Contributed by: Samvad Partners
Recently, the National Company Law Appellate Tribunal (“NCLAT”) in Samir Agrawal v. CCI[Judgment dated 29.05.2020 in Competition Appeal (AT) No. 11 of 2019] held that an Information under Section 19(1)(a) of the Competition Act, 2002 (“the Act”) can only be filed by a person who is either a consumer of the goods/services in question or a beneficiary of healthy competitive practices in a given market. The reasoning for such a restrictive interpretation being placed by the NCLAT on the fact that “unscrupulous people” with “oblique motives” may target enterprises by filing frivolous Information before the CCI.
The aforesaid judgment of the NCLAT appears to be contrary to the plain reading of Section 19(1)(a) of the Act, and in conflict with some of the past decisions of the predecessor Appellate Tribunal i.e. Competition Appellate Tribunal (“COMPAT”).
The proceedings before CCI involve larger public interest keeping in view the objective of the Act and duties casted upon the Commission. These are not adversarial proceedings in the strict sense, and the Commission does also play an inquisitorial role, akin to the police in a criminal case. It is relevant to note that the language of Section 19(1) was amended in 2007, when the words “receipt of complaint” was replaced by the words “receipt of information”. This clearly indicates the legislative intent that the concept of ‘locus standi’ has no application to the proceedings under the Act.
Further, it is well settled that the Information provided by the Informant is only for the purpose of arriving at a prima facie conclusion regarding the violation of the Act i.e. it is only the starting point of the fact finding exercise. The final order of the CCI constitutes its independent view of the matter after taking into consideration the investigation report of the DG, and the objections of the parties to the report.
Another aspect which must be duly taken note of is the penalizing power of the CCI under Section 45 of the Act. The said provision empowers the CCI to impose a monetary fine of upto rupees one crore in case it is found that information furnished is false or the Informant has willfully omitted material facts or altered, suppressed or destroyed any relevant documents. Thus, sufficient deterrence against any frivolous information is already provided for in the scheme of the Act.
In an earlier decision[Shri Surendra Prasad v. CCI (Judgment dated 15.09.2015 in Appeal No. 43 of 2014)] of the COMPAT, it was categorically held that the Parliament has neither prescribed any qualification for the person who wants to file an Information under Section 19(1)(a) nor prescribed any condition which must be fulfilled before an Information can be filed under that section. It was further held that the prayer for investigation into the allegations contained in the Information cannot be rejected on the ground that the Informant does not have personal interest in the matter, or he appears to be acting at the behest of someone else.
The NCLAT in Samir Agrawal has failed to take into consideration these aspects and the earlier precedent of the COMPAT, which raises doubts about the correctness of findings relating to locus standi of the Informant contained in the said judgment.
Thus far the stand of the Commission has consistently been that the concept of locus standi has no application in the scheme of the Competition Act. However, it would be interesting to see whether the Commission chooses to appeal against the NCLAT’s judgment in order to have an authoritative pronouncement from the Supreme Court on this issue.
Contributed by Samvad Partners
The above article has been authored by Mr. Arjun Krishnan, Partner and Mr. Ankur Singh, Senior Associate.