Direction To Act In Accordance With Law Doesn't Transfer CCI's Probe Powers To DG: Orissa High Court

The Orissa High Court has recently held that a direction by the Madras High Court asking the Director General (DG) of the Competition Commission of India (CCI) to take action in accordance with law cannot be read as transferring the CCI's statutory power to form a prima facie opinion and direct an investigation to the DG.

A bench of Chief Justice Harish Tandon and Justice Chittaranjan Dash dismissed the appeal filed by the CCI and the DG against a Single Judge's decision quashing the investigation against Rungta Mines Limited and its Whole-Time Director. The bench observed:

“The statute makes a clear distinction between the functions of the CCI and the DG. The power to form a prima facie opinion and direct an investigation under Section 26(1) of the Act vests in the CCI, whereas the DG undertakes investigation pursuant to such direction. A judicial direction to take action in accordance with law cannot be read as transferring the statutory power of the CCI to the DG or permitting the latter to proceed independently of the prescribed statutory framework.”

The case arose from a complaint filed by the Coimbatore Corporation Contractors Welfare Association before the CBI on March 6, 2021, alleging cartelisation and price-fixing by certain steel manufacturers. Rungta Mines was not named in the complaint. The CBI forwarded it to the CCI's DG, following which the Madras High Court directed the DG to take action in accordance with law.

The CCI subsequently registered a suo motu case and directed an investigation. During the probe, the DG conducted search and seizure operations at Rungta Mines' Kolkata office between December 16 and 18, 2022. The company was later treated as an Opposite Party in the proceedings.

Rungta Mines challenged the investigation, arguing that the CCI had not independently formed a prima facie opinion before directing the probe. It also contended that the company had been brought into the proceedings without following Regulation 24 of the CCI General Regulations, 2009.

The bench found that the CCI's minutes dated August 23, 2021 recorded “detailed deliberations” but did not disclose any prima facie opinion on the alleged cartelisation or explain why an investigation was warranted.

“The mere recital of 'detailed deliberations', without any indication of the substance or outcome of the Commission's consideration, does not sufficiently disclose the formation of an independent prima facie opinion,” the court observed.

Relying on the Supreme Court's ruling in Excel Crop Care Ltd. v. CCI, the bench clarified that the DG can investigate companies not named in the original complaint if their involvement emerges during a validly initiated investigation. A separate direction against each such company is not necessary. However, this power cannot cure the absence of a valid statutory foundation for initiating the investigation.

The court also found that no corresponding CCI order or compliance with the prescribed procedure had been shown for bringing Rungta Mines on record as an Opposite Party. It noted that the DG had obtained the CCI's permission to investigate certain other associations not named in the original complaint.

The bench upheld the decision to quash the investigation and consequential proceedings against Rungta Mines and its Whole-Time Director. It clarified that the relief did not determine the allegations against the other enterprises or persons involved in the proceedings.

For Appellants: Senior Advocate Madhavi Divan, Advocates Swati Smita Pati, Binod Kumar Behera, Ankur Singh, Kaustav Som, Garvish Jain and Aishani Narain

For Respondents: Senior Advocates Abhishek Manu Singhvi, Manoj Kumar Mishra, Advocates Tanmay Mishra, D Poddar, H Dadwal, T Shreyashi, P Jagetia and A Nagar