On 18 May 2018, in M/s B Himmatlal Agrawal (Appellant) v Competition Commission of India (CCI) and Anr. [Civil Appeal No. 5029 of 2018], the Supreme Court of India (Supreme Court) distinguished the decision of the National Company Law Appellate Tribunal (NCLAT) while disposing of a statutory appeal under the Competition Act, 2002 (Competition Act).
The issue before the Supreme Court was whether the NCLAT can dismiss a statutory appeal for non-compliance of its interlocutory direction to deposit a portion of the penalty as a condition for grant of interim relief. In this instant case, the Supreme Court set aside part of the NCLAT's order and restored the appeal that had been dismissed by the NCLAT.
Background
The CCI found the Appellant guilty of rigging the bids for tenders floated by Western Coalfields Limited and correspondingly imposed a penalty of INR 3,61,00,000, which was ordered to be deposited within 60 days (CCI Order). The Appellant filed an appeal before the NCLAT against the CCI Order, seeking inter alia a stay of the penalty deposit. In response, the NCLAT granted a stay against the CCI Order (NCLAT Stay Order), with a condition that the Appellant was to deposit a sum equal to 10% of the total penalty (Deposit). However, the Appellant was unable to execute the Deposit due to financial distress. Consequently, the NCLAT dismissed the appeal on the ground of non-compliance with the NCLAT Stay Order. Being aggrieved, the Appellant filed an appeal against the NCLAT's decision before the Supreme Court.
Decision of the Supreme Court
The Supreme Court recognised that the right to appeal is provided under Section 53B of the Competition Act and that the said provision does not require any pre-deposit of penalty for entertaining an appeal. The Supreme Court held that the right to appeal granted by a statute cannot be curtailed by imposing a condition of pre-deposit of penalty, which can result in the dismissal of the appeal, if such deposit is not satisfied.
The Supreme Court declared that non-compliance of the NCLAT Stay Order will not impact the substantive appeal. As the condition of deposit was attached to the NCLAT Stay Order, any non-compliance would result in the NCLAT Stay Order ceasing to operate, as the pre-condition is not fulfilled. However, the substantive appeal would have to be decided on merits after giving the involved parties an opportunity to be heard.
As a result, the Supreme Court set aside part of the NCLAT Stay Order and directed that the appeal be restored and decided on merits. The stay order remained vacated on ground of the non-compliance.
Comment
In distinguishing the ratio enunciated by the NCLAT, the Supreme Court has settled the principles of law relating to granting of interim relief. The former Competition Appellate Tribunal and, later, the NCLAT had been directing appellants to deposit a portion (varying between 10% to 25%) of the total penalty as a condition precedent to hearing the appeals on merit despite such part-payment not being stipulated under the Competition Act. At times, imposition of this part-payment was considered hardship by appellants and an order of dismissal, if any, for non-payment of such portion of total penalty has been considered contrary to the intent of the Competition Act by the Supreme Court. This decision of the Supreme Court will go a long way in evolving the jurisprudence from an Indian competition law perspective.
The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.