The Hon'ble High Court of Delhi dismissed an appeal filed by Mr Saurabh Tripathy
(Petitioner) against an order of the Competition Commission of India (CCI)
dated 16.02.2017, holding that the Director General's Investigation Report (DG
Report) is not binding on the CCI and that the Commission can disagree with the
DG Report's findings, including deciding to close the case.
The petitioner works for Srijan Ltd. (SRMB) - a rolling mill with two rolling
units in Sagar Bhanga, Durgapur, West Bengal. SRMB is an energy-intensive
industrial unit that relied heavily on coal to meet its needs. However, due to
the polluting nature of coal and other issues associated with its use, it
shifted to a cleaner fuel - Coalbed Methane Gas (CBM).
GEECL is in the business of exploring, developing, producing, distributing, and
selling CBM. It owns a 100 per cent stake in two CBM gas blocks in West Bengal's
Raniganj (South) and Tamil Nadu's Mannargudi. GEECL admits that its pipeline
network in the Asansol-Durgapur industrial belt delivers CBM to more than
thirty-one industrial consumers. GEECL began producing CBM in 2007, and it is
admitted that it was the region's sole supplier of CBM until 2011-2012. GEECL
and SRMB entered into a Gas Sale Purchase Agreement (GSPA) on May 11, 2011.
On September 16, 2019, the petitioner filed a piece of information with CCI
under Section 19(1)(a) of the Act alleging that GEECL violated the provisions of
Section 4(1) of the Act by imposing unfair and discriminatory conditions for the
supply of CBM in accordance with the GSPA.
CCI reviewed the information provided by the petitioner under Section 19(1)(a)
of the Act and concluded that GEECL held a dominant position in the relevant
geographical market of the Asansol-Raniganj-Durgapur Region in the State of West
Bengal. CCI was also of the first impression that the terms of the GSPA appeared
to be biased in favour of the seller (GEECL) and against the buyer, implying
that GEECL had violated Section 4 of the Act.
In light of the foregoing, CCI, by order dated December 29, 2014, issued under
Section 26(1) of the Act, directed the DG to investigate the matter and complete
it within sixty days of receipt of the order. The DG reported that Clause 2,
Clause 4.4, Clause 5.2, Clause 6.1, Clause 9.2, Clause 11.2, and Clause 15 of
the GSPA violated Section 4(1) of the Act read with Section 4(2)(a)(i) of the
CCI issued the impugned order on February 16, 2017, after hearing both parties
and concluding that GEECL had not abused its dominant position in the relevant
market. An appeal was filed against the contested order before the COMPAT, which
dismissed the appeal on the grounds that it was not maintainable. Following
that, on February 28, 2018, the Petitioner filed an application with the High
The Petitioner contended that the CCI's decision was incorrect because it
rejected the DG Report recommended a violation of Section 4 of the Act. The CCI,
according to the petitioner, was instead required to direct further
investigation under Section 26(8) of the Act. It was also argued that the order
violated Natural Justice Principles because the petitioner was not allowed to
contest the premise on which the CCI rejected the DG Report.
contended that the CCI was required to state the reasons for rejecting the DG
report before proceeding, which would have allowed the petitioner to contest the
same. The petitioner also challenged the CCI's decision to reject the DG's
findings regarding the clauses deemed unfair by the CCI.
Arguing that the
agreement was reached after negotiations between the parties involved. GEECL, on
the other hand, contended that the petition was not maintainable because the
petitioner cannot be considered an aggrieved person because he has no interest
and no locus to challenge the CCI's order. GEECL also claimed that the
proceedings were an abuse of the court process because neither SRMB nor GEECL
had claimed that the GSPA was unfair.
Issues Before The Court:
Decision Of The Court
- Whether the CCI was required to issue an order directing further
investigation under Section 26(8) of the Act if it disagreed with the DG's
- The second question before the High Court was whether the impugned order
dated 16.02.2017 had any flaws that required intervention by the High Court
under Article 226 of the Indian Constitution.
Following issue 1, the Court observed that if the CCI believes that no further
investigation is required, there is no need for the CCI to conduct any further
investigation or issue any such directions to the DG to conduct the same. The
Hon'ble Court observed that there is no provision in the Act requiring the CCI
to accept the DG Report recommending that there are violations of the Act's
In other words, the DG Report is not binding on the CCI, and it may
differ from the DG's findings. If the petitioner's arguments are accepted, it
would imply that CCI can never disagree with the DG's report, which is contrary
to the intent of Sections 26 and 27 of the Act. The language of section 26(8)
'If the report of the Director General relates on a reference made under
sub-section (1) and such report recommends that there is no contravention of the
provisions of this Act, the Commission shall invite comments of the Central
Government or the State Government or the statutory authority, as the case may
be, on such report and on receipt of such comments, the Commission shall return
the reference if there is no prima facie case or proceed with the reference as a
complaint if there is a prima facie case'
The word used in this section provides that it is up to the discretion given to
CCI that, it may or may not proceed with further enquiry after DG has submitted
The Court held that the DG Report is merely recommendatory in nature, and that
the CCI is required to examine it and make a decision after hearing the parties,
and that the provisions of further inquiry/investigation (sub-sections 7 and 8
of Section 26 of the Act) are only enabling provisions that allow the Commission
to direct further investigation or conduct further inquiry if it believes that
such further investigation is necessary. As a result, the Court rejected the
petitioner's contention that CCI was required to conduct additional
For the 2nd issue, the petitioner contended that GEECL abused its dominant
position by imposing unfair and discriminatory conditions for the purchase and
sale of CBM and that CCI was required to consider this in light of Section 27(d)
of the Act, which allows the CCI to modify an agreement (GSPA in this case) to
the extent it deems fit.
The High Court rejected this argument for two reasons:
- The GSPA was a negotiated agreement between SRMB and GEECL, and neither
party had approached the CCI for such relief. CCI cannot have exercised its
authority to amend the GSPA at the request of a third party who has no
interest in the agreement.
- The underlying premise that GEECL violated Sections 3 and 4 of
the Act was unjustified.
The petitioner also contended that CCI was incorrect in rejecting the contention
that certain GSPA clauses were discriminatory and/or unfair because the GSPA was
negotiated by the parties. The petitioner contended that even if a condition
imposed for the purchase and sale of goods and services is found to be unfair or
discriminatory, it will remain in effect because it was negotiated between the
The Court rejected this contention, observing that the fact that a commercial
contract was negotiated between two parties is an important factor in
determining whether an enterprise has abused its dominant position by imposing
unfair and discriminatory terms, especially when none of the parties has lodged
any complaint against the said contract.
The High Court acknowledged that there may be cases where one of the parties
establishes that certain unfair terms and conditions were unilaterally imposed
by a dominant enterprise and the affected party was commercially coerced to
accept them. In such cases, the fact that the parties had entered into
negotiations may be unimportant. However, in cases where the contracting parties
have not made any such allegations, the fact that the contract was freely
negotiated is critical in determining whether Sections 3 or 4 of the Act were
As a result, CCI discovered that the parties had exchanged draughts of the GSPA
before finalizing it. More importantly, SRMB did not object to some of the
clauses that the petitioner claimed were unfair and discriminatory during
contractual negotiations. As a result, the Court determined that CCI's decision
to consider the GSPA as a negotiated contract could not be faulted.
In addition to the foregoing observations, the Court examined the various
clauses found by the DG to be in violation of Section 4 and concluded that the
CCI was correct in rejecting the DG's recommendation.
The Delhi High Court has rejected the contention that if the Director General's
(DG) report recommends that there are violations of the Competition Act, the
Competition Commission of India (CCI) cannot close the case immediately. It was
also noted that there is no provision in the Competition Act requiring the CCI
to accept the DG's report recommending that there are violations of the Act's
The High Court dismissed the CCI's claims of violation of Sections 26 and 27 as
without merit, holding that the DG's report is only recommendatory and not
binding on the CCI and that the Commission can disagree with the DG's findings
and reject them. Previously, the CCI had rejected the DG's report and, following
a hearing, the parties decided to close the case.
In the case of Saurabh Tripathy v. CCI
, the Court also rejected the
argument that it was the CCI's responsibility to issue an order directing
further investigation under Section 26(8) of the Competition Act if it did not
agree with the DG's report. Furthermore, in upholding the CCI order on merits,
the Court examined various contract clauses and concluded that the DG's overall
approach in expressing its subjective opinion on various clauses was flawed.