Section 26(2-A) of Competition Act is an Enabling Provision, Not a Jurisdictional Bar on Fresh Probes: Bombay High Court - 2025-09-11

Bombay High Court Upholds CCI's Probe Against Asian Paints, Clarifies Scope of Section 26(2-A) of Competition Act

Mumbai: In a significant ruling, the Bombay High Court has dismissed a writ petition filed by Asian Paints Limited challenging an investigation order by the Competition Commission of India (CCI). The court, comprising Justices Revati Mohite Dere and Neela Gokhale, held that Section 26(2-A) of the Competition Act, 2002, is an "enabling provision" that allows the CCI to dismiss repetitive complaints, but does not create a jurisdictional bar against initiating a fresh probe into similar allegations.

The decision reinforces the CCI's discretion at the preliminary stage and clarifies that an entity under scrutiny has no inherent right to be heard before an investigation is ordered under Section 26(1) of the Act.

Case Background

The case arose from information filed by a new entrant in the decorative paints market, 'Birla Opus Paints', in December 2024. Birla Opus alleged that Asian Paints, a dominant player, was abusing its position by engaging in anti-competitive practices. These practices allegedly included pressuring dealers to maintain exclusivity, threatening punitive actions against those stocking rival products, and restraining suppliers from dealing with Birla Opus.

Acting on this information, the CCI, on July 1, 2025, formed a prima facie opinion that a case of contravention existed and directed its Director General (DG) to conduct an investigation. Asian Paints challenged this order, primarily on two grounds: procedural irregularity concerning two slightly different orders being uploaded, and the CCI's failure to adhere to Section 26(2-A) of the Competition Act.

Key Arguments

Asian Paints' Submissions: Represented by Senior Counsel Darius Khambata, Asian Paints argued that the CCI was jurisdictionally barred from ordering a fresh probe. They contended that the allegations by Birla Opus were "same or substantially the same" as those previously raised by JSW Paints Private Limited, which the CCI had dismissed in 2022 after a full investigation.

The petitioner heavily relied on Section 26(2-A), a provision introduced by the 2023 amendment to the Act. Mr. Khambata argued that this section mandated the CCI to record reasons if it decided to proceed with an inquiry on facts already decided, which it had failed to do. He also asserted that Asian Paints should have been granted a hearing before the investigation was ordered, which would have allowed them to highlight the repetitive nature of the complaint.

CCI and Birla Opus's Rebuttals: Senior Counsel Mustafa Doctor, appearing for the CCI, and Aspi Chinoy, for Birla Opus, countered that the order under Section 26(1) is purely administrative and does not require a hearing for the opposing party. They argued that Section 26(2-A) is not a bar but an enabling provision designed to help the CCI efficiently dispose of repetitive cases and avoid duplication of effort.

They submitted that the provision empowers the CCI to close a case, but does not obligate it to provide reasons for not closing a case. Furthermore, they distinguished the current complaint from the earlier JSW case, pointing out that it was filed by a different party, pertained to a different context, invoked different sections of the Act (Sections 4(2)(a)(i) and 4(2)(d)), and was supported by fresh material.

Court's Analysis and Reasoning

The High Court decisively sided with the CCI's interpretation of the law. The bench first dismissed the grievance regarding the two versions of the order, accepting the CCI's explanation that the first was a draft uploaded in error.

On the substantive legal questions, the Court clarified the scope of Section 26(2-A) and the nature of a Section 26(1) order.

On the Right to a Hearing: The court reiterated the settled legal position established by the Supreme Court in CCI v. Steel Authority of India Limited (SAIL) , stating that a Section 26(1) order is administrative and preparatory, not adjudicatory. It merely forms a prima facie opinion to trigger an investigation.

"It is well settled that no inherent right of hearing, oral/written, vests in the Petitioner at the stage of formation of a prima facie opinion. Whether or not to afford such hearing is a matter of discretion with the CCI," the bench observed.

On Section 26(2-A) as a Jurisdictional Bar: The core of the judgment lay in its interpretation of Section 26(2-A). The Court held that this provision does not create an embargo on the CCI's power to investigate.

"We do not find that Section 26(2-A) creates any jurisdictional embargo on the CCI to entertain a representation, if the representation is found distinct/different from the earlier representation. The object of Section 26(2-A) is only to avoid repetition of the task already undertaken, and in the interest of expedience," the judgment stated.

The bench referred to the Competition Law Review Committee Report to emphasize that the legislative intent was to "expressly enable" the CCI to close cases, making it a discretionary and enabling tool rather than a mandatory procedural hurdle. The court concluded:

"Conversely, where CCI decides not to close the case under Section 26(2) or 26(2-A) and decides to direct the DG to cause an investigation to be made, the CCI is not required to give reasons why Section 26(2-A) is not applicable."

The court also noted that the CCI was aware of the prior JSW case but found the new information from Birla Opus distinct and substantial enough to warrant a prima facie opinion for investigation.

Final Decision

Finding no merit in the petition, the Bombay High Court dismissed Asian Paints' challenge and upheld the CCI's order for investigation. The ruling clarifies that while the CCI can use Section 26(2-A) to summarily dismiss repetitive complaints, it retains the discretion to order a fresh probe if new facts, different legal provisions, or a new context are presented, without being required to provide detailed reasons for not applying the said section.