By TIOL News Service

NEW DELHI, DEC 14, 2015: THE issues are: Whether the Chairperson of the Commission, who did not hear arguments of the counsels representing the appellants on three consecutive dates could become a party to the final order passed under Section 27 of the Competition Act, 2002. NO is the answer.

Facts of the case

The Builder Association of India (BAI) had filed information before the Commission in 2010 alleging cartelization by the Cement Manufacturing Association (CMA) and 11 cement manufacturing companies that they did not undertake production as per their installed capacity resulting in exorbitant rise in the price of cement. It was also alleged that the cement manufacturers had deliberately manipulated the price of cement affecting the public at large. the Commission felt prima facie satisfied that the allegations made by BAI requires detailed investigation. Accordingly, an order was passed on 15.09.2010 under Section 26(1) of the Act and the Director General was directed to make investigation into the matter. The investigation revealed cartelization by the CMA and the cement manufacturing companies in violation of section 3(1), 3(3)(a), 3(3)(b) of the Competition Act. The Commission upheld the DG investigation report and imposed a penalty of Rs 6,316.59 crores. The Commission passed two orders, one of them is non-confidential version of the decision taken by the Commission and the other is confidential version. All the pages of both the orders have been initialed by the Chairperson. On the last pages of both the orders the Chairperson and six Members have appended their signatures without date(s). Aggrieved, the Cement Manufacturing Companies and the CMA filed appeal before the Tribunal. The interlocutory applications filed by the appellants were finally disposed of by the Tribunal vide order dated 17.05.2013 and penalty imposed by the Commission was stayed subject to the condition that the appellants shall deposit 10% thereof.

Reasoning

1. Relying on several judicial decisions, the law on the issue can be summarized to the effect that the very person/officer, who accords the hearing to the objector must also submit the report/take decision on the objection and in case his successor decides the case without giving a fresh hearing, the order would stand vitiated having been passed in violation of the principles of natural justice.”

2. Two orders have been passed by the Commission, one public and one confidential. Each page of both the orders have been initialed by the Chairperson and the last page has been signed by other six Members and the Chairperson albeit without putting the date on which they had signed the orders ignoring the mandate of Regulation 32(1) in terms of which every order of the Commission is required to be signed and dated by the Members including the dissenting note by the dissenting Member. The signing of each page by the Chairperson is strongly indicative of the fact that the orders were authored by him and not by any of the six Members, who had heard the arguments on the above noted three dates. If for any reason, the Chairperson is absent then the senior most Member is required to preside over the meeting of the Commission. Therefore, it is naïve to suggest that the Chairperson had put initials on each page of orders dated 20.06.2012 to authenticate the signatures of six Members

3. It is not possible to imagine as to what the counsel representing the parties might have argued. It is a matter of mystery that without having any idea about the arguments advanced by the Advocates representing the parties, which lasted for three days, the Chairperson of the Commission could become party to the final order, which resulted in imposition of penalty of over Rs.6100 crores.

4. Section 36(1) mandates that in the discharge of its functions, the Commission shall be guided by the principles of natural justice. In other words, the principles of natural justice have been statutorily engrafted in the scheme of the Act and the Commission is bound to comply with the same in the exercise of its adjudicatory functions. Even though, while discharging adjudicatory functions of the Commission, all Members enjoy coordinate position vis-à-vis Chairperson, there can be no denying that the latter, who is over-all In-charge of the Commission plays a pivotal role in the functioning of the body including orders passed by it on the basis of investigation conducted by the Director General. His influence on the decision-making process is subtle and it is not possible to accept the argument that the Chairperson had not influenced the final verdict. None of the Members, who heard the arguments on 21st, 22nd and 23rd February, 2012, has filed affidavit to swear that the decision to penalize the appellants was taken without being influenced by the view of the Chairperson or that he was a mute spectator in the meetings held for discussing the final verdict.

5. It is true that the Chairperson had taken part in some other meetings held for considering whether a prima facie case is made out for investigation and for dealing with the applications filed by the parties or even by the Jt. DG for extension of time, but he did not participate in the most crucial meetings held on 21st, 22nd and 23rd February, 2012 when the arguments of the advocates representing the parties were heard. The prejudice caused to the appellants is writ large on the face of the record.

6. Moreover, it is not possible to make a guesswork of what would have been the fate of the case if the Chairperson had not taken part in the decision-making process. One does not know whether the remaining six Members would have reached a positive conclusion that the appellants are not guilty of violating Sections 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act and/or they would not have imposed the particular penalty under Section 27 of the Act.

(See 2015-TIOL-01-COMPAT-CACT)