[By Sourav Paul]
The author is a student at the National University of Juridical Sciences.
Introduction
On June 11, 2021, the Karnataka High Court (‘HC’) dismissed the writ petitions filed by Flipkart Internet Pvt. Ltd. (‘Flipkart’) and Amazon Sellers Services Pvt. Ltd. (‘Amazon’), challenging the Competition Commission of India’s (‘CCI’) order issued under Section 26 (1) of the Competition Act, 2002 (‘Act’). This case dealt with the principle of res judicata and its applicability to the decisions of the CCI to a considerable extent. The doctrine of res judicata is a universal principle of law that a judicial decision given by a competent court must not be re-litigated provided the decision of the said court is final. The statutory law of res judicata is codified in Section 11 of the Code of Civil Procedure, 1908.
The issue of applicability of this doctrine becomes all the more relevant now since the government intends to introduce the Draft Competition (Amendment) Bill, 2020(‘Bill’) based on the report released by the Competition Law Review Committee. The Bill proposes to include sub-section 2A under Section 26 of the Act, thereby incorporating the doctrine of res judicata in Indian competition law jurisprudence.
Therefore, this article intends to examine the applicability of the doctrine of res judicata to the decisions of the CCI in light of the recent Karnataka HC’s judgment. The article also argues that the doctrine cannot be applied due to the unique character of the CCI and its functions.
Analysing the Karnataka High Court’s Judgment
In January 2020, the CCI passed an order under Section 26(1) of the Act directing the Director-General to investigate the allegations levelled by Delhi VyaparMahasangh (‘DVM’). The DVM alleged that these e-commerce platforms were involved in deep discounting, preferential listing, and other unfair trade practices.
Flipkart, while relying on the order passed by CCI in All India Online Vendors Association v. Flipkart & Ors., (‘AIOVA case’) argued that since CCI did not initiate an investigation against them, as a result, the information filed by the DVMmust be treated in a similar manner. In the AIOVA case, AIOVA informed the CCI that Flipkart is abusing its dominant position in the relevant market, thereby violating Section 4 of the Act. The CCI found no contravention of the Act and held that “looking at the present market construct and structure of online marketplace platforms market in India, it does not appear that anyone player in the market is commanding any dominant position at this stage of evolution of market”.
The HC observed that the doctrine of res judicata does not apply to orders passed by the CCI since the objective of the Act is to ensure free and fair competition in the market. While relying on Cadila Healthcare Ltd. v. CCI (‘Cadila Healthcare’), the HC opined that the “CCI or expert body should ordinarily not be crippled in their efforts by application of technical rules of procedure”.
In Cadila Healthcare, the Delhi High Court (‘DHC’) held that the settlement or disposal of an individual case might not be determinative of the matter which pertains to anti-competitive conduct of an entity also because it affects the wider public, just as a crime does. Furthermore, the DHC observed that barring the CCI from taking cognisance of the same information against the same entity is similar to quashing FIRs filed by different consumers when a service provider’s malpractice is exposed by one complaint. Therefore, in essence, the DHC did not favour the applicability of the doctrine of res judicata to orders passed by the CCI since specific complaints cannot be determinative of the behaviour of an enterprise in the market as it impacts other aspects of the competition law, which may not be mentioned in such complaints.
Non-Applicability of Res Judicata due to the Unique Character of CCI
The test of a judicial tribunal as laid down in Copper v. Wilson presupposes the presence of a dispute between the parties. This test has been followed by the Supreme Court in a number of decisions. It is argued that the CCI’s functions do not include resolving ‘disputes’ between the parties. The informant is not even a party to the dispute but a mere source of information to the CCI, on the basis of which an enquiry is initiated. The CCI’s function is primarily investigatory in nature under Sections 3 and 4 of the Act. It also has the power to take punitive actions against any entity if found contravening any provision of the Act.
The Cooper test also requires the parties to the dispute to present their case. However, as stated in the CCI v. Steel Authority of India &Anr. case, the informant is not entitled to a hearing if the CCI chooses not to go ahead with the enquiry. Furthermore, matters related to compensation are left for the Appellate Tribunal to determine under Section 53N of the Act. Therefore, it is clear that CCI is not a dispute settlement body in light of these arguments.
Furthermore, the DHC in the case of Mahindra Electricity Mobility v. CCI ruled that the CCI is in part an administrative body and in part a quasi-judicial body, and therefore, it cannot be deemed to be a tribunal exclusively discharging judicial functions. The court also relied on the Raghavan Committee Report to determine the actual nature of the CCI.
In Dwarka Prasad Sheokaran Das v. CIT, it was noted that the principle of res judicata is applicable to suits when there are two parties appearing before a court for resolution of their disputes. In Messrs Kamlapat Moti Lal v. CIT, it was held that since income-tax authorities are not courts and therefore, their decisions cannot operate as res judicata.In Smt. Ujjam Bai v. State of Uttar Pradesh, the court opined that the principle applies to administrative tribunals since they discharge judicial duties to a considerable extent. Therefore, in essence, the doctrine of res judicata applies only to bodies that discharge substantial judicial duties. Since the author has already established that the CCI does not solely discharge judicial functions, the logical conclusion that follows is that the doctrine cannot be applied to the decisions of the CCI unless carving out a provision in the Act mentioning its applicability.
Conclusion
In light of the aforementioned discussion, it is clear that the legislature and the judiciary have contrasting views over the applicability of the doctrine of res judicata to decisions of the CCI. The recent HC’s judgment has reiterated the position of the judiciary over the issue. The analysis in Part III of the article revealed that the doctrine could not be applied to decisions of the CCI since it is entrusted with varied duties and performs various functions at different stages of competition law enforcement. Furthermore, it must be noted that competition law cases have a public interest perspective, and the applicability of the doctrine would significantly curb the powers of the CCI. With markets becoming more dynamic in nature, this step would be counter-productive. Therefore, it is hoped that the legislature takes into account these concerns before enacting the Bill to ensure that the CCI’s powers remain intact.