Competition Act and Limitation Act: Time for NCLAT to Adjust Its Blurry Vision?

[By Bhabya Mahapatra]

The author is a student at Hidayatullah National Law University, Raipur.

Introduction

Section 53A of the Competition Act, 2002 (“the Act”) provides for an appellate body, i.e. the National Company Law Appellate Tribunal (“NCLAT”), to hear matters against the orders of the Competition Commission of India (“CCI”). On the other hand, article 226 of the Constitution of India empowers the High Courts to entertain writ petitions as original or appellate bodies. Notably, the Act nowhere bars this power of the High Court. In fact, the Supreme Court in its latest judgement[i] has held that the power of the High Court under article 226 cannot be taken away or abridged by any contrary provision in a statute.

However, the NCLAT on 20th May, 2020 in the case of Maj. Pankaj Rai v. Secretary, CCI[ii] has held that a litigant cannot approach any High Court to appeal against the orders of CCI when the Act specifically provides for a forum for that purpose.

Although, the judgement has also shed light on the standard of review in condonation of delay in filing an appeal in competition matters, a subject that has been touched upon less as opposed to the standard of condonation of delay falling under the purview of the Limitation Act, 1963. This article will try to discuss on what grounds the NCLAT might have erred, in deciding the above-mentioned case.

Background of the case

The Informants had raised concerns under ss. 3 & 4 of the Act before the CCI against NIIT Limited, New Delhi, offering computer education/ training services. The Informants being the franchisees of the Opposite Party, i.e. NIIT (“OP”), alleged that the OP was abusing its dominant position through its franchise agreements and indulging in anti-competitive practices.

The CCI therein, after taking all factors into consideration, reached the conclusion that the OP faced competition from similarly placed players in the market, and thereby it couldn’t be categorically concluded that the OP held a dominant position in the relevant market. Such observations were enough to rule in favour of the OP.

Interestingly, the appellant Mr. Pankaj Rai opted to appeal against this order of the CCI through a writ petition before the High Court of Telangana, contesting that the order was obtained by fraud. Notably, this point was contested by the appellant on the ground that it was because of the intervention of the advocate for the Respondent, i.e. Mr. Vinod Dhall, who previously served as the Chairperson of the CCI, that an order in favour of the Respondent could be obtained, hence claiming that the order was fraudulently obtained.

Noteworthy herein is that the High Court rejected the writ petition of the appellant holding that Mr. Rai should have approached the NCLAT instead of the High Court, on the basis that the Act provides for the remedy of appeal under s. 53A before the NCLAT. After a failed appeal before a Division Bench of the Telangana High Court, and retracting a review petition before the Supreme Court, the appellant after a period of 768 days (emphasis added) filed an appeal against the impugned order of CCI before the NCLAT.

Judgement

NCLAT referred to the case of Swiss Ribbons Pvt. Ltd. v. Union of India[iii] to shed light on the ratio that whenever a statutory remedy is available, the aggrieved party cannot be allowed to invoke the writ jurisdiction of the High Court instead. Hence, in the view of NCLAT, the litigant should have approached NCLAT, as has been provided under the Act (s. 53A). It went on to rule that a litigant aggrieved by the order of CCI cannot be allowed to choose the remedies, under the pretext of the order being against the principles of natural justice. If such a course is allowed, it would lead to forum shopping.

To understand the next part of the judgement, a reading of s. 53B(2) of the Act is required. It reads:

“Every appeal under sub-section (1) shall be filed within a period of sixty days…

Provided that the Appellate Tribunal may entertain an appeal after the expiry of the said period of sixty days if it is satisfied that there was sufficient cause for not filing it within that period.”

  1. 5 of the Limitation Act uses similar wordings:

“..Any appeal or any application … may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”

The NCLAT after considering this similarity, relied on the case of Geeta Kapoor v. Competition Commission of India[iv]  and held that if the ratio of the cases used in interpreting “sufficient cause” under s. 5 of Limitation Act, 1963 are also used to interpret “sufficient cause” under s. 53B(2) of the Act, the purpose of providing a different limitation period under the Act would be defeated, and hence by extension, the provisions of Limitation Act, 1963 stand excluded in proceedings governed by the Competition Act, 2002.

Based on the abovementioned points, NCLAT held that there was no “sufficient cause”, as provided under the proviso of s. 53B(2), for it to condone the delay of filing the appeal after the expiry of 60 days. Moreover, a delay of 768 days was also held to be unreasonable. Hence, the NCLAT conclusively decided that there existed no substantial grounds to admit the appeal beyond the prescribed period of limitation.

Analysis of the judgement

It is noteworthy herein that the two reasons attributed to the delay in filing the appeal under the NCLAT by the appellant were: (i) The geographical vicinity of the High Court of Telangana, as opposed to Delhi, as the appellant was a resident of Hyderabad; (ii) The claim of the order of CCI being obtained fraudulently, allowing the appellant to file a writ petition under any High Court.

The author firmly believes that these two grounds could have been construed by the NCLAT to establish “sufficient cause” as provided under the provision of s. 53B(2) of the Act. This stance will be explained by the author in a two-fold manner:

Firstly, the High Courts have the power to entertain writ petitions, even though the mechanism of appeal has been provided for in the Act. Since the appellant had alleged from the very beginning that the hearing was unfair because of the involvement of the former Chairperson in the CCI proceedings, it was completely legitimate of the appellant to approach the High Court. In the very recent case of MHPL v. CCI[v], there was a question on the jurisdictional ambit of the CCI. This case was heard by the High Court of Delhi and not the NCLAT, as again the High Court had power under the writ of quo warranto to entertain such matters.

Secondly, having established the above fact, since both the High Court of Telangana and the NCLAT had jurisdiction to hear the case, it was only reasonable for the litigant to approach the forum nearest to him.

However, the decision reeks of the baffling approach of the NCLAT.  The NCLAT relies on the case of Geeta Kapoor v. Competition Commission of India (“Geeta Kapoor case”)[vi] decided by the Competition Appellate Tribunal (“COMPAT”) to establish the proposition that the cases used to interpret the term “sufficient cause” under s. 5 of Limitation Act, 1963 cannot be used to interpret the same terms under s. 53B(2) of the Act. Interestingly, in the case of A. Ganesh v. Competition Commission of India (A. Ganesh case)[vii], also decided by the COMPAT, it was held that “…though the proviso of s. 53B(2) is not couched in language similar to s. 5 of the Limitation Act, 1963, … it can certainly be applied for deciding whether the appellant has succeeded in showing the existence of sufficient cause for not filing an appeal within the prescribed period i.e. 60 days.”

Although the case of A. Ganesh was decided a year prior to the Geeta Kapoor case, it is interesting to note that not only did COMPAT deliver two completely contrary decisions separated by only a period of 1 year, but also did not refer to the decision of the case of A. Ganesh in the latter case, if at all it was intended to be overruled.

Therefore, having discussed the above proposition, by implication, the usage of the term “forum shopping” by the NCLAT to describe the conduct of the appellant in the present case might be uncalled for. Forum shopping refers to the practice of a litigant choosing a court to get the most favourable decision.[viii] In several cases[ix], the Supreme Court has time and again proscribed against the practice of forum shopping. In this present case, it is the author’s view that the appellant did not indulge in the practice of forum shopping but had genuine reasons to approach the High Court of Telangana rather than the NCLAT, in the first instance, as has been discussed above.

It would be interesting if the appellant approaches the Supreme Court on the same or some additional grounds, challenging the decision of the NCLAT. But for the time being, the order clearly enumerates that s. 53B(2) of the Act needs to be interpreted separately and not in consonance with s. 5 of the Limitation Act, 1963.

Endnotes: 

[i] Benedict Denis Kinny v. Tulip Brian Miranda, <https://indiankanoon.org/doc/36995966/>

[ii] AT No. 1 of 2020.

[iii] (2019) 4 SCC 17.

[iv] 2016 SCC OnLine Comp AT 180.

[v] 2020 SCC OnLine Del 598.

[vi] Supra at iii.

[vii] 2015 Comp LR 900 (CompAT).

[viii] <https://www.merriam-webster.com/legal/forum%20shopping>

[ix] M/s Chetak Construction Ltd. v. Om Prakash & Ors., 1998 (4) SCC 577; UoI v. Cipla Ltd., VIII (2016) SLT 114.

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