administrative
law. However, with the development of law, this doctrine was C
expanded in its application and the Courts specifically included
in its purview, the right to notice and requirement of reasoned
orders, upon due application of mind in addition to the right of
hearing. These principles have now been consistently followed
in judicial dictum of Courts in India and are largely understood
as integral part of principles of natural justice. In other words, it D
is expected of a tribunal or any quasi judicial body to ensure
compliance of these principles before any order adverse to the
interest of the party can be passed. However, the exclusion of
the principles of natural justice is also an equally known concept
and the legislature has the competence to enact laws which E
specifically exclude the application of principles of natural
justice in larger public interest and for valid reasons. Generally,
we can classify compliance or otherwise, of these principles
mainly under three categories. First, where application of
principles of natural justice is excluded by specific legislation; F
second, where the law contemplates strict compliance to the
provisions of principles of natural justice and default in
compliance thereto can result in vitiating not only the orders but
even the proceedings taken against the delinquent; and third,
where the law requires compliance to these principles of natural G
justice, but an irresistible conclusion is drawn by the competent
court or forum that no p~ej~dice has been caused to the
delinquent and the non-compliance is with regard to an action
of directory nature. The cJses may fall in any of these
categories and therefore, the Court has to examine the .facts H
174 SUPREME COURT REPORTS [2010] 11 S . C.R.
A of each case in light of the Act or the Rules and Regulations in
force in relation to such a case. It is not only difficult but also
not advisable to spell out any straight jacket formula which can
be applied universally to all cases without variation.
50. In light of the above principles, let us examine whether
8
in terms of Section 26(1) of the Act read with Regulations in
force, it is obligatory upon the Commission to issue notice to
the parties concerned (more particularly the affected parties)
and then form an opinion as to the existence of a prima facie
C case, or otherwise, and to issue direction to the Director
General to conduct investigation in the matter.
51. At the very outset, we must make it clear that we are
considering the application of these principles only in light of
the provisions of Section 26(1) and the finding recorded by the
D Tribunal in this regard. The intimation received by the
Commission from any specific person complaining of violation
of Section 3(4) read with Section 19 of the Act, sets into the
motion, the mechanism stated under Section 26 of the Act.
Section 26(1), as already noticed, requires the Commission to
E form an opinion whether or not there exists a prima facie case
for issuance of direction to the Director General to conduct an
investigation. This section does not mention about issuance of
any notice to any party before or at the time of formation of an
opinion by the Commission on the basis of a reference or
F information received by it. Language of Sections 3(4) and 19
and for that matter, any other provision of the Act does not
suggest that notice to the informant or any other person is
required to be issued at this stage. In contra-distinction to this,
when the Commission receives the report from the Director
G General and if it has not already taken a decision to close the
case under Section 26(2), the Commission is not only expected
to forward the copy of the report, issue notice, invite objections
or suggestions from the informant, Central Government, State
Government, Statutory Authorities or the parties concerned, but
also to provide an opportunity of hearing to the parties before
H
COMPETITION COMMISSION OF INDIA v. STEEL 175
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
arriving at any final conclusion under Section 26(7) or 26(8) of A
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)
th!3 requirement of notice, when it is conspicuous by its very B
absence. Once the proceedings before the Commission are
completed, the parties have a right to appeal under Section
53A(1)(a) in regard to the orders termed as appealable under
that provision. Section 538 requires that the Tribunal should
give, parties to the appeal, notice and an opportunity of being c
heard before passing orders, as it may deem fit and proper,
confirming, modifying or setting aside the direction, decision
or order appealed against.
52. Some of the Regulations also throw light as to when
and how notice is required to be served upon the parties D
including the affected party. Regulation 14(7) states the powers
and functions, which are vested with the Secretary of the
Commission to ensure timely and efficient disposal of the
matter and for achieving the objectives of the Act. Under
Regulation 14(7)(f) the Secretary of the Commission is required E
to serve notice of the date of ordinary meeting of the
Commission to consider the information or reference or
document to decide if there exists a prima facie case and to
convey the directions of the Commission for investigation, or
to issue notice of an inquiry after receipt and consideration of F
the report of the Director General. In other words, this provision
talks of issuing a notice for holding an ordinary meeting of the
Commission. This notice is intended to be issued only to the
members of the Commission who constitute 'preliminary
conference' as they alone have to decide about the existence G
of a prima facie case. Then, it has to convey the direction of
the Commission to the Director General. After the receipt of
the report of the Director General, it has to issue notice to the
parties concerned.
H
176 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A 53. Regulation 17(2) empowers the Commission to invite
the information provider and such other person, as is
necessary, for the preliminary conference to aid in formation
of a prima facie opinion, but this power to invite cannot be
equated with requirement of statutory notice or hearing.
B Regulation 17(2), read in conjunction with other provisions of
the Act and the Regulations, clearly demonstrates that this
provision contemplates to invite the parties for collecting such
information, as the Commission may feel necessary, for
formation of an opinion by the preliminary conference.
c Thereafter, an inquiry commences in terms of Regulation 18(2)
when the Commission directs the Director General to make the
investigation, as desired.
54. Regulation 21 (8) also indicates that there is an
obligation upon the Commission to consider the objections or
D suggestions from the Central Government or the State
Government or the Statutory Authority or the parties concerned
and then Secretary is required to give a notice to fix the meeting
of the Commission, if it is of the opinion that further inquiry is
called for. In that provision notice is contemplated not only to
E the respective Gover11ments but even to the parties concerned.
55. The notices are to be served in terms of Regulation
22 which specifies the mode of service of summons upon the
concerned persons and the manner in which such service
F should be effected. The expression 'such other person',
obviously, would include all persons, such as experts, as stated
in Regulation 52 of the Regulations. There is no scope for the
Court to arrive at the conclusion that such other person would
exclude anybody including the informant or the affected parties,
G summoning of which or notice to whom, is considered to be
appropriate by the Commission.
56. With some significance, we may also notice the
provision of Regulation 33(4) of the Regulations, which requires
that on being satisfied that the reference is complete, the
H Secretary shall place it during an ordinary meeting of the
COMPETITION COMMISSION OF INDIA v. STEEL 177
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
Commission and seek necessary instructions regarding the A
parties to whom the notice of the meeting has to be issued.
This provision read with Sections 26(1) and 26(5) shows that
the Commission is, expected to apply its mind as to whom the
notice should be sent before the Secretary of the Commission
can send notice to the parties concerned. In other words, B
issuance of notice is not an automatic or obvious consequence,
but it is only upon application of mind by the authorities
concerned that notice is expected to be issued.
'
57. Regulation 48, which deals with the procedure for
imposition of penalty, requires under Sub-Regulation (2) that C
show cause notice is to be issued to any person or enterprise
or a party to the proceedings, as the case may be, under Sub-
Regulation (1), giving him not less than 15 days time to explain
the conduct and even grant an oral hearing, then alone to pass
an appropriate order imposing penalty or otherwise. D
58. Issue of notice to a party at the initial stage of the
proceedings, which are not determinative in their nature and
substance, can hardly be implied; wherever the legislature so
desires it must say so specifically. This can be illustrated by E
referring to the Customs Tariff (Identification, Assessment and
Collection of Anti-Dumping Duty on Dumped Articles and for
Determination of Injury) Rules, 1995 under the Customs Tariff
Act, 1975. Rule 5(5) provides that while dealing with an
application submitted by aggrieved domestic producers F
accounting for not less than 25% of total production of the like
article, the designated authority shall notify the government of
exporting country before proceeding to initiate an investigation.
Rule 6(1) also specifically requires the designated authority to
issue a public notice of the decision to initiate investigation. In G
other words, notice prior to initiation of investigation is
specifically provided for under the Anti-Dumping Rules,
whereas, it is not so under the provisions of Section 26(1) of
the Act.
I
59. Cumulative reading of these provisions, in conjunction H
178 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A 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
B in the Commission, by virtue of the Regulations, which must be
construed in their plain language and without giving it undue
expansion.
60. It is difficult to state as an absolute proposition of law
C that in all cases, at all stages and in all events the right to notice
and hearing is a mandatory requirement of principles of natural
justice. Furthermore, that non-compliance thereof, would always
result in violation of fundamental requirements vitiating the
entire proceedings. Different laws have provided for exclusion
of principles of natural justice at different stages, particularly,
D at the initial stage of the proceedings and such laws have been
upheld by this Court. Wherever, such exclusion is founded on
larger public interest and is for compelling and valid reasons,
the Courts have declined to entertain such a challenge. It will
always depend upon the nature of the proceedings, the grounds
E for invocation of such law and the requirement of compliance
to the principles of natural justice in light of the above noticed
principles. In the case of Tulsiram Patel (supra), this Court took
the view that audi alteram partem rule can be excluded where
a right to a prior notice and an opportunity of being heard,
F before an order is passed, would obstruct the taking of prompt
action or where the nature of the action to be taken, its object
and purpose as well as the scheme of the relevant statutory
provisions warrant its exclusion. This was followed with approval
and also greatly expanded in the case of Delhi Transport
G Corporation vs. Delhi Transport Corporation Mazdoor
Congress [(1991) Supp1 SCC 600], wherein the Court held that
rule of audi alteram partem can be excluded, where having
regard to the nature of the action to be taken, its object and
purpose and the scheme of the relevant statutory provisions,
H fairness in action does not demand its application and even
COMPETITION COMMISSION OF INDIA v. STEEL 179
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
warrants its exclusion. In the case of Union of India v. WN. A
Chadha [(1993) Supp 4 SCC 260], wherein the Court was
primarily concerned with Section 166(9) of the Criminal
Procedure Code and the application of principles of natural
justice in the domain of administrative law and while deciding
whether a person was entitled to the right of hearing, held as B
under:-
"88. -The principle of"law that could be deduced from the
above decisions is that it is no doubt true that the fact that
a decision, whether a prima facie case has or has not been
made out, is not by itself determinative of the exclusion of C
hearing, but the consideration that the decision was purely
an administrative one and a full-fledged inquiry follows is
a relevant - and indeed a significant - factor in deciding
whether at that stage there ought to be hearing which the
statute dip not expressly grant. D
I'
89. Applying the above principle, it may be held that when
the investigating officer is not deciding any matter except
collecting the materials for ascertaining whether a prima
facie case is made out or not and a full inquiry in case of E
filing a report under Section 173(2) follows in a trial before
the Court or Tribunal pursuant to the filing of the report, it
cannot be said that at that stage rule of audi a/teram
partem superimposes an obligation to issue a prior notice
and hear the accused which the statute does not expressly F
recognise. The question is not whether audi alteram
partem is implicit, but whether the occasion for its
attraction exists at all."
61. The exclusion of principles of natural justice by specific
legislative provision is not unknown to law. Such exclusion would G
either be specifically provided or would have to be imperatively
inferred from the language of the provision. There may be cases
where post decisional hearing is contemplated. Still there may
be cases where 'Clue process' is specified by offering a full
H
180 SUPREME COURT REPORTS [2010] 11 S.C.R.
A hearing before the final order is made. Of course, such
legislation may be struck down as offending due process if no
safeguard is prqyided against arbitrary action. It is an equally
&ettled principle that in cases of urgency, a post-decisional
hearing would satisfy the principles of natural justice. Reference
B can be made to the cases of Maneka Gandhi v. Union of India
[(1978) 1 SCC 48] and State of Punjab v. Gurdayal [AIR 1980
SC 319]. The provisions of Section 26{1) clearly indicate
exclusion of prinf_iples of natural justice, at least at the initial
stages, by necessary implication. In cases where the conduct
C of an enterprise, association of enterprises, person or
association of persons or any other legal entity, is such that it
would cause serious prejudice to the public interest and also
violates the provisions of the Act, the Commission will be well
within its jurisdiction to pass ex parte ad interim injunction
orders immediately in terms of Section 33 of the Act, while
0
granting post decisional hearing positively, within a very short
span in terms of Regulation 31(2). This would certainly be more
than adequate compliance to the principles of natural justice.
62. It is true that in administrative action, which entails civil
E consequences for a person, the principles of natural justice
should be adhered to. In the case of Raj Restaurant and Anr.
v. Municipal Corporation of Delhi, [(1982) 3 SCC 338], the
Supreme Court held as under:
"5. Where, in order to carry on business a licence is
F
required, obviously refusal to give licence or cancellation
or revocation of licence would be visited with both civil and
pecuniary consequences and as the business cannot be
carried on without the licence it would also affect the
livelihood of the person. In such a situation before either
G refusing to renew the licence or cancelling or revoking the
same, the minimum principle of natural justice of notice
and opportunity to represent one's case is a must. It is not
disputed that no such opportunity was given before taking
the decision not to renew the licence though it is admitted
H
COMPETITION COMMISSION OF INDIA v. STEEL 181
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
that the for the reasons herein before set out the licence A
was not renewed such a decision in violation of the
principle of natural justice would b void. Now, it is true that
no specific order is made setting out the reason for refusal
to renew the licence. But the action taken of sealing the
premises for carrying on the business without a licence B
clearly implies that there was refusal to renew the licence
and the reasons are now disclosed. And the action
disclosing the deeision being in violation of the principle
of natural justice, deserves to be quashed."
63. Wherever, this Court has dealt with the matters relating C
to complaint of violation of principles of natural justice, it has
always kept in mind the extent to which such principles should
apply. The application, therefore, would depend upon the nature
of the duty to be performed by the authority under the statute.
Decision in this regard is, in fact, panacea to the rival D
contentions which may be raised by the parties in a given case.
Reference can be made to the judgment of this Court in the
case of Canara Bank vs. Debasis Das [(2003) 4 SCC 557].
\Ne may also notice that the scope of duty cast upon the
authority or a body and the nature of the function to be E
performed cannot be rendered nugatory by imposition of
unnecessary directions or impediments which are not
postulated in the plain language of the section itself. 'Natural
justice' is a term, which may have different connotation and
dimension depending upon the facts of the case, while keeping F
in view, the provisions of the law applicable. It is not a codified
concept, but are well defined principles enunciated by the
Courts. Every quasi judicial order would require the concerned
authority to act in conformity with these principles as well as
ensure that the indicated legislative object is achieved. G
Exercise of power should be fair and free of arbitrariness.
64. Now, let us examine what kind of function the
Commission is called upon to discharge while forming an
opinion under Section 26(1) of the Act. At the face of it, this is
H
182 SUPREME COURT REPORTS [2010] 11 S.C.R.
A an inquisitorial and regulatory power. A Constitution Bench of
this Court in the case of Krishna Swami vs. Union of India
[(1992) 4 SCC 605] explained the expression 'inquisitorial'. The
Court held that the investigating power granted to the
administrative agencies normally is inquisitorial in nature. The
B scope of such investigation has to be examined with reference
to the statutory powers. In that case the Court found that the
proceedi,,gs, before the High Power Judicial Committee
constituted, were neither civil nor criminal but sui generis.
Referring to the investigation under criminal jurisprudence as
c well as scope of inquiry under service jurisprudence, the Court
held as under:
"61. The problem could be broached through a different
perspective as well. In normal parlance, in a criminal case,
investigation connotes discovery and collection of
D evidence before charge-sheet is filed and based thereon
definite charges are framed. Inquiry by a Magistrate is
stopped when the trial begins. The trial is a culminating
process to convict or acquit an accused. In Service
Jurisprudence, departmental inquiry against a delinquent
E employee, bears similar insignia to impose penalty. At the
investigation stage the accused or the charged officer has
no say in the matter nor is he entitled to any opportunity.
The disciplinary authority or inquiry officer, if appointed, on
finding that the evidence discloses prima facie ground to
F proceed against the delinquent officer, the inquiry would
be conducted. The criminal court frames charges after
supplying the record of investigation relied on. Equally, the
disciplinary authority/inquiry officer would frame definite
charge or charges and would communicate the same
G together with a statement of the facts in support thereof
sought to be relied on and would call upon the delinquent
officer to submit his explanation or written statement of
defence etc. At the trial/inquiry the person is entitled to
reasonable opportunity to defend himself.......... "
H
COMPETITION COMMISSION OF INDIA v. STEEL 183
AUTHORITY OF INDIA LTD. [SWATANTERi<UMAR, J.]
65. The exceptions to the doctrine of audi alteram partem A
are not unknown either to civil or criminal jurisprudence in our
country where under the Code of Civil Procedure ex-parte
injunction orders can be passed by the court of competent
jurisdiction while the courts exercising criminal jurisdiction can
take cognizance of an offence in absence of the accused and B
issue summons for his appearance. Not only this, the Courts
even record pre-charge evidence in complaint cases in
absence of the accused under the provisions of the Code of
Criminal Procedure. Similar approach is adopted under
different systems in different countries. Reference in this regard c
can be made to the case of Azienda Co/ori Nazionali - AGNA
S.P.A. v Commission of the European Communities, [(1972)
ECR 0933], where the argument was raised that the
Commission had infringed the administrative procedure laid
down in Regulation No. 17/62 of the European Council
D
Regulation. In that case the Commission of the European
Communities sent the notice of the objections to the applicant
at the time of informing the applicant about the decision to
initiate procedure to establish infringement of rules on
competition. The European Court of Justice while holding that
sending notification of the above mentioned decision E
simultaneously with the notice of objections cannot affect the
rights of the defence, stated as under:-
"10. Neither the provisions in force nor the general
principles of law require notice of the Decision to initiate F
the procedure to establish an infringement to be given prior
to notification of the objections adopted against the
interested parties in the context of such proceedings.
11. It is the notice of objections alone and not the Decision G
to commence proceedings which is the measure stating
the final attitude of the Commission concerning
undertakings against which proceedings for infringement
of the rules on competition have been commenced."
66. The jurisdiction of the Commission, to act under this H
184 SUPREME COURT REPORTS (2010) 11 S.C.R.
A provision, does not contemplate any adjudicatory function. The
Commission is not expected to give notice to the parties, i.e.
the informant or the affected parties and hear them at length,
before forming its opinion. The function is of a very preliminary
nature and in fact, in common parlance, it is a departmental
B function. At that stage, it doe~ot condemn any person and
therefore, application of audi alteram partem is not called for.
Formation of a prima facie opinion departmentally (Director
General, being appointed by the Central Government to assist
the Commission, is one of the wings of the Commission itself)
c 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 i~ appealable before the Tribunal and only
D after this stage, th~re 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 of hearing is not
contemplated under the provisions of Section 26(1) of the Act.
E However, Regulation 17(2) gives right to Commission for
seeking information, or in other words, the Commission is
vested with the power of inviting such persons, as it may deem
necessary, to render required assistance or produce requisite
information or documents as per the direction of the
F Commission. This discretion is exclusively vested in the
Commission by the legislature. The investigation is directed
with dual purpose; (a) to collect material and verify the
information, as may be, directed by the Commission, (b) to
enable the Commission to examine the report upon its
G submission by the Director General and to pass appropriate
orders after hearing the parties concerned. No inquiry
commences prior to the direction issued to the Director
General for conducting the investigation. Therefore, even from
the practical point of view, it will be required that undue time is
H not spent at the preliminary stage of formation of prima facie
. COMPETITION COMMISSION OF INDIA v. STEEL 185
AUTHORITY OF INDIALTD. [SWATANTER KUMAR, J.]
opinion and the matters are dealt with effectively and A
expeditiously.
67. 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 8
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
inquiry into the allegations made in the reference to the C
Commission. ·
68. The Tribunal, in the impugned judgment, has taken the
view that there is a requirement to record reasons which can
be express, or, in any case, ·followed by necessary implication
and therefore, the authority is required to record reasons. for D
coming to the conclusion. The proposition of law whether an
administrative or quasi judicial body, particularly judicial courts,
should record reasons in support of their decisions or orders
is no more res integra and has been settled by a recent
judgment of this Court in the case of Assistant Commissioner, E
C.T.D.W.C. v. Mis Shlfkla & Brothers [JT 2010 (4) SC 35],
wherein this Court was primarily concerned with the High Court
dismissing the appeals without recording any reasons. The
Court alsq examined the practice and requirement of providing
reasons fbr conclusions, orders and directions given by the F
quasi-judipial and administrative bodies. The Court examined
various judgments of this Court in relation to its application to
administrative law and held as under:
"10. The Supreme Court in the case of S.N. Mukherjee v.
Union of India [(1990) 4 SCC 594], while referring to the G
practice adopted and in~tstence placed by the Courts in
United States, emphasized the importance of recording of
reasons for decisions by;the administrative authorities and
tribunals. It said "administrative process will. best be
vindicated by clarity in its exercise". To enable the Courts H
186 SUPREME COURT REPORTS [201 OJ 11 S.C.R.
A to exercise the power of review in consonance with settled
principles, the authorities are advised of the
considerations underlining the action under review. This
Court with approval stated:-
"the orderly functioning of the process of review requires
B
that the grounds upon which the administrative agency
acted be clearly disclosed and adeqt:Jately sustained."
xxx xxx xxx xxx
c 12. At the cost of repetition, we may notice, that this
Court has consistently taken the view that recprding of
reasons is an essential feature of dispensation 6f justice.
A litigant who approaches the Court with any grievance in
accordance with law is entitled to know the re/asons for
D grant or rejection of his prayer. Reasons are t~e soul of
orders. Non-recording of reasons could lead to dual
infirmities; firstly, it may cause prejudice tp the affected
party and secondly, more particularly, ham1per the proper
1
administration of justice. These principles are not only
applicable to administrative or executive actions, but they
E
apply with equal force and, in fact, with a greater degree
of precision to judicial pronouncements. A judgment
without reasons causes prejudice to the person ;against
whom it is pronounced, as that litigant is unable to know
the ground which weighed with the Court in rejecting his
F claim and also causes impediments in his taking adequate
and appropriate grounds before the higher Court in the
event of challenge to that judgment. ..
13. The principle of natural justice has twin ingredients;
G firstly, the person who is likely to be adversely affected by
the action of the authorities should be given notice to show
cause thereof and granted an opportunity of hearing and
secondly, the orders so passed by the authorities should
give reason for arriving at any conclusion showing proper
H application of mind. Violation of either of them could in the
COMPETITION COMMISSION OF INDIA v. STEEL 187
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
given facts and circumstances of the case, vitiate the order A
itself. Such rule being applicable to the administrative
authorities certainly requires that the judgment of the Court
should meet with this requirement with higher degree of
satisfaction. The order of an administrative authority may
not provide reasons like a judgment but the order must be B
supported by the reasons of rationality. The distinction
between passing of an order by an administrative_ or quasi-
judicial authority has practically extinguished and both are
required to pass reasoned orders ...
69. In this very judgment, the Court while referring to other
c
decisions of the Court held that it is essential that administrative
authorities and tribunals should accord fair and proper hearing
to the affected persons and record explicit reasons in support
of the order made by them. Even in cases of supersession, it
was held in Gurdial Singh Fijji v. State of Punjab [(1979) 2 D
sec 368) that reasons for supersession should be essentially
provided in the order of the authority. Reasons are the links
between the materials on which certain conclusions are based
and the actual conclusions. By practice adopted in all courts
and by virtue of judge-made law, the concept of reasoned E
judgment has become an indispensable part of basic rule of
law and in fact, is a mandatory r'?.quirement of the procedural
law. Clarity of thoughts leads to clarity of vision and therefore,
proper reasoning is foundation of a just and fair decision.
Reference can be made to Alexander Machinery (Dudley) Ltd. F
v. Crabtree [1974 ICR 120] in this regard.
70. 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, G
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,
H
188 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 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
B in no uncertain terms that it is of the view that prima facie case
exists, requiring issuance of direction for investigation to the
Director General. Such view should be recorded with reference
. to the information furnished to the Commission. Such opinion
should be formed on the basis of the records, including the
c information furnished and reference made to the Commission
under the various provisions of the Act, as afore-referred.
However, other decisions and orders, which are not directions
simpliciter and determining the rights of the parties, should be
well reasoned analyzing and deciding the rival contentions
raised before the Commission by the parties. In other words,
0
the Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any
adjudicatory or determinative process and by recording
minimum reasons substantiating the formation of such opinion,
while all its other orders and decisions should be well reasoned.
E
71. Such an approach can also be justified with reference
to Regulation 20(4), which requires the Director General to
record, in his report, findings on each of the allegations made
by a party in the intimation or reference submitted to the
F Commission and sent for investigation to the Director General,
as the case may be, together with all evidence and documents
collected during investigation. The inevitable consequence is
that the Commission is similarly expected to write appropriate
reasons on every issue while passing an order under Sections
G 26 to 28 of the Act.
Submissions made and findings in relation. to Point No.3
72. The concept of necessary and proper parties is an
accepted norm of civil law and its principles can safely be
H applied to the proceedings before the Tribunal to a limited
COMPETITION COMMISSION OF INDIA v. STEEL 189
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
extent. Even some provisions of the Act and the Regulations A
would guide the discussion in this behalf. In terms of Section
7(2) of the Act the Commission is a body corporate having
perpetual succession and a common seal with power to sue
and be sued in its name. In terms of Section 53A, the Tribunal
is constituted to hear and dispose of appeals against any 8
direction issued, decision made or order passed under the
provisions stated therein. The Tribunal is also vested with the
power of determining the claim of compensation that may arise
from the findings recorded by the Commission. As already
noticed, the procedure for entertaining the appeals is specified c
under Section 538 of the Act.
73. The right to prefer an appeal is available to the Central
Government, 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 53A (ought to be printed as D
' period specified
53A(1)(a)). The appeal is to be filed within the
and Section 538(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 53S E
contemplates that before the Tribunal a person may either
appear 'in person' or authorize one or more chartered
accountants or company secrete.. •• as, cost accountants or legal
practitioners or any of its officers to present its case before the
Tribunal. However, the Commission's right to legal F
representation in any appeal before the Tribunal has been
specifically mentioned under Section 53S(3). It provides that
the Commission may authorize one or more of chartered
accountants or company secretaries or cost accountants or
legal practitioners or any of its officers to act as presenting G
officers before the Tribunal.
74. Section 53T 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
H
190 SUPREME COURT REPORTS [201 O] 11 S.C.R.
A or order of the Tribunal to them.
75. The expression 'any person' appearing in Section 538
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
8
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. The above stated
C provisions clearly indicate that the Commission a body
corporate, is expected to be party in the proceedings before
the Tribunal as it has a legal right of representation. Absence
of the Commission before the Tribunal will deprive it of
presenting its views in the proceedings. Thus, it may not be able
to effectively exercise its right to appeal in terms of Section 53
D of the Act. Furthermore, Regulations 14(4) and 51 support the
view thatlhe Commission can be a necessary or a proper party
in the pi'.oceedings before the Tribunal. The Commission, in
terms of Section 19 read with Section 26 of the Act, is entitled
to commence proceedings suo moto and adopt its own
E procedure for completion of such proceedings. Thus, the
principle of fairness would demand that such party should be
heard by the Tribunal before any orders adverse to it are
passed in such cases. The Tribunal has taken this view and we
-have no hesitation in accepting that in cases where
F proceedings initiated suo moto by the Commission, the
Commission is a necessary party. However, we are also of the
view that in other cases the Commission would be a proper
party: It would not only help in expeditious disposal, but the
Commission, a~ an expert body, in any case, is entitled to
G participate in its_ proceedings in terms of Regulation 51. Thus,
the assistance rendered by the Commission to the Tribunal
coulcl be useful in complele and effective adjudication of the
· issue before it.
76, Regulations 24 to 26 define powers of the Commission
H
COMPETITION COMMISSION OF INDIA v. STEEL 191
AUJ"HORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
to join or substitute parties in proceedings, permit -person or A
enterprises to take part in proceedings and strike out
unnecessary parties. Out of these provisions regulation 25(1)
has a distinct feature as it lays down the criteria which should
be considered by the Commission while applying its mind in
regard to application of a party for impleadment. The person B
or enterwise sought to be im.pleaded should have substantial i
interest In the outcome of the proceedings and/or that it is
necessary in the public interest to allow such an application. In
other words, substantial interest in proceedings and serving of
larger public interest, amongst others, are the criteria which c
could be considered by the Commission. This principle would
obviously stand extended for exercise of jurisdiction by the
Tribunal. In our view, the Commission would have substantial
interest in the outcome of the proceedings in most of the cases
as not only would the judgments of the Tribunal be binding on
D
it, but they would also provide guidelines for determining various
matters of larger public interest and affect the economic policy
of the country.
77. In light of the above statutory provisions, let us examine
the scheme under the general principles as well. The provisions E
of Order I Rule 10 of Code of Civil Procedure control the parties
to the proceedings and their addition or deletion thereof. Wide
discretion is vested in the Court/appropriate forum in regard
to impleadment of necessary and proper parties to the
proceedings. Of course, such discretion has to be exercised F
in accordance with provisions of law and the principles
enunciated by various judicial pronouncements. The
consideration before the Court, while determining such a
question, is whether the said party is a necessary or a proper
party and its presence before the Court is essential for G
complete.and effective adjudication of the subject matter, inter
a/ia, it should also be kept in mind that multiplicity of litigation
is to be avoided and that the necessary or proper party should
not be left out from the proceedings, particularly, before the
tribunal or the forum. H
192 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 78. These principles were stated by this Court in Udit
Narain Singh Malpaharia v. Addi. Member, Board of Revenue,
Bihar, [AIR 1963 SC 786], wherein this Court has held as
under:-
"7. To answer the question raised it would be convenient
B
at the outset to ascertain who are necessary or proper
parties in a proceeding. The law on the subject is well
settled: it is enough if we state the principle. A necessary
party is one without whom no order can be made
effectively; a proper party is one in whose absence an
c effective order can be made but whose presence is
necessary for a complete and final decision on the question
involved in the proceeding."
79. Another way to examine the matter is that if the
D proceedings cannot be concluded completely and effectively in
absence of a party, that party should be normally impleaded
as a party before the Court, of course, subject to other
restrictions in law. While non-joinder of necessary parties may
prove fatal, the non-joinder of proper parties may not be fatal
E to the proceedings, but would certainly adversely affect interest
of justice and complete adjudication of the proceedings before
the appropriate forum.
80. As a normal rule, the applicant/informant is dominus
litis and has the right to control the proceedings, but at the same
F time, such applicant is required to notify all other parties against
whom the applicant wishes to proceed. Even if an applicant fails
to join a party the Court has the discretion to direct joining of
such party as the question of impleadment has to be decided
on the touchstone of Order I Rule 1O which provides that a
G necessary or proper party may be added. [Ramesh Hirachand
Kundanmal v. Municipal Corporation of Greater Bombay
((1992) 2 sec 524].
81. In the proceedings, which are initiated by the
H Commission suo moto, it shall be dominus /itis of such
COMPETITION COfy'IMISSION OF INDIA v. STEEL 193
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
proceedings while in other cases, the Commission being a A
regu:atoiy body would be a proper party discharging
inquisitorial, regulatory as well as adjudicatory functions and its
presence before the Tribunal, particularly, in light of the above
stated provisions, would be proper. The purpose is always to
achieve complete, expeditious and effective adjudication. This B
Court in the case of Brahm Dutt v. Union of India [(2005) 2
sec 431], while considering the constitutional validity of
Section 8 of the Act observed that the Commission is an expert
body which had been creqted in consonance with international
practice. The Court observed that it might be appropriate if two C
bodies are created for performing two kinds of functions, one,
advisory and regulatory and other adjudicatory. Though the
Tribunal has been constituted by the Competition (Amendment)
Act, 2007, the Commission continues to perform both the
functions stated by this Court in that case. Cumulative effect of D
the above reasoning is that the Commission would be a
necessary and/or a proper party in the proceedings before the
Tribunal.
Submissions made and findings in relation to Point No.4
E
82. Under this issue we have to discuss the ambit and
scope of the powers vested in the Commission under Section
33 of the Act. In order to objectively analyze the content of the
submissions made before us, it will be appropriate to refer to
the provisions of the said Section, which read as under: F
"33. Power to issue interim orders. - Where during an
inquiry, the Commission is satisfied that an act in
contravention of sub-section (1) of section 3 or sub-section
(1) of section 4 or section 6 has been committed and
continues to be committed or that such act is about to be G
committed, the Commission may, by order, temporarily
restrain any party from carrying on such .act until the
conclusion of such inquiry or until further oJders, without
giving notice to such party, where it deems it necessary"
H
194 SUPREME COURT REPORTS [2010] 11 S.C.R.
A 83. A bare reading of the above provision shows that the
most significant expression used by the legislature in this
provision is 'during inquiry'. 'During inquiry', if the Commission
is satisfied that an act in contravention of the stated provisions
has been committed, continues to be committed or is about to
B be committed, it may temporarily restrain any party 'without
giving notice to such party', where it deems necessary. The first
and the foremost question that falls for consideration is, what
is 'inquiry'? The word 'inquiry' has not been defined in the Act,
however, Regulation 18(2) explains what is 'inquiry'. 'Inquiry'
c shall be deemed to have commenced when direction to the
Director General is issued to conduct investigation in terms of
Regulation 18(2). In other words, the law shall presume that an
'inquiry' is commenced when the Commission, in exercise of
its powers under Section 26(1) of the Act, issues a direction
D to the Director General. Once the Regulations have explained
'inquiry' it will not be permissible to give meaning to this
expression contrary to the statutory explanation. Inquiry and
investigation are quite distinguishable, as is clear from various
provisions of the Act as well as the scheme framed thereunder.
The Director General is expected to conduct an investigation
E only in terms of the directive of the Commission and thereafter,
inquiry shall be deemed to have commenced, which continues
with the submission of the report by the Director General, unlike
the investigation under the MRTP Act, 1969, where the Director
General can initiate investigation suo moto. Then the
F Commission has to consider such report as well as consider
the objections and submissions made by other party. Till the
time final order is passed by the Commission in accordance
with law, the inquiry under this Act continues. Both these
expressions cannot be treated as synonymous. They are
G distinct, different in expression and operate in different areas.
Once the inquiry has begun, then alone the Commission is
expected to exercise its powers vested under Section 33 of the
Act. That is the stage when jurisdiction of the Commission can
be invoked by a party for passing of an ex parte order. Even
H at that stage, the Commission is required to record a
COMPETITION COMMISSION OF INDIA v. STEEL 195
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.)
satisfaction that there has been contravention of the provisions A
mentioned under Section 33 and that such contravention has
been committed, continues to be committed or is about to be
committed. This satisfaction has to be understood differently
from what is required while expressing a prima facie view in
terms of Section 26(1) of the Act. The former is a definite B
expression of the satisfaction recorded by the Commi~sion
upon due application of mind while the latter is a tentative view
at that stage. Prior to any direction, it could be a general
examination or enquiry of the information/reference received by
the Commission, but after passing the direction the inquiry is c
more definite in its scope and may be directed against a party.
Once such satisfaction is recorded, the Commission is vested
with the power and the informant is entitled to claim ex parte
injunction. The legislature has intentionally used the words not
only 'ex parte' but also 'without notice to such party'. Again for D
that purpose, it has to apply its mind, whether or not it is
necessary to give such a notice. The intent of the rule is to grant
ex parte injunction, but it is more desirable that upon passing .
an order, as contemplated under Section 33, it must give a
short notice to the other side to appear and to file objections
to the continuation or.otherwise of such an order. Regulation E
31 (2) of the Regulations clearly mandates such a procedure.
Wherever the Coll]mission has passed interim order, it shall
hear the parties against whom such an order has been made,
thereafter, as s_oon as possible. The expression 'as soon as
possible' appearing in Regulation 31 (2) has some significance F
· and it will be obligatory upon the fora dealing with the matters
to ensure compliance to this legislative mandate. Restraint
orders may be passed in exercise of its jurisdiction in terms of
Section 33 but it must be kept in mind that the ex parte restraint
orders can have far reaching consequences and, therefore, it G
will be desirable to pass such order in exceptional
circumstances and deal with these matters most expeditiously.
84. During an inquiry and where the Commission is
satisfiedl~hat the act has been committed and continues to be
H
I
196 SUPREME COURT J;\EPORTS (2010] 11 S.C.R.
A committed or is about to be committed, in contravention of the
provisions stated in Section 33 of the Act, it may issue an order
temporarily restraining the party from carrying on such act, until
the conclusion of such inquiry or until further orders, without
giving notice to such party where it deems it necessary. This
B power has to be exercised by the Commission sparingly and
under compelling and exceptional circumstances. The
Commission, while recording a reasoned order, inter a/ia,
shquld : (a) record its satisfaction (which has to be of much
higher degree than formation of a prima facie view under
c Section 26(1) of the Act) in clear terms that an act in
contr~vention of the stated provisions has been committed and
continuei; to be committed or is about to be committed; (b) it
is necessary to issue order of restraint and (c) from the record
before the Commission, there is every likelihood that the party
to the /is would suffer irreparable and irretrievable damage, or
0
there is definite apprehension that it would have adverse effect
on competition in the market.
85. The power under Section 33 of the Act, to pass a
temporary restraint order, can only be exercised by the
E Commission when it has formed prima facie opinion and
directed investigation in terms of Section 26(1) of the Act, as
is evident from the language of this provision read with
Regulation 18(2) of the Regulations.
F 86. It will be useful to refer to the judgment of this Court in
the case of Morgan Stanley Mutual Funds v. Kartick Das
((1994) 4 sec 225), wherein this Court was concerned with
Consumer Protection Act 1986, Companies Act 1956 and
Securities and Exchange Board of India (Mutual Fund)
G Regulations, 1993. As it appears from the contents of the
judgment, there is no provision for passing ex-parte interim
orders under the Consumer Protection Act, 1986 but the Court
nevertheless dealt with requirements for the grant of an ad
interim injunction, keeping in mind the expanding nature of the
corporate sector as well as the increase in vexatious litigation.
H The Court spelt out the following principles:
COMPETITION COMMISSION OF INDIA v. STEEL 197
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
"36. As a principle, ex parte injunction could be granted A
only under exceptional circumstances. The factors which
should weigh with the court in the grant of ex parte
injunction are-
(a} whether irreparable or serious mischief will B
ensue to the plaintiff;
(b) whether the refusal or ex parte injunction
would involve greater injustice than the grant
of it would involve;
c
(c) the court will also consider the time at which
the plaintiff first had notice of the act
complained so that the making of improper
order against a party in his absence is
prevented; D
(d) the court will consider whether the plaintiff had
acquiesced for sometime and in such
circumstances it will not grant ex parte
injunction;
E
(e) the court would expect a party applying for ex\
parte injunction to show utmost good faith in
making the application;
(f) even if granted, the ex parte injunction would
F
be for a limited period of time.
(g) General principles like prima facie case,
balance of convenience and irreparable loss
would also be considered by the court."
G
87. In the case in hand, the provisions of Section 33 are
specific and certain criteria have been specified therein, which
need to be satisfied by the Commission, before it passes an
ex parte ad interim order. These three ingredients we have
already spelt out above and at the cost of repetition we may H
198 SUPREME COURT REPORTS [2010] 11 S.C.R.
A notice that there has to be application of mind of higher degree
and definite reasons having nexus to the necessity for passing
such an order need be stated. Further, it is required that the
case of the informant-applicant should also be stronger than a
mere prima facie case. Once these ingredients are satisfied
B and where the Commission deems it necessary, it can pass
such an order without giving notice to the other party. The scope
of this power is limited and is expected to be exercised in
appropriate circumstances. These provisions can hardly be
invoked in each and every case except in a reasoned manner.
c Wherever, the applicant is able to satisfy the Commission that
from the information received and the documents in support
thereof, or even from the report submitted by the Director
General, a strong case is made out of contravention of the
specified provisions relating to anti-competitive agreement or
D an abuse of dominant position and it is in the interest of free
market and trade that injunctive orders are called for, the
Commission, in its discretion, may pass such order ex parte
or even after issuing notice to the other side.
88. For these reasons, we may conclude that the
E Commission can pass ex parte ad interim restraint orders in
terms of Section 33, only after having applied its mind as to
the existence of a prima facie case and issue direction to the
Director General for conducting an investigation in terms of
Section 26(1) of the Act. It has the power to pass ad interim
F ex parte injunction orders, but only upon recording its due
satisfaction as well as its view that the Commission deemed it
necessary not to give a notice to the other side. In all cases
where ad interim ex parte injunction is issued, the Commission
must ensure that it makes the notice returnable within a very
G short duration so that there is no abuse of the process of law
and the very purpose of the Act is not defeated.
Submissions made and findings in relation to Point No.6
89. In light of the above discussion, the next question that
H we are required to consider is, whether the Court should issue
COMPETITION COMMISSION OF INDIA v. STEEL 199
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
certain directions while keeping in mind the scheme of the Act, A
legislative intent and the object sought to be achieved by
enforcement of these provisions. We have already noticed that
the principal objects of the Act, in terms of its Preamble and
Statement of Objects and Reasons, are to eliminate practices
having adverse effect on the competition, to promote and B
sustain competition in the market, to protect the interest of the
consumers and ensure freedom of trade carried on by the
participants in the market, in view of the economic
developments in the country. In other words, the Act requires
not only protection of free trade but also protection of consumer c
interest. The delay in disposal of cases, as well as undue
continuation of interim restraint orders, can adversely and
prejudicially affect the free economy of the country. Efforts to
liberalize the Indian Economy to bring it at par with the best of
the economies in this era of globalization would be jeopardised
0
if time bound schedule and, in any case, expeditious disposal .
by the Commission is not adhered to. The scheme of various
provisions of the Act which we have already referred to
including Sections 26, 29, 30, 31, 538(5) and 53T and
Regulations 12, 15, 16, 22, 32, 48 and 31 clearly show the
legislative intent to ensure time bound disposal of such matters. E
90. The Commission performs 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 serious ramifications. F
The Commission has the jurisdiction even to direct that an
agreement entered into between the parties shall stand
modified to the extent and in the manner, as may be specified.
Similarly, where it is of the opinion that the combination has,
or is likely to have, an appreciable adverse effect on G
competition but such adverse effect can be eliminated by
suitable modification to such combination, the Commission is
empowered to direct such modification. These powers of the
Commission, read with provisions mentioned earlier, certainly
require issuance of certain directions in order to achieve the H
200 SUPREME COURT REPORTS [2010] 11 S.C.R.
A ot
object the Act and to ensure its proper implementation. The
power tQ restructure the agreement can be brought into service·
and matJers dealt with expeditiously, rather than passing of ad
interim prders in relation to such agreements, which may
continue for indefinite periods. To avoid this mischief, it is
B necessary that wherever the Commission exercises its
jurisdiction to pass ad interim restraint orders, it must do so
by issuing notices for a short date and deal with such
applicatipns expeditiously. Order XXXIX, Rules 3 and 3A of the
Code of,Civil Procedure also have similar provisions. Certain
c proced~ral directions will help in avoiding prejudicial
consequences, against any of the parties to the proceedings
and thej possibility of abuse of jurisdiction by the parties can
be elim nated by proper exercise of discretion and for valid
reasons. Courts have been issuing directions in appropriate
cases /and wherever the situation has demanded so.
0
Admini$tration of justice does not depend on individuals, but it
has to ~e a collective effort at all levels of the judicial hierarchy,
i.e. the/ hierarchy of the Courts or the fora before whom the
matters are sub-Judice, so that the persons awaiting justice can
receive the same in a most expeditious and effective manner.
E The approach of the Commission even in its procedural
matters, therefore, should be macro level rather than micro level.
It must deal with all such references or applications
expeditiously in accordance with law and by giving appropriate
reasons. Thus, we find it necessary to issue some directions
F which shall remain in force till appropriate regulations in that
regard are framed by the competent authority.
FINQINGS ON MERITS:
!
G 91. Having examined various legal issues arising in the
pre,sent case, we will now revert back to the facts of the case
in Jiland. It is clear that Jindal Steel, the informant. had made a
reference to the Commission. The Commission had initiated
pefoceedings and asked for further information from the
i~formant and thereafter, had even issued notice calling upon
H SAIL to submit its views and comments. From the record it is
I
COMPETITION COMMISSION OF INDIA v. STEEL . 201
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
clear that parties had appeared before the Commission. The A
SAIL had failed to file the reply and prayed for extension of time,
which was declined by the Commission in its order dated 8th
December, 2009. The Director General was asked to conduct
the investigation, but liberty was granted to SAIL to file its views
and comments during the pendency of the investigation. Since B
further time was declined, SAIL preferred an appeal before the
Tribunal, which resulted in passing of the order impugned in the
present appeal. We are unable to accede to the submission
that the Commission is not a necessary or proper party before
the Tribunal. On the contrary, the Regulations and even the c
interest of justice demands that for complete and effective
adjudication the Commission be added as a necessary and
proper party in the proceedings before the Tribunal. The
direction issued by the Commission was set aside by the
Tribunal and further time was granted to SAIL to file its further D
reply in addition to what has been filed on 15th December, 2009
and the Tribunal then directed the Commission to consider all
such material and record a fresh decision. We have held that
there is no statutory obligation on the Commission to issue
notice for grant of hearing to the parties at the stage of forming
an opinion under Section 26(1) of the Act unless, upon due
E
application of mind, it finds it necessary to invite parties or
experts to render assistance to and produce documents before
the Commission at that stage. We are also unable to agree
with the view expressed by the Tribunal that the inquiry
commences as soon as the aspects highlighted in sub-section F
(1) to Section 19 are fulfilled and brought to the notice of the
Commission. It is obvious that Regulation 18(2) was not
brought to the notice of the Tribunal which resulted in error of
law, particularly, when examined in the light of other provisions
and scheme of the Act as well. The Commission, vide its order G
9ated 8th December, 2009, had, for reasons stated therein,
declined the extension of time to SAIL. This order of the
Commission cannot be stated to be without jur~sdiction or
suffering from any apparent error of law. However, the Tribunal,
in exercise of its judicial discretion, had interfered with the said H
202 SUPREME COURT REPORTS [2010] 11 S.C.R.
A order and granted further time to SAIL unconditionally. We do
not propose to interfere in the exercise of the discretion by the
Tribunal except to the extent of imposition of cost. We, therefore
direct that SAIL should pay cost of Rs. 25,000/- to the informant
for seeking extension of time. The cost shall be conditional,
B whereafter, the additional reply filed by SAIL would be taken
on record and the Commission shall apply its mind to form a
prima facie view in terms of Section 26(1) of the Act, if the
report of the Director General has not been received as yet. In
the event the report prepared by the Director General during
c the period 8th December, 2009 to 11th January, 2010 has
been received, the Commission shall proceed in accordance
with the provisions of the Act and the principles of law
enunciated in this judgment giving proper notice to the informant
as well as to SAIL and pass appropriate orders.
D CONCLUSION AND DIRECTIONS
·. 92. Having discernibly stated our conclusions/ answers in
the earlier part of the judgment, we are of the considered opinion
. that this is a fit case where this Court should also issue certain
E directions in the larger interest of justice administration.
93. The scheme of the Act and the Regulations framed
thereunder clearly demonstrate the legislative intent that the
investigations and inquiries under the provisions of the Act
should be concluded as expeditiously as possible. The various
F provisions and the Regulations, particularly Regulations 15 and
16, direct conclusion of the investigation/inquiry or proceeding
within a "reasonable time". The concept of "reasonable time"
thus has to be construed meaningfully, keeping in view the
object of the Act and the larger interest of the domestic and
G international trade. In this backdrop, we are of the considered
view that the following directions need to be issued:
(A) Regulation 16 prescribes limitation of 15 days for the
Commission to hold its first ordinary meeting to consider
H whether prima facie case exists or not and in cases of
COMPETITION COMMISSION OF INDIA v. STEEL 203
AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.]
alleged anti-competitive agreements and/or abuse of A
dominant position, the opinion on existence of prima facie
case has to be formed within 60 days. Though the time
period for such acts of the Commission has been
specified, still it is expected of the Commission to hold its
meetings and record its opinion about existence or B
otherwise of a prima facie case within a period much
shorter than the stated period.
(B) All proceedings, including investigation and inquiry
should be completed by the Commission/Director General
most expeditiously and while ensuring that the time taken C
in completion of such proceedings does not adversely
affect any of the parties as well as the open market in
purposeful implementation of the provisions of the Act.
(C) Wherever during the course of inquiry the Commission D
exercises its jurisdiction to pass interim orders, it should
pass a final order in that behalf as expeditiously as
possible and in any case not later than 60 days.
(D) T~e Director_ General in terms of Regulation 20 is
E
. expected to submit his report within a reasonable time. No
inquiry by the Commission can proceed any further in
absence of the report by the nirector General in terms of
Section 26(2) of the Act. l ne reports by the Director
General should be submitted within the time as directed
by the Commission but in all cases not later than 45 days
F
from the date of passing of directions in terms of Section
26( 1) of the Act.
(E) The Commission as well as the Director General shall
maintain complete 'confidentiality' as envisaged under G
Section 57 of the Act and Regulation 35 of the
Regulations. Wherever the 'confidentiality' is breached, the
aggrieved party certainly has the right to approach the
Commission for issuance of appropriate directions in
H
204 SUPREME COURT REPORTS [2010] 11 S.C.R.
A terms of the provisions of the Act and the Regulations in
force.
94. In our considered view the scheme and essence of the
Act and the Regulations are clearly suggestive of speedy and
expeditious disposal of the matters. Thus, it will be desirable
8
that the Competent Authority ·frames Regulations P!.9'1lidirlg
definite time frame for completion of investigation, inquiry and
final disposal of the matters pending before the Commission.
Till such Regulations are framed, the period specified by us
supra shall remain in force and we expect all the concerned
C authorities to adhere to the period specified.
95. Resultantly, this appeal is partially allowed. The order
dated 15th February, 2010 passed by the Tribunal is modified
to the above extent. The Commission snall proceed with the
D case in accordance with law and the principles· enunciated
supra.
96. In the circumstances there will be no order as to costs.
R.P Appeal partly allowed.
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