CCI shows teeth; imposes Rs 1 crore fine on Kingfisher for not furnishing information

As per the media reports, CCI has imposed a fine of Rs 1 crore on Kingfisher Airlines for not furnishing information it sought during the investigation into the carrier's proposed strategic agreement with another private player Jet Airways.

The newspaper reports suggest that Kingfisher Airlines had not furnished certain information that the Director General had asked for. Therefore, CCI, while exercising its powers under Section 43 of the Competition Act, 2002, has imposed fine to the tune of INR one crore (approximately USD 222,220) on Kingfisher Airlines. However, the media reports suggest that the fine was imposed under Section 44, which obviously cannot be true as Section 44 applies to combinations and the provisions relating to combinations have not been enforced by the Central Government yet. This is for the first time that India's new competition regulator (CCI) has imposed penalty on any company.

It would be interesting to see how Kingfisher Airlines responds to the recent move of CCI. Under Section 43 of the Act, CCI has power to impose fine which may extend to Rs 1 lac for each day during which non-compliance continues subject to a maximum of Rs 1 crore. Kingfisher may choose to appeal against this order. The Appellate Tribunal has express powers under Section 53A of the Act to hear appeals against order passed by CCI pursuant to Section 43.

However, the Appellate Court or any Writ Court has very limited power to meddle with the decision of a lower authority on issues of penalty. The Appellate Court would, rather review the issue, than examine it on detailed merits. It would interfere with the quantum only if it finds that the decision is illogical or suffers from procedural impropriety or is shocking to the conscience of the court, in the sense that it is in defiance of logic or moral standards.

The law in India on this issue is settled. In B.C. Chaturvedi V. Union of India and others, (1995) 6 SCC 749, the Supreme Court after referring to a number of its earlier decisions observed as under:-

"A review of the above legal position would establish that the disciplinary authority, and on appeal the appellate authority, being fact-finding authorities have exclusive power to consider the evidence with a view to maintain discipline. They are invested with the discretion to impose appropriate punishment keeping in view the magnitude or gravity of the misconduct. The High Court/Tribunal, while exercising the power of judicial review, cannot normally substitute its own conclusion on penalty and impose some other penalty. If the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the High Court/Tribunal, it would appropriately mould the relief, either directing the disciplinary/appellate authority to reconsider the penalty imposed, or to shorten the litigation, it may itself, in exceptional and rare cases, impose appropriate punishment with cogent reasons in support thereof." (emphasis supplied)

Similarly, in Apparel Export Promotion Council Vs. A.K. Chopra, AIR 1999 SC 625, the Supreme Court again observed :-

". . . Even insofar as imposition of penalty or punishment is concerned, unless the punishment or penalty imposed by the Disciplinary or the Departmental Appellate Authority, is either impermissible or such that it shocks the conscience of the High Court, it should not normally substitute its own opinion and impose some other punishment or penalty."

Thus, the Appellate Court would interfere only if it finds that the quantum of penalty is wholly inconceivable, given the facts of the case. In absence of correct facts and data in public domain, it is not known what information was not provided by Kingfisher Airlines. It is also not known whether CCI issued any further notice calling for information before imposing the penalty.

It would be interesting to see what happens next. Indeed, these are exciting times for both academia and lawyers concerned with the developments in competition law.