The present writ petition is filed seeking a writ of mandamus to set aside the order dated 03.10.2019 passed by Respondent No.1 under Section 26(1) of the Competition Act, 2002 in Case No. 30 of 2019 and to set aside order dated 04.10.2019 passed by Respondent No.1 directing the parties to appear in Case No. 30 of 2019.
2. Heard Mr. S. Niranjan Reddy, learned senior counsel, appearing for Ms. Rubaina Khatoon, learned counsel for petitioners, Mr. K. Vivek Reddy, learned senior counsel, appearing for Ms. Neha Pandey, learned counsel for 1st respondent and Mr. D. Prakash Reddy, learned senior counsel, appearing for Mr. Sriram Polali, learned counsel for 2nd respondent.
Facts of the Case:-
3. Petitioner No.1 is a company exclusively involved in the maintenance, financing, development and operation of Rajiv Gandhi International Airport, Hyderabad (RGIA) by virtue of a concession agreement dated 20.12.2004 entered into between itself and the Government of India. Clause 3.2.2 of the said concession agreement granted exclusive rights to the 1st Petitioner to grant third party service 3 providers rights to carry out activities and business to maintain and operate RGIA. Respondent No. 2 is one such third party service provider which provides Maintenance, Repair & Overhaul (MRO) services including Line Maintenance Services to aircrafts landing at RGIA. According to the 2nd Respondent, Line Maintenance Services can only be provided from the premises of RGIA.
4. Pursuant to the concession agreement, Petitioner No. 1 entered into a license agreement dated 20.12.2011 with the Respondent No. 2 granting an area of 96.04 Sq. Mts. at RGIA for Setting up and operating Airline Engineering Maintenance Office to provide line maintenance services for a period of three years. The said license agreement dated 20.12.2011 was extended vide agreement dated 28.11.2014 for a period of five years until 22.03.2019.
5. 1st Petitioner addressed a letter dated 22.02.2019 to Respondent No.2 informing that the license agreement dated 28.11.2014 cannot be extended as space occupied by second respondent was required for ongoing expansion works at RGIA. 2nd Respondent addressed an email dated 25.02.2019 requesting the 1st Petitioner to extend the license agreement dated 28.11.2014 which was due to expire on 22.03.2019 by another five years. 1st Petitioner replied to the said email by referring to the letter dated 22.02.2019 stating that the license agreement cannot be 4 extended. Subsequently, another email dated 11.03.2019 was addressed by 2nd Respondent to 1st Petitioner requesting the extension of the license agreement by another five years. 2nd Respondent also addressed letters to Ministry of Civil Aviation seeking their intervention in the matter.
6. On 27.06.2019, Petitioner No.1 addressed a letter to Respondent No. 2 asking it to vacate the premises licensed to it by 30.06.2019. Respondent No. 2 addressed another letter dated 28.06.2019 requesting Petitioner No. 1 to withdraw its letters dated 22.02.2019 and 27.06.2019. However, the license agreement was not extended.
7. On 01.07.2019, Respondent No. 2 filed W.P. No. 13298 of 2019 seeking to set aside the letter dated 27.06.2019 on the ground of it being arbitrary, unconstitutional and violative of principles of natural justice. Respondent No. 2 also sought a direction to allow it carry on its business of providing Line Maintenance Services from the premises of RGIA. In the said writ petition. Respondent No. 2 filed interlocutory applications I.A. No. 1 of 2019 and I.A. No. 2 of 2019 seeking interim reliefs against Petitioner No. 1 to allow it to carry on business at the premises admeasuring 96.04 Sq. Mts. at RGIA and to suspend the letter dated 27.06.2019 which directed Respondent No. 2 to vacate the premises admeasuring 96.04 Sq. Mts, at RGIA respectively. This Court vide order dated 02.07.2019 dismissed the said Interlocutory Applications on the 5 ground that the relationship between Petitioner No. 1 and Respondent No. 2 is purely contractual in and is the nature of licensor and licensee. Respondent No. 2 challenged the order dated 02.07.2019 by filing writ appeal W.A. No. 677 of 2019 before the Division Bench of this Court. The writ appeal was dismissed vide order dated 16.08.2019 and upheld the order dated 02.07.2019.
8. While the proceedings were pending in W.P. No. 13298 of 2019, Respondent No. 2 filed information under S.19(1) of the Competition Act, 2002 (hereinafter ‘the Act 2002’) before the Competition Commission of India ((hereinafter referred to as CCI for brevity)/ Respondent No.1 on 07.10.2019. In the said information, Respondent No. 2 alleged that by virtue of the concession agreement dated 20.12.2004, Respondent No. 1 was in dominant position in the market of providing Line Maintenance Services at RGIA. Respondent No. 2 alleged that all third-party service providers providing MRO services including the Line Maintenance Services are subject to the control of Petitioner No. 1 as the same can only be provided from RGIA’s premises and Petitioner No. 1 has discretion in granting licenses to such third-party service provides to operate businesses at RGIA. Respondent No. 2 alleged that the license agreement was not extended by Petitioner No. 1 to favour Petitioner No. 2 (subsidiary of GMR Air Cargo 6 and Aerospace Engineering Limited (GACASEL) which in turn is a wholly owned subsidiary of Petitioner No. 1) which is also engaged in the business of providing Line Maintenance services.
9. Respondent No. 2 in its information alleged that Petitioner No. 1 abused its dominant position by a) denying market access to Respondent No. 2 by refusing to extend the market period which is contrary to S.4(2)(C) of the Act, 2002; b) by ousting Respondent No. 2 from the market from Line Maintenance Services and thereby adversely affecting competition in contravention to S.4(2)(b)(i) of the Act, 2002; c) by leveraging its dominant position in the upstream market to favour Petitioner No. 2 in the downstream market of providing Line Maintenance Services in violation of S.4(2)(e) of the Act, 2002; d) by creating a monopolistic environment to favour Petitioner No. 2 which will affect the consumers and the same is in contravention to S.4(2)(a)(i) of the Act, 2002.Therefore, it was alleged that Petitioner No. 1 enjoyed dominant position at the RGIA which it abused.
10. Respondent No. 1 based on the information filed by Respondent No. 2 passed the impugned order dated 03.10.2019 directing the Director General to conduct investigation into possible abuse of dominance by Petitioner No. 1. In the said impugned order dated 03.10.2019, Respondent No. 1 noted that the upstream market was 7 ‘market for provision of access to airport premises / facilities’ and the downstream market was ‘market for provision of Line Maintenance Services at RGIA’.
11. Respondent No. 1 noted based on the concession agreement dated 20.12.2004 that Petitioner No. 1 was in dominant position in the upstream market. Respondent No. 1 in the impugned order, prima facie, observed that the dominant position in the upstream market was abused by Petitioner No. 1 to exclude Respondent No.2 from the downstream market to favour Petitioner No. 2. Respondent No. 1 noted that a) use of RGIA premises (upstream market) was indispensable for operating Line Maintenance services (downstream market) and the use of the premises was refused by Petitioner No.1; b) refusal of use of RGIA’s premises shall most likely eliminate competition; c) refusal of use of RGIA’s premises effects the consumers.
12. Further, Respondent No.1 in its impugned order dated 03.10.2019 noted that RGIA constitutes an essential facility which is controlled by Petitioner No. 1, the said facility (RGIA) cannot be duplicated by other competitors (third party service providers) and they cannot enter the relevant market of providing Line Maintenance Services without being present RGIA’s premises. Respondent No. 1 also noted that Petitioner No. 1 denied market access to Respondent No. 2 by not 8 extending the license agreement. Respondent No.1 further noted that the allegations by Respondent No. 2 that Petitioner No. 1 is trying to poach its clients and employees suggests exclusionary motive.
13. Respondent No. 2 is a significant market player in providing line maintenance services and denial of market access along with alleged exclusionary motive of Petitioner No.1 suggests that it tried to eliminate competition to favour Petitioner No. 2. Therefore, Respondent No.1 noted that the allegations along with the material placed before it, prima facie, suggests that Petitioner No. 1 contravened S.4(2)(b)(i), S.4(2)(e) and S.4(2)(a)(i) of the Act, 2002. Respondent No.1 directed the Director General to conduct investigation.
14. On 04.10.2019, Respondent No.1 dealing with the application filed under S.33 of the Act, 2002 by Respondent No. 2 seeking interim reliefs, inter alia, to continue the business of Line Maintenance Services from the premises of RGIA directed the parties to appear on 17.10.2019 for a hearing on grant of interim reliefs.
15. Therefore, the Petitioners have filed the present writ petition challenging the orders dated 03.10.2019 and 04.10.2019. An interlocutory application I.A. No. 1 of 2019 was filed by the Petitioners seeking interim stay of all further proceedings pursuant to the orders dated 03.10.2019 and 04.10.2019 pending disposal of the writ petition. 9 This Court vide order dated 16.10.2019 granted interim stay of impugned orders dated 03.10.2019 and 04.10.2019.
16. Contentions of the Petitioners
i. Respondent No.1 could not have exercised its jurisdiction as W.P. No. 13298 of 2019 was pending before the High Court in which similar reliefs were claimed by Respondent No. 2. By passing the impugned orders, Respondent No.1 has usurped the jurisdiction of High Court before which the matters were already sub-judice. Therefore, Respondent No.1 exceeded its jurisdiction by passing the impugned orders. Reliance was placed on Syed Yakoob v. K.S. Radhakrishnan (AIR 1964 SC 477), Reliance Airport Developers P. Ltd. v. Airports Authority of India (2006) 10 SCC 1), Mafatlal Industries v. UOI (1997) 5 SCC 536), King v. Paramanand (AIR 1949 Pat. 222), Kartar Singh v. State of Punjab (1994) 3 SCC 569) and State of UP v. Mohd. Nooh (1958 SCR 2562).
ii. There is a possibility of Respondent No.1 reaching findings/conclusions contrary to the findings of High Court in order dated 16.08.2019 in W.A. No. 677 of 2019. The same will contrary to the decision in CCI v. Bharti Airtel Ltd (2019) 2 SCC 521).
iii. Respondent No. 1 could not have exercised its jurisdiction as contractual disputes existed between the parties and their relationship was of a licensor and licensee. Respondent No. 1 failed to note the said aspect which was also recorded by the Ld. Single Judge in order dated 02.07.2019 and by the Division Bench in order dated 16.08.2019. Further, Respondent No. 1 in plethora of cases has held that issues pertaining to contractual terms do not fall within the realm of the Act, 2002.
iv. Respondent No.1 could not have considered the application filed under S.33 of the Act, 2002 by Respondent No.2 as similar reliefs were rejected by the High Court vide order dated 02.07.2019 in W.P. No. 13298 of 2019 and order dated 16.08.2019 in W.A. No. 677 of 2019. Further, any determination of issues by Respondent No.1 will amount to determination of issues already pending in W.P. No. 13298 of 2019.
v. The impugned order dated 03.10.2019 suffers from errors apparent on the face of the record as it failed to consider and note the order dated 16.08.2019 in W.A. No. 677 of 2019. The said impugned order determined Petitioner No.1’s dominant position and market shares of the players relying on wrong facts. Respondent No.1 only took into account figures in relation to foreign airlines and not domestic airlines to determine market share of the competitors. Further, Respondent No.1 considered downstream market share of providing Line Maintenance Services based on number of airlines (customers) and not the number of flights serviced by the competitors. Had Respondent No. 1 considered number of flights to consider market share it would a reach a conclusion that Petitioner No.2 was the dominant player in the downstream market. Respondent No.1 11 failed to consider the market share of other competitors like AI SATS which also provide Line Maintenance Services.
vi. Furthermore, the relevant geographic market determined by Respondent No.1 is unsustainable as it failed to consider that Respondent No.2 operates pan India and relevant geographic market cannot be restricted to Line Maintenance Services at RGIA.
vii. Further, Petitioner No.1 did not create any hurdles by not granting requisite permissions to Respondent No.2 and the said allegation is baseless.
viii. There was no exclusionary motive on the part of Petitioner No.1 to benefit Petitioner No. 2, which was already in the business of providing MRO services including Line Maintenance Services from 2010 and not from 2017 as alleged by Respondent No.2. Therefore, it cannot be alleged that Petitioner No.1 excluded Respondent No.2 to benefit Petitioner No.2. Further, Petitioner No. 2 is no longer in the business of providing Line Maintenance Services as the business of Petitioner No.2 is merged into the business of GACASEL by virtue of order dated 26.07.2019 passed by National Company Law Tribunal, Hyderabad.
ix. The impugned orders were passed in violation of principles of natural justice as no opportunity of hearing was granted to the Petitioners. Relying on Regulation 17 of the CCI (General) Regulations, 2009 it was contended that Respondent No.1 12 arbitrarily exercised its discretion by not granting the Petitioners an opportunity of hearing before passing the impugned orders.
x. Respondent No.2 approached Respondent No. 1 with unclean hands by suppressing the order dated16.08.2019 passed in W.A. No. 677 of 2019 and seeking similar relief as sought in W.P. 13298 of 2019 amounts to abuse of process and forum shopping. Relying on doctrine of election it was contended that a person choosing one forum cannot approach another forum with another relief. Reliance was placed on Mahabir Prasad Jain v. Ganga Singh (1999) 8 SCC 274) and Manish Goel v. Rohini Goel (2014) 4 SCC 393).
xi. Unnecessary investigation by Respondent No.1 in the absence of material on record will severely impact the reputation of Petitioner No.1. Reliance was placed on Google Inc. v. CCI (2015) 150 DRJ 192 (DB).
xii. The license agreement between Respondent No.2 and Petitioner No.1 stood elapsed due to efflux of time and the same was not unilaterally terminated.
17. Contentions of Respondent No. 1 (Competition Commission of India (CCI):
i. The writ petition is premature and is liable to be dismissed.
ii. The impugned order dated 03.10.2019 is an administrative order and is based on prima facie opinion and requires no adjudication. The said order is not a final order on merits and causes no prejudice to the Petitioners. Further, S.26(1) does not contemplate an opportunity of hearing before directing investigation. Therefore, at such a preliminary stage cannot interfere with an order directing investigation under Article 226. Reliance was placed on CCI v. SAIL (2010) 10 SCC 744).
iii. Respondent No.1 is statutorily obligated under S.18 to eliminate practices having adverse impact on competition and is obligated to promote and sustain competition along with protecting the interests of the consumers. Therefore, the impugned order dated 03.10.2019 was passed in exercise of the said jurisdiction.
iv. The reliefs claimed in W.P. No. 13298 of 2019 have no bearing on the proceedings before Respondent No. 1 as the later deals with competition law effecting an entire market and consumers whereas the former deals with a commercial dispute between two private parties. The issues before this Court in W.P. No. 13298 of 2019 dealt with constitutional law and it could not have gone into the issues of competition law, the jurisdiction of which rests with Respondent No. 1. Therefore, it cannot be said that Respondent No. 1 usurped the jurisdiction of High Court.
v. Reiterating the findings of the impugned order dated 03.10.2019 it was contended that a prima facie case was made out that Petitioner no.1 abused its dominant position and the same requires investigation.
vi. Further, the impugned order dated 04.10.2019 is only a notice directing the parties to appear. The Petitioners are given opportunity of hearing to oppose the interim reliefs claimed by Respondent No.2. Therefore, the present writ petition is premature.
18. Contentions of Respondent No. 2
i. The impugned order dated 03.10.2019 is administrative in nature and does not determine any rights of the parties. It is in the nature of departmental proceedings and is based on a prima facie opinion. Therefore, at a premature stage High Court cannot interfere under Article 226.
ii. The reliefs claimed in W.P. No. 13298 of 2019 are entirely different than the ones claimed before Respondent No.1 as the former sought setting aside of vacating letter dated 27.06.2019 against Petitioner No. 1 on the ground violation of principles of natural justice and the latter raises competition law issues effecting the rights of various stakeholders.
iii. Respondent No.1 had jurisdiction to pass the impugned orders as the information provided to it raised competition law issues which it alone could have decided under the Act, 2002.
iv. Reiterating the findings of the impugned order dated 03.10.2019 it was contended that a prima facie case was made out that Petitioner no.1 abused its dominant position and the same requires investigation.
v. There was no suppression of order dated 16.08.2019 as the same was informed to Respondent No. 1 as additional information. In any case, the order dated 16.08.2019 has no bearing on the prima facie opinion formed by Respondent No. 1 as it was 15 aware of the proceedings before this Court in W.P. No. 13298 of 2019.
Findings of the Court
19. From the facts of the case, it is clear that the Petitioners, mainly, challenge the orders dated 03.10.2019 directing investigation under S.26(1) of the Act, 2002 and 04.10.2019 directing the parties to appear on the ground that the same is without jurisdiction as similar reliefs were claimed in W.P. No. 13298 of 2019 and directing investigation will usurp the jurisdiction of this Court under Article 226 of the Constitution of India. 1st respondent lacks jurisdiction. On the other hand, the respondents contended that the impugned orders were passed under S.26(1) by prima facie determining the existence of possible abuse of dominant position by the 1st Petitioner. The Respondents contended that the reliefs claimed in W.P. No. 13298 of 2019 has no bearing on the proceedings before Respondent No. 1 as the latter deals with competition law issues and the former dealt with violation of Articles 14 and 19 along with violation of principles of natural justice. Therefore, the main question before this Court is whether the order dated 03.10.2019 passed by Respondent No. 1 forming a prima facie opinion regarding existence of abuse of dominant position is liable to be set aside as similar reliefs were claimed by Respondent No.2 in W.P. No. 13298 of 2019 and the same is pending before this Court.
20. Before deciding the issues at hand, it is apposite to discuss the scope of CCI’s (Respondent No.1) power and jurisdiction under S.26(1) of the Act, 2002vis--vis the scope of interference by High Court under Article 226 of Constitution of India.
21. In SAIL (supra), the Hon’ble Supreme Court explaining the scope of prima facie investigation held that an order passed under S.26(1) of the Act, is an administrative order which has no civil consequences. The relevant paragraphs are extracted below:
37. As already noticed, in exercise of its powers, the Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima facie case justifying passing of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53-A of the Act.
38. In contradistinction, the direction under Section 26(1) after formation of a prima facie opinion is a direction simpliciter to 17 cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to one of its own wings departmentally and is without entering upon any adjudicatory process. It does not effectively determine any right or obligation of the parties to the lis. Closure of the case causes determination of rights and affects a party i.e. the informant; resultantly, the said party has a right to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations.
39. 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 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.
22. In Excel Corp. Care Ltd. v. CCI (2017) 8 SCC 47), the Supreme Court held that investigation ordered under S.26(1) of the Act, cannot be interfered with, as the proceedings are only at the preliminary stage. It is only after the investigation that the CCI can reach a conclusion whether competition law was breached. Therefore, an order directing investigation cannot be interfered with. The relevant paragraph is extracted below:
45. If the contention of the appellants is accepted, it would render the entire purpose of investigation nugatory. The entire purpose of such an investigation is to cover all necessary facts and evidence in order to see as to whether there are any anti-competitive practices adopted by the persons complained against. For this purpose, no doubt, the starting point of inquiry would be the allegations contained in the complaint. However, while carrying out this investigation, if other facts also get revealed and are brought to light, revealing that the “persons” or “enterprises” had entered into an agreement that is prohibited by Section 3 which had appreciable adverse effect on the competition, the DG would be well within his powers to include those as well in his report. Even when CCI forms prima facie opinion on receipt of a complaint which is recorded in the order passed under Section 26(1) of the Act and directs the DG to conduct the investigation, at the said initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of the violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act which is to prevent practices having appreciable adverse effect on the competition. We, therefore, reject this argument of the appellants as well touching upon the jurisdiction of the DG.
23. Subsequently, the Supreme Court in Bharti Airtel Ltd. (supra) affirmed the decision in SAIL (supra) and held as follows:
116. We may mention at the outset that in SAIL [CCI v. SAIL, (2010) 10 SCC 744] , nature of the order passed by CCI under Section 26(1) of the Competition Act [here also we are concerned with an order which is passed under Section 26(1) of the Competition Act] was gone into. The Court, in no uncertain terms, held that such an order would be an administrative order and not a quasi-judicial order. It can be discerned from paras 94, 97 and 98 of the said judgment, which are as under : (SAIL case [CCI v. SAIL, (2010) 10 SCC 744] , SCC pp. 785 & 787)
“94. The Tribunal, in the impugned judgment [SAIL v. Jindal Steel & Power Ltd., 2010 SCC OnLine Comp AT 5] , 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 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 CCT v. Shukla & Bros. [CCT v. Shukla & Bros., (2010) 4 SCC 785 : (2010) 3 SCC (Civ) 725 : (2010) 2 SCC (Cri) 1201 : (2010) 2 SCC (L&S) 133] , wherein this Court was primarily concerned with the High Court dismissing the appeals without recording any reasons. The Court also examined the practice and requirement of providing reasons for conclusions, orders and directions given by the quasi-judicial and administrative bodies.
97. 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, we may refer to the 20 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, 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 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 information furnished and reference made to the Commission under the various provisions of the Act, as aforereferred. However, other decisions and orders, which are not directions simpliciter and determining the rights of the parties, should be well-reasoned analysing and deciding the rival contentions raised before the Commission by the parties. In other words, 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.
98. 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 Commission and sent for investigation to the Director General, as the case may be, together with all evidence and documents collected during investigation. The 21 inevitable consequence is that the Commission is similarly expected to write appropriate reasons on every issue while passing an order under Sections 26 to 28 of the Act.”
117. There is no reason to take a contrary view. Therefore, we are not inclined to refer the matter to a larger Bench for reconsideration.
121. Once we hold that the order under Section 26(1) of the Competition Act is administrative in nature and further that it was merely a prima facie opinion directing the Director General to carry the investigation, the High Court would not be competent to adjudge the validity of such an order on merits. The observations of the High Court giving findings on merits, therefore, may not be appropriate.
Further, a Division Bench of the Karnataka High Court in Flipkart Internet Pvt. Ltd. v. CCI (Order dated 23.07.2021 passed by Division Bench of Karnataka High Court in W.A. No. 562 of 2021 and W.A. No. 563 of 2021) explained the scope of prima facie opinion under S.26(1) and the limited interference of High Courts under Article 226 of the Constitution of India. It is relevant to note that the said decision of the Division Bench was upheld by the Supreme Court vide order dated 09.08.2021 in SLP(C) No. 11558 of 2021. The relevant paragraphs are extracted below:
19. The Hon'ble Supreme Court has held that in order to avoid anticompetitive agreements, which causes harm to consumers by fixing the prices, limits outputs or allocating the markets, the IndianParliament has enacted Competition Act 2002. The competition law enforcement deals with anticompetitive practices and in those circumstances, once the CCI forms a prima facie opinion on receipt of a complaint which is given under Section 26(1) of the Act of 2002, directs the Director General to conduct an investigation, at that initial stage, it cannot foresee and predict whether any violation of the Act would be found upon investigation and what would be the nature of violation revealed through investigation. If the investigation process is to be restricted in the manner projected by the appellants, it would defeat the very purpose of the Act, which is to prevent practices having appreciable adverse effect on the competition. Therefore, at this stage, in the considered opinion of this Court, the issues and grounds raised in respect of anticompetitive practices as argued by the learned counsel for the appellants does not arise. The appellants are certainly entitled for opportunity of hearing as provided under the Statute and the present petitions/appeals are certainly premature.
21. In the light of the aforesaid, in order to achieve the object of the Act of 2002, the question of interference does not arise. The appellants do have a right to participate in the proceedings and/or under an obligation to produce all the material as desired during the enquiry by the Director General. The appellants want to crush the proceedings at a preliminary stage in a similar manner like quashing of FIR as prayed in a petition filed under Section 482 of the Cr.P.C. Earlier, almost in every criminal case, petitions were filed for quashment of the First Information Report (FIR) and in those circumstances, the Hon'ble Supreme Court has laid down parameters for quashment of the criminal proceedings/FIR in the case of State of Haryana and others v. Bhajan Lal and others, reported in AIR 1992 SC 604. Similarly, in Revenue matters as well as in case of violation of other Statutes on issuance of show cause notices, the aggrieved persons started rushing to Courts and in those circumstances, the Hon'ble Supreme Court in the case of Union of India &Anr., vs. Kunisetty Satyanarayana, reported in: (2006) 12 SCC 28, has passed the following;
"13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge sheet or show-cause notice vide Executive Engineer, Bihar State Housing Board vs. Ramesh Kumar Singh ( 1 SCC 327/JT  8 SC 331), Special Director vs. Mohd. Ghulam Ghouse (AIR 2004 SC 1467), Ulagappa vs. Divisional Commissioner, Mysore (2001(10) SCC 639), State of U.P. vs. BrahmDatt Sharma (AIR 1987 SC 943) etc.
14. The reason why ordinarily a writ petition should not be entertained against a mere show-cause notice or charge-sheet is that at that stage the writ petition may be held to be premature. A mere charge-sheet or show-cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so. It is quite possible that after considering the reply to the show-cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show-cause notice or charge-sheet does not infringe the right of anyone. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.
15. Writ jurisdiction is discretionary jurisdiction and hence such discretion under Article 226 should not ordinarily be exercised by quashing a show-cause notice or charge sheet.
16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show-cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter."
22. The Hon'ble Supreme Court in the aforesaid case has held that unless and until the show cause notice is vague or has been issued by an authority not competent to do so, interference can be done in the matter. In the present case, the order passed by the CCI directing an enquiry is the first stage of initiating process under the CCI Act and the enquiry is yet to commence. The appellants do not want to participate in the enquiry for the reasons best known to them.
23. The present case is not a case where the mala fides are alleged against the Regulator, nor there is any jurisdictional infirmity. The order passed under Section 26(1) is neither an adjudication, nor determinative, but merely an inquisitorial, departmental proceedings in the nature of a direction to the Director General to make an investigation. It is neither a judicial nor a quasi judicial proceedings as held by the Hon'ble Supreme Court in the case of CCI v. SAIL…………………..
24. Keeping in view Sections 19 and 26 of the Act of 2002, the order is certainly administrative in nature and has been passed at a preliminary/preparatory stage.
25. Learned Senior counsel appearing for the appellants have argued before this Court that they should have been granted an opportunity of hearing by the CCI before passing an order under Section 26 does not help the appellants in any manner and the Statute does not provide for grant of an opportunity of hearing before passing an order under Section 21 of the Act of 2002 and the order under Section 26(1) is passed at the pre-enquiry stage, as held by the Hon'ble Supreme Court in the case of CCI v. SAIL. The CCI is only required to see whether a prima facie opinion exists or not while passing an order under Section 26(1) of the Act of 2002. The order under Section 26(1) of the Act of 2002 can be passed when there is prima facie material to direct an enquiry and elaborate reasons are not required, as the CCI is required to express only a tentative view. In case, elaborate reasons are provided in the order passed under Section 26(1), it will certainly prejudice the case of the person against whom a complaint has been made and therefore, the Statute has provided a safeguard for holding an enquiry after an order is passed under Section 26(1) and the Director General is certainly required to grant an opportunity of hearing while holding an enquiry in the matter. Therefore, the petitions filed by the appellants before the learned Single Judge were certainly premature petitions and without permitting the Director General of the CCI to look into various agreements executed by the appellants with the other persons, the appellants want this Court to hold that the appellants have not committed breach of the statutory provisions as contained under the Act of 2002. In the considered opinion of this Court, unless and until a detailed enquiry is conducted by the CCI, the question of giving a finding in respect of the violation of the statutory provisions, does not arise.
27. Keeping in view the law laid down by the Hon'ble Supreme Court in the case of CCI v. SAIL, the order passed under Section 26(1) does not set into motion an unstoppable process that necessarily culminates into an adjudication against the entity against whom an enquiry is initiated. In fact, Section 26 of the Act of 2002 read as a whole, discloses a comprehensively and thoughtfully construed, stepwise scheme which contemplates not only a fair hearing to the concerned parties at the appropriate stage, but it is characterized by an inherent robustness by which the proceedings may culminate in closure.
28. In the present case, earlier also there was an information submitted against the appellants and the matter is ended in closure (AIOVA case). The Director General after conducting an enquiry recommended closure by submitting an investigation report and the same was accepted by the CCI. Therefore, the appellants should not feel shy in participating in the enquiry, which is yet to commence by the Director general and all the grounds raised by the appellants shall be available before the Director General as well as before the CCI. The order passed under Section 26(1) is only the starting point of the process and the appellants want to crush the process at the threshold and the CCI is not being permitted by the appellants to proceed ahead in the matter.
30. The Hon'ble Supreme Court in the case of CCI v. SAIL has held that the threshold requirement for establishing a prima facie case under Section 26(1) is a low threshold and what constitutes a prima facie case at the stage of Section 26(1) must be gleaned from the stand point of setting the process into motion and not from point of view of granting any interim measure or adjudicating the matter.
31. In the light of the aforesaid, it is apparent from a reading of the CCI order dated 13.1.2020 that the prima facie case was in existence and keeping in view the prima facie case, an enquiry has been ordered by passing an order under Section 26(1) of the Act of 2002 by the CCI. In the considered opinion of this Court, the learned Single Judge was justified in holding that the order passed by the CCI does not warrant an interference.
32. In the considered opinion of this Court, the other ground raised in respect of violation of Section 3 cannot be looked into as various agreements executed by the appellants with different parties, relevant material in respect violation of Section 3 is yet to be produced before the Director General, hence, the petitions/appeals are premature and there cannot be an adjudication in respect of violation of Section 3 at this stage, as argued by the learned counsel for the appellants.
33. The CCI has found out a prima facie case for initiating the process and motion. The 'prima facie case' as defined in the case of Management of the Bangalore Woollen Cotton and Silk Mills Co. Ltd., v. B. Dasappa, reported in AIR 1960 SC 1352, reads as under;
"9. A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence."
In the aforesaid case, the Hon'ble Supreme Court has placed reliance upon its earlier judgment delivered in the case of Martin Burn Ltd., v. R.N. Banerjee, reported in (1958) SCR 514. Keeping in view the aforesaid definition of prima facie case and after going through the material on record, this Court is of the opinion that the CCI has rightly exercised its jurisdiction based upon the prima facie information on receipt of a complaint and therefore, in the considered opinion of this Court, the quashment of the same does not arise.
24. Similarly, the Madras High Court in TANGEDCO v. Competition Commission of India (2021 SCC OnLine Mad 6549) refused to interfere in the investigation ordered under S.26(1) under Article 226 and held as follows:
55. In the present case, perusal of the allegations raised by the 3rd respondent would reveal that there is a prima facie case that the TANGEDCO/writ petitioner enjoys dominant position in respect of electricity in the State of Tamil Nadu. This factum is not disputed. When the writ petitioner/TANGEDCO is in dominant position, the allegations set out in the complaint indicates certain abuses and therefore, the said abuse of dominant position warrants any further action or not, is to be investigated and all appropriate proceedings are to be allowed for the purpose of forming a final opinion.
56. This Court is not inclined to step-in to the nature of the allegations or its veracity or otherwise, which is yet to be investigated by the Director General under the provisions of the Competition Act. The allegations, which all are not yetinvestigated by the competent authority, it would be unnecessary for the Court to appreciate such allegations or made a finding, which would cause prejudice to either of the parties, either to proceed with the investigation or to form an opinion for initiation of further actions under the provisions of the Competition Act or to refer the matter to the Electricity Regulatory Commission under the Electricity Act by invoking Section 21-A of the Competition Act. This exercise is to be done by the respondents 1 and 2 and this Court is not inclined to provide any findings on the allegations or with reference to the investigations to be conducted by the competent authority.
57. Therefore, once an anti-competitive practices are brought to the notice of the Competition Commission of India by way of complaint and such allegations are falling under Section 4 of the Competition Act, then the Competition Commission of India is empowered to conduct investigation and form a final opinion for the purpose of initiation of actions. In the present case, the Electricity Act does not provide any power to the Tamil Nadu Electricity Regulatory Commission to conduct investigation, more specifically, with reference to the allegations of abuse of dominant position, which is a specific provision under Section 4 of the Competition Act. When the Electricity Regulatory Commission is not vested with the power of investigation under the Electricity Act, but it confers with the powers to frame policy or to pass orders for maintaining the efficient supply, securing the equitable distribution of electricity and promoting competition, then the Competition Commission of India is empowered to deal with the complaint with reference to Section 4 and initiate further proceedings by following the procedures as contemplated under the Competition Act.
25. The Madras High Court in MRF Limited v. Ministry of Corporate Affairs (2022 SCC OnLine Mad 50) has held as follows:
42. A reading of the above provision shows that on 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 case, it shall direct the Director General to cause an investigation to be made into the matter. As rightly observed by the learned single Judge, an order for investigation passed under Section 26(1) is a preliminary order and does not give room for conclusion on the allegation made against the erring party except for forming an opinion with regard to the existence of a prima facie case. On the other hand, orders passed under Section 26(2), 26(6) are final orders closing the matter by coming to a conclusion that no prima facie case exists even at the threshold view of the matter or when the Director General, after investigation, makes recommendation to the effect that there is no contravention and such recommendation is agreed by the Commission. Therefore, under both circumstances, a final order is passed closing the matter. On the other hand, after inquiry, if the Commission finds that there is a contravention, it will issue appropriate direction and impose penalty on the erring party. Thus, the said order is again a final order passed under Section 27.
43. Now in this case, when the Competition Commission has proceeded to order investigation after forming an opinion that a prima facie case exists, the rights of the parties cannot be complained of being affected in any manner at this stage, because the order for investigation does not attract any civil consequences, inasmuch as it does not determine the issue raised against the parties finally. Although certain procedural lapses take place while arriving at such a prima facie opinion, that itself will not make the entire proceedings invalid, because the parties are given opportunities to take part in the investigation and thereafter to submit their objections before the Commission, to enable the Commission to arrive at a just and proper conclusion and pass a final order under Section 27. Further, receiving of complaint/information in the form of reference and ordering investigation on the same after forming a prima facie opinion that there exists a prima facie case, are undoubtedly an administrative action at a preliminary stage. Therefore, at this stage, any interference will only allow the parties to escape from the investigation itself, which would ultimately defeat the object sought to be achieved by the Act. This is for the reason that they are entitled to place relevant materials before the investigating authority and show that the allegations are baseless. They can also take part in the proceedings before the Commission and contest the matter after filing of the report by the investigating authority. Therefore, in our considered view, the view taken by the learned single Judge that the writ Court cannot interfere with the preliminary order directing investigation on the ground of procedural lapses either in making the reference or entertaining the same, does not call for any interference by this Court.
47. The above ratio clearly shows that the order passed by the Commission under Section 26(1) is not amenable to writ jurisdiction, as it does not affect the rights of the parties and it also does not effectively determine any right or obligation of the parties 32 to the lis. The direction issued under Section 26(1) being inquisitorial, preparatory and preliminary in nature, the same does not affect the rights of any party, because it is departmental in nature and does not cause any prejudice giving rise to civil consequences. Moreover, the order going to be passed by the Commission under Section 26(2) being a final order putting an end to the information received in any one of the specified modes, is only appealable. Therefore, the issue No. (ii) is also answered against the appellant.
26. From the above decisions, it is clear that an order passed under S.26(1) of the Act, directing investigation by the Director General is an administrative order passed only to determine whether the allegations made by the informant under S.19 (1) of the Act, about possible violations of competition law are true. Once information is received under Section 19(1) of the Act, CCI, based on the material produced by the informant has to form a prima facie opinion regarding the possible competition law violations. It is relevant to note that while forming a prima facie opinion, CCI has to only determine if the allegations along with the material produced are taken to be true, will that result in breach of competition law. CCI cannot determine the legality or correctness of the allegations by going into the merits of the case. It only has to see whether the allegations, prima facie, constitute violation of competition law.
27. It is also relevant to note that the scope of interference of High Courts under Article 226 of the Constitution of India, in an order passed directing investigation under Section 26(1) is extremely limited. CCI and the authorities under the Act, 2002 are well equipped to conduct investigation and possess expertise in the said field. High Courts cannot interfere with such investigation unless there is an abuse of process and prima facie it appears that the investigation was marred by mala fides. As held by the Karnataka High Court in Flipkart (supra), the scope of interference is akin to exercise of power under S.482 to quash an FIR. Only in rare cases, where prima facie it is clear that investigation will lead to abuse of process can the High Court interfere with the investigation order under Article 226. Therefore, High Courts should not normally interfere with the investigation ordered under S.26(1) of the Act, 2002.
28. Now coming to the facts of the case, the Petitioners contend that this Court can interfere and stop the investigation ordered vide order dated 03.10.2019 as the matter is sub-judice before this Court in W.P. No. 13298 of 2019. Further, it was contended that CCI’s direction to conduct investigation usurps the jurisdiction of this Court. According to this Court, the said contentions cannot be accepted.
29. It is relevant to note that the said writ petition W.P. No. 13298 of 2019 was filed seeking to set aside the letter reference number GHIAL/ GH19/GH/010 dated 27-06-2019 directing Respondent No. 2 to vacate the premises of RGIA on the ground that it was arbitrary, unconstitutional and violative of principle of natural justice. It cannot be said that Respondent No.2 had raised competition law concerns before the High Court. It only approached the High Court on the ground of violation of principles of natural justice. The same did not preclude it from approaching the CCI (Respondent No. 1) under Section 19(1) of the Act, 2002 raising concerns of abuse of dominant position.
30. A same cause of action may have reliefs under different areas of law and the party aggrieved by the same can invoke both remedies. For instance, remedy for fraud is available under civil law which may include a claim of money and under criminal law the said fraud can be prosecuted under IPC. Similarly, a party may claim damages for defamation under tort law and also initiate criminal proceedings under S.499 of IPC. Therefore, it cannot be said that Respondent No. 2 could not have approached CCI with concerns of abuse of dominant position of Petitioner No. 1. A relief for breach of fundamental rights is independent from a relief sought aggrieved by abuse of dominance. Respondent No. 1/CCI was well within its jurisdiction to entertain information under 35 S.19(1) of the Act, and order investigation on the basis of prima facie opinion.
31. The Petitioners relying on Bharti Airtel (supra) contended that when matter was pending before another authority, CCI cannot direct investigation as it may lead to contrary findings. The said contention cannot be accepted. The decision of Bharti Airtel (Supra) is distinguishable on facts. In the said case, the Court held that CCI cannot decide the issues pertaining to telecom sector as TRAI had exclusive jurisdiction. It was only after the issues pertaining to the telecom sector were decided, the CCI could have decided breaches of competition law. The relevant paragraphs of Bharti Airtel (supra) are extracted below:
104. We, therefore, are of the opinion that the High Court is right in concluding that till the jurisdictional issues are straightened and answered by TRAI which would bring on record findings on the aforesaid aspects, CCI is ill-equipped to proceed in the matter. Having regard to the aforesaid nature of jurisdiction conferred upon an expert regulator pertaining to this specific sector, the High Court is right in concluding that the concepts of “subscriber”, “test period”, “reasonable demand”, “test phase and commercial phase rights and obligations”, “reciprocal obligations of service providers” or “breaches of any contract and/or practice”, arising out of the TRAI Act and the policy so declared, are the matters within the jurisdiction of the Authority/Tdsat under the TRAI Act only. Only when the jurisdictional facts in the present matter as mentioned in this 36 judgment particularly in paras 72 and 102 above are determined by TRAI against the IDOs, the next question would arise as to whether it was a result of any concerted agreement between the IDOs and COAI supported the IDOs in that endeavour. It would be at that stage CCI can go into the question as to whether violation of the provisions of the TRAI Act amounts to “abuse of dominance” or “anti-competitive agreements”. That also follows from the reading of Sections 21 and 21-A of the Competition Act, as argued by the respondents.
105. The issue can be examined from another angle as well. If CCI is allowed to intervene at this juncture, it will have to necessarily undertake an exercise of returning the findings on the aforesaid issues/aspects which are mentioned in para 102 above. Not only TRAI is better equipped as a sectoral regulator to deal with these jurisdictional aspects, there may be a possibility that the two author
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ities, namely, TRAI on the one hand and CCI on the other, arrive at conflicting views. Such a situation needs to be avoided. This analysis also leads to the same conclusion, namely, in the first instance it is TRAI which should decide these jurisdictional issues, which come within the domain of the TRAI Act as they not only arise out of the telecom licences granted to the service providers, the service providers are governed by the TRAI Act and are supposed to follow various regulations and directions issued by TRAI itself. 32. In the present case, there is no threat of contrary findings as breach of principles of natural justice by one party towards other has little or no bearing on abuse of dominance which effects the entire market. Further, the said contention loses its relevance as W.P. No. 13298 of 2019 was withdrawn and the same was recorded in order dated 02.01.2020. Therefore, given that no parallel proceedings are pending at this juncture, this Court cannot interfere with the investigation ordered vide order dated 03.10.2019. 33. Petitioners contended that any interim order passed in furtherance of order dated 04.10.2019 directing the Petitioners to appear to decide the interim reliefs will be contrary to orders dated 16.08.2019 passed in W.A. No. 677 of 2019. Petitioners contended that the Division Bench of this Court gave a categorical finding that the dispute between Petitioner No. 1 and Respondent No. 2 is commercial in nature and the relationship between them is of a licensor and licensee. Therefore, CCI/Respondent No. 1 cannot interfere with disputes arising out of contractual obligations. This Court does not see merit in the said contentions. The findings recorded in W.A. No. 677 of 2019 were pursuant to the material placed before the Division Bench based on which it was held that commercial disputes exist between the parties. The Bench therein did not have an occasion and also the material to determine whether the said contractual disputes effects competition in the market adversely. In any case, it is only after the investigation/inquiry is completed and parties are given an opportunity of hearing that CCI can 38 decide whether the dispute is strictly commercial and raises no competition law concerns. Therefore, the contention that dispute arises out of a license agreement and raises no competition law concerns cannot be accepted. 34. The Petitioners further contended that the order dated 03.10.2019 was erroneous as it failed to consider the order dated 16.08.2019 passed in W.A. No. 677 of 2019. Petitioners contended that Respondent No. 2 suppressed the said order passed in W.A. No. 677 of 2019 and the same constitutes abuse of process and forum shopping, The said contentions cannot be accepted. As stated above, the orders passed in W.A. No. 677 of 2019 had little or no bearing to decide whether Petitioner No. 1 abused its dominant position. Further, the findings in order dated 03.10.2019 regarding possible abuse of dominant position were based on the relevant market share of the parties and the exclusive rights granted to Petitioner No.1. 35. The Petitioners also contended that order dated 03.10.2019 is liable to be set aside as no opportunity of hearing was afforded to the Petitioners. The said contention is liable to be rejected in view of the decision in SAIL (supra). The Supreme Court has held that at the stage of ordering investigation, the parties are not entitled for a notice and opportunity of hearing. The relevant paragraph is extracted below: 91. The jurisdiction of the Commission, to act under this 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 function. At that stage, it does not condemn any person and therefore, application of audi alteram partem is not called for. Formation of a prima facie opinion departmentally (the Director General, being appointed by the Central Government to 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 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 is appealable before the Tribunal and only after this stage, there 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 or hearing is not contemplated under the provisions of Section 26(1) of the Act. 36. The other contentions raised by the Petitioners that CCI/Respondent No. 1 delineated the relevant market, the share of and participation of the parties in the downstream and upstream market erroneously cannot be decided at the preliminary stage when investigation is yet to be completed. The said grounds can be raised by 40 the Petitioners at an appropriate stage if it is found that they are guilty of abusing their dominant position. At this stage when matter is yet to be investigated, this Court cannot consider disputed questions of facts. 37. This Court has perused the order dated 03.10.2019. The said order is well reasoned given that only a prima facie opinion was formed. Respondent No. 1 made it clear that no final opinion was expressed on the merits of the case. Therefore, according to this Court, the Director General shall complete investigation in accordance with law. Therefore, the present writ petition is liable to be dismissed. 38. In the result, the writ petition is dismissed. The interim order dated 16.10.2019 is vacated. Consequently, miscellaneous applications pending, if any, shall stand closed.