Appellate Jurisdiction of the Hon'ble Competition Appellate Tribunal

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[1] 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.

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[1] However, contrary to the finding of the COMPAT, please see Sections 27 (a), (d), (e), (g) which makes a reference to directing enterprises and issuing appropriate directions; Section 31 (2) & (11); See also Section 42A read with Section 27, 28, 31, 32, 33;