# COMPETITION COMMISSION OF INDIA v. STEEL AUTHORITY OF INDIA LTD. & ANR

- **Citation:** [2010] 11 S.C.R. 112
- **Court:** Supreme Court of India
- **Decided:** 2010-09-09
- **Case number:** Civil Appeal No. 7779 OF 2010
- **Bench:** S.H. Kapadia, K.S.Panicker Radhakrishnan, Swatanter Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/competition-commission-of-india-v-steel-authority-of-india-ltd-anr-26322
- **Pages:** 93

## Headnote

Competition Act, 2002:
ss. 19,26(1), 53-A(1) -
Proceedings before the
Competition Commission - Appealable order - Information
furnished to the Commission alleging abuse by a Public
Sector Company of its dominant position and depriving others
0
of fair competition - Direction issued by the Commission in
terms of s.26(1) - HELD: Taking a prima facie view and
issuing a direction to Director General for investigation would
not be an order appealable uls 53-A - Interpretation of
statutes - Maxim, 'expressum tacit cessare taciturn' and 'est
E boni judicis ampliare justiciam, non-jurisdictionem' -
Applicability of - Code of Civil Procedure, 1908 - Or. 43,
rr.4(1AJ.
s.26(1) - Power of Commission - Ambit and scope ofParty claiming issuance of notice - HELD: Neither any
F
statutory duty is cast on the Commission to issue notice/grant
hearing nor can any party claim, as a matter of right notice
and/or hearing at s.26(1) stage.
ss. g3-A and 53-B -
Appeal before Competition
G
Appellate Tribunal - Party - HELD: Competition Commission
shall be a necessary party where inquiry has been initiated
by it suo motu - In all other cases, it shall be a proper party
in the proceedings before the Appellate Tribunal -
Competition Commission of India (General) Regulations,
H
112
COMPETITION COMMISSION OF INDIA v. STEEL
113
AUTHORITY OF INDIA LTD.
2009 - Regulations 14(4) and 51 - Code of Civil Procedure,
A
1908 - Or.1,r.10.
s. 33 - Power of Commission to grant interim orders -
HELD: 'During inquiry', if the Commission is satisfied that an
act in contravention of the stated provision has been 8
committed, continues to be committed, or is about to be
committed, it may temporarily restrain any party without giving
notice to such party - The Legislature has intentionally used
the words 'not only ex-parte' but also 'without notice to such
party' - However, this power has to be exercised by the
Commission sparingly and under compelling and exceptional C
circumstances, after recording its satisfaction that a case
exists for the restraint order - Wherever Commission has
passed interim order, it shall hear the affected party, thereafter
as soon as possible - Competition Commission of India
(General) Regulations, 2009 - Regulation 18(2) and 31 (2).
D
s.33 - 'During inquiry' - Connotation of - HELD: Inquiry
is commenced when the Commission, in exercise o'f its
powers u/s 26(1) issues a direction to the Director General.
E
s.26(1) - Formation of prima facie opinion - Recording
of reasons - HELD: Commission is expected to record at
least some reasons even while forming a prima facie view -
. However, while passing directions and order dealing with the
rights of parties in its adjudicatory and determinative capacity,
it is required of the Commission to pass speaking orders.
F
Object of the Act - Explained - Keeping in view the
objective of the Act and various functions performed by the
Commission under the Act, directions issued in order to
achieve the object of the Act and to ensure its proper G
implementation - The said directions shall remain in force
till appropriate regulations in that regard are framed by the
competent authority - Legislation - Administrative Law -
Delegated/subordinate Legislation - Need for - Meanwhile,
H
114
SUPREME COURT REPORTS
(2010] 11 S.C.R.
A
directions issued by Court through judicial pronouncement to
remain in force.
B
\
.. Words and Phrases:
Words 'or', 'and', 'any' - Connotation of
Expressions 'inquiry' and 'investigation' - Connotation of
An information was furnished to the Competition
Commission of India (Commission) that respondent no.
C 1(SAIL) entered into an exclusive supply agreement with
Indian Railways for supply of rails and, thus, it was
alleged, SAIL abused its dominant position in the market
and deprived others of fair competition. The Commission
registered the information and directed the informant to
file an affidavit in support of the information supplied by
D
it. A notice was issued to SAIL enclosing the informatio

## Text

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A
B
c
[2010] 11 S.C.R. 112
COMPETITION COMMISSION OF INDIA
v.
STEEL AUTHORITY OF INDIA LTD. & ANR.
(Civil Appeal No. 7779 OF 2010)
SEPTEMBER 9, 2010
[S.H. KAPADIA, CJI, K.S.PANICKER RADHAKRISHNAN
AND SWATANTER KUMAR, JJ.)
Competition Act, 2002:
ss. 19,26(1), 53-A(1) -
Proceedings before the
Competition Commission - Appealable order - Information
furnished to the Commission alleging abuse by a Public
Sector Company of its dominant position and depriving others
0
of fair competition - Direction issued by the Commission in
terms of s.26(1) - HELD: Taking a prima facie view and
issuing a direction to Director General for investigation would
not be an order appealable uls 53-A - Interpretation of
statutes - Maxim, 'expressum tacit cessare taciturn' and 'est
E boni judicis ampliare justiciam, non-jurisdictionem' -
Applicability of - Code of Civil Procedure, 1908 - Or. 43,
rr.4(1AJ.
s.26(1) - Power of Commission - Ambit and scope ofParty claiming issuance of notice - HELD: Neither any
F
statutory duty is cast on the Commission to issue notice/grant
hearing nor can any party claim, as a matter of right notice
and/or hearing at s.26(1) stage.
ss. g3-A and 53-B -
Appeal before Competition
G
Appellate Tribunal - Party - HELD: Competition Commission
shall be a necessary party where inquiry has been initiated
by it suo motu - In all other cases, it shall be a proper party
in the proceedings before the Appellate Tribunal -
Competition Commission of India (General) Regulations,
H
112
COMPETITION COMMISSION OF INDIA v. STEEL
113
AUTHORITY OF INDIA LTD.
2009 - Regulations 14(4) and 51 - Code of Civil Procedure,
A
1908 - Or.1,r.10.
s. 33 - Power of Commission to grant interim orders -
HELD: 'During inquiry', if the Commission is satisfied that an
act in contravention of the stated provision has been 8
committed, continues to be committed, or is about to be
committed, it may temporarily restrain any party without giving
notice to such party - The Legislature has intentionally used
the words 'not only ex-parte' but also 'without notice to such
party' - However, this power has to be exercised by the
Commission sparingly and under compelling and exceptional C
circumstances, after recording its satisfaction that a case
exists for the restraint order - Wherever Commission has
passed interim order, it shall hear the affected party, thereafter
as soon as possible - Competition Commission of India
(General) Regulations, 2009 - Regulation 18(2) and 31 (2).
D
s.33 - 'During inquiry' - Connotation of - HELD: Inquiry
is commenced when the Commission, in exercise o'f its
powers u/s 26(1) issues a direction to the Director General.
E
s.26(1) - Formation of prima facie opinion - Recording
of reasons - HELD: Commission is expected to record at
least some reasons even while forming a prima facie view -
. However, while passing directions and order dealing with the
rights of parties in its adjudicatory and determinative capacity,
it is required of the Commission to pass speaking orders.
F
Object of the Act - Explained - Keeping in view the
objective of the Act and various functions performed by the
Commission under the Act, directions issued in order to
achieve the object of the Act and to ensure its proper G
implementation - The said directions shall remain in force
till appropriate regulations in that regard are framed by the
competent authority - Legislation - Administrative Law -
Delegated/subordinate Legislation - Need for - Meanwhile,
H
114
SUPREME COURT REPORTS
(2010] 11 S.C.R.
A
directions issued by Court through judicial pronouncement to
remain in force.
B
\
.. Words and Phrases:
Words 'or', 'and', 'any' - Connotation of
Expressions 'inquiry' and 'investigation' - Connotation of
An information was furnished to the Competition
Commission of India (Commission) that respondent no.
C 1(SAIL) entered into an exclusive supply agreement with
Indian Railways for supply of rails and, thus, it was
alleged, SAIL abused its dominant position in the market
and deprived others of fair competition. The Commission
registered the information and directed the informant to
file an affidavit in support of the information supplied by
D
it. A notice was issued to SAIL enclosing the information
submitted by the informant, asking it to submit its reply
within two weeks. SAIL requested for six weeks time. The
Commission declined extension and, by its order dated
8.12.2009, formed the opinion that prima facie case
E
existed against SAIL. It directed the Director General to
make investigation into the matter in terms of s.26(1) of
the Competition Act, 2002. SAIL was granted liberty to file
its reply before the Director General. However, SAIL filed
an interim reply before the Commission along with an
F
application that it should be heard before any interim
order was passed by the Commission. On 22.11.2009, the
Commission reiterated its earlier order directing the
Director General for investigation and granting liberty to
SAIL to file its reply before the Director General. SAIL filed
G an appeal before the Competition Appellate Tribunal
(Tribunal) challenging the order dated 8.12.2009. The
Commission filed an application before the Tribunal
seeking impleadment in the appeal, and also questioned
the maintainability of the appeal on the ground that the
H
COMPETITION COMMISSION OF INDIA v. STEEL
115
AUTHORITY OF INDIA LTD.
direction simpliciter to conduct investigation was not an
A
order appealable within the meaning of s.53-A of the Act.
The Tribunal, inter alia, held that the Commission was
neither a necessary party nor was it a proper party in the
appeal; and that the appeal against the order dated
8.12.2009 was maintainable.
B
In the instant appeal filed by the Commission, the
following questions arose for consideration.
Q.1Whether the directions passed
by the
Commission in exercise of its powers u/s 26(1) of the Act C
forming a prima facie opinion would be appealable in
terms of Section· 53A(1) of the Act?
Q.2What is the ambit and scope of power vested with
the Commission u/s 26(1) of the Act and whether the o
parties, including the informant or the affected party, are
entitled to notice or hearing, as a matter of right, at the
preliminary stage of formulating an opinion as to the
existence of the prima facie case?
,.-
Q.3Whether the Commission would be a necessary,
or at least a proper, party in the proceedings before the
Tribunal in an appeal preferred by any party?
Q.4At what stage and in what manner the
Commission can exercise powers vested in it u/s 33 of
the Act to pass temporary restraint orders? and
Q.5Whether it is obligatory for the Commission to
record reasons for formation of a prima facie opinion in
terms of s. 26(1) of the Act?
Q.6What directions, if any, need to be. issued by the
Court to ensure proper compliance in regard to
procedural requirements while keeping in mind the
scheme of the Act and the legislative intent? Also to
ensure that the procedural intricacies do not hamper in
E
F
G
H
116
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A achieving the object of the Act, i.e., free market and
competition.
Partly allowing the appeal, the Court
HELD: 1.1 In terms of s. 53A(1 )(a) of the Competition
B Act, 2002, an appeal shall lie only against such directions,
decisions or orders passed by the Commission before
the Tribunal which have been specifically stated under the
provisions of s. 53A(1)(a). The orders, which have not
been specifically made appealable, cannot be treated
C appealable by implication. Taking a prima facie view and
issuing a direction to the Director General for
investigation would not be an order appealable u/s 53A.
Thus, the appeal preferred by SAIL ought to have been
dismissed by the Tribunal as not maintainable. [para 21]
D [149-F-G]
1.2 Right of appeal is neither a natural nor inherent
right vested in a party. It is substantive statutory right
regulated by the statute creating it. In absence of any
E specific provision creating a right in a party to file an
appeal, such right can neither be assumed nor inferred
in favour of the party. It is a creation of statute and it does
require application of rule of plain construction. Such
provision should neither be construed too strictly nor too
liberally; if given either of these extreme interpretations,
F it is bound to adversely affect the legislative object as
well as hamper the proceedings before the appropriate
forum. [para 32 and 34] [165-F-H; 166-A; 164-G-H; 165-A]
Maria Cristina De Souza Sadder vs. Amria Zurana
G Pereira Pinto (1979) 1 SCC 92; M. Ramnarain Private
Limited v. State Trading Corporation of India Limited, 1983
(3) SCR 25 = (1983) 3 SCC 75; and Gujarat Agro Industries
Co. Ltd. v. Municipal Corporation of the City of Ahmedabad
1999 (2) SCR 895 = (1999) 4 sec 468 - relied on.
H
COMPETITION COMMISSION OF INDIA v. STEEL
117
AUTHORITY OF INDIA LTD.
Kondiba Dagadu Kadam vs. Savitribai Sopan Gujar
A
1999 ( 2) SCR 728 = (1999) 3 SCC 722; and Kashmir Singh
vs. Harnam Singh 2008 (3) SCR 763 = 2008 AIR SC 1749;
Shiv Shakti Co-op. Housing Society, Nagpur vs. Swaraj
Developers 2003 (3) SCR 762 = (2003) 6 SCC 659- referred
to
B
The Law Commission of India, 183rd Report; Mimansa
Sutras by Jaimini - referred to.
1.3 The Tribunal has been vested with the power to
hear and dispose of appeals against any direction issued
C
or decision made or order passed by the Commission in
exercise of its powers under the provisions mentioned
in s. 53A of the Act. The order passed by the Commission
u/s 26(2) is a final order as it puts an end to the
proceedings initiated upon receiving the information in
D
one of the specified modes. This order has been
specifically made appealable u/s 53A of the Act. [para 2425] [160-A-E]
1.4 The provisions of s.53A(1 )(a) use the expression
'any direction issued or decision made or order passed
by the Commission'. There is no occasion for the court
to read and interpret the word 'or' in any different form
as that would completely defeat the intention of the
legislature. It is a settled principle of law that the words
'or' and 'and' may be read as vice versa but not normally.
The language of the Section is clear and the statute does
E
F
not demand that the court should substitute 'or' or read
this word interchangeably for achieving the object of the
Act. On the contrary, the objective of the Act is more than
clear that the legislature intended to provide a very limited
G
right to appeal. [para 27, 28, and 29] [162-A-E; 163-B-C]
Super Cassettes Industries Ltd. vs. State of UP. 2009
(14) SCR 627 = (2009)10 SCC 531; and Municipal
H
118
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A Corporation of Delhi vs. Tek Chand Bhatia 1980 ( 1 ) SCR
910 = (1980) 1 sec 158 - relied on
Green v. Premier Glynrhonwy Slate Co. (1928) 1 KB 561
p. 568; and Mersey Docks and Harbour Board v. Henderson
8 Bros. (1888) 13 AC 595; - referred to.
1.5 The direction uls 26(1) after formation of a prima
facie opinion is a direction simpliciter to cause an
investigation into the matter. Issuance of such a direction,
at the face of it, is an administrative direction to one of
C its own wings departmentally and is without entering
upon any adjudicatory process. It does not effectively
determine any right or obligation of the parties to the tis.
[para 25) [160-C-E]
0
Automec Sri v.
Commission of the European
Communities (1990) ECR 11-00367 - referred to.
1.6 The Tribunal was not right in holding that the use
of the words 'any' and 'or' were the expressions of wide
magnitude and that 'any' being an adjective qualifies the
E nouns under the relevant provisions, i.e. directions,
decisions and orders, all were appealable without
exception. The expression 'any', in fact, qualifies each of
the three expressions 'direction issued or decision made
or order passed'. It cannot be said that it signifies any one
F of them and, particularly, only 'direction issued'. All these
words have been used by the legislature consciously and
with a purpose. It has provided for complete mechanism
ensuring their implementation under the provisions of the
Act. [para 39-40) [169-A-D]
G
H
1.7 The provisions of s.26 and 53A of the Act clearly
depict the legislative intent that the framers never desired
that all orders, directions and decisions should be
appealable to the Tribunal. Under s.26(1) the Commission
COMPETITION COMMISSION OF INDIA v. STEEL
119
AUTHORITY OF INDIA LTD.
is expected to make a decision by formation of a prima
A
facie opinion and issue a direction to cause an
investigation to be made by the Director General and after
receiving the report has to take a final view in terms of
s.26(6) and, even otherwise, it has the discretion to form
an opinion and even close a case u/s 26(2). Having
B
enacted these provisions, the legislature, in its wisdom,
made only the order u/s 26(2) and 26(6) appea!able u/s 53A
of the Act. Thus, it specifically excludes the opinion/
decision of the authority u/s 26(1 rand even an order
passed u/s 26(7) directing further inquiry, from being c
appealable before the Tribunal. Therefore, it wbuld
neither be permissible nor advisable to make these
provisions appealable against the legislative mandate.
[para 40] [169-C-F]
1.8 Expressum facit cessare taciturn - Express
mention of one thing implies the exclusion of other.
(Expression precludes implication). This doctrine has
been applied by this Court in various cases to enunciate
D
the principle that expression precludes implication. The
first and primary rule of construction is that intention of
E
the legislature is to be found in the words used by the
legislature itself. The true or legal meaning of an
enactment is derived by construing the meaning of the
word in the light of the discernible purpose or object
which comprehends the mischief and its remedy to which
F
an enactment is directed. It is always important for the
court to keep in mind the purpose which lies behind the
statute while interpreting the statutory provisions. The
appropriate interpretation of s.53A(1 )(a) would be t~at no
other direction, decision or order of the Commission is
G
appealable except those expressly stated in it. The maxim
est boni judicis ampliare justiciam, non-jurisdictionem
finds application here. [para 42-44] [170-B-E; 171-A,-C]
Union of India vs. Tulsiram Patel, 1985 (2) Suppl'.
:
,
H
'
120
SUPREME COURT REPORTS
(2010] 11 S.C.R.
A
SCR 131 =AIR 1985 SC 1416; State of Himachal Pradesh
vs. Kai/ash Chand Mahajan 1992 (1) SCR 917 =AIR 1992 SC
1277 and Padma Sundara Rao v. State of T.N. 2002 (2)
SCR 383 =AIR 2002 SC 1334 - referred to.
8
1.9 Section 538(1) itself is an indicator of the
restricted scope of appeals that shall be maintainable
before the Tribunal; it provides that the aggrieved party
has a right of appeal against 'any direction, decision or
order referred to in s.53A(1 )(a).' One of the parties before
the Commission would, in any case, be aggrieved by an
C order where the Commission grants or declines to grant
extension of time. Such orders cannot be held to be
appealable within the meaning and language of s.53A of
the Act and also on the principle that they are not orders
which determine the rights of the parties. No appeal can
D lie against such an order. Still, the parties are not
remediless as, when they prefer an appeal against the
final order, they can always take up grounds to challenge
the interim orders/directions passed by the Commission
in the memorandum of appeal. Such an approach would
I
E be in consonance with the procedural law prescribed in
0.43, r. 1-A CPC and even in other provisions thereof.
[para 44-45) [171-C-D; F-H; 172-A]
2.1 Neither any statutory duty is cast on the
F Commission to issue notice or grant hearing, nor any
party can claim, as a matter of right, notice and/or hearing
at the stage of formation of opinion by the Commission,
in terms of s.26(1) of the Act, that a prima facie case exists
for issuance of a direction to the Director General to
G cause an investigation to be made into the matter. The
provisions of s.19 do not suggest that any notice is
required to be given to the informant, affected party or any
other person at that stage. [para 11 and 21) [149-H; 150A-B; 145-C-D]
H
2.2 However, the Commission, being a statutory body
COMPETITION COMMISSION OF INDIA v. STEEL
121
AUTHORITY OF INDIA LTD.
exercising, inter alia, regulatory jurisdiction, even at that
A
stage, in its discretion and in appropriate cases may call
upon the concerned party(s) to render required
assistance or produce requisite information, as per its
directive. [para 21] [150-C]
B
2.3 The principle of audi alteram partem, as
commonly understood, means 'hear the other side or
hear both sides before a decision is arrived at'. The
principle is largely understood as integral part of
principles of natural justice. It is expected of a tribunal or C
any quasi-judicial body to ensure compliance of these
principles before any order adverse to the interest of the
party can be passed. However, the exclusion of the
principles of natural justice is also an equally known
concept and the legislature has the competence to enact
laws which specifically exclude the application of D
principles of natural justice in larger public interest and
for valid reasons. Generally, compliance or otherwise, of
these principles can be classified mainly under three
categories: first, where application of principles of natural
justice is excluded by specific legislation; second, where
the law contemplates strict compliance to the provisions
of principles of natural justice and default in compliance
thereto can result in vitiating not only the orders but even
the proceedings taken against the delinquent; and third,
where the law requires compliance to these principles of
natural justice, but an irresistible conclusion is drawn by
the competent court or forum that no prejudice has been
caused to the delinquent and the non-compliance is with
regard to an action of directory nature. The cases may
E
F
fall in any of these categories and, therefore, the court G
. has to examine the facts of each case in the light of the
IAct or the Rules and Regulations in force in relation to
~uch a case. [para 48-49] [172-G-H; 173-A-H; 174-A]
Cooper v. Wands Worth Board of Works (1863), 14 C.B.
H
122
SUPREME COURT REPORTS
[2010] 11 S.C.R.
A (N.S.) 180; and Errington v. Minister of Health (1935) 1 KB
249 - referred to.
2.4 Issue of notice to a party at the initial stage of the
proceedings, which are not determinative in their nature
8 and substance, can hardly be implied; wherever the
legislature so desires it must say so specifically. From the
provisions of the Act, and some of the Regulations, it is
· obvious that wherever the legislature has intended that
notice is to be served upon the other party, it has
C specifically so stated and there is no compelling reason
to read into the provisions of s.26(1) the requirement of
notice, when it is conspicuous by its very absence. [para
51 and 58] (177-E; 175-A-C]
~.5 The provisions of s.26(1) clearly indicate
D exclusion of principles of natural justice, at least at the
initial stages, by necessary implication. In cases where
the conduct of an enterprise, association of enterprises,
person or association of persons or any other legal
entity, is such that it would cause serious prejudice to the
E public interest and also violates the provisions of the Act,
the Commission will be well within its jurisdiction to pass
ex parte ad interim injunction orders immediately in terms
of s. 33 of the Act, while granting post decisional hearing·
positively, within a very short span in terms of Regulation
F 31 (2). This would certainly be more than adequate
compliance to the principles of natural justice. The
application of the principle of natural justice, therefore,
would depend upon the nature of the duty to be
performed by the authority under the statute. Decision in
G this regard is, in fact, panacea to the rival contentions
which may be raised by the parties in a given case. [para
61 and 63] [179-G-H; 180-A-D; 181-C-E]
H
Delhi Transport Corporation vs. Delhi Transport
Corporation Mazdoor Congress (1991) Supp1 SCC 600;
COMPETITION COMMISSION OF INDIA v. STEEL
123
AUTHORITY OF INDIA LTD.
Union of India v. W.N. Chadha 1992 (3) Suppl. SCR 594 = A
(1993) Supp 4 SCC 260; Maneka Gandhi v. Union of India
(1978) 1 SCC 48; State of Punjab v. Gurdayal 1980 (1)
SCR 1071 =AIR 1980 SC 319; Raj Restaurant and Anr. v.
Municipal Corporation of Delhi (1982) 3 SCC 338; Canara
Bank vs. Debasis Das 2003 ( 2 ) SCR 968 = (2003) 4 SCC
B
557; M. Krishna Swami vs. Union of India 1992 ( 1 ) Suppl.
SCR 53 = (1992) 4 SCC 605 - referred to.
Azienda Colori Nazionali - AGNA S.P.A. v Commission
of the European Communities, (1972) ECR 0933 - referred
C
to.
2.6 Besides, the jurisdiction of the Commission to act
u/s 26(1) does not contemplate any adjudica~ry function.
The Commission is not expected to give notice to the
parties, i.e. the informant or the affected parties and hear
D
them at length, before forming its opinion. The function
is of a very preliminary nature and in fact, lin common
parlance, it is a departmental function. At t~at stage, it
does not condemn any person. and, therefore,! application
of audi alteram partem is not called for. Formation of a
E.
prima facie opinion departmentally (Director General,
being appointed by the Central Government t«1> assist the .
Commission, is one of the wings of the Commission itself)
does not amount to an adjudicatory function but is merely
of administrative nature. At best, it can direct the
F
investigation to be conducted and report to be submitted
to the Commission itself or close the case in terms of s.
26(2) of the Act, which order itself is appealable before
the Tribunal and only after this stage, there is a specific
right of notice and hearing available to the aggrieved/
G
affected party. The functions performed by the
Commission u/s 26(1) of the Act are in the nature of
preparatory measures in contrast to the decision making
process. That is the precise reason that the legislature
has used the word 'direction' to be issued to the Director
H
124
SUPREME COURT REPORTS
[201 OJ 11 S.C.R.
A General for investigation in that provision and not that the
B
· Commission shall take a decision or pass an order
directing inquiry into the allegations made in the
reference to the Commission. [para 66-67) [183-H; 184-AD; 185-8-C]
2.7 Cumulative reading of the relevant provisions, in
conjunction with the scheme of the Act and the object
sought to be achieved, suggests that it will not be in
consonance with the settled rules of interpretation that
C a statutory notice or an absolute right to claim notice and
hearing can be read into the provisions of s.26(1) of the
Act. Discretion to invite, has been vested in the
Commission, by virtue of the Regulations, which must be
construed in their plain language and without giving it
undue expansion. Thus, keeping in mind the nature of
D the functions required to be performed by the
Commission in terms of s. 26(1 ), the Court is of the
considered view that the right of notice of hearing is not
contemplated under the provisions of s. 26(1) of the Act.
[para 59 and 66) [177-H; 178-A-B; 184-D-E]
E
3.1 The Commission, in cases where the inquiry has
been initiated by the Commission suo moto, shall be a
necessary party and in all other cases the Commission
shall be a proper party in the proceedings before the
F Competition Tribunal. The presence of the Commission
before the Tribunal would help in complete adjudication
and effective and expeditious disposal of matters. Being
an expert body, its views would be of appropriate
assistance to the Tribunal. Thus, the Commission in the
G proceedings before the Tribunal would be a necessary
or a proper party, as the case may be. [para 21) [150-GH; 151-A-B]
3.2 The concept of necessary and proper parties is
an accepted norm of civil law and its principles can safely
H be applied to the proceedings before the Tribunal to a
COMPETITION COMMISSION OF INDIA v. STEEL
125
AUTHORITY OF INDIA LTD.
limited extent. The procedure for entertaining the appeals
A
is specified u/s 53-B of the Act. The expression 'any
person' appearing in s. 538 has to be construed liberally
as the provision first mentions specific government
bodies then local authorities and enterprises, which term,
in any case, is of generic nature and then lastly mentions
B
'any person'. Obviously, it is intended that expanded
meaning be given to the term 'persons', i.e., persons or
bodies who are entitled to appeal. The right of hearing is
also available to the parties to appeal. The provisions
clearly indicate that the Commission being a body c
corporate, is expected to be party in the proceedings
before the Tribunal as it has a legal right of
representation. Absence of the Commission before the
Tribunal will deprive it of presenting its views in the
proceedings. Thus, it may not be able to effectively
0
exercise its right to appeal in terms of s. 53 of the Act.
(para 72 and 75] (188-H; 189-A; 190-B-D]
3.3 Furthermore, in view of provisions of Regulations
14(4) and 51, the Commission can be a necessary or a
proper party in the proceedings before the Tribunal. The
E
Commission, in terms of s.19 read with s.26 of the Act, is
entitled to commence proceedings suo moto and adopt
its own procedure for completion of such proceedings.
Thus, the principle of fairness would demand that such
party should be heard by the Tribunal before any orders
F
adverse to it are passed in such cases.The Tribunal has
taken the view that in cases where proceedings initiated
suo moto by the Commission, the Commission is a
necessary party. Even otherwise, as a normal rule, the
applicant/informant is dominus litis and has the right to
G
control the proceedings, but at the same time, such
applicant is required to notify all other parties against
whom the applicant wishes to proceed. Even if an
applicant fails to join a party the court has the discretion
to direct joining of such party as the question of H
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A impfeadment has to be decided on the touchstone of
Or.1,r,10 CPC, which provides that a necessary or proper
party may be added. [para 75 and 80] [190-D-G; 192-F-G]
Udit Narain Singh Malpaharia v. Addi. Member, Board of
B Revenue, Bihar, 1963 Suppl. SCR 676 =AIR 1963 SC 786;
Ramesh Hirachand Kundanmal v. Municipal Corporation of
Greater Bombay 1992 ( 2 ) SCR 1 = (1992) 2 SCC 524 -
referred to.
3.4 In the proceedings, which are initiated by the
C Commission suo moto, it shall be dominus litis of such
proceedings while in other cases, the Commission being
a regulatory body would be a proper party discharging
inquisitorial, regulatory as well as adjudicatory functions
and its presence before the Tribunal would be proper.
D The purpose is always to achieve complete, expeditious
and effective adjudication. The Commission would be a
necessary and/or a proper party in the proceedings
before the Tribunal. [para 81] [192-H; 193-A-D]
E
Brahm Dutt v. Union of India (2005) 2 SCC 431 -
referred to.
4.1 During an inquiry and where the Commission is
satisfied that the act is in contravention of the provisions
stated in s. 33 of the Act, it may issue an order temporarily
F restraining the party from carrying on such act, until the
conclusion of such inquiry or until further orders without
giving notice to such party, where it deems it necessary .
. This power has to be exercised by the Commission
sparingly and under compelling and exceptional
G circumstances. The Commission, while recording a
reasoned order inter alia should : (a) record its
satisfaction (which has to be of much higher degree than
formation of a prima facie view u/s 26(1) of the ActrTn
clear terms that an act in contravention of the stated
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provisions has been committed and continues to be
A
committed or is about to be committed; (b) It is necessary
to issue order of restraint and (c) from the record before
the Commission, it is apparent that there is every
likelihood of the party to the /is, suffering irreparable and
irretrievable damage or there is definite apprehension that
B
it would have adverse effect on competition in the market.
The three ingredients that there has to be application of
mind of higher degree and definite reasons having nexus'
to the necessity for passing such an order· need be
stated. Further, it is required that the case of t.he c
informant-applicant should also be stronger than a mere
prima facie case. Once these ingredients are satisfied and
where the Commission deems it necessary, it can pass
such an order without giving notice to the other party. The
scope of this power is limited and is expected to be
0
. exercised in appropriate circumstances. [para 21 and 87]
[151-C-H; 197-G-H; 198-A-B]
4.2 The power u/s 33 of the Act to pass temporary
restraint order can only be exercised by the Commission
when it has formed primci facie opinion and directed
E
investigation in terms of s. 26(1) of the Act, as is evident
from the language of this provision read with Regulation
18(2) of the Regulations. [para 21] [152-A-B]
4.3 A bare reading of s.33 shows that the most
significant expression used by the legislature in this
provision is 'during inquiry'. The word 'inquiry' has not
been defined in the Act. However, Regulation 18(2)
explains that 'inquiry' shall be deemed to have
commenced when direction to the Director General is
G
issued to conduct investigation in terms of Regulation
18(2). Thus, the law shall presume that an 'inquiry' is
commenced when the Commission, in exercise of its
powers u/s 26(1) of the Act, issues a direction to the
Director General. Once the Regulations have explained
F
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SUPREME COURT REPORTS
[201 OJ 11 S.C.R.
A 'inquiry' it will not be permissible to give meaning to this
· expression contrary to the statutory explanation. The
Tribunal erred in holding that the inquiry commences as
soon as the aspects highlighted in sub-section (1) of s.19
are fulfilled and brought to the notice of the Commission.
B It is obvious that Regulation 18(2) was not brought to the
hotice of the Tribunal which resulted in error of law,
particularly, when examined in the light of other
provisions and scheme of the Act as well. [para 83 and
91] [194-A-D; 201-F-G]
c
4.4
Inquiry
and
investigation
are
quite
distinguishable, as is clear from various provisions of the
Act as well as the scheme framed thereunder. Both these
expressions cannot be treated as synonymous. They are
distinct, different in expression and operate in different
D areas. The Director General is expected to conduct an
investigation only in terms of the directive of the
Commission and thereafter, inquiry shall be deemed to
have commenced, which continues with the submission
of the report by the Director General, unlike the
E investigation under the MRTP Act, 1969, where the
Director General can initiate investigation suo motu. Then
the Commission has to consider such report as well as
consider the objections and submissions made by other
party. Till the time final order is passed by the
F Commission in accordance with law, the inquiry under
this Act continues. [para 83] [194-D-G]
4.5 Once the inquiry has begun, then alone the
Commission is expected to exercise its powers vested u/
G s 33 of the Act. That is the stage when jurisdiction of the
Commission can be invoked by a party for passing of an
ex parte order. Even at that stage, the Commission is
required to record a satisfaction that there has been
contravention of the provisions mentioned u/s 33 and that
such contravention has been committed, continues to be
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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 s.26(1) of
the Act. The former is a definite expression of the
satisfaction recorded by the Commission upon due
application of mind while the latter is a tentative view at
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
A
B
be directed against a party. Once such satisfaction is c
recorded, the Commission is vested with the power and
the informant is entitled to claim ex parte injunction'. The
legislature has intentionally used the words not only 'ex
parte' but also 'without notice to such party'. Again for
that purpose, the Commission has to apply its mind,
whether or not it is necessary to give such a notice. [para
83] [194-G-H; 195-A-D]
D
4.6 The intent of the rule is to grant ex parte
injunction, but it is more desirable that upon passing an
order, as contemplated u/s 33, it must give a short notice
E
to the other side to appear and to file objections to the
continuation or otherwise of such an order. Regulation
31 (2) of the Regulations clearly mandates such a
procedure. Wherever the Commission has passed interim
order, it shall hear the parties against whom such an
F
order has been made, thereafter; as soon as possible. The
expression 'as soon as possible' appearing in Regulation
31 (2) has some significance and it will be obligatory upon
the fora dealing with the matters to ensure compliance
·to this legislative mandate. Restraint orders may be
G
passed in exercise of jurisdiction in terms of s. 33 but it
must be kept in mind that the ex parte restraint orders
can have far reaching consequences and, therefore, it will
be desirable to pass such order in exceptional
circumstances and deal with these matters most
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[2010] 11 S.C.R.
A expeditiously. [para 83) [195-D-G]
Morgan Stanley Mutual Funds v. Kartick Das 1994 (1)
Suppl. SCR 136 = (1994) 4 SCC 225 - referred to.
5.1 In consonance with the settled principles of
B administrative jurisprudence, the Commission is
expected to record at least some reasons even while
forming a prima facie view. However, while passing
directions and orders dealing with the rights of the parties
in its adjudicatory and determinative capacity, it is
C required of the Commission to pass speaking orders,
upon due application of mind, responding to all the
contentions raised before it by the rival parties. [para 21)
[152-C-D]
0
5.2 By practice adopted in all courts and by virtue of
judge-made law, the concept of reasoned judgment has
become an indispensable part of basic rule of law and in
fact, is a mandatory requirement of the procedural law.
Clarity of thoughts leads to clarity of vision and therefore,
E proper reasoning is foundation of a just and fair decision.
[para 69) [187-E-F]
Assistant Commissioner, C. T.D. WC. v. Mis Shukla &
Brothers 2010 (4) SCR 627 =JT 2010 (4) SC 35; Gurdial
Singh Fijji vs. State of Punjab [1979) 2 SCC 368 - referred
F to.
Alexander Machinery (Dudley) Ltd. v. Crabtree 1974 ICR
120 - referred to.
5.3 Section 26, under its different sub-sections,
G requires the Commission to issue various directions, take
decisions and pass orders, some of which are even
appealable before the Tribunal. Even if it is a direction
under any of the provisions and not a decision,
conclusion or order passed on
m~rits by the
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AUTHORITY OF INDIA LTD.
Commission, it is expected that the same would be
A
supported by some reasoning. At the stage of forming a
prima facie view, as required u/s 26(1) of the Act, the
Commission may not really record detailed reasons, but
must express its mind in no uncertain terms, by
recording minimum reasons, that it is of the view that a
B
prima facie case exists, requiring issuance of direction for
inve~tigation to the Director General. Such view should
be recorded with reference to the information furnished
to the Commission. Such opinion should be formed on
the basis of the records, including the information c
furnished and reference made to the Commission under
the various provisions of the Act. [para 70) [187-G-H; 188A-D]
6.1 The main objective of competition law is to
promote economic efficiency using competition as one
D
of the means of assisting the creation of market
responsive to consumer preferences. The advantages of
perfect competition are three-fold: allocative efficiency,
which ensures the effective allocation of resources;
productive efficiency, which ensures that costs of E
production are kept at a minimum; and dynamic
efficiency, which promotes innovative practices. These
factors by and large have been accepted all over the
world as the guiding principles for effective
implementation of competition law. The Act and the
Regulations framed thereunder clearly indicate the
legislative intent of dealing with the matters related to
contravention of the Act, expeditiously and even in a time
bound programme. Keeping in view the nature of the
controversies arising under the provisions of the Act and
larger public interest, the matters should be dealt with
and taken to the logical ends of pronouncement of final
orders without any undue delay. In the event of delay, the
very purpose and object of the Act is likely to be
frustrated and the possibility of great damage to the open
F
G
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[2010] 11 S.C.R.
A market and resultantly, country's economy cannot be
rules out. [para 5 and 7) [138-8-D; 139-F-H]
6.2 The Commission performs various functions
including regulatory, inquisitorial and adjudicatory. The
8 powers conferred by the Legislature upon the
Commission u/ss 27(d) and 31 (3) are of wide magnitude
and of serious ramifications. The Commission has the
jurisdiction even to direct that an agreement entered into
between the parties shall stand modified to the extent and
in the manner, as may be specified. Similarly, where it is
C of the opinion that the combination has, or is likely to
have, an appreciable adverse effect on competition but
such adverse effect can be eliminated by suitable
modification to such combination, the Commission is
empowered to direct such modification. These powers of
D the Commission, read with other provisions, certainly
require issuance of certain directions in order to achieve
the object of the Act and to ensure its proper
implementation. The following directions are, therefore,
issued which shall remain in force till appropriate
E regulations in that regard are framed by the competent
authority:
(A) Regulation 16 prescribes limitation of 15 days for
the Commission to hold its first ordinary meeting to
F consider whether prima facie case exists or not and in
cases of alleged anti-competitive agreements and/or
abuse of dominant position, the opinion on existence of
prima facie case has to be formed within 60 days. Though
the time period for such acts of the Commission has been
G specified, still it is expected of the Commission to hold
. its meetings and record its opinion about existence or
otherwise of a prima facie case within a period much
shorter than the stated period.
(8) All proceedings, including investigation and
H inquiry should be completed by the Commission/Director
COMPETITION COMMISSION OF INDIA v.