Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(NCLAT) 183

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
NARESH SALECHA, Member (Technical)
Manoj K. Sheth – Appellant
Versus
Competition Commission Of India – Respondent
I.A. No. 2843, 2844 of 2021 & 3768 of 2023 | Case No. 35 of 2019

Advocates:
For the Appellants/Petitioners: Mr. Nityaesh Natraj, Mr. Vaibhav R Venkatesh, Mr. Udian Sharma, Mr. Akash Srinanda, Mr. Anirudh A Sriram, Ms. Harsha Sadhwani, Mr. Manav Mitra, Ms. Subhika Joshi, Mr. Sahil Saraswat
For the Respondents: Mr. Neeraj Malhotra Sr. Adv. with Mr. Aman Singh Sethi, Ms. Manika Brar, Mr. Parteek Yadav, Mr. Shivek Sahai Endlaw, Mr. Rohan Dembani, Mr. Nimish Gupta, Mr. Rahul Ajatshatru, Ms. Aashima Gautam, Ms. Sunaina Dutta

Dominance alone not abuse under Competition Act without appreciable adverse effect on competition; co-location services optional, uniform, liquidity-enhancing, not prima facie violative of Section 4 despite regulatory lapses.

Headnote:(A) Competition Act, 2002 - Sections 2(h), 2(u), 4, 19(1), 26(1), 26(2), 53B - Abuse of dominant position - Co-location facilities offered by dominant stock exchange to trading members on first-come-first-serve basis with uniform fees - Allegations of preferential access to select brokers via flawed technology (TCP/IP without randomizer/load balancer), secondary server misuse, information asymmetry, front-running, market division, denial of market access violating Sections 4(2)(a)(i), 4(2)(b)(ii), 4(2)(c) - CCI dismissed information under Section 26(2) holding no prima facie case after considering sectoral regulator findings, expert reports; facilities enhance liquidity, not anti-competitive - Tribunal upheld: dominance not abusive absent appreciable adverse effect on competition (AAEC); no overt discriminatory conduct or consumer harm proven; facilities optional, available to all trading members; not bound to investigate without prima facie material. (Paras 113-149)

(B) Competition law - Prima facie opinion under Section 26(1) - CCI not required to hear opposite party or conduct full inquiry; subjective satisfaction based on objective material; reliance on sectoral regulator reports permissible for technical facts; effects-based analysis mandatory - Abuse requires proven harm/AAEC, not mere dominance or regulatory lapses. (Paras 129-138)

(C) Appeal - Scope - Appellate Tribunal does not substitute view unless perversity/illegality; Section 26(2) order sustainable if reasoned, considering all material. (Paras 60, 138)

Facts of the case:
Informant challenged dominant stock exchange's co-location services alleging discriminatory preferential access to data/servers for select trading members, causing front-running, asymmetry, market exclusion. CCI examined information, submissions, sectoral regulator orders (finding regulatory lapses but no fraud/collusion), expert audits; concluded no prima facie violation, closed matter. Appeal against dismissal.

Findings of Court:
Co-location optional value-added service enhancing efficiency/liquidity; uniform terms, no refusal to eligible members; technology choice bona fide; no evidence of AAEC or consumer prejudice; CCI correctly formed prima facie opinion declining investigation.

Issues: Whether CCI erred in declining inquiry under Section 19(1); co-location caused discriminatory/restrictive market access violating Section 4; absence of randomizer/load balancer denied equitable access; CCI bound to direct DG probe; prima facie case existed. (Para 111)

Ratio Decidendi: No abuse of dominance without AAEC; facilities pro-competitive, not exclusionary; CCI's reasoned Section 26(2) order valid post-material appraisal including sectoral findings; investigation unwarranted sans prima facie contravention. (Paras 115, 141-142)

Result: Appeal dismissed; impugned order upheld.

Table of Content
1. appeal challenges cci dismissal of co-location abuse case. (Para 1 , 88)
2. co-location creates preferential access and information asymmetry. (Para 2 , 3 , 26 , 27 , 39)
3. nse dominant in securities market via co-location services. (Para 4 , 5 , 28)
4. tcp/ip lacks randomizer, enables server access discrimination. (Para 6 , 16 , 29 , 30 , 31 , 92 , 93)
5. sebi tac/deloitte reports confirm preferential access inequities. (Para 7 , 8 , 9 , 10 , 32 , 99 , 100 , 101)
6. cci proceedings afforded multiple hearings despite prima facie stage. (Para 12 , 13 , 82 , 83)
7. sebi/sat exonerates nse of fraud, finds regulatory lapses only. (Para 33 , 40 , 43 , 71 , 102 , 106 , 107)
8. high co-location fees not discriminatory or market barring. (Para 36 , 37 , 46 , 121)
9. co-location enhances liquidity, standard global practice. (Para 61 , 62 , 63 , 64 , 65 , 66 , 67 , 95)
10. section 4 prohibits abuse causing appreciable adverse competition effect. (Para 113 , 114 , 115 , 116)
11. no abuse via optional co-location offered equally to members. (Para 120 , 124 , 125 , 126 , 146 , 147)
12. cci requires prima facie material before directing dg inquiry. (Para 128 , 129 , 130 , 131 , 132 , 133 , 134 , 137 , 138)
13. section 4 demands proof of anti-competitive harm effects. (Para 141 , 142)
14. cci may rely on sectoral regulator sebi findings. (Para 143 , 144 , 145)

JUDGEMENT

(06 .02.2026)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed under Section 53(b) of the Competition Act, 2002 (the “Competition Act/Act”) by Manoj K. Sheth who is the Appellant herein, challenging the Impugned Order dated 28.06.2021 in Case No.35 of 2019 passed by the Competition Commission of India under Section 26(2) of the Competition Act. Competition Commission of India is the Respondent No.1 herein. National Stоck Exchange of India is the Respondent No.2 herein.

2. The Appellant submitted that he initiated a complaint before the Competition Commission of India (CCI) under Section 19(1)(a) of the Competition Act, 2002, against the National Stock Exchange of India Limited (NSE) for indulging in practices of granting preferential market access to select brokers through "Co-location Facilities", thereby disadvantaging the rest of the market via front-running, artificial information asymmetry, and market manipulation on a consistent basis.

3. The Appellant submitted that the co-location facility permitted select brokers to locate trading systems within NSE premises, enabling access to granular 'tick-by-tick' data (including orders, cancellations, modifications, prices, and trades) ahead of other market participants, thereby benefiting such brokers with lower latency and faster execution, distorting market competition. The Appellant further contended that NSE's practices in relation to these facilities violated Sections 4(2)(a)(i), 4(2)(b)(ii), and 4(2)(c) of the Competition Act, as NSE, being a dominant enterprise in the securities market, granted unfair preferential access to select trading members, limiting and restricting services to others, resulting in denial of equal market access and elimination of competition among participants.

4. The Appellant submitted that NSE qualifies as an "enterprise" under Section 2(h) of the Competition Act, engaged in activities relating to the business of acquiring, holding, underwriting, or dealing with securities, either directly or through units/divisions/subsidiaries. It was further contended that the co-location services constitute a "service" under Section 2(u) of the Competition Act, made available to potential users (trading members) on payment of fees for full or half racks, with consumers (availing brokers) gaining advance access to critical data, creating a market divide between payers and non-payers, fostering exploitation and exclusion.

5. The Appellant argued that NSE holds a "dominant position" in the relevant market, evidenced by its substantial market share, consumer dependence, and high regulatory

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2026 Supreme(Online)(NCLAT) 183

NATIONAL COMPANY LAW APPELLATE TRIBUNALNARESH SALECHA, Member (Technical)Manoj K. Sheth – AppellantVersusCompetition Commission Of India – RespondentI.A. No. 2843, 2844 of 2021 & 3768 of 2023 | Case No. 35 of 2019

Dominance alone not abuse under Competition Act without appreciable adverse effect on competition; co-location services optional, uniform, liquidity-enhancing, not prima facie violative of Section 4 despite regulatory lapses.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
NARESH SALECHA, Member (Technical)
Manoj K. Sheth – Appellant
Versus
Competition Commission Of India – Respondent
I.A. No. 2843, 2844 of 2021 & 3768 of 2023 | Case No. 35 of 2019