Competition Commission Of India vs M/S. Grasim Industries Ltd.

on 12 September, 2019 18/10/2019, 15*59

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Cites 39 docs - [View All]
Section 4 in the Competition Act, 2002
Section 26 in the Competition Act, 2002
Section 26(1) in the Competition Act, 2002
Section 3 in the Competition Act, 2002
Section 19 in the Competition Act, 2002

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Delhi High Court

Competition Commission Of India vs M/S. Grasim Industries Ltd. on 12 September, A Fashion
2019
Blog by Dana
$~
Straut
* IN THE HIGH COURT OF DELHI AT NEW DELHI

Reserved on: 29th August, 2019

Decided on: 12th September, 2019
+ LPA 137 of 2014
An oasis of
COMPETITION COMMISSION OF INDIA ..... Appellant
creation &
Through: Mr Samar Bansal, Ms Devahuti
Pathak, Mr Manan Shishodia, and inspiration for all
Mr Sachin Mishra, Advocates. fashion & beauty
versus
things,.
M/s. GRASIM INDUSTRIES LTD. ..... Respondent
Through: Mr Dhruv Mehta, Senior Advocate
with Mr. Ajit Warrier, Mr.Ashish
Gupta and Mr Sharad Kharra,
Advocates.
CORAM:
JUSTICE S. MURALIDHAR
JUSTICE TALWANT SINGH

JUDGMENT

% Dr. S. Muralidhar, J.:

Introduction 1.1 The Competition Commission of India („CCI‟) has filed this appeal against the
impugned judgment dated 17th December, 2013 passed by the learned Single Judge disposing of W.P.
(C) No.4159/2013 filed by the Respondent Grasim Industries Limited („GIL‟).

1.2 In the said writ petition, GIL had questioned an order dated 30 th May, 2013 passed by the CCI,
dismissing GIL‟s application, seeking the quashing of a report dated 26th February 2013, submitted
by the Director General („DG‟) of the CCI, stating that GIL had abused its dominant position, in terms
of Section 4 of the Competition Act, 2002 („Act‟).

1.3 The learned Single Judge has, in the impugned judgment, held that inasmuch as the direction
issued by the CCI to the DG was to investigate violations of Section 3(3) (a), (b) and (c) of the Act,

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pertaining to anti- competitive agreements, by manufacturers of Man Made Fibre („MMF‟), including
GIL, the DG could not have investigated into any violation by GIL of Section 4 of the Act which
pertained to abuse of dominant position. The learned Single Judge clarified that CCI would be entitled
to treat the aforesaid part of the report of the DG as „information‟ under Section 19 of the Act and
proceed accordingly if the CCI was of the opinion that there existed a prima facie case of
contravention by GIL of Section 4 of the Act.

1.4 In the judgment that follows, this Court reverses the judgment of the learned Single Judge and
holds that the DG was within his powers in terms of Section 26 (1) of the Act read with Regulations
18, 20 and 41 of the CCI (General) Regulations 2009 (CCI Regulations), to submit a report regarding
the violation of Section 4 of the Act by GIL, although the direction issued by the CCI under Section
26 (1) of the Act was with reference to information pertaining to violation of Section 3(3) (a) , (b) and
(c) of the Act.

Background facts

2. On 30th May 2011, „information‟ came to be filed with the CCI under Section 19 (1) of the Act that
all manufacturers of MMF, including GIL, had imposed anti-competitive restrictions on the Indian
textile industry. GIL is a manufacturer of Viscose Staple Fibre („VSF‟), a variety of MMF.

3. On 22nd June 2011, CCI passed an order under Section 26 (1) of the Act, concluding that the
aforementioned information prima facie disclosed violation under Section 3(3)(a), (b) and (c) of the
Act by the manufacturers of MMF. The CCI, therefore, directed the DG to investigate the matter and
submit a report within 60 days.

4. Between 30th November, 2011 and 17th December, 2012, GIL led evidence and provided
information called for by the DG. On 26 th February 2013, the DG submitted a report to the CCI,
holding that none of the parties named in the information had committed any violation under Section 3
of the Act. It was, however, observed by the DG in his report that GIL had abused its dominant
position in the market in terms of Section 4 of the Act.

Sections 3 and 4 of the Act

5. At this stage, it may be noted that Section 3(3) of the Act deals with „anti- competitive agreements‟
entered into between enterprises or association of enterprises or persons or associations of persons,
including cartels engaged in identical or similar trade of goods, which:

(a) directly or indirectly determine purchase of sale prices;

(b) limit or control production, supply, markets, technical development, investment or provisions of
services;

(c) share the market or source of production or provisions of services by way of allocation of
geographical area of the market, or or type of goods or services, or number of customers in the market
any other similar way; and

(d) directly or indirectly results in a bid-rigging or collusive bidding. In the event of any of the above
situations existing, there shall "be presumed to have an appreciable adverse effect on competition".

6. Section 4 of the Act is titled „abuse of dominant position‟. Section 4 (1) of the Act states that no
enterprise or group shall abuse its dominant position. Explanation (a) thereto defines „dominant
position‟ to mean "a position of strength enjoyed by an enterprise in the relevant market in India
which enables it to:

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(i) Operate independently of competitive forces prevailing in the relevant market; or

(ii) Affect its competitors or consumers or the relevant market in its favour.

7. It is thus seen that the focus of Section 4 is on a particular enterprise or group. „Enterprise‟ is
defined under Section 2 (h) of the Act to mean a person or a department of the government engaged in
any activity relating to production, storage, supply, distribution, acquisition or control of articles or
goods or the provision of services of any kind. Under Section 2 (l) of the Act, a person includes a
company. It is thus seen that the scope of enquiry under Section 4 of the Act would be different from
the scope under Section 3 of the Act. However, it is entirely possible that, as has happened in the
present case, while investigating activities attracting Section 3 of the Act, the DG may come across
„information‟ that prima facie reveals activities attracting Section 4 of the Act.

CCI's directions under Section 26 (1) of the Act

8. The report dated 26th February, 2013 of the DG was pursuant to the following directions issued by
the CCI on 22nd June, 2011:

"11. On thorough Perusal of the entire material submitted by the informant, the
Commission, prima facie, finds substance in the submissions made in the Information
supported by the material filed by the Informant.

12. After giving thoughtful consideration on the matter, the Commission is of the opinion
that. there exists a. prima facie, case to direct the Director General to cause an
investigation into the matter.

13. Accordingly, the Commission directs the Director General to conduct an investigation
into the matter and to submit his report within a period of 60 days from the communication
of this order.

14. The Secretary is directed to send a copy of the information to the Office of the Director
General in terms of the relevant provisions of the Act and the Regulations made
thereunder."

DG's Report

9. The DG submitted a report dated 26th February, 2013 in which, apart from the three issues framed
for investigation in respect of violations under Sections 3(3) (a), (b) and (c) of the Act, a fourth issue
was framed on "whether GIL had abused its dominant position, by directly or indirectly imposing any
unfair or discriminatory conditions in purchase or sale of VSF or imposing unfair or discriminatory
price in purchase or sale, or by limiting production, or by indulging in practices resulting in denial of
market access in any manner?" After analysing the replies given by GIL on 31 st August, 2011, the
DG came to the following conclusion:

"In the light of the above submissions, analysis and discussions, it is concluded that there
is no violation of the provisions of section 3(3)(a), 3(3)(b) or 3(3)(c) of the Act 'by the
Grasim looking to the fact that Grasim is the sole producer, of VSF and hence there can be
no agreement in existence or any tacit collusion or understanding within the market so that
any such provisions can be invoked."

10. From paragraph 9.49 of the report, the DG began discussing the allegations relating to abuse of
dominant position by GIL. The conclusions reached in paragraph 9.56 of the report in this regard read
as under:

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"After the examination of the submissions by the Ops, various spinners as well as the
informant and also obtaining details/data wherever found necessary and looking to the
allegations and its analysis, it was found that GIL is a dominant enterprise and has abused
its dominant position with respect to the following:

(1) The GIL has kept dual basic price and differential discounts. for the sale of VSF, by
imposing unfair conditions relating to subsequent production and sale of yarn (either
domestic or export) by virtue of its dominance and violated the provisions of section 4(2)
(a) of the Act.

(2) The GIL provides segmental discounts for export or domestic consumption on the
condition that a minimum of 35% content of VSF is necessary in yarn. In case the content
of VSF is less than that, no discounts are offered. GIL obtains proof of production/export
before providing discounts. Customers have no choice but to manufacture the yarn in the
given manner to obtain such discount. Otherwise they have to pay higher prices for the
same VSF. GIL being dominant in the relevant market have imposed such unfair
conditions and violated the provisions of section 4(2)(a) of the Act.

(3) A continuity discount/rebate is given by GIL with a condition that the yarn
manufacturer shall not purchase VSF from anybody (including imports) other than GIL.
The policy of GIL in this regard is not transparent and through such conditions, the GIL
prevents its customer from importing VSF. Putting such unfair conditions and limiting or
restricting the market for yarn manufacturers for imports of VSF is violative of the
provisions of section 4(2)(a) and 4(2)(b) of the Act.

(4) The GIL sells VSF to the yarn manufacturers directly. It is not sold to the traders. The
production, composition of yarn and its quantity is monitored by the GIL to see that VSF
is not traded in the relevant market. The GIL stifles the competition by preventing trading
of VSF in the relevant market and restricts the choice of customers to buy VSF from
alternate source in India. Accordingly putting such unfair conditions in sales and
restricting the market, GIL Is violating the provisions of section 4(2)(a) and 4(2)(b) of the
Act.

(5) GIL provides discounts on lifting or consumption of VSF, whichever is lower. Through
this unfair condition on discount, GIL not only monitors the sale but also the production of
yarn and prevents trading of VSF which is violative of the provisions of section 4(2)(a) of
the Act.

(6) The GIL has also found to be maximizing its profits through imposing unfair
conditions and abusing Its dominant position. By taking the advantage of import landed
price and Imposing unfair conditions in pricing and sales, the high profit margins are
earned, which is not. passed on to the customers and thereby violating the provisions of
section 4(2)(a) of the Act."

Impugned order of the CCI

11. The investigation report was considered by the CCI on 13th March, 2013, and it decided to send a
copy thereof to the informant and opposite parties, including GIL, for the replies and objections. It
was clarified at the meeting on 30th April, 2013 that since the DG had found a violation of the Act
only by GIL, the opposite party would be only GIL.

12. Thereafter on 30th May, 2013, the CCI passed the impugned order, whereby the plea of GIL that
the investigation of the DG was limited to examining violations of Sections 3 of the Act and that the

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DG could not have suo motu enlarged the scope of investigation into violation of Section 4 of the Act,
was negatived.

13. Referring to the decision of the Supreme Court in Competition Commission of India v. Steel
Authority of India Limited (2010) 10 SCC 744, the CCI held that at the initial stage, the DG has to
only give a prima facie view whether the case was worth investigation or not. Referring to Regulations
18 (1) and 20 (4) of the Competition Commission of India (General) Regulations, 2009 („CCI
Regulations‟), the CCI held that the DG had to submit a report on each of the allegations made in the
„information‟ or the „reference‟, as the case may. It was further held as under:

"10. The scope of investigation to be made by the DG cannot be limited by the prima facie
opinion expressed by the Commission. Neither, the DG is bound by the views given by the
Commission. While the Commission may have found a matter prima facie showing
violation of the provisions of the Act, DG may come to a contrary conclusion. Similarly,
the Commission may form a view (prima facie) on the basis of facts available to it
regarding violation of one or the other provisions of the Competition Act. DG on
investigation may find the violations in respect of different provisions of the Competition
Act."

14. The CCI further held that the directions given to the DG under Section 26(1) of the Act are only
meant to initiate the process of investigation and the purpose of Section 26(1) was neither to scuttle
nor to limit the investigation. As regards the submission of GIL that it was never put to notice by the
DG about the potential violation of Section 4 of the Act being investigated, and that it had denied an
opportunity to present its arguments in relation to such violation, the CCI observed that the
questionnaire sent by the DG to GIL "was self-explanatory and reflected the direction of
investigation". It was noted that GIL had been given a copy of the report of the DG and that it had the
opportunity to file the relevant documents before the CCI. The order concluded by observing that the
CCI would consider all those documents and evidence filed by GIL with its objections to the report of
the DG.

Single Judge's impugned judgment

15. W.P.(C) No.4159/2013 challenging the aforementioned order of the CCI was then filed by GIL in
this Court. When it was first listed on 5 th July, 2013, while directing notice to be issued in the writ
petition, the learned Single Judge directed, noting the statement of learned counsel appearing for the
CCI, that the CCI would not take up the matter for hearing till the following date.

16. Ultimately, orders were reserved on 6th December, 2013 and the impugned judgment was passed
by the learned Single Judge on 17 th December, 2013. The learned Single Judge held as under:

(i) If the investigation by the DG is based upon information which the CCI did not consider while
forming its opinion with respect to the existence of a prima facie case, the DG‟s action would be
contrary to the scheme of the Act.

(ii) Regulation 18 (4) of the CCI Regulations requires the DG to give a report containing its findings
on each of the allegations in the information or the reference, as the case may be. This was yet another
indicator that the report of the DG was to be confined to the allegations in the information or the
reference received by the CCI and he is "not competent to travel outside the said information or
reference".

(iii) Under the scheme of the Act, the enterprise against whom the information is given to the CCI is
entitled to defend itself, first before the DG during the course of investigation, and in case the DG is
not satisfied and reports a contravention of the provisions of the Act, then before the CCI, during the

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course of enquiry by the CCI.

(iv) Had the information, alleging contravention of Section 4 of the Act by GIL, been considered by
CCI, for forming its opinion under Section 26(1) of the Act, and the DG been directed to cause an
investigation to be made into the said information, GIL could have requested the DG, under
Regulation 41 (4) of the CCI Regulations, to permit it to lead evidence to satisfy the DG that no
contravention of Section 4 of the Act had been committed by it. Since the part of the information
provided to the DG during the course of investigation alleging contravention by GIL of Section 4 of
the Act was not available to the CCI, it was not the subject matter of the directions issued by the CCI
to the DG. Consequently, GIL had no occasion to make an application to the DG under Regulation
41(4) and (5) of the CCI Regulations.

(v) Although there was no power given to the CCI under the Act to quash or set aside the report of the
DG, if the DG carried out an investigation into an information, which was not considered by the CCI,
while forming its opinion under Section 26 (1) of the Act, CCI was entitled to reject that part of the
report, which pertained to such investigation.

(vi) The report of the DG, to the extent that it reported a contravention of Section 4 of the Act by GIL,
could not be forwarded to GIL under Section 26 (4) of the Act, nor could the CCI hold a further
enquiry into it under Section 26 (8) of the Act, or proceed to pass an order on its basis under Section
27 of the Act. However, CCI in its discretion could treat the said part of the report as 'information‟
under Section 19 of the Act (concerning prima facie contravention of Section 4 of the Act) and direct
the DG to undertake an investigation into such information.

This appeal

17. While admitting this appeal on 7th February, 2014, this Court passed the following order:

"Admit.

Issue notice to the respondent returnable on 31st March, 2014. In the meantime, in view of
the undertaking given by the learned Solicitor General of India that the appellant, till the
disposal of the appeal is not going to proceed against the respondent under sub-Section (8)
of Section 26 of the Competition Act, 2002 with regard to the report of the Director
General to the effect that the respondent has misused its dominant position as a VSF
manufacturer and will also not pass order on the said report in terms of Section 27 of the
Act, operation of the impugned judgment dated 17.12.2013 passed in W.P.(C)
No.4159/2013 shall remain suspended."

18. On 15th February, 2016, the interim order was made absolute during the pendency of the appeal.

Submissions on behalf of CCI

19. Mr Samar Bansal, learned counsel appearing for the CCI, submitted as under:

(i) The „information‟ that the CCI received under Section 19 (1) of the Act was different from a
„complaint‟. When information is either received by the CCI or taken note of suo moto, in respect of
the violation of the provisions of the Act, such initial information is considered, and a prima facie
view is taken by the CCI.

(ii) In the present case the directions by the CCI to the DG was to cause an investigation „into the
matter‟. The expression „matter‟ was wide enough to include a violation not limited to Section 3 of
the Act, but any other violation of the Act, which emerged in the course of investigation.

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(iii) If the view of the learned Single Judge is accepted, it would place a very narrow interpretation on
the scope of the „information‟ that triggers the order under Section 26 of the Act and equates it to a
„petition/complaint‟. The legislative intent was not to place the burden of proof of all violations on the
informant. The information was meant to trigger investigation followed by submission of a report by
the DG, on the basis of which the CCI could pass its final order. A complete investigation by the DG
involved analysing the fact from all angles and finding out every possible violation of the Act.
Reliance was placed on the observations of the Supreme Court in Competition Commission of India v
Steel Authority of India Limited (supra).

(iv) In the present case, it could not be said that the DG exceeded his jurisdiction in examining the
conduct of GIL for violation of Section 4 of the Act. The information provided in the case on file with
the CCI was a comprehensive one. It sought an enquiry against the MMF Industry and Association of
MMF Industry in India by referring inter alia to Section 19 (4) and (6) of the Act, which specifically
dealt with abuse of dominance provision under Section 4 of the Act. The information highlighted that
GIL manufactured VSFs. The source of such information was a Tecoya Trend article dated 11th May,
2011, which stated that GIL had reported a "30% hike in VSF price realisation". All of this was
forwarded to DG for further investigation.

(v) A correct interpretation of Regulation 18 (1) and Regulation 20 (4) of the CCI Regulations would
acknowledge that the DG has to attach with the investigation report all the evidence and documents,
statements, and analysis collected during investigation, which might not be limited to the prima facie
opinion expressed by the CCI, which, in any event, was not binding upon the DG.

(vi) After the DG had already given a comprehensive report of investigation, pointing to violation of
Section 4 of the Act by the GIL, it would be pointless for the CCI to again require the DG to undertake
an identical exercise by treating it only as „information‟ for the purposes of forming a prima facie
view under Section 26 (1) of the Act.

Submissions on behalf of GIL

20. Mr Dhruv Mehta, learned Senior Counsel appearing for the GIL, submitted as under:

(i) The expression „into the matter‟, in the order dated 22nd June, 2011 of the CCI, only referred to
violations of Section 3(3) (a), (b) and (c) of the Act, and not Section 4 of the Act.

(ii) The scope of the powers of the DG does not include exercise of any suo moto powers of
investigation. The Act made a clear departure from its predecessor i.e. the Monopolies and Restrictive
Trade Practices Act, 1969 („MRTP Act‟), which it repealed. As a delegatee under the Act, the DG
cannot exceed the specific powers vested in him. Reliance was placed on the decisions in Roop Chand
v. State of Punjab 1962 (1) SCR 539; A.K. Roy v. State of Punjab (1986) 4 SCC 326 and Marathwada
University v. Seshrao Balwant Rao Chavan (1989) 3 SCC 223.

(iii) The prima facie opinion of the CCI was a sine qua non for initiation of an investigation by the
DG, in terms of Section 26 (1) of the Act. Therefore, the jurisdiction of the DG to conduct
investigation was strictly circumscribed by the scope and ambit of Section 26 (1) of the Act. Reliance
was placed on the decisions in Bhikhubhai Vithlabhai Patel v. State of Gujarat (2008) 4 SCC 144;
Rohtas Industries v. S.D. Agarwal 1969 (1) SCC 325; Barium Chemicals Ltd. v. Company Law Board
1966 Supp. SCR 311; and Google Inc. V. Competition Commission of India 2015 SSC-Online (Del)
8992.

(iv) Under Regulations 24 and 26 of the CCI Regulations, only the CCI has been given the powers to
join and substitute parties, or strike out unnecessary parties. Under Regulations 27 and 28, it is only
the CCI which can "join multiple information" and allow amendment of the information. Therefore, if

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the DG, during the investigation, came across additional information, pointing to violation of Section
4 of the Act, he had to place such information before the CCI, and seek its approval, before
proceeding further.

(v) A reading of Section 26 (1) of the Act with Regulation 20 (4) of the CCI Regulations, revealed that
the DG cannot initiate any suo moto investigation, based on the information that was never placed
before the CCI, in the first instance. If the DG was held not be bound by the prima facie view of the
CCI, then the DG would be "virtually on a higher pedestal than the CCI itself", and this would be
contrary to the legislative intent.

(vi) To the extent that the report of the DG found GIL to be in violation of Section 4 of the Act, it
would be violative of principles of natural justice, as GIL was never put to notice during investigation
that the DG was examining such violations. Had it been given such an opportunity, GIL would have
made submissions on facts, law and economics, regarding market definition, dominance and abuse of
a dominant position, which formed the subject matter of Section 4 of the Act. Thus, the report of the
DG to the extent that contained findings of alleged contravention of Section 4 of the Act by GIL was
null and void, and cannot be used or relied for any purpose. Reliance is placed on the decision in
Institute of Chartered Accountants v. L.K. Ratna, (1986) 4 SCC 537 and Commissioner of Wealth Tax
v. Ravi Cheloor (1989) 178 ITR 640 (Ker).

21. Mr Mehta distinguished the decision in Excel Crop Care Limited v. Competitive Commission of
India (2017) 8 SCC 47, which dealt with inclusion of more than one incident or incidents of
contravention of the same matter i.e. violations of Section 3 of the Act within the ambit of the DG‟s
investigation. He pointed out that the complaint in that case was filed in respect of one tender only,
and the DG sought to investigate the conduct of the relevant entities with respect to a subsequent
tender. However, in the present case, the DG went beyond the complaint under Section 3 of the Act,
and investigated GIL for alleged violation of Section 4 of the Act. It was accordingly submitted that
the decision in Excel Crop Care Limited v. Competitive Commission of India (supra) would have no
application to the facts of the present case.

22. Mr. Mehta also sought to distinguish the decision of this Court in Cadila Healthcare Limited v.
Competition Commission of India 2018 SSC OnLine Del 11229 by pointing out that in that case the
CCI held that "in the course of investigation, if involvement of any other parties is found, the DG shall
investigate the conduct of such other parties, who may have indulged in such contravention". It was on
those specific facts that this Court, according to Mr Mehta, found no error in the investigation against
Cadila, which was not named in the original complaint.

23. Mr. Mehta submitted that a judicial decision is an authority of what it actually decides and not for
what can be read into it by implication. Reliance was placed on the decisions in Amrendra Pratap
Singh v. Tej Bahadur Prajapati (2004) 10 SCC 65; M.P. Gopal Krishna Nair v. State of Kerala (2005)
11 SCC 45; Davinder Singh v. State of Punjab (2010) 13 SCC 88 and State of Orissa v. Md. Illiya
(2006) 1 SCC 275.

Analysis and reasons

24. Before proceeding to consider the above submissions, the relevant provisions of the Act are
required to be referred to. The object of the Act is to ensure fair competition by prohibiting trade
practices which have an adverse effect on competition in the markets within India. The focus of the
Act is to prohibit anti-competitive agreements, which are the subject matter of Section 3 of the Act,
and abuse of dominant position, which forms the subject matter Section 4 of the Act. The Act also
seeks to regulate „combinations‟ under Sections 5 and 6 of the Act.

25. Under Section 18 of the Act, the CCI is tasked with the duty of eliminating practices that have an

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adverse effect on competition „and to promote and sustain competition, protect the interest of
consumers, and ensure freedom of trade carried on by other participants in the markets in India‟.
Section 19 of the Act deals with "inquiry by the CCI into certain agreements and dominant position of
enterprise." While Section 19 (3) lists out the factors that will be examined by the CCI while
determining whether an agreement has an appreciable adverse effect on competition under Section 3
of the Act, Section 19 (4) of the Act lists out those factors which would be kept in view when the CCI
enquires into whether an enterprise enjoys a dominant position or not under Section 4 of the Act.

26. Section 26 of the Act sets out the procedure for an enquiry under Section 19 of the Act and it reads
as under:

"26. Procedure for inquiry on complaints under section 19.--

(1) On receipt of a complaint or a reference from the Central Government or a State

Government or a statutory authority or on its own knowledge or information, 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.

(2) The Director General shall, on receipt of direction under sub- section (1), submit a
report on his findings within such period as may be specified by the Commission.

(3) Where on receipt of a complaint under clause (a) of sub-section (1) of section 19, the
Commission is of the opinion that there exists no prima facie case, it shall dismiss the
complaint and may pass such orders as it deems fit, including imposition of costs, if
necessary.

(4) The Commission shall forward a copy of the report referred to in sub-section (2) to the
parties concerned or to the Central Government or the State Government or the statutory
authority, as the case may be.

(5) If the report of the Director General relates on a complaint and such report
recommends that there is no contravention of any of the provisions of this Act, the
complainant shall be given an opportunity to rebut the findings of the Director-General.

(6) If, after hearing the complainant, the Commission agrees with the recommendation of
the Director General, it shall dismiss the complaint.

(7) If, after hearing the complainant, the Commission is of the opinion that further inquiry
is called for, it shall direct the complainant to proceed with the complaint.

(8) If the report of the Director General relates on a reference made under sub-section (1)
and such report recommends that there is no contravention of the provisions of this Act,
the Commission shall invite comments of the Central Government or the State
Government or the statutory authority, as the case may be, on such report and on receipt of
such comments, the Commission shall return the reference if there is no prima facie case
or proceed with the reference as a complaint if there is a prima facie case.

(9) If the report of the Director General referred to in sub-section (2) recommends that
there is contravention of any of the provisions of this Act, and the Commission is of the
opinion that further inquiry is called for, it shall inquire into such contravention in
accordance with the provisions of this Act."

27.1 The scope of the powers of the CCI under Section 26 of the Act has been examined in sufficient
detail by the Supreme Court in Competition Commission of India v. Steel Authority of India Limited

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(supra). It was observed in paragraphs 37 to 39 of the said decision as under:

"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 53A of the Act.

38. In contradistinction, the direction under Section 26(1) after formation of a prima facie
opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such
a direction, at the face of it, is an administrative direction to one of its own wings
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."

27.2. The Supreme Court in the above decision also discussed various provisions of the CCI
Regulations in the context of whether at all stages and at all events, the right to notice and hearing is a
mandatory requirement of principles of natural justice. It was held as under:

"77. Issue of notice to a party at the initial stage of the proceedings, which are not
determinative in their nature and substance, can hardly be implied; wherever the
legislature so desires it must say so specifically. This can be illustrated by referring to the
Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on
Dumped Articles and for Determination of Injury) Rules, 1995 under the Customs Tariff
Act, 1975. Rule 5(5) provides that while dealing with an application submitted by
aggrieved domestic producers accounting for not less than 25% of total production of the
like article, the designated authority shall notify the government of exporting country
before proceeding to initiate an investigation. Rule 6(1) also specifically requires the
designated authority to issue a public notice of the decision to initiate investigation. In
other words, notice prior to initiation of investigation is specifically provided for under the
Anti-Dumping Rules, whereas, it is not so under the provisions of Section 26(1) of the
Act.

78. Cumulative reading of these provisions, in conjunction with the scheme of the Act and

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the object sought to be achieved, suggests that it will not be in consonance with the settled
rules of interpretation that a statutory notice or an absolute right to claim notice and
hearing can be read into the provisions of Section 26(1) of the Act. Discretion to invite,
has been vested in the Commission, by virtue of the Regulations, which must be construed
in their plain language and without giving it undue expansion.

79. It is difficult to state as an absolute proposition of law that in all cases, at all stages and
in all events the right to notice and hearing is a mandatory requirement of principles of
natural justice. Furthermore, that non- compliance thereof, would always result in
violation of fundamental requirements vitiating the entire proceedings. Different laws have
provided for exclusion of principles of natural justice at different stages, particularly, at the
initial stage of the proceedings and such laws have been upheld by this Court. Wherever,
such exclusion is founded on larger public interest and is for compelling and valid reasons,
the Courts have declined to entertain such a challenge. It will always depend upon the
nature of the proceedings, the grounds for invocation of such law and the requirement of
compliance to the principles of natural justice in light of the above noticed principles."

27.3 The Supreme Court in Competition Commission of India v Steel Authority of India Limited
(supra) has characterized the powers of the CCI under Section 26 (1) of the Act as „an inquisitorial
and regulatory power‟. The Supreme Court then explained as under:

"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 (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 of hearing is not contemplated under the provisions of Section 26(1)
of the Act."

27.4 The Supreme Court also drew a distinction between the expression „enquiry‟ occurring in
Regulation 18 (2) of the CCI Regulations and „investigation‟ and held as under:

"115. The first and the foremost question that falls for consideration is, what is `inquiry'?
The word `inquiry' has not been defined in the Act, however, Regulation 18(2) explains
what is `inquiry'. `Inquiry' shall be deemed to have commenced when direction to the
Director General is issued to conduct investigation in terms of Regulation 18(2). In other
words, the law shall presume that an `inquiry' is commenced when the Commission, in
exercise of its powers under Section 26(1) of the Act, issues a direction to the Director
General. Once the Regulations have explained `inquiry' it will not be permissible to give
meaning to this expression contrary to the statutory explanation.

116. Inquiry and investigation are quite distinguishable, as is clear from various provisions
of the Act as well as the scheme framed thereunder. The Director General is expected to

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conduct an investigation only in terms of the directive of the Commission and thereafter,
inquiry shall be deemed to have commenced, which continues with the submission of the
report by the Director General, unlike the investigation under the MRTP Act, 1969, where
the Director General can initiate investigation suo moto. Then the Commission has to
consider such report as well as consider the objections and submissions made by other
party. Till the time final order is passed by the Commission in accordance with law, the
inquiry under this Act continues. Both these expressions cannot be treated as synonymous.
They are distinct, different in expression and operate in different areas."

27.5. A distinction was drawn between the kind of satisfaction that the CCI would record, in terms of
Section 33 of the Act, and that which has to be recorded under Section 26 (1) of the Act. It was held as
under:

"117. Once the inquiry has begun, then alone the Commission is expected to exercise its
powers vested under Section 33 of the Act. That is the stage when jurisdiction of the
Commission can be invoked by a party for passing of an ex parte order. Even at that stage,
the Commission is required to record a satisfaction that there has been contravention of the
provisions mentioned under Section 33 and that such contravention has been committed,
continues to be committed or is about to be committed. This satisfaction has to be
understood differently from what is required while expressing a prima facie view in terms
of Section 26(1) of the Act. The former is a definite expression of the satisfaction recorded
by the Commission upon due application of mind while the latter is a tentative view at that
stage. Prior to any direction, it could be a general examination or enquiry of the
information/reference received by the Commission, but after passing the direction the
inquiry is more definite in its scope and may be directed against a party."

27.6 Thus, it will be seen that the Supreme Court in Competition Commission of India v. Steel
Authority of India Limited (supra) made it clear that the opinion formed by the CCI at the stage of
issuing directions to the DG under Section 26 (1) of the Act is, by no means, intended to restrict the
opinion that may be formed by the DG on such investigation.

28. Both Regulations 18 (1) and 20 (4) of the CCI Regulations, require the DG to investigate the
matter i.e. the allegations "made in information or reference, as the case may be", together with all
evidence, documents, statements or analysis collected during investigation. The investigation has to be
a comprehensive one. The DG may not, in fact, be able to anticipate what information may emerge
during such investigation. Merely because the information that emerges does not pertain to the specific
subject matter which the DG has been asked to investigate, would not constrain the DG from
examining such information as well if it points to violation of some other provisions of the Act.
Indeed, the directions given by the CCI to the DG under Section 26 (1) of the Act is only to „trigger‟
investigation.

29.1 In Excel Crop Care Limited v. Competitive Commission of India (supra), the Supreme Court
further explained the powers of the DG in broad terms. In that case, an enquiry was initiated by the
CCI on the basis of a letter/complaint dated 4th February, 2011 sent by the Chairman and Managing
Director of FCI to the CCI to the effect that four manufacturers of Aluminium Phosphide Tablets
(„APT‟) had formed a cartel by entering into anti-competitive agreements amongst themselves and on
that basis had been submitting bids for the previous eight years by quoting identical rates in the
tenders invited by the FCI for the purchase of APT.

29.2 In the report of the DG, issued pursuant to the directions issued by the CCI under Section 26 (1)
of the Act, it was inter alia found that right from the year 2002 up to 2009, all the four parties used to
quote identical rates, except in the year 2007. In 2008, all parties abstained from quoting, while in

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2009, only three of them participated. For the tender floated in 2009, the three Appellants had quoted
identical rates. On that basis, the DG formed an opinion that the Appellants had contravened Section
3(3) (a) (b) and (d) read with Section 3 (1) of the Act.

29.3 The Appellant there inter alia contended that since Sections 3 and 4 of the Act were brought into
force only with effect from 20 th May, 2009, the tenders prior to that date, could not be the subject
matter of enquiry for ascertaining if there was a violation of Section 3 of the Act. Even the March,
2009 tender could not form the subject matter of such enquiry. As far as the tender of 2011 was
concerned, since FCI in its complaint dated 4th February, 2011 did not mention it, an enquiry into that
aspect by the DG was without jurisdiction.

29.4 One of the issues that arose in the appeal was whether CCI was barred from investigating the
matter pertaining to the tender floated by FCI in March, 2011, which obviously did not form part of
the complaint of FCI made on 4th February, 2011. It was observed in paragraphs 44 and 45 as under:

"44. The CCI had entrusted the task to DG after it received representation/complaint from
the FCI vide its communication dated February 04, 2011. Argument of the Appellants is
that since this communication did not mention about the 2011 tender of the FCI, which
was in fact even floated after the aforesaid communication, there could not be any
investigation in respect of this tender. It is more so when there was no specific direction in
the CCI's order dated February 24, 2011 passed Under Section 26(1) of the Act and,
therefore, the 2011 tender could not be the subject matter of inquiry when it was not
referred to in the communication of the FCI or order of the CCI. The COMPAT has
rejected this contention holding that Section 26(1) is wide enough to cover the
investigation by the DG, with the following discussion: (Excel Crop Care Ltd. case):

„28. As per the Sub-section (1) of Section 26, there can be no doubt that the DG has the
power to investigate only on the basis of the order passed by the Commission Under
Section 26(1). Our attention was also invited to Sub-section (3) of Section 26 under which
the Director- General, on receipt of direction under Sub-section (1) is to submit a report of
its findings within such period as may be specified by the Commission. The argument of
the parties is that if on the relevant date when the Commission passed the order, even the
tender notice was not floated, then there was no question of Direction General going into
the investigation of that tender. It must be noted at this juncture that Under Section 18, the
Commission has the duty to eliminate practices having adverse effect on competition and
to promote and sustain competition. It is also required to protect the interests of the
consumers. There can be no dispute about the proposition that the Director General on his
own cannot act and unlike the Commission, the Director General has no suo-moto power
to investigate. That is clear from the language of Section 41 also, 28 which suggests that
when directed by the Commission, the Director General is to assist the Commission in
investigating into any contravention of the provisions of the Act. Our attention was also
invited to the Regulations and more particularly to Regulation 20, which pertains to the
investigation by the Director General. Sub-Regulation (4) of Section 20 was pressed into
service by all the learned Counsel, which is in the following term:

20(4). The report of the Director-General shall contain his findings on each of the
allegations made in the information or reference, as the case may be, together with all
evidences or documents or statements or analyses collected during the investigation:
(proviso not necessary) From this, the learned Counsel argued that the Director General
could have seen into the tender floated on 08.05.2009 only, and no other tender as the
information did not contain any allegation about the tender floated in 2011. Therefore, the
investigation made into the tender floated in 2011 was outside the jurisdiction of the

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Director General. This argument was more particularly pressed into service, as the
Director General as well as the Competition Commission of India have found that all the
Appellants had entered into an agreement to boycott the tender floated in 2011 and thereby
had rigged the bids.

29. We have absolutely no quarrel with the proposition that the Director General must
investigate according to the directions given by the CCI Under Section 26(1). There is also
no quarrel with the proposition that the Director General shall record his findings on each
of the allegations made 29 in the information. However, it does not mean that if the
information is made by the FCI on the basis of tender notice dated 08.05.2009, the
investigation shall be limited only to that tender. Everything would depend upon the
language of the order passed by the CCI on the basis of information and the directions
issued therein. If the language of the order of Section 26(1) is considered, it is broad
enough. At this juncture, we must refer to the letter written by Chairman and Managing
Director of FCI, providing information to the CCI. The language of the letter is clear
enough to show that the complaint was not in respect of a particular event or a particular
tender. It was generally complained that Appellants had engaged themselves in carteling.
The learned Counsel Shri Virmani as well as Shri Balaji Subramanian are undoubtedly
correct in putting forth the argument that this information did not pertain to a particular
tender, but it was generally complained that the Appellants had engaged in the
anticompetitive behaviour. When we consider the language of the order passed by the CCI
Under Section 26(1) dated 23.04.2012 the things become all the more clear to us. The
language of that order is clearly broad enough to hold, that the Director General was
empowered and duty bound to look into all the facts till the investigation was completed.
If in the course of investigation, it came to the light that the parties had boycotted the
tender in 2011 with pre- concerted agreement, there was no question of the DG not going
into it. We must view this on the background that when the information was led, the
Commission had material only to form a prima facie view. The said prima- facie view
could not restrict the Director General, if he was duty bound to carry out a comprehensive
investigation in keeping with the direction by CCI. In fact, the DG has also taken into 30
account the tenders by some other corporations floated in 2010 and 2011 and we have
already held that the DG did nothing wrong in that.

In our opinion, therefore, the argument fails and must be rejected.‟ We entirely agree with
the aforesaid view taken by the COMPAT.

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 the 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

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having appreciable adverse effect on the competition. We, therefore, reject this argument
of the Appellants as well touching upon the jurisdiction of the DG."

29.5 It is thus seen that in Excel Crop Care Limited v. Competitive Commission of India (supra), the
Supreme Court has agreed with the view taken by the Competition Appellate Tribunal („COMPAT‟)
that much would depend upon the language of the order passed by the CCI on the basis of the
information and the directions issued therein. Although the said information did not refer to a
particular tender, it generally complained about the anti- competitive behaviour of the Appellant. It
was held that the language of the order passed by the CCI was broad enough to enable the DG to look
into "all the facts till the investigation was completed". Therefore, the DG was not prevented from
examining any anti-competitive practice adopted by the Appellant in the 2011 tender as well.

30. Turning to the facts of the present case, the Court finds that while the information with the CCI did
pertain to the alleged violation by GIL and others under Section 3(3) (a) and (b) of the Act, the
direction given to the DG was to investigate „the matter‟, and this enabled the DG to examine
violations not only of under Section 3 of the Act, but any other violation that may have come to his
notice while undertaking the investigation.

31. It must be noticed here that when the learned Single Judge passed the impugned judgment, he did
not have the benefit of the decision in Excel Crop Care Limited v. Competitive Commission of India
(supra), and this Court is in no doubt that if such judgment was available at that point in time, the
learned Single Judge would not have taken the view that he has taken in the impugned judgment.

32.1 The Division Bench of this Court in Cadila Healthcare Limited v. Competition Commission of
India (supra) was called upon likewise to examine whether the DG in that case had exceeded its
powers in finding a violation of the Act by Cadila which was not even named in the original complaint
filed by the CCI.

32.2 There, the CCI took cognizance of information filed by the Reliance Medical Agency („RMA‟)
complaining of denial of supply of medicines by certain pharmaceutical companies. Cadila‟s case was
that there had to be separate orders under Sections 26 (1) of the Act by the CCI authorizing the DG to
investigate Cadila, and that, in the absence of such order, the DG could not have proceeded against
Cadila on the strength of a general order passed by the CCI on 17th November, 2015 where it stated as
under:

"in the course of investigation, if involvement of any other party is found, the DG shall
investigate the conduct of such other parties who may have indulged in such
contravention".

32.3 After the DG‟s report was submitted to the CCI, a copy thereof was provided to Cadila, which
objected to the report. It also relied upon the decision of this Court in Google Inc. v. Competition
Commission of India (supra). However, the CCI rejected these objections. After its appeal against the
said order was dismissed by the COMPAT, Cadila filed a writ petition before the learned Single Judge.
The said writ petition was dismissed by the learned Single Judge by an order dated 9th March, 2018
and against the said dismissal, Cadila approached the Division Bench.

32.4 In dismissing Cadila‟s appeal, the DB of this Court, after analysing the decision in Competition
Commission of India v. Steel Authority of India Limited (supra) and Excel Crop Care Limited v.
Competitive Commission of India (supra), held as under:

"43. Cadila's argument, that in Excel Crop Care the issue was inclusion of more than one
instance or incident within the ambit of investigation (given that the complaint was in
respect of one tender only) is distinguishable, is in this court's opinion, insubstantial and

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needs to be rejected. Its reliance on Grasim Industries, is no longer apt. At the stage when
the CCI takes cognizance of information, based on a complaint, and requires investigation,
it does not necessarily have complete information or facts relating to the pattern of
behaviour that infects the marketplace. Its only window is the information given to it.
Based on it, the DG is asked to look into the matter. During the course of that inquiry,
based on that solitary complaint or information, facts leading to pervasive practises that
amount to abuse of dominant position on the part of one or more individuals or entities
might unfold. At this stage, the investigation is quasi inquisitorial, to the extent that the
report given is inconclusive of the rights of the parties; however, to the extent that
evidence is gathered, the material can be final. Neither is the DG's power limited by a
remand or restricted to the matters that fall within the complaint and nothing else. Or else,
the Excel Crop Care would not have explained the DG's powers in broad terms: (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....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). The trigger for
assumption of jurisdiction of the CCI is receipt of complaint or information, (when the
Commission is of the opinion that there exists a prima facie case exists (per Section 26
(1)). The succeeding order is administrative (per SAIL); however, that order should
disclose application of mind and should be reasoned (per SAIL). Up to this stage, with that
enunciation of law, no doubt arguably Cadila could have said that absent a specific order
as regards its role, by CCI, the DG could not have inquired into its conduct. However, with
Excel Crop Care specifically dealing with the question of alleged "subject matter"
expansion (in the absence of any specific order under Section 26 (1)) and the Supreme
Court clarifying that the subject matter included not only the one alleged, but other allied
and unremunerated ones, involving others (i.e. third parties), the issue is no longer
untouched; Cadila, in the opinion of this court, is precluded from stating that a specific
order authorizing transactions by it, was a necessary condition for DG's inquiry into its
conduct. This court is further reinforced in its conclusion in this regard by the express
terms of the statute: Section 26 (1) talks of action by CCI directing the DG to inquire into
"the matter". At this stage, there is no individual; the scope of inquiry is the tendency of
market behaviour, of the kind frowned upon in Sections 3 and 4. The stage at which it CCI
can call upon parties to react is when it receives a report from DG stating there is no
material calling for action, it has to issue notice to the concerned parties (i.e. the
complainant) before it proceeds to close the case (Sections 26 (5) and (6)). On the other
hand, if the DG's report recommends otherwise, it is obliged to proceed and investigate
further (Sections 26 (7) and (8)). Again Section 27 talks of different "parties" [enterprise
or association of enterprises or person or association of personsǁ- per Section 27 (a)].
Likewise, the steps outlined in Section 26 are amplified in the procedure mandated by
Regulation 20 and 21, which requires participation by "the parties" in the event a report
after DG's inquiry, which is likely to result in an adverse order, under Sections 27-34 of the
Act. Consequently, Cadila's argument that a specific order by CCI applying its mind into
the role played by it was essential before the DG could have proceeded with the inquiry, is
rejected."

33. Mr Mehta sought to distinguish both Excel Crop Care Limited v. Competitive Commission of
India (supra) and Cadila Healthcare Limited v. Competition Commission of India (supra) on the
ground that they did not involve a situation where the initial complaint was for violation of Section 3

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of the Act, but what was found by the DG was a violation of another provision. This submission is
unconvincing when the binding ratio decidendi of both decisions is distilled. The decision in Excel
Crop Care Limited v. Competitive Commission of India (supra) makes it abundantly clear that while
the initial complaint may be on a limited aspect, the DG can investigate into other violations that
emerged during the investigation of such complaint. For instance, in Excel Crop Care Limited v.
Competitive Commission of India (supra), the validity of the DG‟s report which pointed to the
existence of a cartel in relation to a tender which was not even mentioned in the first complaint was
upheld by the Supreme Court. Likewise, a party which was not even named in the complaint could be
investigated into by the DG, as held by this Court in Cadila Healthcare Limited v. Competition
Commission of India (supra).

34. The aforementioned decisions clarify that an order of the CCI under Section 26 (1) of the Act
„triggers‟ investigation by the DG, and that the powers of the DG are not necessarily circumscribed to
examine only such matters that formed the subject matter of the original complaint. No doubt, the
language of the order passed by the CCI issuing directions to the DG will also have a bearing on the
scope of such investigation by the DG. In the present case, however, the language of the order passed
by the CCI on 26 th February, 2011, is broad enough to cover an investigation by the DG into what
appeared to be prima facie violation of Section 4 of the Act by GIL.

35. Consequently, this Court is not impressed with the submissions of Mr Mehta that since Section 26
(1) of the Act limits the powers of the DG, in the instant case, the DG went beyond the scope of its
powers in submitting a report for the alleged violations of Section 4 of the Act by the GIL.

36. Extensive reliance was placed by Mr Mehta on the decision in Bhikhubhai Vithlabhai Patel v. State
of Gujarat (supra) to restrict the ambit and scope of the order passed under Section 26 (1) of the Act.
That decision was in the context of Section 17 (1) (a) (2) of the Gujarat Town Planning and Urban
Development Act, 1976 and the procedure that had to be adopted by the State Government in making
modification to the draft development plan prepared thereunder. Clearly, that decision turned on the
language of the statute involved and the facts of the case.

37. As far as the present case is concerned, the aforementioned decision of the Supreme Court in
Competition Commission of India v. Steel Authority of India Limited (supra) and Excel Crop Care
Limited v. Competitive Commission of India (supra), followed by this Court in Cadila Healthcare
Limited v. Competition Commission of India (supra), provides a complete answer to all the
contentions of Mr Mehta. In light of the law explained in the above decisions, the conclusion arrived
at by the learned Single Judge that the DG had exceeded the scope of its powers in submitting a report
on the alleged violation under Section 4 of the Act by GIL cannot be sustained in law.

38. There is also merit in the contention of the CCI that even the consequential directions issued by
the learned Single Judge that the report of the DG can at best constitute information, which again had
to be placed before the CCI under Section 19 of the Act for an order for fresh investigation, actually
serves no purpose. While the learned Single Judge may be right in concluding that there is a two-step
process before the CCI can pass a final order, i.e. the first stage before the DG and then before the
CCI, this Court is unable to agree with the conclusion that the scope of the opportunity available to
GIL before the DG, at the stage of investigation, is no different from the opportunity available to it
before the CCI, at the stage of the enquiry, following the report of the DG.

39. No doubt under Regulation 41 of the CCI Regulations, both the CCI and the DG can determine the
manner in which evidence may be adduced in the proceedings before them, and the DG also has the
powers to call for information and examine witnesses and documents under Regulation 45 of the CCI
Regulations, it is not mandatory that in every such investigation the DG has to necessarily exercise all
those powers. The extent of the opportunity to be given to a party, against whom the investigation is in

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progress, will depend on the facts and circumstances of the case, and on the kind of information and
evidence chanced upon by the DG during the course of its investigation. Indeed, it is not mandatory
that in every such case, even at the stage of investigation, the party will have to be given opportunity
to adduce evidence, cross-examine persons who may have given evidence adverse to them, in the
course of investigation. That is not the position that emerges on a collective reading of Section 26 of
the Act read with Regulations 20, 41 and 45 of the CCI Regulations.

40. The admitted position is that GIL did make its written submissions before the DG and was
considered by the DG before forming a prima facie view in the report submitted to CCI. It is not in
dispute that before the CCI, the GIL had a full-fledged opportunity of presenting evidence, documents
and materials to counter the report of the DG.

41. In Cadila Healthcare Limited v. Competition Commission of India (supra), the Court characterized
the functions of the DG at the stage of investigation as „quasi inquisitorial.‟ Indeed, the essential
function of the DG is to investigate i.e. gathering of facts and evidence and analyzing them to form a
prima facie view about the violations alleged in the complaint or information, which forms the subject
matter of investigation.

42. The scope of the powers and functions of the CCI, when it is considering the report of the DG, is a
quasi judicial function. It undertakes that exercise after furnishing to the party a copy of the report and
then permits the party to make its submissions in relation thereto. This is followed by a full-fledged
hearing. At that stage the CCI can in its discretion permit the affected party to lead evidence.
Therefore, the scope and extent of participation of GIL in the present case would obviously be
different at the stage of investigation before the DG and at the subsequent stage of consideration of the
DG‟s report by the CCI.

43. The Court, therefore, is unable to concur with the view expressed by the learned Single Judge that
in the present case, GIL was deprived of an opportunity to present its case before the DG and,
therefore, the DG‟s report was violative of principles of natural justice.

Conclusion

44. For all of the aforementioned reasons, this Court sets aside the impugned judgment of the learned
Single Judge and restores the order dated 30 th May, 2013 passed by the CCI. The matter before the
CCI will now proceed from the stage where it was when the above order was passed, in accordance
with law.

45. The appeal is allowed in the above terms. No costs.

S. MURALIDHAR, J.

TALWANT SINGH, J.

SEPTEMBER 12, 2019 rd

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