The Supreme Court has allowed the appeal filed by the Competition Commission of India (CCI) and restored penalties imposed on the Kerala Film Exhibitors Federation (KFEF) and its office-bearers for engaging in anti-competitive practices in violation of Section 3(3)(b) of the Competition Act, 2002.
The case originated from a complaint by Crown Theatre alleging that KFEF and its President, P.V. Basheer Ahamed, and General Secretary, M.C. Bobby, pressured distributors to withhold films from its theatre. The Director General’s investigation confirmed that KFEF and its office-bearers orchestrated a boycott and restricted film distribution, adversely affecting competition.
The CCI, in its order dated 08.09.2015, held KFEF and its two office-bearers liable, imposed monetary penalties, and barred them from holding office for two years. However, the Competition Appellate Tribunal (COMPAT) later set aside the penalties against Ahamed and Bobby, citing lack of specific notice regarding proposed penalties and violation of natural justice.
On appeal, the Supreme Court held that the notice dated 10.06.2015, issued along with the DG’s report, sufficiently apprised the office-bearers of the charges and gave them opportunity to respond. The Court ruled that no separate “second notice” was required before imposition of penalty under Section 27, as the statutory framework envisaged a single stage of hearing.
The Bench, led by Justice K.V. Viswanathan emphasized the absence of procedural violations by the Commission, rejected the need for a separate penalty show-cause notice, and reinforced the legality of combined merit and penalty hearings as per the Competition Act’s framework. The Court restored CCI’s directions limiting the involvement of accused office bearers in KFEF for two years and mandated compliance reporting, strengthening regulatory enforcement against anti-competitive conduct in the Indian film exhibition sector.
Appearances:
Mr. Arjun Krishnan, learned counsel for the appellant-Commission and
Mr. Harshad V. Hameed, learned counsel for the Respondent Nos. 1 to 3.
