2018 Supreme(Del) 3010

IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, A.K. CHAWLA, JJ.
Cadila Healthcare Limited And Anr. – Appellants
Versus
Competition Commission of India And Ors. – Respondents
LPA 160 of 2018 & CM APPL. Nos. 11741-44 of 2018
Decided On : 12-09-2018

The CCI has the power to recall/review the order under Section 26(1) of the Competition Act but within the parameters and subject to the restrictions discussed in the judgment.

Headnote:

The Competition Commission of India (CCI) has the power to recall/review the order under Section 26(1) of the Competition Act but within the parameters and subject to the restrictions discussed in the judgment.

Fact of the Case:

The case involves an appeal against the judgment of a single judge of the High Court, which upheld the orders of the CCI. The CCI had rejected the appellant's (Cadila) review/recall application and its application for cross-examination. Cadila had alleged that the CCI had erred in proceeding with the investigation against it without a separate order under Section 26(1) of the Act, that the investigation was vitiated due to fraud, and that the CCI had erred in rejecting its application for cross-examination.

Finding of the Court:

The court held that the CCI has the power to recall/review the order under Section 26(1) of the Act but within the parameters and subject to the restrictions discussed in the judgment. The court also held that the CCI did not err in rejecting Cadila's review/recall application and that the CCI erred in refusing to grant cross-examination (to Cadila) of the three witnesses who had deposed before the DG.

Issues: (1) Whether the DG's investigation in the absence of a specific order under Section 26(1) by CCI having formed a prima facie opinion, is vitiated; (2) Is the impugned judgment correct in upholding as sound CCI's finding rejecting the recall application, (based on grounds of fraud, res judicata and/or no cause of action). (3) Whether there was denial of principles of natural justice in the rejection of Cadila's request for cross examination; (4) Whether DG could have issued notice to Cadila's officials under Section 48

Ratio Decidendi: (1) The court held that the DG's investigation in the absence of a specific order under Section 26(1) by CCI having formed a prima facie opinion, is not vitiated. The court reasoned that the purpose of the 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, 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. (2) The court held that the impugned judgment is correct in upholding as sound CCI's finding rejecting the recall application. The court reasoned that the CCI has the power to recall/review the order under Section 26(1) of the Act but within the parameters and subject to the restrictions discussed in the judgment. The court also held that the CCI did not err in rejecting Cadila's review/recall application because the recall application was filed after the DG's report to CCI and the conclusion of the court in Google Inc. (supra) has to be read/understood to mean a recall/review application can be filed during investigation and not after the submission of the report by the DG. (3) The court held that there was denial of principles of natural justice in the rejection of Cadila's request for cross examination. The court reasoned that the CCI erred in refusing to grant cross-examination (to Cadila) of the three witnesses who had deposed before the DG. The court held that the reasons given by the CCI for denying the request for cross examination are not germane and that the discretion, which is undoubtedly vested with the CCI to permit or refuse cross examination of a witness, is to be exercised judiciously. (4) The court held that the DG could have issued notice to Cadila's officials under Section 48. The court reasoned that the correct interpretation of law was given in Pran Mehra the reasoning of which is hereby confirmed, as is the reasoning in Ministry of Agriculture v. M/s Mahyco Monsanto Biotech Ltd, which proceeds on a correct appreciation of the law.

Final Decision: The appeal succeeds in part and is allowed to the extent that CCI shall afford opportunity to cross examine the three individuals named by Cadila in its application (dated 08.01.2018) by issuing a notice to all concerned. On all other aspects the appeal, i.e. as to rejection of the recall application and the other points discussed above, has to fail and is dismissed.