The Hon’ble Supreme Court in the SAIL judgment (2010) 10 SCC 744) had
decided, inter alia, on the scope of the appellate jurisdiction of the
Competition Appellate Tribunal (‘COMPAT’). JP had in one of the earliest posts
on this blog written about this judgment. Some interesting questions on the
jurisdiction of the COMPAT arise now from the said judgment and this would be
addressed in the present post. To better understand the issues, it would be
apposite to delve into the history of the SAIL
judgment.
The specific factual context in the Sail judgment was whether an order directing the DG to initiate investigation under Section 26 (1) was appealable or not. When the case was appealed to the
Hon’ble COMPAT from the order of the CCI it was argued that under Section 53B (1) of the Competition
Act, 2002 (hereinafter referred to as ‘Act’) an appeal would like only in
relation to a direction, decision or order referred to under Section 53A (1)
(a) and it was only direction, decisions or orders referred in Section
53A (1) (a) that were appealable. For ease of
reference, Sections 53A (1) (a) and 53B (1) are extracted herein below:
“53A.(1) The Central Government
shall, by notification, establish an Appellate Tribunal to be known as Competition
Appellate Tribunal –
(a)
to
hear and dispose of appeals against any direction issued or decision
made or order passed by the Commission under sub-Sections (2) and (6) of
section 26, 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 the Act;
…
53B.(1)The Central Government or the
State Government or a local authority or enterprise or any person, aggrieved by
any direction, decision or order referred to in clause (a) of section 53A
may prefer an appeal to the Appellate Tribunal.
(Emphasis supplied)
Thereby, it was argued that only
directions issued, decisions made or orders passed under one of the said
provisions was appealable or in other words directions issued or decisions made
or orders passed were used in a conjunctive sense and not a disjunctive way. Therefore,
since an order under Section 26 (1) was not specifically referred under Section
53A (1) (a), such an order was not appealable.
It was held by the Hon’ble COMPAT
that in the enumerated provisions there was no express provision for direction
or decision
and, therefore, the legislative intention in Section 53A (1) (a) was to use
‘or’ in the disjunctive sense (Para 13 & 15). It was further held that the
natural and ordinary meaning of the words have to be given effect as the
principle rule of interpretation and uninfluenced by policy dictates (Para 17
& 18). The Hon’ble COMPAT also found support in the term ‘any’ in Section
53A (1) (a) to qualify the noun ‘direction’, ‘decision’ and ‘order (Para 18).
On appeal the Hon’ble Supreme
Court held that when the legislature had specifically identified specific
orders, decisions and directions to be appealable, the implication would be
that all other orders, directions and decisions that have been excluded are not
appealable. The Hon’ble Supreme Court held that the word ‘or’ need not be read
interchangeably or substitute the word ‘or’, for the object of the Act was to
provide a very limited right of appeal. In this regard, the Hon’ble Supreme
Court relied upon the judgment of the Super
Cassettes Industries Ltd v State of
UP (2009) 10 SCC 531 wherein it was held that right of appeal is not a
natural or inherent right and orders apart from the orders mentioned in the
appeals provision are not appealable.
The Hon’ble Supreme Court further
held that as appeal was a statutory right, such a right may be lost by a party
in the face of relevant provisions of law and in the absence of a provision
enabling an appeal against an order, a right to appeal against such an order
may not lie.
Therefore, Hon’ble Supreme Court
held that only the orders, decisions or directions under the provisions
mentioned under Section 53A are appealable (viz. orders, directions or
decisions under sub-Sections (2) and (6) of section 26, 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). In fact the Court even observed
that in the present scheme of the legislature even a direction of the CCI to
the DG to investigate further under Section 26 (7) is not appealable. Also, the
Hon’ble Supreme Court held that Section 53B was an indicator of the reasoning
that not all orders, directions or decisions are appealable for the said provision
provided that any person aggrieved by direction, decision or orders ‘referred’
to in Section 53A may prefer an appeal. The Supreme Court held that had it not
been the intention to limit the appeal, Section 53B would have been worded
otherwise.
Therefore, on the basis of this
reasoning the Hon’ble Supreme Court held that appeals will lie only from
decisions, orders or directions specifically mentioned under Section 53A (1)
(a) of the Act.
The Case of Section 26 (8)
As a result of the SAIL judgment,
not all orders or decisions or directions are appealable but only those that
have been mentioned under Section 53A. It will be relevant to note that Section
26 (8) is not a provision referred to in Section 53A. Section 26 (8) reads as follows:
(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 opinion that further inquiry is called for, it shall inquire into such
contravention in accordance with the provisions of this Act.
It may be pertinent also to note
Section 26 (2) and (6) at this stage, from which appeals may lie to the COMPAT.
In a case under Section 26 (2), the CCI finds that there is no prima facie case and
closes the matter and under Section 26 (6) after the CCI finds a prima face
case and the DG presents a report to the CCI recommending no contravention of Sections
3 or 4, the CCI thereon agrees with the recommendation of the CCI and closes
the matter. However, under Section 26 (8), where the DG recommends that there
is a contravention of Section 3 or 4, the CCI shall inquire into the matter
thereon.
In this circumstance, the CCI may either come to a conclusion that
there is a contravention of Sections 3 or 4; or come to conclusion that there
is no contravention of the provisions of the Act. In the event the CCI agrees
with the recommendation of the DG, it may thereon pass necessary orders or
directions under Section 27 or 28 and which would be appealable before the Hon’ble
COMPAT. However, in the event the CCI comes to a conclusion that there is no
contravention, then Sections 27 and 28 will not be applicable as they would
apply only when there is a contravention of Sections 3 or 4; Section 31 will
not be applicable as it applies to combinations; Section 32 may not be
applicable if the order of the CCI is not on the extraterritorial jurisdiction
of the CCI; Section 33 will not be applicable for the reason that the present
circumstance is not in relation to an interim order and similarly the other
provisions under Section 53A will also not be attracted. Therefore, such an
order of the CCI will not be an appealable order.
Therefore, as a result of the judgment
passed by the Hon’ble Supreme Court, in a case where the DG holds that there is
a contravention and the CCI thereon holds that there is no contravention and
closes the case therewith, no appeal will lie against such an order of the CCI.
In fact it will also be relevant
to note that in the Competition (Amendment) Bill, 2012 that is pending
consideration before the Parliament in clause 17 it is now proposed that Section
53A would be amended to include Sections 26 (7) and (8) also as appealable
orders. This thereby indicates that the kind of orders referred to above under Section 26 (8) by the CCI are
not appealable orders.
Present Scenario
In fact the Hon’ble COMPAT is
seized of this very point presently in one of the appeals (appeal No. 136/2012)
that is pending adjudication before it. The Hon’ble COMPAT has only issued
notice on the maintainability of the appeals. It has also come to my attention that the very same issue has
also been raised in few other matters and are pending before the Hon’ble
COMPAT. It appears that as a result of the SAIL judgment, such appeals may not
be maintainable and the aggrieved parties in such cases may only approach the
writ court and not COMPAT. The position, however, may change when the Competition (Amendment) Bill, 2012 is passed by Parliament, but until then it appears that the parties caught in this peculiar circumstance may not have a right of appeal to the Hon'ble COMPAT.
