SCM SOLIFERT LIMITED & ANR.versusCOMPETITION COMMISSION OF INDIA

302                      [2018]REPORTS
               SUPREME COURT    4 S.C.R. 302                 [2018] 4 S.C.R.


A                     SCM SOLIFERT LIMITED & ANR.
                                         v.
                  COMPETITION COMMISSION OF INDIA
                         (Civil Appeal No. 10678 of 2016)
B                                APRIL 17, 2018
                 [ARUN MISHRA AND NAVIN SINHA, JJ.]
             Competition Act, 2002 – ss.5(a)(i), (ii), 6(2), 43A – Appellants
      acquired shares of a company (‘MCFL’) on two occasions – First
      acquisition was for 24.46% paid up share capital and the second
C
      acquisition was for a further 1.7% paid up share capital – Appellants
      filed notice disclosing details of the first acquisition and notifying
      second acquisition within 30 days of the second acquisition –
      Competition Commission imposed penalty u/s.43A for failing to notify
      the proposed combination before the acquisition as required u/s.6(2)
D     – Order upheld by appellate tribunal – On appeal, held: Under
      s.6(2) the proposal to enter into combination is required to be notified
      to the Commission – Notification has to be made before entering
      into the combination – Notice of s.6(2) is to be given prior to
      consummation of the acquisition – Ex post facto notice is not
      contemplated u/s.6(2) – Further, Sch.1 to the Combination
E
      Regulations, 2011 provides that acquisition of shares or voting rights
      referred to in s.5(a)(i) or s.5(a)(ii) does not entitle the acquirer to
      hold 25% or more of the total shares or voting rights of the company,
      directly or indirectly – In the instant case, by the second transaction
      appellant’s holding exceeded more than 25%, as its total
F     shareholding increased to 25.3% and thus, prior permission was
      required – Explanation to Sch.1 further states that acquisition of
      less than 10% of the total shares or voting rights of an enterprise is
      solely an investment – Beyond this threshold, the transaction is
      required to be looked at carefully – Appellant’s first acquisition
      was a part of the long-term plan to try and take over ‘MCFL’, which
G
      was simply not an investment– Purchase of 24.46% equity stake,
      vested power to exercise influence – Thus, there was a failure to
      comply with s.6(2) in regard to the acquisition of 24.46% equity of
      the shareholding – In the facts of the case, information was disclosed
      belatedly – Imposition of penalty was right – CCI (Procedure in
H
                                      302
     SCM SOLIFERT LIMITED & ANR. v. COMPETITION                         303
               COMMISSION OF INDIA

regard to the Transaction of Business Relating to Combinations)         A
Regulations, 2011 – rr. 4,5 and Entry I of Schedule I – SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations,
2011.
     Competition Act, 2002 – s.6(2) – Legislative mandate of –
Discussed.                                                              B
       Competition Act, 2002 – s.43A – Imposition of penalty under
– Discretion for – Held: Imposition of penalty u/s.43A is on account
of breach of a civil obligation – Thus, a penalty has to follow –
Discretion u/s.43A is with respect to quantum.
      Competition Act, 2002 – ss.6(2),31(1) – Vide two transactions,    C
appellants acquired shares of a company (‘MCFL’) and filed notice
disclosing the details thereof within 30 days of the second
acquisition – Competition Commission approved the proposed
combination, however, imposed penalty for failing to notify the
proposed combination before the acquisition as required u/s.6(2) –      D
Plea of appellants that after approval of the proposed combination
u/s.31(1), penalty ought not to have been imposed – Held: Merely
by grant of approval by the Commission violation of provisions does
not become condonable ipso facto, when prior notice was not given
u/s.6(2).
                                                                        E
      Dismissing the appeal, the Court
      HELD: 1.1 Section 6 of the Competition Act, 2002 deals
with regulation of combinations. Any person or enterprise before
entering into a combination, has to give notice to the Commission
disclosing the details within 30 days of (a) approval of the proposal   F
relating to merger or amalgamation as provided in the Act; (b)
execution of any agreement or other document for acquisition
referred to in Section 5(a) of the Act or acquiring of control under
section 5(b). Section 43A deals with the power to impose a penalty
for non-furnishing of information on combinations. Any person or
enterprise who fails to give notice under Section 6(2) of the Act       G
to the Commission, the Commission, in such an event, is
authorized to impose the penalty which may extend to 1% of the
total turnover or the assets, whichever is higher. [Paras 9, 10
and 11][308-E; 309-C-D, E-F]
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304           SUPREME COURT REPORTS                      [2018] 4 S.C.R.


A           1.2 Regulation 5 of the CCI (Procedure in regard to the
      Transaction of Business Relating to Combinations) Regulations,
      2011 deals with the form of notice for the proposed combination.
      Regulation 5(8) provides that “other document” in Section 6(2)(b)
      to mean any binding document by whatever name called,
      conveying an agreement or decision to acquire control, shares,
B
      voting rights or assets. Schedule 1 to the Combination Regulations
      provides that acquisition of shares or voting rights referred to in
      Section 5(a)(i) or Section 5(a)(ii) of the Act does not entitle the
      acquirer to hold 25% or more of the total shares or voting rights
      of the company, directly or indirectly. The Explanation makes it
C     clear that the acquisition of less than 10% of the total shares or
      voting rights of an enterprise shall be treated solely as an
      investment. [Paras 13, 14][310-A-B, F-G]
             1.3 Through the first acquisition of the shares of MCFL by
      the appellants, there was acquisition of 24.46% equity share
D     capital of MCFL on a single day of which 19.9% were acquired
      through the block and bulk deals. The contemporaneous Press
      Release dated 3.7.2013 issued by the appellants indicated that
      the objective was not to make an investment in MCFL. It referred
      “investment is very strategic and a good fit with the company’s
      business”. There was a pointer in the Press Release of its intent
E     when it stated that DFPCL looks forward to working closely with
      MCFL to “enhance long-term value for the shareholder of both
      companies”. Not only the appellants but another player Zuari
      group also made a significant purchase of shares of MCFL i.e.
      9.72% on 2.4.2013 is also not in dispute. Thus, it is apparent that
F     the appellant’s first acquisition was a part of the long-term plan
      to try and take over MCFL, which was simply not an investment.
      The purchase of 24.46% equity stake, vested power to exercise
      influence as was reflected in Press Release-II also. The
      acquisition of less than 10% of the total shares or voting rights
      of an enterprise is solely an investment. It also indicates that
G     beyond this threshold, the transaction is required to be looked
      carefully. Thus, there was a failure to comply with the provisions
      of Section 6(2) of the Act in regard to the acquisition of 24.46%
      of the shareholding. [Para 16][311-F-H; 312-A-C]

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     SCM SOLIFERT LIMITED & ANR. v. COMPETITION                     305
               COMMISSION OF INDIA

       1.4 It is apparent from Section 6(2) of the Act that the     A
proposal to enter into combination is required to be notified to
the Commission. The legislative mandate is apparent that the
notification has to be made before entering into the combination.
The Commission has been established to prevent practices having
an adverse effect on the competition. Section 6(2A) provides that
                                                                    B
no combination shall come into effect until 210 days have passed
from the date of notice or passing of orders under Section 31 by
the Commission, whichever is earlier. The provisions made in
Regulation 5(8) also buttresses the aforesaid conclusion. Notice
of Section 6(2) is to be given prior to consummation of the
acquisition. Ex post facto notice is not contemplated under the     C
provisions of section 6(2). Same would be in violation of the
provisions of the Act. The expression “proposes to enter into a
combination” in Section 6(2) and further details to be disclosed
in the notice to the Commission are of the ‘proposed
combination’. [Paras 18, 19][312-E-H; 313-A]
                                                                    D
      2. The factum of the approval of the combination
subsequently by the Commission is not going to provide an
insulation when the provisions of the Act have been violated and
prior notice had not been given under Section 6(2). Merely by
grant of approval by the Commission violation of provisions does
not become condonable ipso facto. In the facts of the case,         E
information was disclosed belatedly. The imposition of penalty
was warranted due to the violation of the provision and it was
rightly imposed. [Paras 21, 22][313-D-E, G]
      3. There was no requirement of mens rea under Section
43A or an intentional breach as an essential element for            F
levy of penalty. Mens rea is important to adjudge criminal or
quasi-criminal liability. The imposition of penalty under Section
43A is on account of breach of a civil obligation, and the
proceedings are neither criminal nor quasi-criminal. Thus, a
penalty has to follow. Discretion is with respect to                G
quantum. [Paras 23, 24][313-H; 314-A, G]
     Hindustan Steel Ltd. v. State of Orissa AIR 1970 SC
     253 : [1970] 1 SCR 753 -relied on.

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306            SUPREME COURT REPORTS                          [2018] 4 S.C.R.


A                             Case Law Reference

            [1970] 1 SCR 753              relied on            Para 23

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 10678
      of 2016.
B
            From the Judgment and Order dated 30.08.2016 of the Appellate
      Tribunal at New Delhi in Appeal No. 59 of 2015.

           Amit Sibal, Sr. Adv., G. R. Bhatia, Abdullah Hussain, Ms. Kanika
      Chaudhary, Avinash Amanath, Abhay Kumar, Advs. for the Appellants.
C
           Salman Khurshid, Sr. Ad.v, Samar Bansal, Neeraj Shekhar,
      Ms. Shreya Singh, Advs. for the Respondent.

            The Judgment of the Court was delivered by
D
            ARUN MISHRA, J. 1. The appellants SCM Solifert Limited
      and another are in appeal under section 53T of the Competition Act,
      2002 (hereinafter referred to as “the Act”) as against the final judgment
      and order dated 30.08.2016 passed in Appeal No.59 of 2015 by the
      Competition Appellate Tribunal thereby affirming the order passed by
E     the Competition Commission of India under section 43A of the Act.

             2. The Competition Commission of India initiated the proceedings
      against the appellants on whom due to the failure to notify a proposed
      combination as required under section 6(2) of the Act, the penalty of
      Rupees Two crores was imposed under section 43A of the Act. On
F     3.07.2013, the appellants had purchased 2,89,91,150 shares of Mangalore
      Chemicals and Fertilisers Limited (in short referred to as “the MCFL”)
      constituting 24.46 paid up share capital of the MCFL on the Bombay
      Stock Exchange.

G           3. The first transaction of the acquisition of the shares was by
      way of the purchase of shares conducted through bulk and block deals.
      It was followed by press release dated 3.7.2013 by Deepak Fertiliser
      and Petrochemicals Corporation Limited filed with the Stock Exchanges,
      in compliance with the requirements of the Listing Agreement.

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      SCM SOLIFERT LIMITED & ANR. v. COMPETITION                                307
        COMMISSION OF INDIA [ARUN MISHRA, J.]

       4. On the second acquisition of the shares on 23.04.2014 the             A
appellants made a purchase order in the open market for the purchase
of up to 20 lacs equity shares representing 1.7 percent shares of the
MCFL. Subsequently, an open offer in terms of the SEBI (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 (for short, “the
Regulations, 2011”) was made for acquiring up to 26 percent of shares
                                                                                B
of the MCFL.

       5. The appellants filed a notice disclosing details of the first
acquisition and notifying the second acquisition under Section 6(2) of the
Act with the Commission on 22.04.2014 within thirty days of the public
announcement pursuant to the Regulations, 2011 for the acquisition of           C
1.7 percent of the MCFL. The Competition Commission vide its order
dated 30.07.2014 under section 31(1) of the Act approved the proposed
combination, however, directed to initiate penalty proceedings against
the appellants under section 43A of the Act. Pursuant to that, a show
cause notice was issued on the ground of failure to notify in accordance
to section 6(2) of the Act, in regard to first and second acquisitions of       D
shares.

        6. It was the case on behalf of the appellants that first acquisition
was made solely for the purpose of investment under Entry I of Schedule
I of the CCI (Procedure in regard to the Transaction of Business Relating
to Combinations) Regulations, 2011, (hereinafter referred to as “the            E
Competition Regulations”). Thereby, it assumed exemption from the
notification. It was also urged that the second acquisition was notified to
the Commission within the stipulated time of 30 days as specified in
section 6(2) of the Act. The purchase was not consummated because
as per the Escrow Agreement dated 28.04.2014, the shares purchased              F
in the second acquisition were credited to a specifically designated
Escrow account of J.M. Financial Services Limited. The sole purpose
of entering into an escrow agreement was that the transaction was not
consummated prior to approval of the Commission. The Commission
has imposed the penalty of 2 crores; the appellate tribunal has affirmed
the order. The Commission has held that the appellants have violated            G
section 6(2) of the Act by failing to notify the proposed combination.

       7. It was urged by learned counsel on behalf of the appellants that
first acquisition did not fall within the purview of Entry 1 Schedule 1.
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308            SUPREME COURT REPORTS                            [2018] 4 S.C.R.


A     The interpretation made by the Commission of the Entry 1 of Schedule
      1 is incorrect. With respect to the second acquisition of shares, it was
      urged that the sole purpose of creation of Escrow Account was to ensure
      that the appellants could not exercise the legal and beneficial rights
      accruing through the shares, as the account was operatable solely on
      the basis of instructions of the Manager and to the exclusion of the
B
      appellants. After approval of the proposed combination, penalty ought
      not to have been imposed. Violation, if any, was technical, not willful,
      deliberate or mala fide.
             8. Per contra, the Commission has rightly imposed the penalty.
      There was a breach of provisions contained in section 6(2). The penalty
C
      imposed is meager. The first acquisition of shares was notifiable. It could
      not have been termed solely as an investment. Reliance has been placed
      on Press Release issued on 3.7.2013, which referred investment being
      “very strategic”, and the appellant also notified to the public that they
      “look forward to working closely with MCFL in the future”. The
D     knowledge of acquisition by the Zuari group of 9.72% shares in MCFL
      on 2.4.2013 was admitted in the reply filed by the appellants. There was
      the acquisition of a large number of shares on the same day through the
      block and bulk deals. MCFL was not very profitable. Therefore, purchase
      of shares could not be said to be a sound investment by a prudent investor.
E            9. To appreciate the rival submissions, it is necessary to refer to
      certain provisions contained in the Act. Section 6 of the Act deals with
      regulation of combinations and the same is extracted hereunder:
            “Section 6: Regulation of combinations
            (1) No person or enterprise shall enter into a combination, which
F           causes or is likely to cause an appreciable adverse effect on
            competition within the relevant market in India and such a
            combination shall be void.
            (2) Subject to the provisions contained in sub-section (1), any person
            or enterprise, who or which proposes to enter into a combination,
G           13 [shall] give notice to the Commission, in the form as may be
            specified, and the fee which may be determined, by regulations,
            disclosing the details of the proposed combination, within thirty
            days of—

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      SCM SOLIFERT LIMITED & ANR. v. COMPETITION                                 309
        COMMISSION OF INDIA [ARUN MISHRA, J.]

       (a) approval of the proposal relating to merger or amalgamation,          A
       referred to in clause (c) of section 5, by the board of directors of
       the enterprises concerned with such merger or amalgamation, as
       the case may be;
       (b) execution of any agreement or other document for acquisition
       referred to in clause (a) of section 5 or acquiring of control referred   B
       to in clause (b) of that section.
       (2A) No combination shall come into effect until two hundred and
       ten days have passed from the day on which the notice has been
       given to the Commission under sub-section (2) or the Commission
       has passed orders under section 31, whichever is earlier.”                C
       10. Any person or enterprise before entering into a combination,
has to give notice to the Commission disclosing the details within 30
days of (a) approval of the proposal relating to merger or amalgamation
as provided in the Act; (b) execution of any agreement or other document
for acquisition referred to in section 5(a) of the Act or acquiring of control   D
under section 5(b). No combination shall come into effect as provided in
section 6(2A) until 210 days have passed from the day when notice has
been given to the Commission.
      11. Section 42 of the Act deals with contravention of the orders of
the Commission. Section 43A deals with the power to impose a penalty             E
for non-furnishing of information on combinations. Any person or
enterprise who fails to give notice under section 6(2) of the Act to the
Commission, the Commission, in such an event, is authorized to impose
the penalty which may extend to 1% of the total turnover or the assets,
whichever is higher.
                                                                                 F
       12. Section 43A is extracted hereunder:
       “Section 43A: Power to impose the penalty for non-
       furnishing of information on combinations
                  If any person or enterprise who fails to give notice to
       the Commission under sub-section (2) of section 6, the Commission         G
       shall impose on such person or enterprise a penalty which may
       extend to one percent, of the total turnover or the assets, whichever
       is higher, of such a combination.”


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310            SUPREME COURT REPORTS                           [2018] 4 S.C.R.


A           13. Regulation 4 of the Combination Regulations deals with
      categories of transactions not likely to have an appreciable adverse effect
      on competition in India. Regulation 5 deals with the form of notice for
      the proposed combination. Regulation 5(8) provides that “other
      document” in section 6(2)(b) to mean any binding document by whatever
      name called, conveying an agreement or decision to acquire control,
B
      shares, voting rights or assets. Rule 5(8) is extracted hereunder :
            “5. Form of notice for the proposed combination -
              (1)      ……
              (8) The reference to the “other document” in clause (b) of sub-
C           section (2) of section 6 of the Act shall mean any binding document,
            by whatever name called, conveying an agreement or decision to
            acquire control, shares, voting rights or assets:
              Provided that if the acquisition is without the consent of the
            enterprise being acquired, any document executed by the acquiring
D           enterprise by whatever name called, conveying a decision to
            acquire control, shares or voting rights shall be the “other
            document”.
              Provided further that where a public announcement has been
            made in terms of the Securities and Exchange Board of India
E           (Substantial Acquisition of Shares and Takeovers) Regulations,
            2011, for the acquisition of shares, voting rights or control, such
            public announcement shall be deemed to be the
            “other document”.”
            14. Schedule 1 to the Combination Regulations provides that
F     acquisition of shares or voting rights referred to in section 5(a)(i) or
      Section 5(a)(ii) of the Act does not entitle the acquirer to hold 25% or
      more of the total shares or voting rights of the company, directly or
      indirectly. The Explanation makes it clear that the acquisition of less
      than 10% of the total shares or voting rights of an enterprise shall be
      treated solely as an investment. Schedule 1 to the Combination
G
      Regulations is extracted hereunder:
            “(1) An acquisition of shares or voting rights, referred to in sub-
            clause (i) or sub-clause (ii) of clause (a) of section 5 of the Act,
            solely as an investment or in the ordinary course of business in so
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      SCM SOLIFERT LIMITED & ANR. v. COMPETITION                               311
        COMMISSION OF INDIA [ARUN MISHRA, J.]

      far as the total shares or voting rights held by the acquirer directly   A
      or indirectly, does not entitle the acquirer to hold twenty five per
      cent (25%) or more of the total shares or voting rights of the
      company, of which shares or voting rights are being acquired,
      directly or indirectly or in accordance with the execution of any
      document including a share holders” agreement or articles of
                                                                               B
      association, not leading to acquisition of control of the enterprise
      whose shares or voting rights are being acquired.
      Explanation:- The acquisition of less than ten percent of the total
      shares or voting rights of an enterprise shall be treated as solely
      as an investment. Provided that in relation to the said acquisition
      – (A) the Acquirer has ability to exercise only such rights that the     C
      exercisable by the ordinary shareholders of the enterprise whose
      shares or voting rights are being acquired to the extent of their
      respective shareholding; and (B) the Acquirer is not a member of
      the board of directors of the enterprise whose shares or voting
      rights are being acquired and does not have a right or intention to      D
      nominate a director on the board of directors of the enterprise
      whose shares or voting rights are being acquired and does not
      intend to participate in the affairs or management of the enterprise
      whose shares or voting rights are being acquired.”
       15. The procedure for imposition of penalty is provided under           E
Regulation 48 of the new Regulations. A show cause notice has to be
given and thereafter if an oral hearing is granted, then the Commission is
empowered to impose the penalty considering the facts and circumstances
of the case.
       16. First, we deal with the acquisition of the shares of MCFL by        F
the appellants on 3.11.2013. There was the acquisition of 24.46% equity
share capital of MCFL on a single day of which 19.9% were acquired
through the block and bulk deals. The contemporaneous Press Release
dated 3.7.2013 issued by the appellants filed with the stock exchanges,
in compliance with the requirement of the Listing Agreement indicated
that the objective was not to make an investment in MCFL. The Press            G
Release referred “investment is very strategic and a good fit with the
company’s business”. There was a pointer in the Press Release of its
intent when it stated that DFPCL looks forward to working closely with
MCFL to “enhance long-term value for the shareholder of both
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312             SUPREME COURT REPORTS                             [2018] 4 S.C.R.


A     companies”. Not only the appellants but another player Zuari group also
      made a significant purchase of shares of MCFL i.e. 9.72% on 2.4.2013
      is also not in dispute. Thus, it is apparent that the appellant’s first
      acquisition was a part of the long-term plan to try and take over MCFL,
      which was simply not an investment. The purchase of 24.46% equity
      stake, vested power to exercise influence as was reflected in Press
B
      Release-II also. The acquisition of less than 10% of the total shares or
      voting rights of an enterprise is solely an investment. It also indicates
      that beyond this threshold, the transaction is required to be looked carefully.
      Thus, there was a failure to comply with the provisions of section 6(2) of
      the Act in regard to the acquisition of 24.46% of the shareholding. The
C     provisions of section 6(2) were not at all complied with.
             17. Coming to the second acquisition of shares of 0.8% equity
      shares of MCFL, the dispute is as to whether the notifying within 30
      days of the purchase was compliance of the provision as per provisions
      of section 6(2) it should have been notified before the acquisition. As a
D     corollary, it was also argued that the equity shares purchased second
      time were placed in the Escrow Account. The appellants could not have
      exercised the beneficial rights until the Commission made the approval
      of the proposed combination. What was essential under section 2(e)
      was the voting rights and the appellants could not have exercised voting
      rights by placing shares in the escrow account.
E
             18. We find no merits in the submissions raised. It is apparent
      from section 6(2) of the Act that the proposal to enter into combination
      is required to be notified to the Commission. The legislative mandate is
      apparent that the notification has to be made before entering into the
      combination. The Preamble of the Act contains that the Commission
F     has been established to prevent practices having an adverse effect on
      the competition. The combination cannot be entered into and shall come
      into effect before order is passed by Commission or lapse of certain
      time from date of notice is also apparent from the terminology used in
      section 6(2A) which provides that no combination shall come into effect
G     until 210 days have passed from the date of notice or passing of orders
      under section 31 by the Commission, whichever is earlier. The provisions
      made in Regulation 5(8) also buttresses the aforesaid conclusion. Notice
      of Section 6(2) is to be given prior to consummation of the acquisition.
      Ex post facto notice is not contemplated under the provisions of section
      6(2). Same would be in violation of the provisions of the Act.
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      SCM SOLIFERT LIMITED & ANR. v. COMPETITION                              313
        COMMISSION OF INDIA [ARUN MISHRA, J.]

       19. The expression “proposes to enter into a combination” in           A
section 6(2) and further details to be disclosed in the notice to the
Commission are of the ‘proposed combination’ and the specific provisions
contained in section 6(2A) of the Act provides that no combination shall
come into effect until 210 days have passed from the date on which
notice has been given or passing of orders under section 31 by the
                                                                              B
Commission, whichever is earlier. The intent of the Act is that the
Commission has to permit combination to be formed, and has an
opportunity to assess whether the proposed combination would cause
an appreciable adverse effect on competition. In case combination is to
be notified ex-post facto for approval, it would defeat the very intendment
of the provisions of the Act.                                                 C
       20. When the transaction has been completed and acquisition has
been made and the latter transaction has exceeded holding more than
25% by the second purchase, obviously prior permission was required,
as discussed hereinabove, as its total shareholding increased to 25.3%.
Thus, we have no hesitation to hold that the notification under section       D
6(2) of the Act has to be ex-ante.
      21. The factum of the approval of the combination subsequently
by the Commission is not going to provide an insulation when the
provisions of the Act have been violated and prior notice had not been
given under section 6(2). It was open to impose a penalty under section       E
43A. Merely by grant of approval by the Commission violation of
provisions does not become condonable ipso facto.
       22. The provisions contained in section 43A make it clear that the
Commission shall impose the penalty which may in its discretion extend
to 1% of the total turnover or the assets, whichever is higher, of the        F
combination. It has been found on facts that the turnover of the
combination was Rs.3322 crores per annum, 1% of which would be
Rs.33.22 crores. The Commission had imposed a nominal penalty of
Rs.2 crores which amounts to only 0.06% of the total turnover. In the
facts of the case, information was disclosed belatedly. The imposition of
penalty was warranted due to the violation of the provision and it was        G
rightly imposed.
       23. There was no requirement of mens rea under section 43A or
an intentional breach as an essential element for levy of penalty. The
Act does not use the expression “the failure has to be willful or mala
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314             SUPREME COURT REPORTS                             [2018] 4 S.C.R.


A     fide” for the purpose of imposition of penalty. The breach of the provisions
      of the Act is punishable and considering the nature of the breach, it is
      discretionary to impose the extent of penalty. Mens rea is important to
      adjudge criminal or quasi-criminal liability, not in case of violation of the
      civil statutory provision. In Hindustan Steel Ltd. v. State of Orissa AIR
      1970 SC 253, with respect to the failure to comply with the civil obligation
B
      this Court has laid down thus:
              “In our opinion, mens rea is not an essential ingredient for
              contravention of the provision of a civil Act. In our view, the penalty
              is attracted as soon as a contravention of the statutory obligations
              as contemplated by the Act is established and, therefore, the
C             intention of the parties committing such violation becomes
              immaterial. In other words, the breach of a civil obligation which
              attracts penalty under the provisions of an Act would immediately
              attract the levy of penalty irrespective of the fact whether the
              contravention was made by the defaulter with any guilty intention
D             or not. This apart that unless the language of the statute indicates
              the need to establish the element of mens rea. It is generally
              sufficient to prove that a default in complying with the statute has
              occurred. The penalty has to follow and only the quantum of penalty
              is discretionary “
              In our considered opinion, the penalty is attracted as soon as the
E             contravention of the statutory obligation as contemplated by the
              Act and the Regulation is established and hence intention of the
             parties committing such violation becomes wholly irrelevant.
             We also further hold that unless the language of the statute
             indicates the need to establish the presence of men’s rea, it is
F            wholly unnecessary to ascertain whether such a violation was
             intentional or not. On a careful perusal of Section 15(D) (b) and
             Section 15-E of the Act, there is nothing which requires that men’s
             rea must be proved before a penalty can be imposed under these
             provisions. Hence once the contravention is established then the
             penalty is to follow.”
G
              24. The imposition of penalty under section 43A is on account of
      breach of a civil obligation, and the proceedings are neither criminal nor
      quasi-criminal. Thus, a penalty has to follow. Discretion in the provision
      under section 43A is with respect to quantum. Thus, we find that in view
      of the submissions made by learned counsel for the appellants no case
H     for our interference is made out.
      SCM SOLIFERT LIMITED & ANR. v. COMPETITION                            315
        COMMISSION OF INDIA [ARUN MISHRA, J.]

      25. The judgment and order passed by the Commission as affirmed       A
by the appellate tribunal are in accordance with law. The appeal being
devoid of merit, deserves dismissal and is hereby dismissed. No costs.


Divya Pandey                                            Appeal dismissed.
                                                                            B




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                                                                            H