UNDER SECTION 26(2) OF COMPETITION ACT 2002

1. This information has been filed under section 19 of the Competition Act against the opposite parties on 9.2.2010 alleging abuse of dominant position by his banker, the Punjab National Bank, more specifically the branch at Ratanda Colony, Jodhpur by way of laxity in matters pertaining to Forward Markets in foreign exchange. In support of the application, the informant has filed material which is annexed in Vol. II of the record. Vide order dated 2.3.2010, the Commission directed the informant to explain and substantiate its case. In compliance to the notice of the Commission, Shri Sanjay Jhanwar, Advocate, appeared and argued the matter on behalf of the informant.

2. The relevant facts as culled out from the information and the material filed in support thereof, are being summarized as under:

2.1 The informant owns a small scale industrial undertaking which is engaged in the business of manufacturing and sale of steel utensils. It has been banking with the opposite party, Punjab National Bank (hereinafter referred to as PNB) for quite some years and PNB has granted various types of credit facilities to it. The bank is an authorized dealer of foreign exchange/foreign currencies and is entitled to deal in various foreign exchange products including the forward, option and derivative transactions.

2.2 The informant and PNB entered into several derivative transactions in the year 2007 against the export orders of the informant to hedge the risk of foreign exchange rate fluctuation. The maturity of these transactions was contracted as per the expected date of realization of export proceeds.

2.3 In the year 2008, the informant had to cancel various export orders on account of sudden levy of export duty by the Government of India and consequently informant required the premature cancellation of the derivative transaction. In premature cancellation the informant incurred some losses due to the adverse (upward) movement of US Dollar prices from July, 2008 onwards on account of the difference between USD price at the time of booking and at the time of such premature cancellation of forward contract. Therefore, the informant formally approached the Banker with the restructuring proposal to fund/finance the loss of Rs. 1.40 crores arising out of such premature cancellation as per the prevailing banking guidelines during August, 2008.

2.4 The bank took substantial time for a decision and arbitrarily rejected the proposal on 1.10.2008 stating that the derivative losses are not related to the business of the informant and are also not on account of business activities of the informant. On rejection of the proposal the informant approached higher officers of bank and accordingly a term loan of Rs.625 lakhs was sanctioned in December, 2008 but by now, due to shoot up in the USD prices, the loss of Rs. 1.40 crores escalated to Rs.10.25 crores in December, 2008.

2.5 The informant again approached PNB seeking compensation alleging that the losses increased due to inordinate delay on the part of PNB in sanctioning the restructuring proposal of informant. The informant submitted that the PNB is under obligation to compensate his losses under the policy of PNB as well as under RBI guidelines. The informant has alleged that PNB by abusing its dominant position not only rejected the informant's claim for compensation but also debited the losses to his account and declared his business unit as Non Performing Asset (NPA) and has declared informant's unit as sick.

3. On the basis of the above allegations the informant has alleged that the PNB has violated the provisions of section 4(1) and 4(2)(b) to (e) of the Competition Act, 2002 abusing its dominant position.

4. The informant has prayed for the following reliefs :-

4.1 To direct PNB to compensate the informant with and amount equivalent to the excess derivative losses exceeding Rs. 1.40 crores along with interest thereon suffered by the informant on account of