Informant Has No Right To Hearing At CCI Screening Stage, Must Approach NCLAT: Delhi High Court

The Delhi High Court on 14 May held that the Competition Commission of India (CCI) is not required to issue notice or grant a hearing to an informant at the prima facie screening stage under Section 26(2) of the Competition Act, 2002, and that the appropriate remedy against such closure lies in a statutory appeal before the National Company Law Appellate Tribunal (NCLAT).

Justice Purushaindra Kumar Kaurav dismissed the writ petition filed by KSD Zonne Energie LLP and upheld the CCI's closure of its complaint, holding that no procedural infirmity or violation of natural justice was made out. He held:

“Beyond judicial authority, the statutory architecture independently and conclusively supports the conclusion that no prior hearing is required at the Section 26(2) stage.

…Therefore, the Commission was not required to issue notice or afford an opportunity of hearing to the Petitioner before passing the Impugned Order under Section 26(2) of the Act of 2002. The natural justice obligation under Section 36(1) is, at this stage, discharged by the requirement to pass a speaking, reasoned order and by the availability of a comprehensive appellate remedy before the NCLAT.”

KSD Zonne Energie LLP, a solar power generator registered under the MSME Act, had availed a loan of Rs 13.25 crore from Canara Bank in 2016. It alleged that the bank unilaterally altered interest rates, imposed retrospective back-interest, converted arrears into a funded interest term loan, and withheld collateral documents to obstruct loan transfer. It further alleged collusion with valuers to undervalue its solar plant for SARFAESI auction proceedings.

On 27 November 2024, the petitioner filed a complaint before the CCI under Section 19(1)(a) of the Competition Act, 2002, alleging violations of Sections 3 and 4 against Canara Bank and seeking interim relief under Section 33.

On 19 May 2025, the CCI closed the complaint under Section 26(2), holding that Canara Bank was not dominant in the relevant market, that interest rate changes were contractual in nature, that no material evidence supported allegations of anti-competitive conduct, and that retention of collateral documents was a standard banking practice.

Before the High Court, the petitioner argued that the closure order violated principles of natural justice, contending that Section 36(1) mandates adherence to natural justice even at the prima facie stage. It further distinguished between Section 26(1) and Section 26(2), arguing that closure under Section 26(2) has irreversible consequences due to the bar on re-filing under Section 26(2A).

The CCI raised a preliminary objection on maintainability, submitting that an efficacious appellate remedy under Section 53A of the Act was available before the NCLAT. She argued that neither the Act nor the CCI Regulations require issuance of notice or hearing at the screening stage, and that writ jurisdiction cannot be invoked to bypass the statutory appellate mechanism.

The Court referred to the statutory framework and binding precedent in Competition Commission of India v. Steel Authority of India Ltd. (SAIL), reiterating that the Section 26 function is administrative and inquisitorial, and does not require pre-decisional hearing either to proceed with investigation or to close a matter at the prima facie stage.

It held that two binding propositions emerge from SAIL: first, no right of hearing exists at the prima facie stage for either informant or opposite party; and second, a Section 26(2) closure order is appealable under Section 53A, as it determines rights by terminating proceedings initiated on information.

The Court also relied on Bharti Airtel Ltd. v. Competition Commission of India, reiterating that writ jurisdiction against Section 26 orders is limited and does not warrant interference at the screening stage. It further noted that the 2023 amendments to the Competition Act introduced a hearing requirement only at the post-investigation closure stage under Section 26(9), while consciously omitting any such requirement under Section 26(2), thereby reflecting clear legislative intent. It observed:

“The differential treatment of these two closure provisions is the clearest possible expression of legislative intent. Where Parliament wanted to mandate a hearing, it did so expressly, in Section 26(9), in the proviso to Section 6(6), and in the show-cause notice requirements under Sections 27 and 31. Where it did not, as at the Section 26(2) stage, the omission is intentional and must be given full effect.”

Relying on Samir Agrawal v. Competition Commission of India, the Court also held that the petitioner has an effective statutory remedy of appeal before the NCLAT under Section 53B.

Accordingly, the High Court dismissed the writ petition and granted liberty to KSD Zonne Energie LLP to challenge the CCI's order dated 19 May 2025 before the NCLAT.