Case: Ultra Tech Cement Ltd Vs. Competition Commission of India and Ors

1. All these appeals preferred by the Appellants are statutory in nature as they have been filed Under Section 53T of the Competition Act, 2002 and arise out of a consolidated order passed by the Competition Appellate Tribunal (hereinafter referred to as the Tribunal) dated 17.5.2013 holding therein that there is a prima facie case for granting stay in respect of the penalty which has been imposed on the Appellants in view of the allegation that the Appellants who are cement manufacturing companies had indulged in the offence of cartelisation by creating artificial scarcity of cement in the market in spite of their gross production in the years spanning between 2009 to 2011, giving rise to artificial increase of price with a sole intention to gain undue profit which is known as cartelisation in corporate jargon and is admittedly an offence, liable to imposition of monetary penalty which has been saddled on the Appellants by the Competition Commission. The Appellants challenged the same by way of appeals before the Competition Appellate Tribunal where the appeals are subjudice & the Tribunal while granting stay of payment of penalty imposed a condition that the Appellants shall pay 10% of the penalty to be deposited in the Consolidated Fund of India & in the event of non-payment by any Appellant, the appeal of such Appellants shall stand dismissed. 2. Since the controversy in these appeals is confined to the question as to whether the order of the Tribunal is justified while issuing a direction to the Appellants to deposit 10% of the amount of the penalty imposed by the Competition Commission of India (CCI), it is not quite essential to go into the merits of the appeal which is subjudice before the Tribunal. At this stage, the limited question is whether the Tribunal was justified in directing the Appellants to deposit even 10% of the penalty imposed on the Appellants by the CCI against which they have preferred an appeal before the Tribunal as already indicated hereinbefore. 3. The Tribunal although has admitted the appeal, it has passed an order to the effect that the Appellants should pay 10% of the penalty imposed by the CCI in the nature of a pre-deposit which is normally provided under several Acts, which are statutory in nature under the relevant Acts but is not provided in the Act applicable to these matters. However, insofar as the nature of the allegation that has been levelled against the Appellants, it is in regard to the charge/allegation that they have indulged in cartelisation of the commodity which they were manufacturing-which is cement and they increased their margin of profit by increasing the prices artificially and unreasonably in the year spanning between 2009 to 2011. Since the Tribunal thought it proper to direct the Appellant companies to deposit the 10% of the penalty, the Tribunal thought it appropriate to assign reasons in this regard and, therefore, passed a detailed order which is under challenge in these appeals, holding therein finally that 10% payment of penalty imposed would be justified in the facts and circumstances of the case. 4. As already stated earlier, all the Appellants have assailed that order stating that even 10% payment by way of penalty would result into huge amount running into several crores of rupees which will be an unnecessary and a grave financial burden on the companies turnover as the Tribunal itself has recorded a finding that they have a strong prima facie case in their favour against the allegation of cartelisation. In this view of the matter, all these appeals have been filed where the prayer essentially is to the effect that this Court should stay the order of imposition of even 10% of the penalty in view of the fact that the appeals are listed for hearing on 21.08.2013 and in view of the said fact, there was no necessity of directing the Appellants to deposit this 10% by way of the penalty, the justification of which is yet to be gone into by the Tribunal. 5. Learned Counsels representing the Appellants have sincerely made an endeavour to impress upon this Court that the imposition of 10% penalty is neither in pursuance of any provision under the Competition Act, 2002 as there is no provision of pre-deposit under the Competition Act, 2002 in order to entertain appeal nor the Tribunal was justified in imposing this rider directing the parties to deposit 10% by way of penalty as it is yet to examine the reasonableness and justification of the order under appeal. In addition, it was submitted that in view of the observation of the Tribunal to the effect that there is a strong prima facie case in their favour against the allegation of cartelisation, it was absolutely not essential to saddle the Appellants with this huge financial liability. 6. In response to the show cause notice, counsel for the CCI and the Builders Association of India are also present before us, who obviously supported the order passed by the Tribunal imposing the penalty of 10% but the counsel for the Appellants assailed the order for the reasons referred to hereinabove. 7. Having heard them at some length, we are of the view that it would not be appropriate for us to make any observation or express any opinion insofar as the merit of the allegation levelled against the Appellants are concerned as the same is subjudice before the Tribunal. But we are surely concerned with the order of penalty imposed on the Appellants by the CCI which, for the time being, has been limited for payment to the extent of 10% of the amount which has been determined by the CCI. Having heard them we are further of the view that if the penalty order made by the CCI is not given effect to in a blanket way by exempting the Appellants from making the payment, it might practically amount to allowing their appeals by the Tribunal. Besides this, it is common practice in the legal arena that a decree, penalty or any order which is in the nature of payment in terms of money, the same is rarely interfered with and obviously so as in case of setting aside such order, the affected party can always be adequately compensated. At this stage, therefore, if the Tribunal thought it proper to take an equitable view of the matter by directing the Appellants to pay only 10% of the amount to be paid by them, the same in our view is not fit to be interfered with by way of an interim measure. The concern of this Court, however, is if the appeal is finally allowed by the Tribunal then what exactly would be the way out to pass on the amount of penalty to the benefit of the consumers, if the same is transferred to the State exchequer through the Consolidated Fund of India.

Decision reasoning: 1[ds]7. Having heard them at some length, we are of the view that it would not be appropriate for us to make any observation or express any opinion insofar as the merit of the allegation levelled against the Appellants are concerned as the same is subjudice before the Tribunal. But we are surely concerned with the order of penalty imposed on the Appellants by the CCI which, for the time being, has been limited for payment to the extent of 10% of the amount which has been determined by the CCI. Having heard them we are further of the view that if the penalty order made by the CCI is not given effect to in a blanket way by exempting the Appellants from making the payment, it might practically amount to allowing their appeals by the Tribunal. Besides this, it is common practice in the legal arena that a decree, penalty or any order which is in the nature of payment in terms of money, the same is rarely interfered with and obviously so as in case of setting aside such order, the affected party can always be adequately compensated. At this stage, therefore, if the Tribunal thought it proper to take an equitable view of the matter by directing the Appellants to pay only 10% of the amount to be paid by them, the same in our view is not fit to be interfered with by way of an interim measure. The concern of this Court, however, is if the appeal is finally allowed by the Tribunal then what exactly would be the way out to pass on the amount of penalty to the benefit of the consumers, if the same is transferred to the State exchequer through the Consolidated Fund of India.