COMPETITION COMMISSION OF INDIA v. STEEL AUTHORITY OF INDIA LTD. & ANR.

The Judgment of the Court was delivered by

F SWATANTER KUMAR, J. 1. The application for leave to appeal is allowed.

2Copy pinpoint2. The decision of the Government of India to liberalize its economy with the intention of removing controls persuaded the Indian Parliament to enact laws providing for checks and balances in the free economy. The laws were required to be enacted, primarily, for the objective of taking measures to avoid anti-competitive agreements and abuse of dominance as well as to regulate mergers and takeovers which result in distortion of the market. The earlier Monopolies and Restrictive Trade H

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AUTHORITY OF INDIA LTD. (SWATANTER KUMAR, J.]

Practices Act, 1969 was not only found to be inadequate but also obsolete in certain respects, particularly, in the light of international economic developments relating to competition law. Most countries in the world have enacted competition laws to protect their free market economies- an economic system in which the allocation of resources is determined solely by supply and demand. The rationale of free market economy is that the competitive offers of different suppliers allow the buyers to make the best purchase. The motivation of each participant in a free market economy is to maximize self-interest but the result is favourable to society. As Adam Smith observed: "there , c is an invisible hand at work to take care of this".

3Copy pinpoint3. As far as American law is concerned, it is said that the Sherman Act, 1890, is the first codification of recognized common law principles of competition law. With the progress of time, even there the competition law has attained new dimensions with the enactment of subsequent laws, like the Clayton· Act, 1914, the Federal Trade Commission Act, 1914 and the Robinson-Patman Act, 1936. The United Kingdom, on the other hand, introduced the considerably less stringent Restrictive Practices Act, 1956, but later on more elaborate legislations like the Competition Act, 1998 and the Enterprise Act, 2002 were introduced. Australia introduced its current Trade Practices Act in 1974.

4Copy pinpoint4. The overall intention of competition law policy has not changed markedly over the past century. Its intent is to limit the role of market power that might re£ult from substantial concentration in a particular industry. The major concern with .monopoly and similar kinds of concentration is not that being big is necessarily undesirable. However, because of the control exerted by a monopoly over price, there are economic efficiency losses to society and product quality and diversity may also be affected. Thus, there is a need to protect competition. The primary purpose of competition law is to remedy some of those situations where the activities of one firm H

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A or two lead to the breakdown of the free market system, or, to prevent such a breakdown by laying down rules by which rival businesses can compete with each other. The model of perfect competition is the 'economic model' that usually comes to an economist's mind when thinking about the competitive markets. B

5Copy pinpoint5. As far as the objectives of competition laws are concerned, they vary from country to country and even within a country they seem to change and evolve over the time. However, it will be useful to refer to some of the common objectives of competition law. The main objective of competition law is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency, which ensures the effective allocation of resources, productive efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes innovative practices. These factors by and large have been accepted all over the world as the guiding principles for effective implementation of competition law. E

6Copy pinpoint6. In India, a High Level Committee on Competition Policy and Law was constituted to examine its various aspects and make suggestions keeping in view the competition policy of India. This Committee made recommendations and submitted its report on 22nd of May, 2002. After completion of the consultation process, the Competition Act, 2002 {for short, the 'Act') as Act 12 of 2003, dated 12th December, 2003, was enacted. As per the statement of objects and reasons, this enactment is India's response to the opening up of its economy, removing controls and resorting to liberalization. The natural corollary of this is that the Indian market should be geared to face competition from within the country and outside. The Bill sought to ensure fair competition in India by prohibiting trade practices which cause appreciable adverse effect on the competition in market within India and for this purpose H

COMPETITION COMMISSION OF INDIA v. STEEL 139

AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] establishment of a quasi judicial body was considered essential. A The other object was to curb the negative aspects of competition through such a body namely, the 'Competition Commission of India' (for short, the 'Commission') which has the power to perform different kinds of functions, including passing of interim orders and even awarding compensation and B imposing penalty. The Director General appointed under Section 16(1) of the Act is a specialized investigating wing of the Commission. In short, the establishment of the Commission and enactment of the Act was aimed at preventing practices having adverse effect on competition, to protect the interest of c the consumer and to ensure fair trade carried out by other participants in the market in India and for matters connected therewith or incidental thereto.

7Copy pinpoint7. The various provisions of the Act deal with the establishment, powers and functions as well as discharge of adjudicatory functions by the Commission. Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act. In exercise of the powers vested in it under Section 64, the Commission has framed Regulations called The Competition Commission of India (General) Regulaticms, 2009 (for short, the 'Regulations'). The Act and the F Regulations framed thereunder clearly indicate the legislative intent of dealing with the matters related to contravention of the Act, expeditiously and even in a time bound programme. Keeping in view the nature of the controversies arising under the provisions of the Act and larger public interest, the matters G should .be dealt with and taken to the logical end of pronouncement of final orders without any undue delay. In the event of delay, the very purpose and object of the Act is likely to be frustrc;-~ed and the possibility of great damage to the open market and resultantly, country's economy cannot be ruled out. H

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A The present Act is quite contemporary to the laws presently in force in the United States of America as well as in the United Kingdom. !n other words, the provisions of the present Act and Clayton Act, 1914 of the United States of America, The Competition Act, 1988 and Enterprise Act, 2002 of the United B Kingdom have somewhat similar legislative intent and scheme of enforcement. However, the provisions of these Acts are not quite pari materia to the Indian legislation. In United Kingdom, the Office of Fair Trading is primarily regulatory and adjudicatory functions are performed by the Competition Commission and c the Competition Appellate Tribunal. The U.S. Department of Justice Antitrust Division in United States, deals with all jurisdictions in the field. The competition laws and their enforcement in those two countries is progressive, applied rigorously and more effectively. The deterrence objective in these anti-trust legislations is clear from the provisions relating to criminal sanctions for individual violations, high upper limit for imposition of fines on corporate entities as well !lS extradition of individuals found guilty of formation of cartels. This is so, despite the fact that there are much larger violations of the provisions in India in comparison to the other two countries, where at the very threshold, greater numbers of cases invite the attention of the regulatory/adjudicatory bodies. Primarily, there are three main elements which are intended to be controlled by implementation of the provisions of the Act, which have been specifically dealt with under Sections 3, 4 and 6 read with F Sections 19 and 26 to 29 of the Act. They are anti-competitiva agreements, abuse of dominant position and regulation of combinations which are likely to have an appreciable adverse effect on competition. Thus, while dealing with respective contentions raised in the present appeal and determining the G impact of the findings recorded by the Tribunal, it is necessary for us to keep these objects and background in mind.

8Copy pinpoint8. Jindal Steel & Powers Ltd. (for short the 'informant') invoked the provisions of Section 19 read with Section 26(1) H of the Act by providing information to the Commission alleging

COMPETITION COMMISSION OF INDIA v. STEEL 141

AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] that M/s. Steel Authority of India Ltd. (for short 'SAIL') had, inter alia, entered into an exclusive supply agreement with Indian Railways for supply of rails. The SAIL, thus, was alleged to have abused its dominant position in the market and deprived others of fair competition and therefore, acted contrary to Section 3(4) (Anti-competitive Agreements) and Section 4(1) (Abuse of dominant position) of the Act. This information was registered by the Commission and was considered in its meeting held on 27th October, 2008 on which date the matter was deferred at the request of the informant for furnishing additional information. During the course of hearing, it was also brought to the notice c of the Commission that a petition being Writ Petition (C} No.8531 of 2009, filed by the informant against the Ministry of Railways, was also pending in the High Court of Delhi at New Delhi. Vide order dated 10th November, 2009 the Commission directed the informant to file an affidavit with respect to the D information furnished by it. The Commission also directed SAIL to submit its comments in respect of the information received by the Commission within two weeks from the date of the said meeting and the matter was adjourned till 8th December, 2009. On 19th November, 2009 a notice was issued to SAIL E enclosing all information submitted by the informant. When the matter was taken up for consideration by the Commission on 8th December, 2009, the Commission took on record the affidavit filed by the informant on 30th November, 2009 in terms of the earlier order of the Commission, but SAIL requested extension of six weeks time to file its comments. Finding no F justification in the request of the 'SAIL, the Commission, vide its order dated 8th December, 2009, declined the prayer for extension of time. In this order, it also formed the opinion that prima facie case existed against SAIL, and resultantly, directed the Director General, appointed under Section 16(1) of the Act, G to make investigation into the matter in terms of Section 26(1) of the Act. It also granted liberty to SAIL to file its views and comments before the Director General during the course of investigation. Despite these orders, SAIL filed an interim reply before the Commission along with an application that it may H

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A be heard before any interim order is passed by the Commission in the proceedings. On 22nd December, 2009 the Commission only reiterated its earlier directions made to the Director General for investigation and granted liberty to SAIL to file its reply before the Director General. The correctness of B the directions contained in the order dated 8th December, 2009 was challenged by SAIL before the Competition Appellate Tribunal (for short, the 'Tribunal'). The Commission filed an application on 28th January, 20~ 0 before the Tribunal seeking impleadment in the appeal filed by SAIL. It also filed an c application for vacation of interim orders which had been issued by the Tribunal on 11th January, 2010, staying further proceedings before the Director General in furtherance of the directions of the Commission dated 8th December, 2009. It will be useful to refer to the order passed by the Commission on D 8th December, 2009 at this stage itself which reads as under:

''The meeting was held under the chairmanship of Sh. H.C. Gupta, Member.

2. The case was earlier considered by the Commission E in its meetings held on 4.11.2009 and 10.11.2009. In the meeting of the Commission held on 10.11.2009, Mr. Suman Kr. Dey, VP and Head Legal and Mrs. Pallavi Shroff, Advocate (along with their fellow advocates) appeared before the Commission on behalf of the F informant and made detailed admissions. As per decision taken during the meeting held on 10.11.2009, informant/ his counsel was directed to file an affidavit regarding the current status of the writ petition filed in the Delhi high Court, particular indicating its admission or otherwise and as to whether any other order has been passed by the G Hon'ble High Court, in the matter so far. SAIL was also requested to furnish their views/comments in the matter within 2 weeks time.

3. In the meeting of the Commission held on H 08.12.2009, the Commission took on .record the affidavit

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] filed by the informant on 30.11.2009 regarding the current status of the writ petition filed in the Delhi High Court and certified copies of all the orders passed by the Hon'ble High Court, in the matter, till date. However, SAIL did not file its reply within the stipulated time and requested to allow extension of time from 3.12.2009 for a further period of six weeks. The Commission considered the above request of SAIL. However, the Commission did not allow any further extension.

4. The case was discussed in detail. After considering the details filed by the informant with the information and the entire relevant material/record available in this context as well as detailed submission made by the advocates of the informant before the Commission on 10.11.2009. Commission is of the opinion that there exists a prima facie case. Therefore, the Commission decided that the case be referred to Director General for investigation in the matter.

5. Secretary was accordingly directed to refer the case to DG for investigation and submission of the report within E 45 days of the receipt of orders of the Commission. SAIL informed that they may furnish their views/comments in the matter to the DG."

9Copy pinpoint9. As already noticed, the legality of this order was questioned before the Tribunal by SAIL on one hand, while, on the other hand the Commission had pressed its application for impleadment. In the application for impleadment it was averred by the Commission that it is a necessary and proper party for adjudication of the matter before the Tribunal and therefore, it should be impleaded as a party and be heard in accordance with law. Emphasis was also placed on Section 18 of the Act to contend that powers, functions and duties of the Commission were such that it would always be appropriate for the Commission to be impleaded as a party in appeals filed before the Tribunal. It was also averred .in the application that H

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A intervention of the Commission at the appellate proceedings would not prejudice anybody. The very maintainability of the appeal before the Tribunal was also questioned by the Commission on the ground that the order under appeal before the Tribunal was a direction simp/iciter to conduct investigation B and thus was not an order appealable within the meaning of Section 53A of the Act. The Tribunal in its order dated 15th February, 2010, inter alia, but significantly held as under:

(a) The application of the Commission for impleadment was dismissed, as in the c opinion of the Tribunal the Commission was neither a necessary nor a proper party in the appellate proceedings before the Tribunal. Resultantly, the application for vacation of stay also came to be dismissed. D (b) . It was held that giving of reasons is an essential element of administration of justice. A right to reason is, therefore, an indispensable part of sound system of judicial review. Thus, the Commission is directed to give reasons while passing any order, direction or taking any decision.

(c) The appeal against the order dated 8th December, 2009 was held to be maintainable in terms of Section 53A of the Act. While setting aside the said order of the Commission and recording a finding that there was violation of principles of natural justice, the Tribunal granted further time to G SAIL to file reply by 22nd February, 2010 in addition to the reply already filed by SAIL.

10Copy pinpoint10. This order of the Tribunal dated 15th February, 2010 is impugned in the present appeal. H

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11Copy pinpoint11. The informant, i.e. the person who wishes to complain to the Commission constituted under section 7 of the Act, would make such information available in writing to the Commission. Of course, such information could also be received from the Central Government, State Government, Statutory authority or on its own knowledge as provided under Section 19(1)(a) of the Act. When such information is received, the Commission is expected to satisfy itself and express its opinion that a prima facie case exists, from the record produced before it and then to pass a direction to the Director General to cause an investigation to be made into the matter. This direction, c normally, could be issued by the Commission with or without assistance from other quarters including experts of eminence. The provisions of Section 19 do not suggest that any notice is required to be given to the informant, affected party or any other person at that stage. Such parties cannot claim the right to D notice or hearing but it is always open to the Commission to call any 'such person', for rendering assistance or produce such records, as the Commission may consider appropriate.

12Copy pinpoint12. The Commission, wherever, is of the opinion that no prima facie case exists justifying issuance of a direction under E Section 26(1) of the Act, can close the case and send a copy of that order to the Central Gover'nment, State Government, Statutory Authority or the parties concerned in terms of Section 26(2) of the Act. It may be noticed that this G:ourse of action can be adopted by thefcommission in cases of receipt of reference from sources othe~ than of its own knowledge and without calling for the report from Director General. I I

13Copy pinpoint13. In terms of Section 26(3), the Director General is supposed to take up the investigation and submit the report in accordance with law and within the time stated by the Commission in th~ directive issued under Se.ction 26(1). After the report is submitted, there is a requirement and in fact specific duty on the Commission to issue notice to the affected parties to reply with regard to the details of the information and i H

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A the report submitted by the Director General and thereafter· permit the parties to submit objections and suggestions to such documents. After consideration of objections and suggestions, if the Commission agrees with the recommendations of the Director General that there is no offence disclosed, it shall close B the matter forthwith, communicating the said order to the person/authority as specified in terms of Section 26(6) of the Act. If there is contravention of any of the provisions of the Act and in the opinion of the Commission, further inquiry is needed, then it shall conduct such further inquiry into the matter itself or c direct the Director General to do so in accordance with the provisions of the Act.

14Copy pinpoint14. In terms of Section 26(7), the Commission is vested with the power to refer the matter to the Director General for further investigation, or even conduct further inquiry itself, if it so chooses. The Commission, depending upon the nature of the contravention. shall, after inquiry, adopt the course specified under Sections 27 and 28 of the Act in the case of abuse of dominant position and the procedure under Sections 29 to 31 of the Act in the case of combinations. The Commission is vested with powers of wide magnitude and serious repercussions as is evident from the provisions of Sections 27(d), 28 and 31(3) of the Act. The Commission is empowered to direct modification of agreements insgfar as they are in contravention of Section 3, divisioQ,of-ail enterprise enjoying dominant position, modificationOf combinations wherever it deems necessary and to ensure that there is no abuse or contravention of the statutory provisions. We may notice that the provisions relating to combinations have been duly notified vide Notifications dated 12th October 2007 and 15th May, G 2009 respectively. However, in the facts of the present case, these provisions do not fall for consideration of the Court.

15Copy pinpoint15. For conducting inquiry and passing orders, as contemplated under the provisions of the Act, the Commission is entitled to evolve its own procedure under Section 36(1) of H

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] the Act. However, the Commission is also vested with the A powers of a Civil Court in terms of Section 36(2) of the Act, though for a limited purpose. After completing the inquiry in accordance with law, the Commission is required to pass such orders as it may deem appropriate in the facts and circumstances of a given case in terms of Sections 26 to 31 B of the Act.

16Copy pinpoint16. Having referred to the background leading to the enactment of competition law in India and the procedure that the Commission is expected to follow while deciding the matters before it and facts of the case, now it will be appropriate for this Court to refer to the submissions made in light of the facts of this case. According to the Commission (the appellant herein), the directions passed in the order dated 8th December, 2009 under Section 26(1) of the Act are not appealable and further there is no requirement in law to afford an opportunity of hearing to the parties at the stage of formulating an opinion as to the existence of a prima facie case. It is also the contention of the Commission that in an appeal before the Tribunal it is the necessary party and that the Commission is not expected to state reasons for forming an opinion at the prima facie stage.

17Copy pinpoint17. On the contrary, according to SAIL (the respondent herein), the principles of natural justice have been violated by the Commission while declining to grant extension of time to file its reply and that the direction in referring the matter to Director General was passed in undue haste.

18Copy pinpoint18. The informant placed reliance upon Regulation 30(2) of the Regulations which empowers the Commission to pass such orders as it may deem fit on the basis of the facts available, where a party refuses to assist or otherwise does not provide necessary information within the stipulated time. Further, according to the informant there was no valid reason submitted by the SAIL which would justify grant of extension and H

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A as such the order passed by the Commission on merits was not liable to be interfered.

19Copy pinpoint19. We may also notice that learned counsel appearing for the parties had addressed the Court on certain allied issues which may not have strictly arisen from the memorandum of appeal, but the questions raised were of public importance and are bound to arise before the Commission, as well as the Tribunal in all matters in which the proceedings are initiated before the Commission. Thus, we had permitted the parties to argue those allied issues and, therefore, we would proceed to record the reasons while dealing with such arguments as well.

20Copy pinpoint20. In order to examine the merit or otherwise of the contentions raised by the respective ·parties, it will be appropriate for us to formulate .the following points for determination:-

(1) Whether the directions passed by the Commission in exercise of its powers under Section 26(1) of the Act forming a prima facie opinion would be appealable in terms of Section 53A( 1) of the Act?

(2) What is the ambit and scope of power vested with the Commission under Section 26(1) of the Act and whether the parties, including the informant or the affected party, are entitled to notice or hearing, as a matter of right, at the preliminary stage of formulating an opinion as to the existence of the prima facie case? G (3) Whether the Commission would be a necessary, or at least a proper, party in the proceedings before the Tribunal in an appeal preferred by any party? H (4) At what stage and in what manner the

COMPETITION COMMISSION OF INDIA v. STEEL 149

AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] Commission can exercise powers vested in A it under Section 33 of the Act to pass temporary restraint orders?

(5) Whether it is obligatory for the Commission to record reasons for formation of a prima 8 facie opinion in terms of Section 26(1) of the Act?

(6) What directions, if any, need to be issued by the Court to ensure proper compliance in regard to procedural requirements while C keeping in mind the scheme of the Act and the legislative intent? Also to ensure that the procedural intricacies do not hamper in achieving the object of the Act, i.e., free market and competition. D

21Copy pinpoint21. We would prefer to state our answers to the points of law argued before us at the very threshold. Upon pervasive analysis of the submissions made before us by the learned counsel appearing for the parties, we would provide our conclusions on the points noticed supra as follows:

(1) In terms of Section 53A(1 )(a) of the Act appeal shall lie only against such directions, decisions or orders passed by the Commission before the Tribunal which have been specifically stated under the provisions of Section 53A(1 )(a). The orders, which have not been specifically made appealable, cannot be treated appealable by implication. For example taking a prima facie view and issuing a direction to the Director General for investigation would not be an order appealable under Section 53A.

(2) Neither any statutory duty is cast on the H

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A Commission to issue notice or grant hearing, nor any party can claim, as a matter of right, notice and/or hearing at the stage of formation of opinion by the Commission, in terms of Section 26(1) of the Act that a prima B facie case exists for issuance of a direction to the Director General to cause an investigation to be made into the matter.

However, the Commission, being a statutory body exercising, inter alia, regulatory c jurisdiction, even at that stage, in its discretion and in appropriate cases may call upon the concerned party(s) to render required assistance or produce requisite information, as per its directive. D The Commission is expected to form such prima facie view without entering upon any adjudicatory or determinative process. The Commission is entitled to form its opinion E without any assistance from any quarter or even with assistance of experts or others. The Commission has the power in terms of Regulation 17 (2) of the Regulations to invite not only the information provider but even F 'such other person' which would include all persons, even the affected parties, as it may deem necessary. In that event it shall be 'preliminary conference', for whose conduct of business the Commission is entitled to evolve its own procedure. G (3) The Commission, in cases where the inquiry has been initiated by the Commission suo moto, shall be a necessary party and in all other cases the Commission shall be a H proper party in lhe proceedings before the

COMPETITION COMMISSION OF INDIA v. STEEL 151

AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] Competition Tribunal. The presence of the A Commission before the Tribunal would help in complete adjudication and effective and expeditious disposal of matters. Being an expert body, its views would be of appropriate assistance to the Tribunal. Thus, B the Commission in the proceedings before the Tribunal would be a necessary or a proper party, as the case may be.

(4) During an inquiry and where the Commission is satisfied that the act is in contravention of the provisions stated in Section 33 of the Act, it may issue an order temporarily restraining the party from carrying on such act, until the conclusion of such inquiry or until further orders without giving notice to such party, where it deems it necessary. This power has to be exercised by the Commission sparingly and under compelling and exceptional circumstances. The Commission, while recording a E reasoned order inter alia should : (a) record its satisfaction (which has to be of much higher degree than formation of a prima facie view under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed; (b) It is necessary to issue order of restraint and (c) from the record before the Commission, it is apparent that there is every likelihood of the party to the /is, suffering irreparable and irretrievable damage or there is definite apprehension that it would have adverse effect on competition in the market. H

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A The power under Section 33 of the Act to pass temporary restraint order can only be exercised by the Commission when it has formed prima facie opinion and directed investigation in terms of Section 26(1) of the B Act, as is evident from the language of this provision read with Regulation 18(2) of the Regulations.

(5) In consonance with the settled principles of administrative jurisprudence, the c Commission is expected to record at least some reason even while forming a prima facie view. However, while passing directions and orders dealing. witb_the rights of the parties in its adjudicatory and D determinative capacity, it is required of the Commission to pass speaking orders, upon due application of mind, responding to all the contentions raised before it by the rival parties. E Submissions made and findings in relation to Point No.1

22Copy pinpoint22. If we examine the relevant provisions of the Act, the legislature, in its wisdom, has used different expressions in regard to exercise of jurisdiction by the Commission. The F Commission may issue directions, pass orders or take decisions, as required, under the various provisions of the Act. The object of the Act is demonstrated by the prohibitions contained in Sections 3 and 4 of the Act. Where prohibition under Section 3 relates to anti-competition agreements there G Section 4 relates to the abuse of dominant position. The regulations and control in relation to combinations is dealt with in Section 6 of the Act. The power of the Commission to make inquiry into such agreements and the dominant position of an entrepreneur, is set into motion by providing information to the H Commission in accordance with the provisions of Section 19

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of the Act and such inquiry is to be conducted by the A Commission as per the procedure evolved by the legislature under Section 26 of the Act. In other words, the provisions of Sections 19 and 26 are of great relevance and the discussion on the controversies involved in the present case would revolve on the interpretation given by the Court to these provisions. B

23Copy pinpoint23. Thus, we may reproduce provisions of Section 19 and 26 which read as under:

"19. Inquiry into certain agreements and dominant position of enterprise.-(1) The Commission may inquire into any alleged contravention of the provisions contained in subsection (1) of section 3 or sub-section (1) of section 4 either on its own motion or on-

(a) receipt of any information, in such manner and accompanied by such fee as may be determined by regulations,/ from any person, consumer or their association or trade association; or

(b) a reference made to it by the Central Government or a State Government or a statutory authority. E

(2) Without prejudice to the provisions contained in sub- section (1 ), the powers and functions of the Commission shall include the powers and functions specified in sub- sections (3) to (7) .. F (3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:- G (a) creation of barriers to new entrants in the market;

(b) driving existing competitors out of the market;

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A (c) foreclosure of competition by hindering entry into the market;

(d) accrual of benefits to consumers;

(e) improvements in production or distribution of goods or B provision of services;

(f) promotion of technical, scientific ~'nd economic 1 development by means of production orl distribution of goods or provision of services. · C· (4) The Cqmmission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following factors, namely:-

D (a) market share of the enterprise;

(b) size and resources of the enterprise;

(c) size and importance of the competitors;

E (d) economic power of the enterprise including commercial advantages over competitors;

(e) vertical integration of the enterprises or sale or service network of such enterprises; F (f) dependence of consumers on the enterprise;

(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise; G (h) entry barriers including barriers such as regulatory barriers, financial risk, high capital cost of entry, marketing entry barriers, technical entry barriers, economies of scale, high cost of substitutable goods or service for consumers;

H (i) countervailing buying power; ·

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] 0) market structure and size of market; A (k) social obligations and social costs;

(/) relative advantage, by way of the contribution to the economic development, by the enterprise enjoying a dominant position having or likely to have an appreciable B adverse effect on competition;

(m) any other factor which the Commission may consider relevant for the inquiry.

(5) For determining whether a market constitutes a C "relevant market" for the purposes of this Act, the Commission shall have due regard to the "relevant geographic market" and "relevant product market".

(6) The Commission shall, while determining the "relevant D geographic market", have due regard to all or any of the following factors, namely:-

(a) regulatory trade barriers;

(b) local specification requirements; E

(c) national procurement policies;

(d) adequate distribution facilities;

(e) transport costs; F

(f) language;

(g) consumer preferences;.

(h) need for secure or regular supplies or rapid after-sales G services.

(7) The Commission shall, while determining the "relevant product mark~t", have due regard to all or any of the following factors, namely:- H

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A (a) physical characteristics or end-use of goods;

(b) price of goods or service;

(c) consumer preferences;

B (d) exclusion of in-house production;

(e) existence of specialised producers;

(f) classification of industrial products.

c 26. Procedure for inquiry under section 19

(1)0n·receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima_ facie case, it shall direct the Director General to cause an investigation to be made into the matter:

Provided that if the subject matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by ~ny previous information received, then the new information may be clubbed with the previous information.

(2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be.

(3) The Director General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission. H

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] (4) The Commission may forward a copy of the report A referred to in sub section (3) to the parties concerned:

Provided that in case the investigation is caused to be made based on reference received from the Central Government or the State Government or the statutory 8 authority, the Commission shall forward a copy of the report referred to in subsection (3) to the Central Government or the State Government or the statutory authority, as the case may be.

(5) If the report of the Director General referred to in sub- C section (3) recommends that there is no contravention of the provisions of this Act, the Commissi0n shall invite objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be, on such report of D the Director General.

(6) If, after consideration of the objections and suggestions referred to in sub section (5), if any, the Commission agrees with the recommendation of the Director General, E it shall close the matter forthwith and pass such orders as it deems fit and communicate its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be.

(7) If, after consideration of the objections or suggestions referred to in sub section (5), if any, the Commission is of the opinion that further investigations is called for, it may direct further investigation in the matter by the Director General or cause further inquiry to be made by in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of1 this Act. \

(8) If the report of the Director General referred to in sub- section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the I H '

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A opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of this Act."

24Copy pinpoint24. The Tribunal has been vested wiih the power to hear and dispose of appeals against any direction issued or 8 decision made or order passed by the Commission in exercise of its powers under the provisions mentioned in Section 53A of the IA.ct. The appeals preferred before the Tribunal under Sectior:i 53A of the Act are to be he<;1rd and dealt with by the Tribunal as per the procedure spelt out under Section 538 of C the Act. It will be useful to refer to both these provisions at this stage itself, which read as under:- • ' I I

"~3A. Establishment of Trib1,mal. - (1) The Central Government shall, by notification, establish an Appellate D Tribunal to be known as Competition Appellate Tribunal,

(a) to hear and dispose of appeals against any direction is9ued or decision made or order passed by the / Commission under sub-sections (2) and (6) of section 26, E section 27, section 28, section 31, section 32, section 33, section 38, section 39, section 43, section 43A, section 44, section 45 or section 46 of this Act;

(b) to adjudicate on claim for compensation that may arise F from the findings of the Commission or the orders of the · Appellate Tribunal in an appeal against any finding of the Commission or under section 42A or under subsection(2) of section 53Q of this Act, and pass orders for the recovery of compensation under section 53N of this Act. G (2) The Headquarter of the Appellate Tribunal shall be at such place as the Central Government may, by notification, specify.

538. Appeal to Appellate Tribunal. - (1) The Central H Government or the State Government or a local authority

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] or enterprise or any person, aggrieved by any direction, A decision or order referred to in clause (a) of section 53A may prefer an appeal to the Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be filed within a period of sixty days from the date on which a copy of 8 the direction or decision or order made by the Commission is received by the Central Government or the State Government or a local authority or enterprise or any person referred to in that sub-section and it shall be in such form and be accompanied by such fee as may be prescribed: c Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of sixty days if it is satisfied that there was sufficient cause for not filing it within that period. D (3) On receipt of an appeal under sub-section (1 ), the Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the direction, decision or order appealed against. E (4) The Appellate Tribunal shall send a copy of every order made by it to the Commission and the parties to the appeal. ·

(5) The appeal filed before the Appellate Tribunal under F sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal within six months from the date of receipt of the appeal."

25Copy pinpoint25. As already noticed, in exercise of its powers, the G Commission is expected to form its opinion as to the existence of a prima facie case for contravention of certain provisions of the Act and then pass a direction to the Director General to cause an investigation into the matter. These proceedings are H

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A initiated by the intimation or reference received by the Commission in any of the manners specified under Section 19 of the Act. At the very threshold, the Commission is to exercise its powers in passing the direction for investigation; or where it finds that there exists no prima facie case justifying passing 8 of such a direction to the Director General, it can close the matter and/or pass such orders as it may deem fit and proper. In other words, the order passed by the Commission under Section 26(2) is a final order as it puts an end to the proceedings initiated upon receiving the information in one of the specified modes. This order has been specifically made appealable under Section 53A of the Act. In contradistinction, the direction under Section 26(1) after formation of a prima facie opinion is a direction simpliciter to cause an investigation into the matter. Issuance of such a direction, at the face of it, is an administrative direction to one of its own wings departmentally and is without entering upon any adjudicatory process. It does not effectively determine any right or obligation of the parties to the /is. Closure of the case causes determination of rights and affects a party, i.e. the informant; resultantly, the said party has a right to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to one of the wings of the Commission is akin to a departmental proceeding which does not entail civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the Commission in terms of Section 57 of the Act and Regulation 35 of the Regulations.

26Copy pinpoint26. Wherever, in the course of the proceedings before the Commission, the Commission passes a direction or interim order which is at the preliminary stage and of preparatory nature without recording findings which will bind the parties and where such order will only pave the way for final decision, it would not make that direction as an order or decision which affects the rights of the parties and therefore, is not appealable. At this stage the case of Automec Sri v. Commission of the

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] European Communities ((1990) ECR 11-00367] can be noted, where the Court of First Instance held as under:-

"42. As the Court of Justice has consistently held, any measure the legal effects of which are binding on, and capable of affecting the interests of, the applicant by 8 bringing about a distinct change in his legal position is an act or decision against which an action for annulment may be brought under Article 173. More specifically, in the case of acts or decisions adopted by a procedure involving several stages, in particular where they are the culmination C of an internal pro9edure, an act is open to review only if it is a measure definitively laying down the position of the institution on t~ conclusion of that procedure, and not a provisional measure intended to pave the way for that final decision Gudgment in Case 60/81 IBM v. Commission (1981] ECR 2639, at p. 2651, paragraph 8 et seq.). It D follows that the fact that the contested act is a preparatory measure constitutes one of the barriers to the admissibility of an action for annulment which the Court may consider of its own motion, as the Court of Justice acknowledged in its judgment in Case 346/87 Bossi v. Commission E [1989] ECR 303, especially at p.332 et seq."

27Copy pinpoint27. The provision·s of Sections 26 and 53A of the Act clearly depict the legislative intent that the framers never desired that all orders, directions and decisions should be appealable to the Tribunal. Once the legislature has opted to specifically state the order, direction and decision, which would be appealable by using clear and unambiguous language, then the normal result would be that all other directions, orders etc. are not only intended to be excluded but, in fact, have been excluded from the operation of that provision. The presumption is in favour of the legislation. The legislature is deemed to be . aware of all the laws in existence and the consequences of the laws enacted by it. When other orders have been excluded from the scope of appellate jurisdiction, it will not be permissible H

162 SUPREME COURT REPcDRTS [2010) 11 S.C.R.

A to include such directions or orders by implication or with reference to other prpvisions which hardly have any bearing on the matter in issuej and thus make non-appealable orders appealable. The p~ovisions of ~ection 53A(1 )(a) use the expression 'any dir¢ction issued' or decision made or order B passed by the Comnjlission'. There is no occasion for the Court to read and interpre~ the word 'or·.: in any different form as that would completely d$feat the intention of the legislature. The contention raised b¢fore us is that the word 'or' is normally disjunctive and 'and1 is normally conjunctive, but at the same c time they can be rea~ vice versa. The respondent argued that the expression 'any direction issued' should be read disjunctive and that gives a complete right to a party to prefer an appeal under Section 53A, against a direction for investigation, as that itself is an appealable right independent of any decision or order which may be made or passed by the Commission. 0

28Copy pinpoint28. It is a settled principle of law that the words 'or' and 'and' may be read as vice versa but not normally. "You do sometimes read 'or' as 'and' in a statute. But you do not do it I • unless yqu are obhg13d because 'or' does not generally mean E 'and' and 'and' doe$ not generally mean 'or' ..... " [Green v. Premier Glynrhonwyl Slate Co. (1928) 1 KB 561 p. 568)]. As pointed out by Lord ~alsbury, the reading of 'or' as 'and' is not to be resorted to, "unless some other part of the same statute or the clear intention: of it requires that to be done." [Mersey F Docks and Harbour $oard v. Henderson Bros. (1888) 13 AC 595 at 603)]. The Cowrt adopted with approval Lord Halsbury's principle and in fa¢t went further by cautioning against substitution of cor)junctions in the case of Municipal Corporation of Delh/1 vs. Tek Chand Bhatia [(1980) 1 SCC G 158], where the Court held as under:- 1

"11 ....... As Lorp Halsbury L.C. observed in Mersey Docks & Harbouk Board v. Henderson [LR (1888) 13 AC 603), the readingiof "or" as "and" is not to be reso11ed to "unless some othf:H part of the same statute or the clear H

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AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] intention of it requires that to be done". The substitution of A conjunctions, however, has been sometimes made without sufficient reasons, and it has been doubted whether some of the cases of turning "or" into "and" and vice versa have not gone to the extreme limit of interpretation." B

29Copy pinpoint29. To us, the language of the Section is clear and the statute does not demand that we should substitute 'or' or read this word interchangeably for achieving the object of the Act. On the contrary, the objective of the Act is more than clear that the legislature intended to provide a very limited right to appeal. C The orders which can be appealed against have been specifically stipulated by unambiguously excluding the provisions which the legislature did not intend to make appealable under the provisions of the Act. It is always expected of the Court to apply plain rule of construction rather than trying to read the words into the statute which have been specifically omitted by the legislature.

30Copy pinpoint30. We may usefully refer to similar interpretation given by this Court in the case of Super Cassettes Industries Ltd. vs. State of UP. [(2009)10 SCC 531), wherein the Court was dealing with cancellation of a notice issued under Section 9(2) of the U.P. Imposition of Ceiling of Land Holdings Act, 1960, requiring submission of a statement by the tenure holder for determination of surplus land in accordance with law. Sub- section (1) of Section 13 of the said Act read as under:- F

"13. Appeals-(1) Any party aggrieved by an order under sub-section (2) of Section 11 or Section 12, may, within thirty days of the date of the order, prefer an appeal to the Commissioner within whose jurisdiction the land or any part thereof is situate." G

31Copy pinpoint31. The State of UP through its Collector had preferred an appeal under Section 13 of the Act against an order passed by the authority cancelling the notice which had been issued under Section 9(2) of the Act. The contention raised was that H

164 SUPREME COURT REPORTS [2010) 11 S.C.R.

A the said order amounted to an order being passed under Section 11 (2) of the Act. An order passed under Section 11 (2) of the Act in furtherance of the statement prepared by the tenure holder was final and conclusive and could not be called in question in any court of law. The Court while interpreting the B provisions of Section 13(1) held that it is only the specific order passed under Section 11 (2) and Section 12 of the Act which could be appealed against and while applying its rule held as ·under:-

"23. It is well known that right of appeal is not a natural or c inherent right. It cannot be assumed to exist unless expressly provided for by statute . Being a creature of statute, remedy of appeal must be legitimately traceable to the statutory provisions ...... . ---- D )()()( )()()( )()()( )()()(

31. Section 13 provides a right of appeal to a party aggrieved by an order under Sub-section (2) of Section 11 or Section 12 and no other. In other words, any order passed by the Prescribed Authority other than the order E under-Section (2) of· Section 11 or Sectio[! 12 is not _appealable. From a'ny reckoning, the order dated December 17, 2003 is neither an order under Sub-section (2) of Section 11 nor an order under Section 12. Act 1960 does not make the order of the Prescribed Authority F canceling the notice issued under Section 9(2) amenable to appeal. Such order does not fall within the ambit of Section 13." ·

32Copy pinpoint32. We find that the view taken by the Court in this case G squarely applies to the case in hand as well. Right to appeal is a creation of statute and it does require application of rule of plain construction. Such provision should neither be construed too strictly nor too liberally, if given either of these extreme interpretations, it is bound to adversely affect the H

COMPETITION COMMISSION OF INDIA v. STEEL 165

AUTHORITY OF INDIA LTD. [SWATANTER KUMAR, J.] legislative object as well as hamper the proceedings before the A appropriate forum.

33Copy pinpoint33. In the case of Maria Cristina De Souza Sadder vs. Amria Zurana Pereira Pinto [(1979) 1 SCC 92], this Court held as under: B "5 ... It is no doubt well-settled that the right of appeal is a substantive right and it gets vested in a litigant no sooner the /is is commenced in the Court of the first instance, and such right or any remedy in respect thereof will not be affected by any repeal of the enactment C conferring such right unless the repealing enactment either expressly or by necessary implication takes away such right or remedy in respect thereof."