The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has asserted that where the Competition Commission differs from the findings of the Director General on any issue adverse to the opposite party, it must give notice indicating such disagreement and afford an effective opportunity of hearing/rebuttal before recording an adverse finding or issuing directions based on that departure. Failure to do so violates the principles of natural justice, particularly the rule of audi alteram partem.
The Tribunal stated that if the Commission proposes to differ from the DG’s findings, it must spell out the reasons for disagreement and give the affected party an opportunity to respond. It further observed that the newly inserted proviso to Section 26(9), effective from Sep 19, 2024, requiring issuance of a show cause notice and reasonable opportunity of hearing, merely affirms what had already been laid down in the COMPAT decisions.
Accordingly, the NCLAT set aside the impugned CCI order and remanded the matter back to CCI with a direction to provide Grasim an opportunity wherever CCI differs from the DG’s findings, and then decide the case expeditiously. The Tribunal clarified that it had not commented on the merits.
The Division Bench comprising Justice Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) expressly limited itself to the question whether the CCI had decided anything contrary to the DG’s report without giving an opportunity of rebuttal, and did not examine the merits of the abuse of dominance findings.
The Tribunal held that CCI’s direction requiring Grasim to make its discount policy transparent and publicly accessible was contrary to the DG’s finding that non-disclosure of the pricing/discounting policy was not, in itself, a contravention.
The Tribunal also held that CCI’s direction that buyers of Viscose Staple Fibre (VSF) should be free to use it for spinning or trading or any other lawful purpose was in variance with the DG’s finding that Grasim had no obligation to keep traders in business and that refusal to sell to traders did not appear to fall within Section 4.
Thus, the NCLAT rejected the respondents’ submission that the word “buyer” in para 124 should be read only as “spinners”; it held that no such limiting definition appeared in the direction, and in common parlance a buyer allowed to trade can be understood as a trader.
Briefly, the appeal was filed by Grasim Industries Ltd. against the Competition Commission of India’s order, by which CCI held Grasim guilty of abuse of dominant position under Sections 4(2)(a)(ii), 4(2)(d) read with Section 4(1) of the Competition Act and imposed a penalty of Rs. 301.61 crores. The impugned CCI order held, inter alia, that: (i) the relevant market was the market for supply of Viscose Staple Fibre (VSF) to spinners in India; (ii) Grasim was dominant in that market; (iii) it charged unfair/discriminatory prices; (iv) it imposed supplementary obligations; (v) it must publish a transparent and non-discriminatory discount policy; and (vi) it must not impose end-use restrictions on buyers, who should be free to use VSF for spinning, trading, or any other lawful purpose.
The appeal before NCLAT was, at this stage, confined to the issue of compliance with principles of natural justice, namely whether CCI had departed from the Director General’s findings without giving Grasim an opportunity to rebut such departure. The DG had found that refusal to sell to traders did not appear to fall within Section 4, observing that Grasim had no obligation to keep traders in business and could not be faulted merely for not selling to them. The DG had also observed that non-disclosure of pricing/discounting policy, in itself, did not appear to be a contravention of the Act, though it could lead to unfair/discriminatory pricing, which aspect had separately been examined. At the same time, the DG did find contravention on the issues of unfair/discriminatory pricing and supplementary obligations imposed on spinners.
Appearances:
C Aryama Sundaram, Sr. Advocates with Nisha Kaur Uberoi, Sarthak Ranade, Mehar Singh Dang, Shivangi Chawla, Ishan Arora, Advocates, for the Appellant
Samar Bansal, Manu Chaturvedi, Madhav Tripathi, Vedant Kapur, Advocates for CCI
M.M Sharma, Ankit Singh Rajput, Advocates, for Respondent no.2
