Mr. Justice V.S Sirpurkar, Chairman
The appellant herein has filed this appeal under Section 53-B of the Competition Act, 2002 (“Act” hereinafter) challenging the order passed by Competition Commission of India (“CCI” hereinafter) dated 09.01.2012 levying a penalty of Rs. 72,50,000/- under Section 43 of the Act. The said penalty has been inflicted on the ground that from 5 May, 2010 to 27 September, 2010 the appellant had no reasonable cause for not complying with the directions dated 11 August, 2009 issued by Director General under Section 36(2) and 41 of the said act whereby the appellant was directed to furnish certain information to the Director General.
2. In the first round of this litigation, the CCI had passed an order dated 21.10.2010 and imposed a find of Rs. 1,00,00,000/- by way of penalty for the delay in supplying of the information sought by Director General on 11 August, 2009 covering the period commencing from 26 August, 2009 till 27 September, 2010. The aforementioned order dated 21 October, 2010 was set aside by this Tribunal by its order dated 4 May, 2011 and the matter was remanded back to the CCI for fresh consideration and order, in the light of factual and legal finding as set out in the order of the Tribunal. It was in pursuance of that remand order that the CCI seems to have passed the second order, which is impugned before us.
3. Before we consider the controversy involved, it would be better to see the factual scenario.
4. Proceedings were initiated against Jet Airways and Kingfisher Airlines (the “Appellant” herein) by the CCI for anti-competitive practices and the matter was sent to the Director General for investigation vide Commission's order dated 04.08.2009 The Commission had directed the Director General to submit a report within 45 days.
5. The Director General, therefore, issued notice dated 11 August, 2009 asking the appellant to furnish certain information in the office of Director General on 19 August, 2009, either in person or through an authorized representative. The details of the information sought were given in the notice. According to the Director General, the Kind Fisher Airlines did not furnish the required information and instead raised a plea that it was not bound to give information as the Commission had no jurisdiction in the matter. According to the Director General several opportunities were given to the appellant for providing information, but to no effect.
6. Section 43 of the Act provides that “where a person fails to comply, without reasonable cause, directions given by the Commission/Director General, such person shall be punishable with a find which may extend to Rs. 1 lakh for each day, as may be determined by the Commission for the period for which the said failure continues subject to a maximum of Rs. 1 crore”.
7. The Director General informed the Commission that a notice was sent to the respondent Jet Airways and Kingfisher Airlines, while Jet Airways furnished the information, the Kingfisher Airlines had failed to furnish the information and instead sought for repeated extension of time. It was informed by the Director General further that though some extensions were granted, but despite that the appellant Kingfisher did not furnish the required information. The Director General had sent communications vide letters dated 26.08.2009, 10.09.2009, 15.04.2010, 06.05.2010, 19.05.2010, 03.06.2010 and 12.07.2010, but all these communications did not yield any result. It is seen from the facts that the appellant had filed Writ Petition before the Bombay High Court challenging the jurisdiction of CCI for holding enquiry against it. It was the case of the Director General that though no stay of proceedings was granted by the Bombay High Court, yet Kingfisher Airlines did not furnish information on the pretext of having filed the Writ Petition. The Writ Petition ultimately came to be dismissed by the Bombay High Court on 31.03.2010 The office of the Director General again issued letters dated 15.04.2010, 06.05.2010 and 19.05.2010 to Kingfisher Airlines to furnish details of information sought. However, the same was not furnished and the Kingfisher raised a plea that it had filed a Special Leave Petition before the Hon'ble Supreme Court of India. Though no stay of proceedings was granted even by the Hon'ble Supreme Court, yet the information sought by the Director General was not furnished. Eventually, the Special Leave Petition before the Supreme Court of India also came to be dismissed.
8. It was under these circumstances that the Commission considered the matter for imposing penalty under Section 43 of the Act and issued a show cause notice to the Kingfisher Airlines and fixed the hearing on 12 October, 2010 for arguments on the issue of imposing penalty for the failure to supply information. After considering the reply and oral arguments on the part of the appellant, it passed an order dated 21.10.2010 imposing a penalty of Rs. 1 crore. This order was assailed before this Tribunal and this Tribunal vide order dated 4 May, 2011 set aside the order dated 21.10.2010 and remitted the matter back to the CCI to consider the relevant aspects highlighted in the order of the Tribunal and to pass a fresh order. The matter was re-examined by the Commission in the light of directions given by the Tribunal vide its order dated 04.05.2011 and the Commission passed the impugned order and that is how the matter has come before us.
9. The learned counsel appearing before us has raised some basic objections to the impugned order. According to him the impugned order has travelled beyond the findings of this Tribunal and has negated those findings without any justification. According to the learned counsel, the CCI could not have travelled beyond the findings to negate them, particularly when the order of this Tribunal had attained finality, not having been challenged before the Hon'ble Supreme Court of India. The learned counsel further took us extensively through the order of this Tribunal to suggest that this Tribunal in its order, while remanding the matter had given some findings, which were final in the nature and had held that the Director General had granted a last opportunity to the appellants and had extended the time for furnishing the details till 28 September, 2010. The learned counsel is at pains to point out that the appellant had eventually furnished all the details on this date. According to the learned counsel infact the contention of the CCI that all the letters addressed to the appellant pursuant to the letter dated 11 August, 2009 were only reminders and did not amount to extension of time was specifically rejected by this Tribunal as being untenable. The learned counsel in this behalf took us through the relevant observations/findings of this Tribunal particularly in paragraph Nos. 9, 10, 16, 18 and 28 of the order of this Tribunal.
10. It is pointed out that though this Tribunal had specifically held the letters in the nature of extension granted the CCI had committed an error of law in travelling beyond the scope of the findings and holding them to be mere reminders, which was not permissible to it.
11. Our attention was also drawn to the finding given by CCI in paragraph 19 read with 22(B) of the impugned order wherein the CCI had held the said letter to be a mere reminder and not the extension granted by the CCI. Further, the learned counsel contended that this Tribunal had specifically held that imposition of penalty could not be a routine matter and that the CCI had not considered the aspect of their being a “reasonable cause” for the non-compliance of the directions and it was therefore the matter was remanded to take into consideration the aspect of “reasonable cause”. It was pointed out that this Tribunal had specifically directed that the CCI should consider the matter “in the light of observations made in the order by this Tribunal”. Lastly, the learned counsel relied on the decision in Hindustan Steel Ltd. v. State Of Orissa . reported in (1969) 2 SCC 627 and more particularly the observations made in paragraph 8 of the said judgment where the Hon'ble Supreme Court laid stress on the principle that penalty will not ordinarily be imposed unless the party against whom failure was alleged acted deliberately or in defiance of law or was guilty of conduct, contemptuous or dishonest conduct or acted in conscious disregard of its obligation. According to the learned counsel, it was reported by the Hon'ble Supreme Court that penalty would not be imposed merely because it was lawful to do so. The following observation was very heavily relied upon by the learned counsel that is “even if a minimum penalty is prescribed the authority competent to impose the penalty will be justified in refusing to impose penalty, where the breach flows from a bonafide belief that the offender is not liable to act in a manner prescribed by the statute”. The learned counsel also relied on a similar view taken by the Division Bench of the Bombay High Court in the case of Securities and Exchange Board of India v. Cabot International Capital Corporation reported in (2005) 123 Company Cases page 841.
12. As against this, the learned counsel appearing for CCI urged that the CCI was well within its right to impose penalty as it was obvious that the appellant had no “reasonable cause” whatsoever in holding back the information sought for by the CCI by its notice dated 11.08.2009 Our attention was invited to the decision of the Hon'ble Supreme Court in Competition Commission of India v. Steel Authority of India Ltd. in Judgement Today 2010 910) SC 26 and more particularly in paragraph 92 where the Hon'ble Supreme Court had cautioned that the delay in disposal of cases, as well as undue continuation of interim restrained orders could adversely and prejudicially affect the free economy of the country. Our attention was also drawn to paragraph 96 where the Hon'ble Supreme Court observed “the scheme of the Act and the Regulations framed there under clearly demonstrate the legislative intent that the investigation and enquiries under the provisions of the Act should be concluded as expeditiously as possible. The various provisions and the Regulations, particularly Regulation 15 and 16 direct conclusion of the investigation/inquiry or proceedings within a ‘reasonable time’. The concept of ‘reasonable time’ thus has to be construed meaningfully, keeping in view the object of the Act and the larger interest of the domestic and international trade”. Our attention was also invited toward the directions given by the Hon'ble Supreme Court in this judgment. In short the contention raised on behalf of the CCI is to the effect that there was no effort on the part of the appellant to comply with the directions and on the other hand, the appellant acted deliberately to flout the notice and had absolutely no “reasonable cause” and did not comply with the directions given in the notice for supplying information which were sought for.
13. It will, therefore, be better to firstly examine the actual findings given by this Tribunal, because it is only then it may be appreciated as to whether the CCI had travelled beyond any findings.
14. In its order dated 4 May, 2011 this Tribunal firstly dealt with the facts in detail. The facts pertain to the notice served upon the appellant dated 11 August, 2009 calling upon the appellant to explain/furnish/submit certain information and evidence by 19 August, 2009. Then a reference, that this information was called upon based on a complaint made by Shri M.P Mehrotra, the third respondent in the appeal before the Tribunal. Then a reference that the letter dated 17.08.2009 whereby the appellant had requested the DG-CCI for four weeks time to file its reply to the notice on the ground of seeking legal advice in the matter. Further, the stand of the appellant seems to have been reflected in the latter dated 25.08.2009 wherein the appellant had taken the stand before the DG-CCI that CCI had no jurisdiction or authority under the Act, in respect of the alleged agreement of October 2008. Then a reference to the letter dated 28.08.2009 whereby the appellant was called upon by the DG-CCI to furnish the information as was required by its notice dated 11.08.2009 It seems it was held by CCI that it had the jurisdiction to conduct the enquiry. Then a reference is made to the notice dated 02.09.2009 which was in continuation of the notice dated 13 August, 2009, the CCI called upon the appellant to appear before it on 8 September, 2009. Then there is a reference that on 8 September, 2009 a Writ Petition No. 1785/2009 was filed by the appellant before the Bombay High Court wherein the jurisdiction of the CCI was challenged along with the notices issued by the DG-CCI dated 4 August, 2009, 11 August, 2009, 13 August, 2009, 26 August, 2009 and 2 September, 2009. There is also a reference to the alleged statement made by the learned counsel appearing for DG and CCI before the Bombay High Court that the respondents would in the meantime defer the proceedings. In the aforesaid Writ Petition, respondents were directed to file affidavits in reply within a period of two weeks. Then there is a reference that a letter of CCI dated 16.09.2009 to the appellant stating that the CCI had considered the request of Jet Airways for granting four weeks and accordingly the matter was to come up on 13 October, 2009, where upon the appellant had addressed a letter to the advocates of the CCI and DG-CCI pointing out that in view of the statement made before the Hon'ble High Court on 15 September, 2009, notices should not have been issued by the CCI. Undoubtedly, the fact that the statement having been made by the learned counsel of the CCI was not accepted. A reference is then made to the effect that the matter was listed on 7 December, 2009 when the counsel for CCI and DG-CCI informed the appellant's advocate that they would seek adjournment on the ground of non-availability of learned Solicitor General. According to the appellant, it was specifically indicated to the counsel that there would be no objection to the adjournment provided the CCI and the DG-CCI did not proceed in the matter. Then there is reference of 14 December, 2009, a letter was received from the advocates of CCI and DG-CCI to the effect that the matter was adjourned on the mutual consent and the CCI had adjourned the hearing from 8 December, 2009 to 22 December, 2009. However, the CCI reiterated its position that there was any agreement that proceedings would be kept in abeyance. There is a reference to the dismissal of Writ Petition as well as the Special Leave Petition and there is clear reference to the letter dated 15 April, 2010 by the DG-CCI asking for the information and clarification and reply to the notice dated 11.08.2009 There is also a reference to the further letters dated 5 May, 2010 and 26 May, 2010. Then there is reference to the several letters exchanged between the appellant's advocate and the DG-CCI. The Tribunal then referred to the Special Leave Petition listed for admission on 30 July, 2010 and 27 August, 2010 and the case was postponed in view of the pending judgment of the Hon'ble Supreme Court in the matter of the said Act, which had not yet come. It is then pointed out that on 16 September, 2010 the CCI issued show cause notice under Section 43 of the Act for their alleged failure. Then there is a reference that the Special Leave Petition which was dismissed as withdrawn in view of the Judgement of the Hon'ble Supreme Court in Competition Commission of India v. Steel Authority of India Reported in [2010] 9 SCALE 291 and there is then ultimately reference to the fact that on 28 of September, 2010 and prior to the hearing of show cause notice to the CCI the appellant furnished to DG-CCI the information which was asked for by the letter dated 11 August, 2010. After dealing with these facts in detail, the Tribunal referred to the plea raised by appellant and noted the contention that the CCI had failed to notice the factual scenario and had proceeded on the incorrect basis that the DG-CCI had never extended time for furnishing the information beyond 26 of August, 2009. Thus the Tribunal noted the stand of the appellant that infact the time for compliance of 11 August, 2009 notice was extended from time to time. In paragraphs 5 and 6 of its order the Tribunal noted the stand taken by the CCI and DG-CCI to the effect that there was no question of any time and the non-compliance on the part of the appellant was deliberate and without any reasonable cause. In paragraph 9 this Tribunal referred to paragraph 11.3, the first order of the CCI and reported the following portion of that paragraph “the arguments of the Kingfisher Airlines that during the pendency of the Writ Petition and Special Leave Petition the DG also did not proceed with the investigation is falsified from the perusal of the record which shows that after issuing notice dated 11.08.2009 the DG again vide its letters dated 26.08.2009, 10.08.2009, 15.04.2010, 06.05.2010, 19.05.2010, 03.06.2010 and 12.07.2010 requested Kingfisher Airlines Ltd. to furnish the required information/documents”. Paragraph 10 gives following observation, “the underlined portions clearly show that the CCI was conscious of the fact that DG-CCI had after 11.08.2009 requested the Appellant to furnish the required information/documents. If the stand of the learned counsel of the CCI is accepted, the time granted by the aforesaid letters for making compliance becomes meaningless. Unfortunately, the CCI has not given due importance to this vital aspect. The non-consideration of this relevant aspect renders the order of CCI vulnerable. The Tribunal then refers to the letter dated 21.09.2010 by the DG-CCI and quotes the same, which is to the following effect “One more opportunity is given to you to appear in person or through your authorized representative to submit your replies on 28.09.2010 at 11:30 a.m on each of the allegations mentioned in the notice and furnish requisite details, failing which, it would be presumed that allegations carry substance, hold true and you have nothing to say in the matter”. The Tribunal then observes that it was clear that “one more opportunity is given” leads to the irresistible conclusion that DG-CCI proceeded on the basis that the matter was not closed so far as furnishing of information/documents is concerned. Then there is a very vital observation at the end of this paragraph to the effect “the concept of “timely compliance” highlighted by the learned counsel for CCI is rendered irrelevant in that background”. In paragraph 16 there is specific observation that “the DG-CCI had granted opportunity and had extended time (emphasis supplied) for furnishing the details”. The Tribunal then makes the observations “the stand of the learned counsel of the CCI is that even if some time was granted and particularly when the Appellant itself had not prayed for time, it cannot extend the period for compliance. Such plea is indefensible and lacks logic and merit, in view of what is stated supra. The other stand of the Appellant is that CCI failed to notice in the impugned order that the DG-CCI in its report itself had stated that the investigation was kept in abeyance as per the opinion of the legal divisions of the Commission till outcome of the Writ Petition before the Bombay High Court. The following table of report is of relevance. After referring to the various dates when investigation was kept in abeyance as per the opinion of the legal division of the Commission till outcome of the Writ Petition, there is another table given regarding the Special Leave Petition, which was pending before the Hon'ble Supreme Court. It is specifically then mentioned that relevance of the aforesaid portion of the report does not appear to have been considered by the CCI. This again is a case of non-consideration of relevant materials. After referring to various decisions in Dhirajlal Girdharilal v. C.I.T, C.I.T v. Daulat Ram Rawtmull, Chhabildas Tribhuvandas Shah v. C.I.T and Shree Meenakshi Mills Ltd. v. C.I.T, the Tribunal has observed that a finding or a question of fact gives rise to a question of law when there is no evidence to support it or if it is perverse when the finding is one of fact, the fact that it is itself an inference from other basic facts will not alter its character as one of fact. In paragraph 18 there is a clear cut finding given to the effect that the impugned order of the CCI is indefensible because of non-consideration of relevant materials. The Tribunal then went on to consider the scope of the term “reasonable” relying upon Stroud's Judicial Dictionary as also Words and Phrases. In paragraph 23 the Tribunal observed that the word “reasonable” signifies “in accordance with reason”. After discussing the further term “reasonable cause” it criticized the CCI for having dealt with the implication of the term in a cryptical manner. In paragraph 28 the Tribunal observes “the CCI failed to distinguish the conceptual difference between “failure to comply” and “belated compliance”. In the former case, it is non-compliance and in the latter case it is belated compliance. In a given case, when the compliance is to be done within a particular time and it is not done, there is failure. But when the time is extended, the failure does not occur till the extended time occurs. The submission of the learned counsel for CCI and the stand taken in Written Submission that the letters in question do not amount to “extension of time” and are “only reminders” are clearly untenable. A reference to the last letter dated 21.09.2010 as noted at para-10 it speak of “one more opportunity” and “submit replies”, “each of the allegations mentioned in the notice” and “furnish requisite details”. It is clear case of extension of time.”
15. We have deliberately taken this exercise of dealing with the earlier judgment of the Tribunal in detail as it is reiterated before us that the finding that there was an extension of time on the part of DG-CCI for compliance with the notice dated 11.08.2009 had become final and therefore unsurmountable by the CCI in its second order. In paragraph 30 there is a clear observation that the CCI was conscious of the fact that the DG itself had extended time for furnishing the information and in the absence of any elaborate discussion on the reasonable cause aspect, the order also becomes vulnerable. It was in view of this that the matter came to be remanded expecting the CCI to deal with the aspects highlighted in the Tribunal's order.
16. On the backdrop of these observations, we will see the impugned order. It is seen that the first 14 paragraphs have been devoted to state the fact. Our attention was specifically invited to the finding given by the CCI in paragraph 19 where the Commission has expressed the view that merely because of sending reminders by the DG the violation does not get condoned. It has also been expressed earlier that sending those reminders was only an effort to get the desired information and till the time the information is given, the violation continues. It is apparent that very basis of the order is the finding that the subsequent letters did not amount to extension, but were merely reminders. The observation to this effect in paragraph 19 of the impugned judgment in our opinion is wholly incorrect. It is obvious that the very basis of the order is this finding. Once the CCI has erred in giving this finding, the very basis of the order is knocked out.
17. We need not reiterate that the CCI could not have rewritten the finding about the letters amounting to extension of time or letters amounting to reminders. It was finally decided by the Tribunal that the letters sent as reminders amounted to extension of time. Now, if the letters amounted to extension of time, there was no question of the appellant being penalized for so called failure to comply. In fact, in our opinion, once the finding was given that the letters amounted to extension of time, there would be no question of any failure to comply at all because admittedly the information was supplied on 28 of September, 2010.
18. The remand by the Tribunal was only for the purpose of considering as to whether such extension of time amounted to a “reasonable cause” for the appellant not to comply with. The time limit given by the notice dated 11.08.2009 was only up to 17.08.2009, when there was a time of four weeks sought by the appellant to comply. Thereafter the appellant took the matters in the High Court and thereafter to the Hon'ble Supreme Court of India. True it is that there was no stay order passed, however, the fact cannot be ignored that the Commission itself had kept the matters in abeyance. The Commission has not viewed the period from 18.08.2009 to 14.10.2009 as a period of non-compliance. It is to be noted that after the notice was issued on 15.04.2010, when the appellant was asked to furnish information by 05.05.2010, the Director General issued seven notices. Again the CCI has called them as “reminder” notices, this is factually incorrect. Those were not reminder notices, particularly in the wake of specific finding of the Tribunal to the effect that those notices amounted to extension of time. In fact these extensions which have been specifically referred to by the Tribunal in its order clearly amounted to a “reasonable cause”. The basic direction for remand was for consideration of these letters, specific finding in respect of which has been given by the Tribunal in its order in paragraph 28. As if it this was not sufficient, the Tribunal in paragraph 29 has specifically given a finding in the following words “in the instant case there is no failure to produce documents etc. it is a case where requisite document etc. were produced within the time finally granted by DG-CCI.” In our opinion the CCI should have considered these aspects of remand. Be that as it may, we do not think that the CCI was justified in any manner firstly, to write a contrary finding to the effect that the Director General had only issued reminders and not extensions and then on the basis of the wrong premise that the letters amounted only to reminders in coming to the conclusion that there was a deliberate failure to comply or as the case may be, there was no “reasonable cause” for failure to comply. In our opinion, the CCI has acted clearly beyond its legitimate scope and therefore, its order levying the penalty of Rs. 72.50 lakhs is not sustainable and would have to be set-aside. The appeal is allowed. The order is set-aside. Under the circumstances, there shall be no order as to costs.
Pronounced in open Court on 29 day of August, 2012.