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Section 53E and 22(3) of Competition Act, 2002 declared unconstitutional and void: Delhi HC

April 12, 2019[2019] 104 229 (Delhi)

Competition Act : In a specific challenge to provisions of Sections 22(3), 27(b), 53A, 53B, 53C, 53D, 53E, 53F and 61 of the Competition Act, 2002 (the impugned provisions) and the notification dated 31-3-2011 amending Regulation 48 (1) of the Competition Commission of India (General) Regulations, 2009 and in relation to the appellate remedies to the Competition Appellate Tribunal (COMPAT) the Delhi High Court holds that:

• CCI does not perform only or purely adjudicatory functions so as to be characterized as a tribunal solely discharging judicial powers of state; it is rather, a body that is in parts administrative, expert (having regard to its advisory and advocacy roles) and quasi-judicial -when it proceeds to issue final orders, directions and (or) penalties.

• Section 22(3) (except the proviso thereto) is declared unconstitutional and void;

• Section 53E (prior to the amendment in 2017) is declared unconstitutional and void: however, this is subject to the final decision of the Supreme Court in the writ petitions challenging the Finance Act, 2017;

• All other provisions of the Competition Act are held to be valid subject to the following orders:

(a)   The CCI shall frame guidelines with respect to the directions contained in para 179 of this judgment, i.e. to ensure that one who hears decides is embodied in letter and spirit in all cases where final hearings are undertaken and concluded. In other words, once final hearings in any complaint or batch of complaints begin, the membership should not vary- it should preferably be heard by a substantial number of 7 or at least, 5 members.
(b)   The Central Government shall take expeditious steps to fill all existing vacancies in the CCI, within 6 months;
(c)   The CCI shall ensure that at all times, during the final hearing, the judicial member (in line with the declaration of law in State of Gujarat v. Utility Users Welfare Association 2018 (6) SCC 21 is present and participates in the hearing;
(d)   The parties should in all cases, at the final hearing stage, address arguments, taking into consideration the factors indicated in Excel Crop Care India v. Competition Commission of India 2017 (8) SCC 47and any other relevant factors; they may also indicate in their written submissions, or separate note, of submissions, to the CCI, why penalty should not be awarded, and if awarded, what should be the mitigating factors and the quantum- without prejudice to their other submissions.
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