SAIL v. Jindal Steel: A Historical Judgement

In an earlier post I had discussed the existing spat between the Competition Commission of India (“CCI”) and the Competition Appeallate tribunal (“Compat”). In this post I shall look into the genesis of this dispute i.e. the Compat’s decision in SAIL v. Jindal Steel dated 15th Feb, 2010. The decision is historical in some senses as it lays down the foundation for the Supreme Court to examine some key questions relating to the Competition Act, 2002 for the first time since it became operational in May last year.
Sometime in October last year Jindal steel made a complain to the CCI alleging that SAIL had entered into anti competitive agreements and/or had also abused its dominant position. Pursuant to this complain the CCI had asked SAIL to communicate its views on this matter within two weeks. SAIL had asked for an extension which was denied by the CCI. In the meantime based on the information produced by Jindal, the CCI was satisfied that there existed a prima facie case against SAIL and therefore decided to the refer the matter to the Director General (“DG”) for further investigation [This procedure is prescribed by S. 26(1) of the Act]. It is against this “direction” of the CCI that SAIL preferred an appeal before Compat. Based on the merits of the dispute two questions had arisen before Compat ; (i) Whether the appeallant (SAIL) had been provided with a reasonable opportunity to be heard and (ii) Whether the CCI was under any legal obligation to record its reasons as to why there existed a prima facie case against the appeallant. Both the questions were answered in favour of the appeallant. But the case seems to be of immense legal significance because of two preliminary questions that had arisen before Compat; (i) Whether the appeal was maintainable and (ii) Whether the CCI can be impleaded as a party in the case.

Maintainability

Both Jindal and CCI had contented that the appeal cannot be maintained as only a “direction” was made under s. 26(1) of the Act to the DG to conduct further inquiries and since the CCI had not reached any conclusion on the alleged complain there was no question of Compat exercising its appellate jurisdiction. Rejecting this contention the Compat held that under S. 53A(1) it had the jurisdiction to hear an appeal even against a “direction” under S. 26(1). The reason afforded by Compat in this regard was that S. 53(A)(1) confers power on it to hear appeals against “any direction or decision made or order passed” by the CCI. In this regard compat noted that the use of the word “any” exemplifies the wide powers conferred on it by the legislature. The compat further noted that the use of the word “or” between the words “direction” and “decision” manifests that the clause under 53A(1) is disjunctive in nature. In other words an appeal can be made even against a mere “direction” of the CCI. In my humble view the literal interpretation of the clause by compat may be correct but the eventual finding is against the scheme of the Act. It is submitted that S. 53(A)(1) of the Act requires legislative correction. This can be done by incorporating an exclusionary clause under S. 53(A)(1) stating that the Compat would not have any jurisdiction pending the completion of any inquiry by the CCI. Such a clause would deter vexatious litigation and be administratively efficacious.

Impleadment

In so far as the impleading of the CCI is concerned, the Compat after a perusal of S. 35, 53S and 53T of the Act noted that the former can only be impleaded as a party when it conducts a suo moto inquiry u/s 19(1) of the Act. The reason being that the CCI does not play any adversarial role, instead its role is only limited to that of an investigative nature.

The CCI has preferred an appeal before the Supreme Court against the finding of the Compat primarily on the maintainability issue.