This appeal is directed against order dated 11.12.2013 by which majority of the Competition Commission of India (for short, the Commission) refused to direct an investigation into the allegation contained in the information filed by the appellant under Section 19(1)(a) of the Competition Act, 2002 (for short, the Act) and closed the case under Section 26(2) of the Act.
2. Respondent No. 2 Maharashtra State Power Generation Co. Limited is incorporated under the Companies Act, 1956 and is a successor of Maharashtra State Electricity Board. It operates seven thermal power stations situated within the State of Maharashtra. The raw material for running the power stationsiscoal which is obtained from the subsidiaries of Coal India Limited, namely, Western Coalfields Ltd., South-Eastern Coalfields Ltd., Mahanadi Coalfields Limited and Singareni Collieries Company Ltd.
3. With a view to ensure that supply of quality coal and proper supervision of transportation thereof, Respondent No. 2 has been availing the services of private liaisoning agents who are appointed through tender / open bidding.
4. In March, 2005, Respondent No. 2 invited bids for award of contract of liaisoning work.Respondents Nos. 3 to 5 and 1 M/s. B.S.N. Joshi & Sons Ltd. were among the bidders. Though the rates quoted by M/s. B.S.N. Joshi & Sons Ltd. werethe lowest, Respondent No. 2 did not award contract to it.Writ Petition No. 2444 of 2005 filed by M/s. B.S.N. Joshi & Sons Ltd. questioning the decision of Respondent No. 2 was dismissed by Nagpur Bench of the Bombay High Court primarily on the ground that it did not satisfy the conditions of eligibility.
5. The Special Leave Petition filed against the order of the High Court, which was converted into Civil Appeal No. 4613 of 2006 was allowed by the Supreme Court vide judgment dated 31.10.2006. The Supreme Court took cognizance of the pleadings filed by the appellant, M/s. B.S.N. Joshi & Sons Ltd. and held that the reasons assigned by the High Court for holding that it was not eligible were legally unsustainable. The Supreme Court also referred to the noting recorded by the Chief Engineer, Director (Operation) and the Director (Finance) and the Managing Director of Respondent No. 2, all of whom opined that Respondents Nos. 3 to 5 had formed a cartel and the bids given by them were Rs. 51 Crores to Rs. 52 Crores higher than the one given by the appellant and held that there was no justification to reject the latters lowest bid. Some of the observations made by the Supreme Court are extracted below : ..Appellant herein is in business for the last 52 years. It had been taking part in contracts involving similar jobs in various parts of India. It had all along been quoting a low rate. According to it, despite the same it has been generating profits. The employer concededly is not bound to accept a bid only because it is the lowest. It must take into consideration not only the viability but also the fact that the contractor would be able to discharge its contractual obligations. It must not forget the ground realities. MAHAGENCO considered all aspects of the matter while accepting the appellant's offer. In its counter-affidavit, it categorically stated that the appellant would be able to perform the contractual undertaking even at such a low rate. xxx xxx xxx The question which arises for consideration is as to what relief can be granted in the instant case. The private respondents who had formed a cartel have successfully obtained the contract after the judgment of the High Court. Award of such contract although was subject to the decision of this appeal, this Court cannot ignore the fact that if the appellant is permitted to take over forthwith, supply of coal to the thermal power station may be affected. We, therefore, intend to give another opportunity to MAHAGENCO It shall consider the offer of the appellant upon consideration of the matter afresh, as to whether it even now fulfils the essential tender conditions. If it satisfies the terms of the tender conditions, the contract may be awarded in its favour for a period of one year; but such contract shall take effect after one month from the date of the said agreement so as to enable the private respondents herein to wind up their business. This order is being passed in the interest of MAHAGENCO as also the private Respondents herein.
6. Since Respondent No. 2 did not comply with the direction contained in the aforesaid order, M/s. B.S.N. Joshi & Sons Ltd. filed a petition under the Contempt of Courts Act 1971, which came to be registered as Contempt Petition No. 245 of 2007. The Supreme Court considered the explanation given by the non- petitioners but did not feel satisfied. However, the apology tendered by them was accepted and the contempt petition was disposed of by a detailed order dated 19.12.2008, the relevant portions of which are extracted below :
8. Supply of coal and that too good quality of coal is essential for running of a thermal power station. It was with that intent in mind that this Court, either at the interim stage or final stage, did not intend to pass any order which would hamper transportation of coal resulting in stoppage of the functioning of the thermal power station.
9. The alleged contemnors, in our opinion, misconstrued the order of this Court for which there was no basis that they were bound by the interim order passed by this Court. For the sake of clarity, we may notice the interim order dated 27-3-2006 which reads as under: Learned counsel for the petitioner submits that the main petition is coming up for final hearing on 17-4-2006. Learned counsel appearing for Respondents 2 and 3 submits that for purposes of generating power, coal supplies have to be continued to the respondents failing which the entire generation of electricity shall come to a standstill. Keeping in view this fact, the respondents are permitted to go ahead with their tender process including award of contract. They are free to make whatever arrangement they want to make in this behalf to ensure continued supply of coal to them. It is, however, made clear that whatever arrangement is made by the respondents the same will be subject to the final decision of this Special Leave Petition. (underlining is ours for emphasis)
10. We, therefore, fail to understand as to how a fresh tender was floated to allot the work of liaisoning of coal and the same companies who had formed a cartel were allowed to carry on the contract job. We may, however, place on record that the contracts were awarded on the condition that the same would be subject to the final outcome and decision of this Court.
11. Our attention has been drawn to the fact that the petitioner was asked to file additional documents in support of its contention that it fulfilled the essential conditions of contract, if it so intended to do. It was, however, wholly unnecessary as only a fresh look was required to be given in regard to the eligibility of the petition for the purpose of awarding the contract where for the Scrutiny Committee was required to form an opinion as to whether the petitioner had substantially complied with the tender conditions, subject, of course, to the fulfilment of essential conditions.
12. Alleged contemnors, in our opinion, committed a serious error in calculating the quantity of coal transported for preceding five financial years from the date of the judgment. The date of the judgment was not at all relevant for the aforementioned purpose. The alleged contemnors did not explain how they have understood the order of this Court wrongly as they had also proceeded on the basis that the five financial years should be counted from the date of calling for the tender and the date of the judgment separately. If they had any difficulty in understanding the direction of the Court, they should have approached this Court for clarification but could not have arrived at such an absurd conclusion that what was necessary to be considered is handling of coal by the petitioner for the preceding five years from the date of passing of the judgment by this Court.
13. What was necessary for them to consider was implementation of the directions issued by this Court in the backdrop of the events noticed by this Court. This Court in its judgment had not only taken into consideration the contentions raised by MAHAGENCO in regard to non-fulfilment of the essential conditions on the part of the petitioner but also implications thereof at some details. They furthermore sought to take into consideration a purported subsequent event viz. the letter dated 20-2-2007 issued by Sanjay Gandhi Thermal Power Station, which was neither relevant nor decisive.
14. The alleged contemnors, therefore, in our opinion, did not read the directions of the Court in their proper perspective. We say so:
(i) because they could not have considered the directions contained in the interim order passed by this Court. The interim order merged into the final order. In any event, even the said interim order was subject to the decision of the Court and, thus, we fail to understand as to how the interim order was found to be continuing despite passing of the final order.
(ii) As the matter was required to be considered afresh and the purpose of considering the eligibility of the petitioner is concerned, they committed a serious error insofar as the eligibility criteria were applied from the date of the judgment.
(iii) They furthermore could not have ignored the note of the alleged Contemnor 1 that the other respondents in the civil appeal had formed a cartel. They furthermore did not notice that having regard to the overall situation and particularly, in view of the opinion of the Scrutiny Committee that the petitioner had substantially complied with the conditions and, thus, the general power of relaxation should have been used.
15. It is, therefore, not a case where two interpretations of the judgment of this Court were possible.
16. Before us an additional affidavit has been filed by Shri Ajoy Mehta, Contemnor 1, stating:
17. I, therefore, respectfully submit that we have not flouted the orders passed by the Hon'ble Court and we shall abide by all directions given by this Hon'ble Court including awarding of the contract to M/s B.S.N. Joshi & Sons Ltd., the petitioner herein, if this Hon'ble Court so directs. Keeping in view the aforementioned statement made before us, we accept the apology tendered by the alleged contemnors for the time being and direct that the contract for a period of one year be granted to the petitioner in terms of our judgment dated 31-10-2006.
17. We are distressed to see that MAHAGENCO had been encouraging formation of a cartel and, thus, allowing the rate of transportation of coal to go high up. Unless a power generating company takes all measures to cut down such malpractices, the generation cost of electricity is bound to go higher and ultimately the same would be passed on to the consumers of electricity. We hope a public sector undertaking would take adequate and appropriate measures to meet the said contingency in future.
7. After disposal of the contempt petition in the manner indicated above, Respondent No. 2 awarded the contract of liaisoning work to M/s B.S.N. Joshi & Sons Ltd. with effect from 03.01.2009. However, the same was terminated on 12.09.2009 on the ground that performance of the contractor was not satisfactory.
8. Between September, 2009 and 2013, Respondent No. 2 issued four advertisements for award of contract of liaison work, but on each occasion the invitation to bid appears to have been cancelled and Respondents Nos. 3 to 5 were allowed to do liaison work on ad hoc basis by dividing the State into different regions. This is evident from the following Chart: Company Area Cumulative Contract Period M/s. Nair Coal Services Ltd. Nasik andChandrapur Since 25.09.2009 to Till date Karam Chand Thapar & Bros. (C.S.) Ltd. Koradi Parli & Khaperkheda Awarded since 25.09.2009 to till date Nareshkumar & Co. Busawal & Paras Awarded since 25.09.2009 to till date
9. The appellant who is practicing as an advocate in the city of Nagpur (Maharashtra) and is also a consumer of electricity generated by Respondent No. 2 filed an information under section 19(1)(a) with the allegation that by abusing its dominant position, Respondent No. 2 has facilitated formation of a cartel by Respondent Nos. 3 to 5 and awarded contracts to them in clear violation of Section 3(3)(c) and (d) of the Act. In support of this assertion, the appellant relied upon the judgment dated 31.10.2006 passed by the Supreme Court in Civil Appeal No. 4613 of 2006 M/s. B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and others and order dated 19.12.2008 passed in Contempt Petition No. 245 of 2007 in Civil Appeal No. 4613 of 2006 M/s. B.S.N. Joshi & Sons Ltd. vs. Ajoy Mehta and another. The appellant alleged that despite an unequivocal finding recorded by the Supreme Court on the issue of formation of cartel by Respondent Nos. 3 to 5, Respondent No. 2 did not take corrective measures and all the bids received after September, 2009 culminated in the award of work to Respondent Nos. 3 to 5.
10. The Commission gave opportunity of hearing to the appellant and also permitted him to file additional documents. The appellant availed that opportunity and filed the documents on 15.10.2013. However, without even adverting to the finding recorded by the Supreme Court and without considering the documents filed by the appellant, the majority of the Commission comprising the Chairman and four members declined to order an investigation into the allegations made by the appellant and closed the case under Section 26(2) of the Act. Paragraphs
24 to 26 of the majority order, which contain the ratio of its decision, are reproduced below :
24. To begin with, the allegations against the opposite party Nos. 2 to 4 with reference to the provisions of section 3 of the Act may be examined. The informant has annexed a chart containing quotes of the opposite party Nos. 2 to 4 for the year 2010 at page
370 onwards in the paper book. On perusal thereof, it appears that the quotes made by these parties were in a narrow band, yet the same cannot be described as identical or similar. Absent any other evidence or circumstance, it is difficult to infer any anti-competitive agreement solely on the basis of the chart noted above. Hence, it may be observed that the informant has not been able to substantiate its allegations of bid rigging by and between the opposite party Nos. 2 to 4. Resultantly, no case of contravention of the provisions of section 3 of the Act is made out against the opposite party Nos. 2 to 4.
25. The next grievance of the informant relates to alleged facilitation by the opposite party No. 1 to the bid rigging allegedly entered into by the opposite party Nos. 2 to 4. This can be summarily dealt with. The opposite party No. 1 is a government company and examination of any allegation of corruption or favouritism per se on its part or on the part of its officers is beyond the purview of the jurisdiction of the Commission.
26. For the same reasons, the allegations of the informant based on the same grounds against MAHAGENCO and the three named contractors relating to contravention of the provisions of section 4 of the Act are also misconceived. In the present case, the informant has alleged contravention of the provisions of section 4 of the Act by MAHAGENCO alongwith the three named contractors. As MAHAGENCO and its contractors do not fall within the definition of 'group', the allegations do not stand. Even at a disaggregated level, assuming MAHAGENCO to be dominant in the market of procurement of liaison work relating to coal in the State of Maharashtra, the allegations made by the informant against MAHAGENCO of favouritism and corruption cannot be said to fall within the purview of section 4 of the Act.
11. One of the members,Justice S.N. Dhingra did not agree with the majority and recorded a dissenting order.He referred to the ratio of the Supreme Courts judgement and observed as under : It is to be noted that OPs 2 to 4 are bidding in these tenders. On the one hand OP1 is unable to finalise a tender with OPs 2 to 4 as bidders and on the other hand work orders are being renewed in favour of OPs 2 to 4 continuously for over two years at the rates quoted by B.S.N. Joshi at the time of initial bid. In the light of the above, it is apparent that Ops had been indulging in collusive behavior and foreclosing competition by hindering entry of other participants in the market. Further, based on the material provided along with information, it is apparent that OPs 2 to 4 formed a cartel and also geographically distributed market in a manner as agreed between them. The result is that OP2 was continuing to be the agent for Chandrapur and Nasik power stations, OP3 for Koradi, Khaperkheda and Parli power stations and OP4 for Paras and Bhusawal power stations. As such, prima facie, the conduct of OPs
2 to 4 was in contravention of section 3(3) of the Act. The conduct of OP1 (procurer) and OPs 2 to 4 (bidders) also prima facie appeared to be covered within the ambit of section 3(4) of the Act. In the instant case, the overall conduct of Opposite Parties amounted to a refusal to deal with other players. The repeated ad hoc renewal of agreement for services was likely to oust certain persons or classes of persons who had offered services at competitive rates. He opined that the relevant product market is the market of liaison services relating to coal for thermal power stations; that the relevant geographical market is the area of State of Maharashtra and the relevant market would be liaison services relating to coal for thermal power stations in the State of Maharashtra. He also noted that the installed capacity of the thermal power stations being operated by Respondent No. 2 is 68000 M.W. it procures 45.57 million tonnes of coal per annum and held that Respondent No. 2 is a dominant player in the relevant market. He went on to observe that the decision of Respondent No.
2 to cancel tenders time and again and to allocate work of liaisoning to Respondent Nos. 3 to 5 on ad-hoc basis and renewal thereof prima facie resulted in driving out competition amongst bidders. On that premise, he concluded that a prima facie case has been made out for ordering investigation by the Director General under Section 26(1) of the Act.
12. Justice Dhingra also opined that the relevant product market is the market of liaison services relating to coal for thermal powerstationsthat the relevant geographical market is the area of State of Maharashtra and the relevant market would be liaison services relating to coal for thermal power stations in the State of Maharashtra. He also noted that the installed capacity of the thermal power stations being operated by Respondent No. 2 is 68000 M.W. it procures 45.57 million tonnes of coal per annum and held that Respondent No. 2 is a dominant player in the relevant market. He went on to observe that the decision of Respondent No. 2 to cancel tenders time and again and to allocate work of liaisoning to Respondent Nos. 3 to 5 on ad-hoc basis and renewal thereof prima facie resulted in driving out competition amongst bidders. On that premise, he concluded that a prima facie case has been made out for ordering investigation by the Director General under Section 26(1) of the Act.
13. The appellanthas questioned the majority order on several grounds including the one that in the face of the opinion expressed by senior officers of Respondent No. 2 and the finding recorded by the Supreme Court that Respondent Nos. 3 to 5 had formed a cartel for procuring contract of liaisoning work, the Commission was not at all justified in refusing to order an investigation under Section 26(1) of the Act. Another ground taken by the appellant is that the order under challenge is vitiated by an error of law because the Commission did not apply mind to the allegations contained in the information and the documents filed on 15.10.2013.
14. In response to the notice issued by the Tribunal, the respondents have filed separate replies. Respondent No. 2 has questioned the locus standi of the appellant by asserting that the grievance made by him against the alleged increase in electricity price cannot be made subject matter of investigation under the Act.Respondent No. 2 has also accused the appellant of invoking the provision of the Act for espousing the cause of M/s. B.S.N. Joshi & Sons Ltd. by asserting that he is working with the advocate who has been representing M/s. B.S.N. Joshi & Sons Ltd. in several litigations. Respondent No. 2 has also pleaded that the impugned order does not call for interference under Section 53- B of the Act because the appellant did not produce any substantive evidence to show that Respondent Nos. 3 to 5 had formed a cartel. Respondent No. 2 has further pleaded that it is not a part of the cartel and even the Supreme Court has not recorded any finding in that regard.
15. Respondent Nos. 3 to 5 have generally questioned the bona fides of the appellant and accused him concealing the fact that the Public Interest Litigation is pending before Nagpur Bench of the Bombay High Courtquestioning the alleged hike in the electricity rates.These respondents have also controverted the allegations of favouritism or corruption and pleaded that the award of contracts to them is in no way injurious to public interest.
16. Shri Amit Khare, learned counsel for the appellant argued that the impugned order is liable to be set aside because while refusing to order an investigation into the allegations of cartelization levelled against Respondent Nos. 3 to 5, the majority of the Commission overlooked the finding recorded by the Supreme Court in the cases of M/s B.S.N. Joshi & Sons Ltd. on the issue of cartel formation. Learned counsel submitted that the manipulations made by Respondent Nos. 3 to 5 to secure contract of liaisoning work to the exclusions of all others and substantially similar rates quoted by them are strong indicators of the cartel formation by Respondent Nos. 3 to 5 and the Commission committed serious error by ordering closure of the case under Section 26(2). Learned counsel then argued that Respondent Nos. 3 have successfully highjacketthe market of liaison work and, thereby, caused loss to Respondent No. 2 for last six years and a serious matter like this should not have been scuttled by the Commission at the threshold. He also pointed out that Respondent No. 2 was very much aware that Respondent Nos. 3 to 5 had formed a cartel and yet it continued to award contracts to them in complete disregard of the public interest as well as national interest
17. Learned counsel for Respondent No. 2 argued that his client cannot be accused of being a party to the cartel because its own officers had discovered cartel formation by Respondent Nos. 3 to 5. He submitted that Respondent No.
2 had taken decision to allocate liaison work to Respondent Nos. 3 to 5 keeping in view the larger public interest of continued availability of good quality coal and therefore,even if the Tribunal comes to the conclusion that the impugned order is legally unsustainable, it should not order an investigation against Respondent No.2.
18. Learned counsel for Respondent Nos. 3 to 5 argued in unison that the appeal should be dismissed because the appellant did not approach the Commission with clean hands. They described the appellant as a puppet of M/s. B.S.N. Joshi & Sons Ltd. and argued that even though section 19(1)(a) does not prescribe any particular qualification for filing information, the Commission and the Tribunal should be extremely cautious in entertaining the information filed by a person of dubious credibility. Learned counsel submitted that no relief should be granted to a person who approaches the Commission or the Tribunal with unclean hands. They also justified the allocation of liaison work to their clients and argued that Respondent No. 2 had been greatly benefitted by regular supply of quality coal to the thermal power stationsbeing operated by it.
19. I have considered the respective arguments and carefully scanned the record. The first question which requires consideration is whether the appellant should be non-suited on the ground that he had not approached the Commission with clean hands and that he has been representing and espousing the cause of M/s. B.S.N. Joshi & Sons Ltd.
20. For decidingthe aforementioned question, it will be useful to notice Section
18 which enumerates the duties of the Commission, Section 19 which provides for inquiry into certain agreement and dominant position of enterprise and Section 26 which contains the procedure for inquiry under Section 19. These provisions read as under:-
18. Duties of Commission - Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country.
19. Inquiry into certain agreements and dominant position of enterprise - (1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub- section (1) of section 4 either on its own motion or on-- (a)[receipt of any information, in such manner and], accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or (b) a reference made to it by the Central Government or a State Government or a statutory authority. (2) Without prejudice to the provisions contained in sub-section (1), the powers and functions of the Commission shall include the powers and functions specified in sub-sections (3) to (7). (3) The Commission shall, while determining whether an agreement has an appreciable adverse effect on competition under section 3, have due regard to all or any of the following factors, namely:-- (a) creation of barriers to new entrants in the market; (b) driving existing competitors out of the market; (c) foreclosure of competition by hindering entry into the market; (d) accrual of benefits to consumers; (e) improvements in production or distribution of goods or provision of services; (f) promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services. (4) to (7) xxx xxx xxx Section 26(1)---Procedure for inquiry under section 19(1) On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director-General to cause an investigation to be made into the matter. Provided that if the subject-matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information. (2) to (8) xxx xxx xxx
21. A reading of the plain language of Section 18 shows that the Commission is under an obligation to ensure that practices having adverse effect on competition are eliminated. The Commission is also duty bound to promote and sustain competition, protect the interest of consumers, and ensure freedom of trade carried on by other participants in markets in India. Of course, the exercise of power under Section 18 is subject to other provisions of the Act. Section 19(1) empowers the Commission to inquire into the allegations of contravention of Section 3(1) of Section 4(1) of the Act. This can be done by the Commission on its own motion or on receipt of any information from any person, consumer or their association or trade association or on a reference made by the Central Government or the State Government or a statutory authority. While determining whether or not an agreement has an appreciable adverse effect on competition under Section 3, the Commission is required to take into consideration all or any of the factors enumerated in Clauses (a) to (f) of Section 19(3) of the Act.
22. It is significant to note thatParliament has neither prescribed any qualification for the person who wants to file an information under section 19(1)(a) nor prescribed any condition which must be fulfilled before an information can be filed under that section. There is nothing in the plain language of Sections 18 and 19 read with Section 26(1) from which it can be inferred that the Commission has the power to reject the prayer for an investigation into the allegations involving violation of Sections 3 and 4 only on the ground that the informant does not have personal interest in the matter or he appears to be acting at the behest of someone else.As a matter of fact,the Commission has been vested with the power to suo moto take cognizance of any alleged contravention of Section 3(1) or Section 3(4) of the Act and hold an inquiry. This necessarily implies that the Commission is not required to wait for receipt of a reference from the Central or the State Government or a statutory authority or a formal information by someone for exercising power under Section 19(1) read with Section 26(1) of the Act. In a given case, the Commission may not act upon an information filed under section 19(1)(a) but may suo moto take cognizance of the facts constituting violation of Section 3(1) or Section 3(4) of the Act and direct an investigation. The Commission may also take cognizance of the reports appearing in print or electronic media or even anonymous complaint/representation suggesting violation of Sections 3 and 4 of the Act and issue direction for investigation under Section 26(1). The only limitation on the exercise of that power is that the Commission should feel prima facie satisfied that thereexist a prima facie case for ordering into the allegation of violation of Sections 3(1) or 4(1) of the Act.
23. So far as this case is concerned, I am satisfied that the appellant cannot be non-suited by accepting the argument of the learned counsel for the respondents that he is espousing the cause of M/s. B.S.N. Joshi & Sons Ltd. The fact that the appellant is practising as an advocate with the counsel who has been representing M/s. B.S.N. Joshi & Sons Ltd. in other cases is not sufficient to draw a dubious inference that he is prosecuting the interest/cause of M/s. B.S.N. Joshi & Sons Ltd. That apart, the respondents have not disputed that the appellant is a consumer of electricity generated and supplied by Respondent No.
2. Therefore, its locus to file an information under section 19(1)(a) cannot be questioned.
24. The issue which remains to be considered is whether the majority order of the Commission is vitiated by an error of law and calls for interference under Section 53-B of the Act. At the cost of repetition, I would like to observe that for the purpose of ordering an investigation under Section 26(1), the only thing required to be seen by the Commission is whether there exists a prima facie case warranting such investigation. Although in view of the judgement of the Supreme Court in Competition Commission of India Vs. Steel Authority of India Limited- (2010) 10 SCC 744, an order passed by the Commission under Section 26(1) cannot be appealed against, legality and propriety of an order passed under Section 26(2) can certainly be subjected to judicial scrutiny by the Tribunal. In other words, if in exercise of the appellate power vested in it under Section 53- B the Tribunal is satisfied that the negative opinion expressed by the Commission on the issue of existence of a prima facie case is vitiated by an error of law then it may set aside the impugned order and direct an investigation under Section 26(1) of the Act.
25. A reading of the impugned order shows that while refusing to order an investigation into the allegations made by the appellant that Respondent Nos. 3 to 5 had formed a cartel and successfully prevented competition in the matter of award of liaison work for procurement of quality coal and supervision of transportation thereof, the majority of the Commission altogether over looked the unequivocal finding recorded by the Supreme Court in the order passed in Contempt Petition No. 245/2007.In paragraphs 2, 5, 6 and 18 of the impugned order, the Commission did make a reference to the main judgement of the Supreme Court reported as M/s. B.S.N. Joshi & Sons Ltd. Vs. Nair Coal Services Ltd. and others (2006) 11 SCC 548 and also the fact that the contempt petition was disposed of vide order dated 19.12.2008 but it did not rely upon the findings recorded by the Supreme Court and proceeded to observe: On perusal thereof, it appears that the quotes made by these parties were in a narrow band, yet the same cannot be described as identical or similar. Absent any other evidence or circumstance, it is difficult to infer any anti-competitive agreement solely on the basis of the chart noted above. Hence, it may be observed that the informant has not been able to substantiate its allegations of bid rigging by and between the opposite party Nos. 2 to 4. Resultantly, no case of contravention of the provisions of section 3 of the Act is made out against the opposite party Nos. 2 to
26. A conjoint reading of the main judgment in Civil Appeal No. 4613/2006 and order dated 19.12.2008 passed in Contempt Petition No. 245/2007 makes it clear that the Supreme Court had, after taking cognizance of the notings recorded by senior functionaries of Respondent No. 2 recorded an unequivocal finding that Respondent Nos. 3 to 5 had formed a cartel. The subsequent allocation of liaison work to Respondent Nos. 3 to 5 despite the fact that the rates quoted by them were substantially similar strengthens the finding recorded by the Supreme Court that Respondents Nos. 3 to 5 had formed a cartel and driven out the competition and it can reasonably be said that the appellant had succeeded in making out a prima facie case warranting an investigation into the matter and the Commission committed grave error by refusing to direct an investigation by the Director General. It appears that the Commission has not been apprised that it is judicially subordinate to the Supreme Court and is bound by the verdict of the highest court in the country.
27. Another grave error committed by the Commission is that even though it did take cognizance of the chart containing the rates quoted by Respondent Nos.
3 to 5 for the year 2010 but totally ignored the allegations made in the information and the documents filed on 15.10.2003. Thus there is no escape from the conclusion that the view expressed by the majority of the Commission that no prima facie case is made out for directing an investigation under Section 26(1) suffers from a patent legal infirmity.
28. In the dissenting order, Justice S.N. Dhingra has relied upon the ratio of the Supreme Court judgement and held that the information filed by the appellant prima facie disclosed violation of Section 3(3) and 3(4) of the Act. He then opined that the relevant market would be liaison services relating to coal for thermal power stations in the State of Maharashtra and concluded that a prima facie case has been made out for ordering investigation under Section 26(1). In my view, the approach adopted by Justice S.N. Dhingra is legally correct and deserves to be approved. The views expressed by him on the relevant market also appear to be correct.
29. In the result the appeal is allowed. The majority order of the Commission is set aside. The Director General shall now conduct investigation into the allegations contained in the information filed by the appellant under section 19(1)(a) and submit a report to the Commission within three months. However, it is made clear that while making investigation, the Director General shall not proceed on the premise that Respondent No. 2 was a part of the cartel.
30. The Secretary of the Commission is directed to forward a copy of the information and documents filed by the appellant to the Director General for the purpose of conducting investigation. (G.S.Singhvi) Chairman 15.09.2015
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