'Informant' u/s 19(1)(a) of the Competition Act, 2002
Published: Jan 27, 2021
By Prashanth Shivadass & Pravallika VS*
THE Supreme Court recently set aside the National Company Law Appellate Tribunal ("NCLAT") on the question of Locus Standi of an Informant, in the recent judgement Samir Agarwal v. Competition Commission of India & Others = 2020-TIOLCORP-01-SC-CL-LB.
A case was filed before the Competition Commission of India ("CCI") by a legal practitioner, Samir Aggarwal ('informant') against Ola and Uber ("Aggregators"). Informant alleged that the aggregators were in contravention of Section 3 of the Competition Act, 2002 ("Act") and were allegedly involved in "Hub and Spoke cartel" between the Aggregators (Hub) and drivers (Spokes).
The information was dismissed by CCI on the ground that the aggregators are not in contravention of the Act and passed an order under Section 26(2). Aggrieved by the order, the informant approached the NCLAT. While the NCLAT agreed with CCI on merits, it went into the question of who is an informant and held that "an informant must establish that he had directly suffered an infringement of his legal rights as a consumer or was a part of beneficiary of healthy competitive practices".
The relevant abstract is under:
"The concept of Locus Standi has been diluted to some extent by allowing public interest litigation, class action and actions initiated at the hands of consumer and trade associations, reference to receipt of any information from any person in Section 19(1)(a) of the Act has necessarily to be constructed as a reference to a person who has suffered invasion of his legal rights as a consumer or beneficiary of healthy competitive practices. Any other interpretation would make room for unscrupulous people to rake issues of anti-competitive agreements or abuse of dominant position targeting some enterprises with oblique motives."
Further, it was also held that the informant in the present case has not shown any record that he has suffered a legal injury at the hands of the aggregators as a consumer or as a member of any consumer or trade association. Not even a solitary event of the informant being a victim of unfair price fixation mechanism at the hands of the aggregators or having suffered on account of abuse of dominant position of either of the two enterprises had been brought to the notice of the Appellate Tribunal. 1 Therefore, the NCLAT held that "informant has no locus standi to maintain an action qua the alleged contravention of Act".
It is interesting to note that this decision of NCLAT counters the earlier decision of the erstwhile Competition Appellate Tribunal ("COMPAT") on same issue in Shri Surendra Prasad v. Competition Commission of India and Others 2, wherein the COMPAT delved into Sections 18 and 19 read with Section 26(1) of the Act and held that there is no specific qualification or condition or criteria that needs to be fulfilled by any person in order to file an information under Section 19(1)(a) of the Act.
Aggrieved by the aforementioned order of the NCLAT, the informant approached the Supreme Court under Section 53T of the Act. While the Supreme Court refused to interfere with the CCI and NCLAT's order on merit, they did intensely look at the NCLAT's opinion on the meaning of the term 'informant'. The Supreme Court set aside the NCLAT's finding that the Locus Standi did not vest in hands of the Informant and held that 'any person' could provide information to the CCI.
The Supreme Court further held that the definition of "person" in Section 2(l) of the Act, is an inclusive one and is extremely wide and includes individuals of all kinds and every artificial juridical person. This may be contrasted with the definition of "consumer" in Section 2(f) of the Act, which makes it clear that only person who buys goods for consideration, or hire or avail of services for consideration, are recognised as consumers. 3
A look at Section 19(1) of the Act would show that the Act originally provided for the "receipt of a complaint" from any person, consumer or their association, or trade association. This expression was then substituted with the expression "receipt of any information in such manner and" by the 2007 Amendment 4. This substitution is not without significance. While a complaint could be filed only by a person who was aggrieved by a particular action, information maybe received from any person, whether or not such person is personally affected. This is for the reason that the proceedings under the Act are proceedings in rem which affect the public interest. 5
Further, the Apex Court held that CCI could inquire into any alleged contravention of provisions of the Act as laid down in Section 19(1) of the Act. CCI exercising its suo moto power "may receive information from any person and not merely from a person who is aggrieved by the conduct that is alleged to have occurred".
This also follows from a reading of Section 35 of the Act, in which the earlier expression "complainant or defendant" has been substituted by the expression, "person or an enterprise," setting out that the informant may appear either in person, or through one or more agents, before the CCI to present the information that he/she has gathered. 6
In this regard, the Competition Commission of India (General) Regulations, 2009 ("2009 Regulations") of the Act also does not require the informant to state how he is personally aggrieved by the contravention of the Act, and only requires a statement of facts and details of the alleged contravention to be set out in the information filed. Further, Regulation 25 7 shows that public interest must be foremost consideration of the CCI when an application is made to it in writing stating that a person or enterprise has substantial interest in the outcome of the proceedings, and such person may therefore be allowed to take part in the proceedings. Regulation 35 8 in this regard also provides that the CCI must maintain confidentiality of the identity of an informant on a request made to it in writing, so that such informant be free from harassment by persons involved in contravening the Act. This however does not mean that all informants/information will be entertained and informant's cannot be punished. Section 45 of the Act is a deterrent against persons who provide information to the CCI, mala fide or recklessly, in as much as false statements and omissions of material facts are punishable with a penalty which may extend to the hefty amount of rupees one crore, with the CCI being empowered to pass other such orders as it deems fit. This, and the judicious use of heavy costs being imposed when the information supplied is either frivolous or mala fide, can keep in check what is described as the growing tendency of persons being "set up" by rivals in the trade. 9
The Supreme Court by virtue of this decision has defined and widened the scope and ambit of the term 'informant' and CCI's role by holding that an information could be received by any person from a member of the public - who may be a person aggrieved or a whistle blower or on its own motion.
[The authors are Founder and Associate respectively with Shivadass & Shivadass (Law Chambers), Bangalore. The authors would like to acknowledge the contribution of Ms. Madhura Rajkumar, a fifth year law student from Symbiosis Law School, Hyderabad. The views expressed are strictly personal.]
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1 See, para 4 at page 7
2 See, Shri Surendra Prasad v. Competition Commission of India and Others; Appeal No. 43 of 2014 = 2015-TIOLCORP-01-CCI
3 See, Para 13 at page 23
4 Competition Commission of India (General)Amendment, 2007 ("2007 Amendment")
5 See, Para 14 at pages 23 and,24
6 See Para 14 at Page 24
7 Regulation 25 - Power of Commission to permit a person or enterprise to take part in proceedings, Competition Commission of India (General) Regulations, 2009
8 Regulation 35 - Confidentiality, Competition Commission of India (General) Regulations, 2009
9 See, Paras 14 and 15 at pages 24 and 25
