In the last seven years, India's fair trade regulator, the Competition Commission of India (CCI) has handed down over seven hundred orders. There is hardly any order which has been struck down by the Competition Appellate Tribunal, an appellate body or any Court on merits of substantive assessment. However, plenty of its orders are facing challenges in various Courts including the Competition Appellate Tribunal on peripheral issues/grounds mainly (a) pre mature or incorrect exercise of jurisdiction, (b) decisions taken by those who have not heard the parties, (c) not affording the charged party an opportunity to defend itself, especially when CCI is in disagreement with the findings of DG, an investigative arm of CCI, (d) DG overstepping the scope of its investigation, (e) DG not affording opportunity to cross examine the witness whose statement is relied upon, and (f) not permitting an Advocate to accompany the deponent during the recording of his/her statement on oath at the investigation stage. Admittedly all these pitfalls hover around the basic tenet of adjudication namely due process, procedural fairness, both flowing from principles of natural justice (PNJs). These are avoidable as well as curable.
In order to carry out the purposes of the Act, the CCI1 as well DG have been conferred with sweeping powers. The CCI can institute an inquiry either suo motu or on information from any person or on reference from State/Statutory Authority2. The CCI is not obliged to hear the alleged charged party before formation of prima facie opinion3 and consequent initiation of an Inquiry. Institution of Inquiry relating to anti competitive agreement or abuse of dominance (ACA/AOD) mandates CCI to refer the matter to Director General for carrying out investigation and to submit Investigation Report within the given time. In order to stay clear and to ensure independence and impartiality in investigation, the CCI in its directions makes clear that nothing stated in prima facie order shall tantamount to final expression of opinion on the merits of the case and DG shall conduct its investigation without being swayed in any manner whatsoever by the observations made in the prima facie order.
Thus carriage of investigation by Director General, submission of Investigation report and sharing of same with the parties are vital compartments of an inquiry. In the last seven years of enforcement journey of provisions of ACA/AOD in India, it is noticed that CCI has by and large agreed with the findings contained in investigation report of DG and wherever CCI did not agree with the findings of DG, in most such cases, the Competition Appellate Tribunal, on appeal, has either dismissed the order of the CCI or has remitted the matter back to CCI for reconsideration. All these demonstrate that the report of DG is the foundation, beside being a precursor to CCI's order/directions4.
Noting the importance and recognizing that the DG has a daunting task of fact finding, the law empowers him with the same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908 while trying a suit, namely (a) summoning and enforcing the attendance of any person and examining him oath; (b) requiring the discovery and ;(c) receiving evidence on affidavits; (d) issuing commissions for the examination of documents; and (e) requisitioning public records (subject to certain conditions). In addition, the DG has been conferred with power to undertake search and seizure of course subject to prescribed checks5 and such a hard approach has been invoked in one case since the enforcement of the law in India.
Generally, the DG adopts two pronged soft approach namely collecting/ collating the information from the parties including third parties and public records, if any and recording of the statement of identified persons conversant with the matter under investigation. The information/documents filed by parties do help the Investigator in better understanding of the case including background, regulatory provisions and the issues involved. Though these submissions/responses filed are expected to be comprehensive and truthful, yet neither these are verified much less supported by a personal affidavit of the authorized person.
In order to check the veracity of the submissions, to have revealed the information to which the deponent has privy either in personal or official capacity, to unearth the business conducts practised but not documented, to fathom the gravity and magnitude of violations, the DG invariably summons the directors and others officers well versed with the business of charged party to tender evidence by way of recording of their statement. It is all in the domain of the DG to decide as to who is to be summoned (notwithstanding whether based out of India or abroad), when a person is be called and what questions are to responded by the deponent.
Undeniably antitrust issues are highly complex and a violation of the law triggers serious adverse sanctions and deterrent penalties. Therefore, due process and procedural fairness are the hallmark of sound and sustainable competition regime. The principles of natural justice mandate that no person should be condemned unheard. Right of being heard includes right of being represented by an attorney of choice. However, the Director General for last few years was disallowing advocates/lawyers to accompany the deponent and thus, statement of individuals were being recorded in the absence of lawyers. It is important to note that it was in the interest of the DG that the advocate is present during the deposition. An advocate can also be a witness to recorded statement and witness to the fact that neither coercion nor undue influence was exerted on a deponent during the course of the recording. This would make it difficult for a deponent to retract his statement and make false claims and therefore, the DG should have happily allowed the presence of an Advocate but the practice of recording statement of deponent without Attorney was unscrupulously followed especially when deposition is of an authorized person of charged party.
Despite the explicit mandate on the CCI to abide by the principles of natural justice and that an enterprise has the right to be represented by an authorized Attorney,6 the DG's office which is to conduct investigation for and on behalf of CCI, was not adhering to this mandate of the law. In this context, the observations of Lord Denning would be relevant and useful
"Once it is seen that a man has a right to appear by an agent, then I see no reason why that agent should not be a lawyer. It is not every man who has the ability to defend himself on his own. He cannot bring out the points in his own favour or the weaknesses in the other side. He may be tongue-tied or nervous, confused or wanting in intelligence. He cannot examine or cross-examine witnesses. We see it every day. A magistrate says to a man: 'You can ask any questions you like'; whereupon the man immediately starts to make a speech. If justice is to be done, he ought to have the help of someone to speak for him; and who better than a lawyer who has been trained for the task? I should have thought, therefore, that when a man's reputation or livelihood is at stake, he not only has a right to speak by his own mouth. He also has a right to speak by counsel or solicitor."
An advocate is an officer of the Court and is in fact mandated to assist the Court7. He is also the voice of others and he owes a variety of obligations to his/her client as well as the society at large. The question of arbitrary, unreasonable, unwritten practice of not allowing authorized advocate to accompany the deponent during the course of recording of statement by the DG, came up for consideration and fortunately it has very recently been settled by the High Court of Delhi8. In support of rationale for not permitting Advocate at the stage of recording of statement in an ongoing investigation, the CCI/DG came up inter-alia with following arguments:
- That the Competition Act belongs to the family of legislation which deals with economic offences such as Foreign Exchange Regulation Act etc and Courts have consistently held that a person who is called to give his statement by way of evidence cannot insist as a matter of right that he be accompanied by a lawyer;
- That the person who is called to give his statement is not an accused and the question of his self incrimination would not arise;
- Larger public interest calls for expeditious investigation;
- That the CCI is not barring advocates from practicing before it but a person being investigated has no right to be represented by an advocate during investigation when there is only a fact finding.
The Hon'ble High Court of Delhi found it difficult to accept the arguments put forth by the CCI/DG and noted that:
- The powers of the DG during such investigation are far more sweeping and wider than the power of investigation conferred on Police under the Code of Criminal Procedure Code. While the Police has no power to record evidence on oath but the DG has been vested with such a power; and
- It is no answer that no prejudice would be caused to the person/enterprise being investigated. The credibility and competitive position of a public company is affected in the business world even though in the end it may be completely exonerated.
In addition, the High Court took note that the Advocate Act, 1961 confers a right to practice on Advocates and it provides that every advocate shall be entitled to practice throughout India in all Courts and Tribunals or before person legally authorized to take evidence9. It further said that right to practice would include accompanying a person who has been summoned before the DG for investigation.
In view of court ruling against which no appeal has been filed before the Supreme Court, it is believed that henceforth, the DG and the Attorney representing a party to the proceedings will work in tandem, not protract the proceedings and will ensure that innocent is not punished and violator is not spared.
Footnotes
* Partner & Head of Competition Law Practice, Luthra & Luthra Law Offices, New Delhi. He is a former Additional Director General , Competition Commission of India/Monopolies and Restrictive Trade Practice Commission, Government of India. The views of the author are personal. The author can be reached at gbhatia@luthra.com
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2 Section 36- Power to regulate its own procedure beside powers as are vested in a Court while trying a suit
32 Section 19- Inquiry into certain agreements and dominant position of enterprise.
4 Supreme Court in the matter of CCI vs Steel Authority of India.
5 Section 27 lays down orders after inquiry into agreements or abuse of dominant position. These include direction to cease and desist beside imposition of monetary penalty.
6 Section 41 of the Competition Act, 2002.
7 Section 35- Appearance before Commission
8 Obligation cast by the Bar Counsel of India.
9 Order of 22nd April, 2016 in WP© 11411/2015 & CM No. 30075/2015 in the matter of Oriental Rubber Industries Private Limited Vs. CCI
10 Section 30
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