Supreme Court Dismisses CCI Appeal Against NCLAT Order Setting Aside ₹301.61 Crore Penalty On Grasim

The Supreme Court on Friday dismissed the Competition Commission of India's (CCI) appeal against the National Company Law Appellate Tribunal's (NCLAT) May 5, 2026 judgment.

The NCLAT had set aside the Commission's order imposing a ₹301.61 crore penalty on Grasim Industries Ltd. for alleged abuse of dominant position in the viscose staple fibre (VSF) market and sent the case back to the Commission. It then directed CCI to give Grasim an opportunity to respond wherever it differs from the DG findings and to decide the matter in a time bound manner.

A bench of Justices J.B. Pardiwala and K. Vinod Chandran declined to interfere with the NCLAT's decision which had held that the CCI travelled beyond the findings recorded by the Director General (DG) without first issuing a show cause notice to Grasim, thereby violating the principles of natural justice.

Appearing for the CCI, Senior Advocate Sajan Poovayya argued that the NCLAT had wrongly concluded that the Commission had departed from the DG's findings. He submitted that Grasim enjoyed 97% market share in the VSF market and contended that the appellate tribunal had conflated the concepts of buyers, traders and spinners.

"There is a conflation in the reasoning. There is no disconnect between the Commission and the DG on traders. We raised no objection on traders. But as regards spinners, we say there is market disruption and therefore issued directions. Before the Appellate Tribunal, the Commission makes a statement saying my directions were not on traders. The NCLAT says, 'No, you have not defined a trader.' Four years of work has been remitted back," Poovayya submitted.

Interjecting, the Bench said it was not inclined to interfere with the order and dismissed the appeal. 

Background

The case arose from the CCI's March 16, 2020 order holding Grasim Industries guilty of abusing its dominant position under Section 4 of the Competition Act by charging discriminatory prices and imposing supplementary obligations on buyers of VSF.

Besides imposing a ₹301.61 crore penalty, the Commission directed Grasim to publish a transparent discount policy and refrain from imposing end-use restrictions. Grasim challenged the order before the NCLAT.

Rejecting the CCI's contention that there was no departure from the DG findings, the Tribunal held that while the DG had not treated non disclosure of Grasim's pricing policy as a contravention, the Commission directed the company to publicise it. It also found that allowing buyers to trade effectively included traders, contrary to the DG's findings. The Bench observed:

“Similarly, the explanation of the Commission that the word “buyer” refers only to “spinners” is not borne out by plain reading of the direction, as no such definition is provided. In the common parlance, if a “buyer” is allowed to trade, then he can be assumed to be a “trader”. Thus, this direction is also in variance with the findings of the DG.”

Relying on the COMPAT decisions in BCCI v. CCI and InterGlobe Aviation Ltd. v. CCI, the Tribunal held that whenever the Commission proposes to differ from the DG's findings, it must first issue a show-cause notice and provide the affected party a reasonable opportunity of hearing. The NCLAT set aside the CCI's order and remanded the matter to the Commission for fresh adjudication after complying with the principles of natural justice.