30 July, 2019
In a recent judgement, the Hon’ble High Court of Delhi (Delhi HC) clarified that the absence of a judicial member did not preclude the Competition Commission of India (CCI) from performing its adjudicatory function until such time the judicial member was appointed by the Central Government.
On 17 July 2018, the Delhi HC passed this judgement in respect of a writ petition filed before it by Cadd Systems and Services Private Limited (Petitioner). The petition challenged two orders of the CCI for contravention of the law laid down by a division bench of Delhi HC in Mahindra & Mahindra Ltd. & Ors. v. Competition Commission of India & Anr. (W.P. (C) 11467/2018 & connected matters) (Mahindra Judgment).
The Mahindra Judgment was passed by a division bench of the Delhi HC in 2018 directing the CCI and Central Government to ensure the presence and participation of a judicial member at all times while passing adjudicatory orders (especially final orders) by the CCI. The Mahindra Judgment also directed the Central Government to take expeditious steps to fill all existing vacancies in the CCI, within a period six months from the date of the pronouncement of the judgment. This briefly created an ambiguity on the functioning and procedural aspects of the CCI amongst practitioners and parties alike.
Background
The Delhi HC’s present judgment emanates from a challenge to two CCI orders, in Nagrik Chetna Manch v. SAAR IT Resources Private Limited & Ors. (Case No. 12 of 2017) dated 23 April 2019 and 8 May 2019 (collectively referred to as CCI Orders), which were passed without the presence of a judicial member.
The Petitioner challenged the CCI Orders stating that the specific directions in the Mahindra Judgment had been flouted and ignored by the CCI as it passed the orders without the presence of a judicial member.
Contentions of the Parties
The Petitioner’s primary argument was that the CCI orders were adjudicatory in nature and, hence, the presence of a judicial member was mandatory as per the law.
In response to the contentions of the Petitioner, the CCI argued that Section 15 of the Competition Act, 2002 (Act), states that no act or proceedings of the CCI would be invalid by reason of any vacancy or any defect in its constitution and, in effect, provides a safe harbour to orders passed by the CCI in the absence of a judicial member. In any event, the Central Government had accepted the decision in the Mahindra Judgment and issued a circular, inviting applications from persons with the requisite qualifications for appointment as a judicial member of CCI.
In respect of the ‘appointment and participation of judicial members’ in a tribunal, the CCI also submitted that the Hon’ble Supreme Court of India[1] has clarified that till such time a reconstitution of the tribunal does not take place arising from a retirement of a member from the legal field, the existing tribunal will decide all the cases. Thus, the CCI concluded that the directions in the Mahindra Judgment cannot be read to be interdicting the functioning of the CCI pending such appointment.
Findings of the Court
The Delhi HC observed that the Mahindra Judgment, in line with the previous judgements of the Hon’ble Supreme Court of India in Utility Users Welfare Association,[2] required the presence of a judicial member but did not preclude the CCI from performing its adjudicatory function until such time the judicial member was appointed by the Central Government. The Delhi HC agreed with the CCI that Section 15 of the Act amply clarifies that no act or proceedings of the CCI would be invalid by reason of any vacancy or any defect in its constitution.
Implications
The present judgment holds significance as it resolves the ambiguities surrounding the directions passed in the Mahindra Judgment, particularly, in relation to the functioning of the CCI until the appointment of judicial members.
The observations of the Delhi HC suggest that courts in India are inclined to give importance to material aspects over procedural issues, as long as due process and the rights of defense are not compromised, specifically on the issues being dealt by regulators such as the CCI.
For further information, please contact:
Anshuman Sakle, Partner, Cyril Amarchand Mangaldas
anshuman.sakle@cyrilshroff.com
[1] K.R. Tamizhmani & Ors. v. The State of Tamil Nadu & Ors., MA No. 2217 of 2018 in T.C. (C) No. 137/2015. Order dated 10.09.2018.
[2] State of Gujarat v. Utility Users Welfare Association, 2018 (6) SCC 21.
