anticompetitive agreement/cartel = Reliance Jio Infocomm Limited has filed information under Section 19(1) of the Competition Act,
2002 before the
Competition Commission of India alleging anticompetitive
agreement/cartel having been formed by three major
telecom operators, namely, Bharti Airtel Limited, Vodafone India
Limited and Idea Cellular Limited (Incumbent Dominant
Operators) (hereinafter referred to as the ‘IDOs’). - As per
Section 26 of the Competition Act, on receipt of such an
information, the CCI has to form an opinion as to whether there
exists a prima facie case or not. If it is of the opinion that there
exists a prima facie case, the CCI directs the Director General to
cause an investigation to be made into the matter. -holding a view that prima facie case exists and an investigation is
warranted into the matter. It, accordingly, directed the Director
General to cause investigation in the case.- writ petitions filed - High court held that In a nutshell, it is held that insofar as
contracts, etc. which are regulated by the TRAI Act are
concerned, in the first instance, it is the authority under the TRAI
Act which has to decide these questions. Once there is a
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 7 of 122
determination of the respective rights and obligations under these
licenses by the authority under the TRAI Act, which provided an
information to the effect that the particular act appears to be anticompetitive,
only thereafter the CCI gets jurisdiction to go into the
question of such anti-competitive practice. Primarily the message
behind the decision of the High Court is that jurisdictional facts
are to be decided by the authorities under the TRAI Act which has
the exclusive jurisdiction to determine those issues as the TRAI is
the statutory authority established for this very purpose, and
unless there is a determination of these facts, the machinery
under the Competition Act cannot be invoked. To put it otherwise,
the judgment proceeds to decide that it was premature for the
CCI to entertain the Information for want of determination of such
issues that fall within the domain of the TRAI Act. -Apex court held that the order under Section 26(1) of the
Competition Act is administrative in nature and further that it was
merely a prima facie opinion directing the Director General to
carry the investigation, the High Court would not be competent to
adjudge the validity of such an order on merits. The observations
of the High Court giving findings on merits, therefore, may not be
appropriate.
99) At the same time, since we are upholding the order of the High
Court on the aspect that the CCI could exercise jurisdiction only
after proceedings under the TRAI Act had concluded/attained
finality, i.e. only after the TRAI returns its findings on the
jurisdictional aspects which are mentioned above by us, the
ultimate direction given by the High Court quashing the order
passed by the CCI is not liable to be interfered with as such an
exercise carried out by the CCI was premature. The result of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 121 of 122
discussion would be to dismiss these appeals, subject to our
observations on certain aspects. Ordered accordingly.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 11843 OF 2018
(ARISING OUT OF SLP (C) NO. 35574 OF 2017)
COMPETITION COMMISSION OF INDIA .....APPELLANT(S)
VERSUS
BHARTI AIRTEL LIMITED AND OTHERS .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO(S). 11844-11845 OF 2018
(ARISING OUT OF SLP (C) NOS. 35532-35533 OF 2017)
CIVIL APPEAL NO(S). 11846 OF 2018
(ARISING OUT OF SLP (C) NO. 35497 OF 2017)
CIVIL APPEAL NO(S). 11852 OF 2018
(ARISING OUT OF SLP (C) NO. 115 OF 2018)
A N D
CIVIL APPEAL NO(S). 11847-11851 OF 2018
(ARISING OUT OF SLP (C) NOS. 37285-37289 OF 2017)
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 1 of 122
2) Reliance Jio Infocomm Limited (hereinafter referred to as 'RJIL')
has filed information under Section 19(1) of the Competition Act,
2002 (hereinafter referred to as the 'Competition Act') before the
Competition Commission of India (for short, 'CCI') alleging anticompetitive
agreement/cartel having been formed by three major
telecom operators, namely, Bharti Airtel Limited, Vodafone India
Limited and Idea Cellular Limited (Incumbent Dominant
Operators) (hereinafter referred to as the ‘IDOs’). Similar
Informations under Section 19 of the Competition Act were also
filed by one Mr. Ranjan Sardana, Chartered Accountant, and Mr.
Justice Kantilal Ambalal Puj (Retd.). These were registered by
the CCI as Case Nos. 80-81, 83 and 95 respectively. As per
Section 26 of the Competition Act, on receipt of such an
information, the CCI has to form an opinion as to whether there
exists a prima facie case or not. If it is of the opinion that there
exists a prima facie case, the CCI directs the Director General to
cause an investigation to be made into the matter. Apart from the
IDOs, certain allegations were also made against the Cellular
Operators Association of India (for short, 'COAI'). The CCI issued
notice to these parties and after hearing the RJIL, the aforesaid
cellular companies and COAI, it passed a common order dated
April 21, 2017 in all these cases (by clubbing them together)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 2 of 122
holding a view that prima facie case exists and an investigation is
warranted into the matter. It, accordingly, directed the Director
General to cause investigation in the case.
Introduction:
3) Four writ petitions came to be filed by the Bharti Airtel Limited,
Vodafone India Limited, Idea Cellular Limited and COAI
respectively. The prayed for quashing of the aforesaid order and
consequential action/proceedings on the ground that the CCI did
not have any jurisdiction to deal with such a matter. Show-cause
notices were issued pursuant to which the CCI as well as RJIL
filed their counter affidavits. The mater was heard and vide
judgment dated September 21, 2017 the High Court has allowed
these writ petitions and quashed/set aside the order dated April
21, 2017 passed by the CCI and consequently notices issued by
the Director General of the CCI have also been quashed. We
may reproduce the conclusions and operative portion of the order
passed by the Bombay High Court here itself, which are as under:
"130. Conclusions:
a) All the Writ Petitions are maintainable and
entertainable. This Court has territorial jurisdiction to deal
and decide the challenges so raised against impugned
order (majority decision) dated 21 April 2017, passed by
the Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002 in
case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 3 of 122
the consequential actions/notices of the Director General
under Section 41 of the Competition Act arising out of it.
b) The telecommunication Sector/Industry/Market is
governed, regulated, controlled and developed by the
Authorities under the Telegraph Act, the Telecom
Regulatory Authority of India Act (TRAI Act) and related
Regulations, Rules, Circulars, including all government
policies. All the “parties”, “persons”, “stakeholders”,
“service providers”, “consumers” and “enterprise” are
bound by the statutory agreements/contracts, apart from
related policy, usage, custom, practice so announced by
the Government/Authority, from time to time.
c) The question of interpretation of clarification of any
“contract clauses”, “unified license”, “interconnection
agreements”, “quality of service regulations”, “rights and
obligations of TSP between and related to the above
provisions”, are to be settled by the Authorities/TDSAT and
not by the Authorities under the Competition Act.
d) The concepts of “subscriber”, “test period”, “reasonable
demand”, “test phase and commercial phase rights and
obligations”, “reciprocal obligations of service providers” or
“breaches of any contract and/or practice”, arising out of
TRAI Act and the policy so declared, are the matters within
the jurisdiction of the Authority/TDSAT under the TRAI Act
only.
e) The Competition Act and the TRAI Act are independent
statutes. The statutory authorities under the respective
Acts are to discharge their power and jurisdiction in the
light of the object, for which they are established. There is
no conflict of the jurisdiction to be exercised by them. But
the Competition Act itself is not sufficient to decide and
deal with the issues, arising out of the provisions of the
TRAI Act and the contract conditions, under the
Regulations.
f) The Competition Act governs the anti-competitive
agreements and its effect – the issues about “abuse of
dominant position and combinations”. It cannot be used
and utilized to interpret the contract conditions/policies of
telecom Sector/Industry/Market, arising out of the
Telegraph Act and the TRAI Act.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 4 of 122
g) The Authority under the Competition Act has no
jurisdiction to decide and deal with the various statutory
agreements, contracts, including the rival
rights/obligations, of its own. Every aspects of
development of telecommunication market are to be
regulated and controlled by the concerned Department/
Government, based upon the policy so declared from time
to time, keeping in mind the need and the technology,
under the TRAI Act.
h) Impugned order dated 21 April 2017 passed by the
Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002
and all the consequential actions/notices of the Director
General under Section 41 of the Competition Act
proceeded on wrong presumption of law and usurpation of
jurisdiction, unless the contract agreements, terms and
clauses and/or the related issues are settled by the
Authority under the TRAI Act, there is no question to
initiating any proceedings under the Competition Act as
contracts/agreements go to the root of the alleged
controversy, even under the Competition Act.
i) The Authority, like the Commission and/or Director
General, has no power to deal and decide the stated
breaches including of “delay, “denial”, and “congestion” of
POIs unless settled finally by the Authorities/TDSAT under
the TRAI Act. Therefore, there is no question to initiate
any inquiry and investigations under Section 26(1) of the
Competition Act. It is without jurisdiction. Even at the time
of passing of final order, the Commission and the Authority,
will not be in a position to deal with the contractual terms
and conditions and/or any breaches, if any. The uncleared
and vague information are not sufficient to initiate inquiry
and/or investigation under the Competition Act, unless the
governing law and the policy of the concerned “market”
has clearly defined the respective rights and obligations of
the concerned parties/persons.
j) Impugned order dated 21 April 2017 and all the
consequential actions/notices of the Director General
under the Competition Act, therefore, in the present facts
and circumstances, are not mere “administrative
directions”.
k) Impugned order dated 21 April 2017 and all the
consequential actions/notices of the Director General
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 5 of 122
under the Competition Act are, therefore, illegal, perverse
and also in view of the fact that it takes into consideration
irrelevant material and ignores the relevant material and
the law.
l) Every majority decision cannot be termed as
“cartelisation”. Even ex-facie service providers and its
Association COAI have not committed any breaches of
any provisions of the Competition Act.
131. Hence the following
ORDER
a) Impugned order dated 21 April 2017, passed by the
Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002 in
case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all
the consequential actions/notices of the Director General
under Section 41 of the Competition Act, are liable to be
quashed and set aside, in exercise of power under Article
226 of the Constitution of India. Order accordingly.
b) All the Writ Petitions are allowed.
c) There shall be no order as to costs.
d) In view of the above, nothing survives in Civil
Application (Stamp) No. 17736 of 2017 in Writ Petition No.
7164 of 2017 and the same is also disposed of. No costs.”
4) Gist of the aforesaid order, as per the High Court, is that insofar
as the telecom sector/industry/market is concerned, same is
governed, regulated, controlled and developed by the authorities
under the India Telegraph Act, 1885 (hereinafter referred to as the
‘Telegraph Act’), the Telecom Regulatory Authority of India Act,
1997 (for short, ‘TRAI Act’), and as well as the related
Regulations, Rules, Circulars, etc. Therefore, the question of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 6 of 122
interpretation or clarification of any “contract clauses”, “unified
license”, “interconnection agreements”, “quality of service
regulations”, “rights and obligations of TSP between and related
to the above provisions”, are to be settled by the
Authorities/Telecom Disputes Settlement and Appellate Tribunal
(TDSAT) and not by the Authorities under the Act. It has also
held that the Competition Act and the TRAI Act are independent
statutes and the statutory authorities under the respective Acts
are to discharge their power and jurisdiction in the light of the
objectives for which they are established. The Competition Act is
itself not sufficient to decide and deal with the issues arising out
of the provisions of the TRAI Act etc. Thus, the CCI has no
jurisdiction to decide and deal with the various statutory
agreements, contracts, including rival rights/obligations, of its
own. The issues arising out of contract agreements, terms and
clauses and/or the related issues are to be settled by the
authority under the TRAI Act in the first instance and unless these
issues are decided, there is no question of initiating any
proceedings under the Act. In a nutshell, it is held that insofar as
contracts, etc. which are regulated by the TRAI Act are
concerned, in the first instance, it is the authority under the TRAI
Act which has to decide these questions. Once there is a
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 7 of 122
determination of the respective rights and obligations under these
licenses by the authority under the TRAI Act, which provided an
information to the effect that the particular act appears to be anticompetitive,
only thereafter the CCI gets jurisdiction to go into the
question of such anti-competitive practice. Primarily the message
behind the decision of the High Court is that jurisdictional facts
are to be decided by the authorities under the TRAI Act which has
the exclusive jurisdiction to determine those issues as the TRAI is
the statutory authority established for this very purpose, and
unless there is a determination of these facts, the machinery
under the Competition Act cannot be invoked. To put it otherwise,
the judgment proceeds to decide that it was premature for the
CCI to entertain the Information for want of determination of such
issues that fall within the domain of the TRAI Act.
5) It is obvious that the RJIL is not happy with the aforesaid
outcome. Even the CCI feels aggrieved. CCI has impugned this
decision by filing four special leave petitions, while the other one
has been filed by the RJIL.
6) The material facts which are absolutely essential to determine the
controversy, eschewing the unnecessary details, may now be
recapitulated:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 8 of 122
Factual Background:
With the decision of the Government of India, more than 25
years ago, ushering into era of globalisation and liberalisation, lot
of avenues opened up. It led to the privatisation of business in
many sectors which were, hitherto, monopolistic domain of the
Government. These included aviation, insurance,
telecommunication etc. With the opening of the industrial and
other activities in all spheres by placing it in the hands of private
sector led to a significant economic development. The absolute
control of the Government through public enterprise or otherwise,
which had seen licence and quota raj, virtually withered away,
thereby reverting back to laissez faire economy to a great extent,
though not completely. It led to two significant developments:
In the first instance, though the private sector was given full
freedom to do the business without any shackles in the form of
controls etc., it was also deemed necessary at the same time that
in public interest, some of the aspects of the business need to be
regulated, of course, not by the Government but by an
independent regulatory authority. This necessity prompted the
Government to come out with regulatory regime in different
sectors. For example, in insurance sector, we have regulatory
authority constituted under Insurance Regulatory and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 9 of 122
Development Authority Act, 1999; for industries generating
electricity, there is an electricity regulatory authority constituted
under the Electricity Act, 2003; and for telecom sector, with which
we are concerned, the TRAI is constituted under the provisions of
TRAI Act.
Secondly, this requirement to do business thereby allowing
free entry to private enterprise led to competition between
different players in the private sector. Competition is perceived
as a phenomena which is in best public interest in so many ways.
Therefore, it becomes necessary to encourage competition. At
the same time, tendency of the business enterprises to adopt
practices which retard healthy competition needed to be curbed.
There was a governing law in the field known as Monopolistic and
Restrictive Trade Practice Act, 1969. However, it was felt that a
new robust statutory regime is required to take care of the needs
of the present day. This necessity prompted the Parliament to
come out with a new Act on the subject and the Competition Act,
2002 was passed by the Parliament. Under this Act, the CCI is
constituted as a statutory body which is to ensure healthy
competition in markets thereby preventing the practice of having
adverse effect on competition; to promote and sustain the
competition in markets; to protect the interest of consumers and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 10 of 122
to ensure freedom of trade. In that sense, the CCI is also a
regulator. But a unique feature of the CCI is that it is not sector
based body but has the jurisdiction across which transcends
sectoral boundaries, thereby covering all the industries, with
focus on the aforesaid object and purpose behind the
Competition Act, 2002.
7) In the instant appeals, width and scope of the powers of the CCI
under the Competition Act, 2002 pertaining to telecom sector i.e.
in respect of the companies in telecom industry providing telecom
services is to be defined vis-a-vis the scope of the powers of
TRAI under the TRAI Act, 1997. It has arisen in these appeals, in
the following background:
As mentioned above, TRAI is the regulatory which regulates
the functioning of the telecom service provider i.e. the telecom
sector. Section 11 of the TRAI Act enumerates various functions
which TRAI is supposed to perform under the Act. Section 13,
likewise, empowers the TRAI to issue directions, from time to
time, to the service provider. In exercise of powers under Section
13 read with Section 11 of the TRAI Act, the TRAI issued
directions dated June 07, 2005 to all the telecom service
providers to provide interconnection within ninety days of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 11 of 122
applicable payments made by the interconnection seeker. The
purpose behind providing interconnection by one service provider
to the other service provider is to ensure smooth communication
by a subscriber of one service provider to the cell number which
is provided by another service provider. In that sense, this
direction facilitates smooth functioning of the cell phone network
even when it is managed by different companies as it ensures
interconnectivity i.e. connectivity from one service provider to
other service provider.
8) On October 21, 2013, RJIL was granted Unified License and
Unified Access Service License under Section 4 of the Telegraph
Act by the Department of Telecom (DoT) for providing
telecommunication services in all 22 circles/licensed service
areas in India. Soon thereafter, RJIL executed interconnection
agreements (ICA) with existing telecom operators inter alia
including, Bharti Airtel Limited and Bharti Hexagon Limited
(hereinafter collectively referred to as the ‘Airtel’), Idea Cellular
Limited (hereinafter referred to as the ‘Idea’); Vodafone India
Limited/Vodafone Mobile Services Limited (hereinafter collectively
referred to as the ‘Vodafone’). RJIL commenced test trial of its
services after intimation and approval of the DoT and TRAI.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 12 of 122
9) By its ‘firm demand’ letter of June 21, 2016, RJIL vide separate
letters requested IDOs to augment Point of Interconnection
(POIs) for access, National Long Distance (NLD) and
International Long Distance (ILD) services, as according to it, the
capacity already provided to it was causing huge POI congestion,
resulting in call failures on its network. According to RJIL, these
companies intentionally ignored the aforesaid request.
Accordingly, RJIL sent a letter dated July 14, 2016 to TRAI stating
that the POIs provided by IDOs are substantially inadequate and
leading to congestion/call failures on its network in all circles.
Hence, TRAI was requested to intervene and direct these
telecom operators to augment the POI capacities as per the
demands made by RJIL. TRAI vide separate letters dated July
19, 2014 requested inter alia the aforementioned telecom
operators to augment POIs as per the RJIL’s request. Further,
responses of the respective companies were also sought on the
issues raised by RJIL, within seven days. Idea responded by
sending letter dated July 26, 2016 to RJIL denying that there had
been any delay in augmentation of POIs and further stated that it
is willing to fully support RJIL and that it had instructed its circle
teams to augment the POIs on the basis of traffic congestion as
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 13 of 122
per the ICA. Likewise, Airtel also sent reply dated August 03,
2016 to TRAI, inter alia stating that augmentation of POIs shall be
undertaken as per the terms and conditions of the ICA and on the
basis of traffic trends post their commercial launch. RJIL was not
satisfied with such responses. It sent another letter dated August
04, 2016 to TRAI reiterating its earlier request for augmentation of
POIs by the subject telecom operators. In the meantime, even
Cellular Operators Association of India (COAI) intervened by
addressing communication dated August 08, 2016 to TRAI
wherein it took a stand by stating that the RJIL was providing free
service to millions of users under the guise of testing which led to
choking of POIs. It was further suggested that due to the free
service provided by RJIL, a substantial imbalance in voice traffic
had occurred for which the existing operators were not
adequately compensated under the Interconnection Usage
Charges regulations (IUC) in place.
10) There was further exchange of correspondence between the
parties and even by the parties to the TRAI which shows that the
parties stuck to their respective positions and it may not be
necessary to refer to those communications in detail. Suffice it is
to mention that RJIL fixed September 05, 2016 as the launch
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 14 of 122
date, which fact was informed to other service providers as well
who were also told that the subscriber base was expected to
substantially and swiftly increase resulting in even more POI
congestion. On that basis, request was made for urgent POI
augmentation vide letter dated September 02, 2016. The TRAI
even facilitated a meeting between the representatives of RJIL
and other service providers (respondents herein) to sort out and
resolve the differences in the interest of the consumers. At the
same time, in the said meeting, the three telecom operators
(respondents herein) also raised a grievance that free calls being
provided by RJIL has resulted in an unprecedented traffic
congestion on their respective networks and the current IUC
regime is inadequate to cover the cost of efficiently maintaining
such high traffic. Thereafter, vide letter dated September 14,
2016, addressed by Airtel to RJIL, it stated that the POIs (also
known as E1s) would be converted into 50:50 ratio to outgoing
and incoming E1s. In other words, the E1s provided would be
converted to ‘only outgoing’ or ‘only incoming’ i.e. one-way E1s.
RJIL replied by stating that it was acceptable to them.
11) Soon thereafter, i.e. in September 2016 itself, Mr. Rajan Sardana,
a Chartered Accountant, filed information under Section 19 of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 15 of 122
Competition Act (registered as Case No. 81 of 2016) and similar
application was filed by Justice K.A. Puj (retired) (registered as
Case No. 83 of 2016). Then, it was followed by information under
Section 19 of the Competition Act by RJIL in November, 2016
(registered as Case No. 95 of 2016).
Proceedings before TRAI:
12) As the matter was with the TRAI as well, it issued show cause
notices dated September 27, 2016 to IDOs and RJIL for violation
of Standard of Quality of Service of Basic Telephone Service
(Wireline) and Cellular Mobile Telephone Service Regulations,
2009 (hereinafter referred to as the ‘QoS’) and for provision of the
License Agreements. Similar show cause notices were also sent
to other telecom operators. On October 21, 2016, TRAI issued
recommendations to DoT after finding that IDOs have violated
conditions under the QoS, interconnection agreements and
Unified License. The TRAI inter alia stated in its recommendation
as under:
"21. … (vii) It is evident from the above clauses that the
licensees are mandated to provide interconnection to all
eligible telecom service provider. However, as mentioned
in para 6 above, Airtel along with other service providers
have jointly through their association (COAI), declined
Point of Interconnection to RJIL which is willful violation of
the above mentioned license conditions.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 16 of 122
...(x) COAI’s letter dated 2nd September, 2016 which was
confirmed by Airtel in the meeting held on 9th September,
2016 clearly indicates attempt by three service providers
namely, Airtel, Vodafone India Limited and Idea Cellular
Limited to stifle competition in the market and willfully
violate the license conditions;…
23. While the Authority has been taking necessary steps
to ensure effective interconnection between Airtel and
RJIL, it is evident from Para 21 that Airtel is in noncompliance
of the terms and conditions of license and
denial of interconnection to RJIL appears to be with ulterior
motive to stifle competition and is anti-consumer.”
13) TRAI recommended that Rs. 50 crore per local service area
(LSA) be imposed on all the above three telecom operators for
failure to adhere to TRAI norms and regulations. Similar
recommendations were also issued to DoT against other telecom
operators. Against the recommendations dated October 21, 2016
of TRAI, Vodafone filed a Writ Petition being Writ Petition (C) No.
11740 of 2016 before the High Court at Delhi. Meanwhile, on
January 17, 2017, TRAI also recommended imposition of penalty
of Rs. 1,90,000/- on Idea for its rejection of mobile number
portability (MNP) requests to RJIL’s network. Against the
aforesaid recommendation, Idea has preferred a Writ Petition
being Writ Petition (C) No. 685 of 2017 before the High Court at
Delhi. The DoT after examining the matter referred it back to
TRAI for fresh consideration vide DoT’s reference dated April 05,
2017 whereby its recommendations imposing penalty upon IDOs
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 17 of 122
were sent back for reconsideration. The TRAI sent its response
dated May 24, 2017 to the DoT, wherein it took a categorical
stand that telecom operators have intentionally denied and
delayed the augmentation of POIs to RJIL.
Proceedings before CCI:
14) The CCI took the cognizance of the three informations given to it
under Section 19 of the Competition Act which were registered as
Case Nos. 81, 83 and 95 of 2016. It gave hearing to the
respondents service providers as well as COAI and passed order
dated April 21, 2017 under Section 26(1) of the Competition Act
as per which it came to a prima facie conclusion that case for
investigation was made out and directed the Director General to
cause investigation in the case. This order was passed by
majority of 3:2 as two members of CCI dissented from the said
order. Operative portion of the majority order holds as under:
"23. The Commission notes that allegations of anticompetitive
agreement as well as abuse of dominant
position have been made for the same conduct of refusal
to facilitate call termination services and denial of mobile
number portability. As discussed earlier, the Commission
is satisfied that there exist a prima facie contravention of
Section 3(3)(b) of Act, as the ITOs appear to have entered
into an agreement amongst themselves through the
platform of COAI, to deny POIs to RJIL. Having been
prima facie convinced that the impugned conduct is an
outcome of the anti-competitive agreement amongst ITOs,
Commission does not find it appropriate to consider the
same impugned conduct as unilateral action by each of the
ITOs. The Commission therefore at this stage does not
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 18 of 122
find it necessary to deal with the allegations and
submissions regarding abuse of dominance in
contravention of the provisions of Section 4 of Act.
24. In view of the foregoing, the Commission directs the
DG to cause an investigation into the matter under the
provisions of Section 26(1) of the Act. Considering the
substantial similarity of allegations in all the informations,
the Commission clubs them in terms of the proviso to
Section 26(1) of the Act read with Regulation 27 of the
Competition Commission of India (General) Regulations,
2009. The DO is directed to complete the investigation
and submit investigation report within a period of 60 days
from the date of receipt of this Order, if the DG finds
contravention, he shall also investigate the role of the
persons who at the time of such contravention were incharge
of and responsible for the conduct of the business
of the contravening entity/entities. During the course of
investigation, if involvement of any other party is found,
DG shall investigate the conduct of such other parties also
who may have indulged in the said contravention. In case
the DG finds the conduct of the Opposite Parties in
violation of the Act, the DG shall also investigate the role of
the persons who were responsible for the conduct of the
Opposite Parties so as to proceed against them in
accordance with Section 48 of the Act.
25. The Commission makes it clear that nothing stated
in this order shall tantamount to final expression of opinion
on the merits of the case and DG shall conduct the
investigation without being swayed in any manner
whatsoever by the observations made herein.”
15) Likewise, two members who dissented inter alia held as follows:
"...As stated above, from the various charts placed on
record by the ITOs showing the number of POIs provided
by them to RJIL, the respective learned senior counsel for
Ops have tried to show that the number of POIs provided
to RJIL by 08.11.2016 i.e. within the first quarter itself,
were much more than what was demanded. In fact, the
charts filed by RJIL itself corroborate this fact. The charts
show that even if some of the POIs provided (one-way
POIs for connecting outgoing calls from ITOs to RJIL) are
not taken into consideration, the number of POIs provided
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 19 of 122
by OP-5 and OP-7 were much more than what was
demanded by RJIL. Even in case of OP-2, the same were
approximately 64% (NLD POIs) and 85.53% (Access
POIs) as on 08.11.2016. However, as we have already
observed above, we are not expected to go into the
question of providing adequate number of POIs. Yet there
is ample material on record to show that RJIL was more to
be blamed for congestion in its traffic than the ITOs...”
“...we are of the considered opinion that on the basis of
material available with the Commission, it is difficult to say
that there is a prima facie case...” made out against the
Petitioner and others and accordingly, “...the instant cases
ought to be closed under Section 26(2) of the Act...”
(hereafter “Dissent Note”).”
16) On June 08, 2017, the Director General issued a letter of
investigation to the appellant seeking call data records in respect
of certain identified mobile numbers by June 19, 2017. On June
19, 2017, respondent No. 2 issued a letter of investigation to the
appellant seeking detailed information/documents to be furnished
by June 30, 2017. Immediately thereafter, writ petitions were filed
challenging the aforesaid order of the CCI as well as action of the
Director General seeking information for holding inquiry. After
preliminary hearing, the High Court passed interim orders dated
June 30, 2017 on the basis of statement of the counsel for CCI
that they shall not proceed with the investigation, which order
continued till the disposal of the writ petitions. The High Court
after hearing the matter finally allowed the writ petitions, as
already mentioned.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 20 of 122
17) It is clear from the above that as per RJIL, the respondent service
providers, along with COAI, entered into an anti-competitive
agreement/formed a cartel and acted in an anti-competitive
manner which is prohibited by the Act. On these allegations, it
approached the CCI for initiating inquiry into this anti-competitive
practices. Insofar as the nature of alleged anti-competitive
agreement is concerned, the allegations of RJIL are the following:
(i) Delay in provisioning or denial in provisioning of POIs, also
known as ‘E1’ in telecom parlance, to RJIL by IDOs during the
testing phase and after commercial launch of RJIL services.
POIs are the points where the networks of telecom operators
connect. Without sufficient POIs it is not possible for subscribers
of one service provider to make calls to subscribers of another
service provider.
(ii) It was also alleged, inter alia, that IDOs are denying Mobile
Number Portability (MNP) requests of customers who wanted to
switch to RJIL competing service.
(iii) It was also alleged that COAI was acting at the behest of
IDOs against the interest of a competing member, i.e. RJIL, and
not for the common interest of the industry and consumers as a
whole.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 21 of 122
Proceedings before the High Court:
18) Against the order passed by the CCI directing investigation into
the aforesaid allegations, in the writ petitions filed by the IDOs
and also by COAI, challenge laid to the aforesaid order was
premised on the ground that the CCI lacked jurisdiction to
entertain such complaints/information filed under Section 19 of
the Competition Act as such a matter falls within the exclusive
jurisdiction of another regulatory authority, namely, TRAI.
19) In nutshell, it was pleaded that the violation alleged by RJIL,
namely, whether there was a delay or denial in provisioning POIs,
comes within the domain of TRAI as it is the TRAI which has the
exclusive jurisdiction to deal with such a matter under the TRAI
Act and, in fact, the complaint was also made by TRAI as well
which was seized of the matter.
20) The plea of the appellants, on the other hand, was that violation
of telecom regulations, etc. was undoubtedly a matter which
could be looked into by the TRAI for which RJIL has approached
the TRAI. However, the subject matter of inquiry before the CCI
was entirely different, namely, formation of cartel and a concerted
effort on the part of the service providers, in collusion with COAI,
to curb the competition in the market and, thus, the CCI was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 22 of 122
competent and had requisite jurisdiction to look into this aspect.
To put it otherwise, according to the appellants, the CCI had
decided to examine the facts purely from the stand point as to
whether the alleged Act constituted anti-competitive practice on
the part of the respondents and, therefore, contravened the
provisions contained in Section 3 or Section 4 of the Act. This
aspect, they had argued, could not be gone into by the TRAI as
the CCI was the only statutory authority constituted under the Act
to examine such an issue.
21) The Bombay High Court in the impugned judgment has, thus,
inter alia, held as under:
"(i) the Competition Commission of India (CCI) had no
jurisdiction in view of the Telecom Regulatory Authority of
India Act, 1997 and the authorities and regulations made
thereunder;
(ii) the CCI could exercise jurisdiction only after
proceedings under the TRAI Act had concluded/attained
finality;
(iii) the order dated 21.04.2017 passed under section
26(1) of the Competition Act was not an administrative
direction, but rather a quasi judicial one that finally decided
the rights of parties and caused serious adverse
consequences, because a detailed hearing had been
given and many materials had been tendered in the courts
of the hearings;
(iv) on the merits of the matter, there was no cartelisation
as alleged and COAI was exonerated; and
(v) the order of the CCI was perverse and liable to be
interfered with under writ jurisdiction.”
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 23 of 122
Arguments: The appellants:
22) Mr. P.S. Narasimha, learned Additional Solicitor General,
appeared on behalf of the CCI and submitted that the impugned
judgment is contrary to the law. His attack was premised on three
principal propositions, which are follows:
(i) Jurisdiction of the CCI: The CCI has jurisdiction in the
present case and it need not wait till the conclusion of
proceedings under the TRAI Act to conclude.
(ii) Scope of Judicial Interference under Article 226: The High
Court erred in holding that the order passed under section 26(1)
was an order resulting in serious adverse consequences merely
because the CCI had granted a hearing.
(iii) The order of CCI was not perverse and the High Court erred
in giving findings on merits. The High Court erroneously
exercised writ jurisdiction.
23) With respect to the first proposition, his argument was that the
High Court had failed to appreciate that issues before the CCI are
altogether different than the issues before the TRAI and they
necessarily be treated differently. He argued that the CCI and
TRAI operate in entirely different fields, which is discernible from
the Preambles of the respective legislations. The TRAI Act was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 24 of 122
supposed to enable it to regulate the telecommunication services,
adjudicate dispute, dispose of appeals and protect the interests of
service providers and consumers of the telecom sector, to
promote and ensure orderly growth of the telecom sector. The
CCI, on the other hand, is a body that has been established to
prevent practices having an adverse effect on competition, to
promote and sustain competition in markets, to protect the
interests of consumers and to ensure freedom of trade carried on
by other participants in markets, in India.
24) Mr. Narasimha emphasised that the issue before the CCI was
whether the opposite parties/respondents, i.e. the IDOs, were
acting in concert and colluding (forming a cartel) so as to block or
hinder the entry of RJIL in the market in violation of section 3(3)
(b) of the Act. The key issue is whether there was an anticompetitive
agreement between the IDOs, using the platform of
COAI. The issue before the TRAI, on the other hand, is whether
the delay/denial of POIs has violated terms of the licence
agreement and QoS regulations. The learned ASG pointed out
that all the opposite parties have argued that they were justified in
declining POIs to RJIL. However, the question before the CCI is
whether the conduct of the parties was unilateral or collective
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 25 of 122
action based on an agreement? It is precisely this issue that
requires investigation by the Director General. If the conduct of
the respondents in delaying/denying POIs was unilateral (i.e. an
independent decision made by each of them), then the conduct
cannot be faulted under Section 3 of the Act since Section 3 is
premised on existence of an ‘agreement’ as defined in Section
2(b). However, if the conduct of the respondents was based on
an ‘agreement’, it would become illegal under Section 3(3)(b) of
the Act because its intent and effect is to ‘limit or control
production, supply, markets, technical development, investment
or provision of services”. It was contended that the conduct may
well be legal under the TRAI Act and regulations or other laws.
However, it is the collusive/concerted nature of the action coupled
with the effect that makes it illegal under the Competition Act.
25) He adverted to the order dated April 21, 2017 of the CCI, while
taking its prima facie view and submitted that the CCI has
recognised the distinction between the issues before the TRAI
and the issues arising under the Act, as follows:
"9. It is observed that telecom sector is regulated by
TRAI as the sectoral regulator. On the allegation of
insufficient POIs being provided to RJIL, the Commission
notes from the information available on TRAI’s website
that, on 21st October 2016, TRAI had recommended,
through three separate communications to the Department
of Telecommunications, imposition of penalty of Rs.50
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 26 of 122
crore per License Service Area (LSA) against Airtel,
Vodafone and Idea, for violation of the provisions of
License Agreements and the Standards of QoS of Basic
Telephone Service (Wireline) and Cellular Mobile
Telephone Service Regulations, 2009. Thus, TRAI as a
sectoral regulator, has held the said conduct of ITOs in
violation of relevant TRAI regulations and recommended
penal action against them. However, the
recommendations of TRAI is in respect of violations of the
provisions of License Agreements and the Standards of
QoS of Basic Telephone Service (Wireline) and Cellular
Mobile Telephone Service Regulations, 2009 by these
OPs. Against this, mandate of the Commission under
Section 18 of the Act is ‘...to eliminate practices having
adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure
freedom of trade carried on by other participants, in
markets in India.’ Accordingly, it becomes the duty and
responsibility of the Commission to eliminate practices in
the market that have an adverse effect on competition and
promote and sustain competition so as to protect the
interest of consumers and ensure freedom of trade.
Further, as per Section 62 of the Act, provisions of the Act
are in addition to and not in derogation of the provisions of
any other law for the time being in force. Section 61 of the
Act grants exclusive power to the Commission and the
Competition Appellate Tribunal to exercise its jurisdiction in
respect of any matter which the Act empowers the
Commission or the Competition Appellate Tribunal to
determine to the exclusion of civil courts. A careful reading
of these provisions show that the Commission has the
jurisdiction to inquire into the issues alleged in the present
information insofar as the same may result in
contravention of the provisions of the Act.
10. It may be noted that the primary grievance of the
Informants relates to cartelization by the Opposite
Parties, amounting to violation of the provisions of
Section 3 of the Act. In this regard, it must be noted
that none of the areas covered under Section 3 of the
Act are covered by TRAI in its mandate as a sector
regulator for TSPs. No doubt, TRAI has the
responsibility/obligation to determine whether Quality
of Service regulations and interconnection norms on
the levels of congestion at the points of
interconnection are complied with it not. But apart
from that, none of the other issues as envisaged under
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 27 of 122
Section 3 of the Act are looked into by TRAI.
Specifically, TRAI cannot arrive at a determination as
to whether the ITOs have colluded and cartelized to
deny POIs to the detriment of RJIL in violation of
Section 3(3) read with Section 3(1) of the Act. The
scope of the Section 3 allegation is not whether the
ITOs have breached the terms of their respective
License agreement or ICA, rather, the scope of the
Section 3 allegations pertains to whether the ITOs
have entered into an anti-competitive agreement to
provide insufficient POIs or delay the provisions of
POIs to RJIL. It is within the mandate of the Commission
which can adjudicate on the issue of cartelization amongst
enterprises/associations and arrive at a finding on the
alleged cartelization. The Commission accordingly holds
that the issue of whether such conduct on the part of ITOs
(including COAI) has resulted in any anti-competitive effect
in the market in violation of the provisions of the Act can
and needs to be examined by it.
11. The Commission recognizes the role and
importance of sectoral regulators and exercises its
jurisdiction keeping in mind their role and responsibilities.
The Commission is a market regulator and has the
jurisdiction to look at those issues which affect
competition in markets in India, including that of an
alleged cartelization amongst enterprises/
associations. The nature of the proceedings before
TRAI involving ITOs on the other hand different and
related to whether interconnection norms and quality
of service regulations are complied with or whether
the contractual terms of ICAs have been breached or
met. Palpably, these issues are not relevant for
determination in the current proceedings before the
Commission.
12. The informants have alleged that the conduct of
ITOs amounts to a “cartel” in relation to denial of POIs
to RJIL. The definition of cartel has been provided under
Section 2(c) of the Act which reads as follows: ‘cartel
includes an association of producers, sellers, distributors,
traders or service providers who by agreement amongst
themselves limit, control or attempt to control the
production, distribution, sale or price of or, trade in goods
or provision of services.’ Further, any alleged agreement
amongst enterprises and an association of enterprises,
engaged in identical or similar trade or provision of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 28 of 122
services is covered under Section 3(3) of the act which
states that:
Any agreement entered into between enterprises or
associations of enterprises or persons or
associations of persons or between any person and
enterprise or practice carried on, or decision taken
by, any association of enterprises or association of
persons, including cartels, engaged in identical or
similar trade of goods or provision of services, which-
(a) directly or indirectly determines purchase or sale
prices;
(b) limits or controls production, supply, markets,
technical development, investment or provision of
services;
(c) …..
(d) …..
shall be presumed to have an appreciable adverse
effect on competition.
13. On the basis of the above, the Commission notes
that in addition to ITOs, conduct of COAI also needs to be
examined under the provisions of Section 3(3) of the Act.”
(emphasis added)
26) He submitted that it was the statutory duty of the CCI,
enumerated in Section 18 of the Act, to eliminate anti-competitive
practices and the focus of the CCI was confined to this Court’s
judgment in the case of Haridas Exports v. All India Float
Glass Manufacturers’ Assn. & Ors.1
wherein it was held that
where statutes operate in different fields and have different
purposes, it cannot be said that there is implied repeal by one, of
1 (2002) 6 SCC 600
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 29 of 122
the other. In the said case, this Court was considering alleged
conflict between the Monopolies & Restrictive Trade Practices
Act, 1969 and the Anti-Dumping Rules under the Customs
Act/Customs Tariff Act. It was held:
"48. The jurisdiction of the MRTP Commission, in our
opinion, is not ousted by the anti-dumping provisions in the
Customs Act. The two Acts operate in different fields and
have different purposes. The Import Control Act and the
Customs Tariff Act are concerned with import of goods into
India and the duty which could be imposed on the
imported items. Import may be allowed on the basis of an
import licence or, depending upon the policy, import may
be allowed under OGL — open general licence — where
no specific licence for import is required. Whether to allow
import or not and the terms on which an item may be
imported is a matter of policy and regulated by law.
xx xx xx
52. The levy or non-levy of anti-dumping or other duty
being a legislative act pursuant to the exercise of powers
under the Customs Tariff Act can also not be a subjectmatter
of judicial review by the MRTP Commission. The
two Acts substantially operate in different fields and the
following table brings out some of the distinctions between
the MRTP Act and the anti-dumping provisions:
[table omitted]
A perusal of the above chart indicates that the two statutes
and regimes operate in different and distinct spheres and
there is no conflict between the two regimes/statutes.
Hence, the question of implied repeal of the provisions of
Section 33(1)(j) of the MRTP Act, 1969 on account of the
provisions of Section 9-A of the Customs Tariff Act, 1975
does not arise.
53. It is thus seen that the provisions relating to antidumping
contained in the Customs Tariff Act do not in any
way affect the power or jurisdiction of the MRTP
Commission. The Import Control Act and the Customs
Tariff Act on the one hand and the MRTP Act on the other
operate in different independent fields and the authority
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 30 of 122
under one has no jurisdiction over the other. In other
words, their paths do not cross each other. While the
provisions of the Anti-Dumping Act are concerned with the
levy of anti-dumping duty, the MRTP Act in the present
case would be concerned with the agreements between
the parties which relate to the restrictive trade practices.
Therefore, it would be incorrect to say that the
incorporation of the anti-dumping provisions ousts the
jurisdiction of the MRTP Commission to inquire and pass
orders, inter alia, with regard to restrictive trade practice in
India.”
The learned ASG pointed out that the allegation against the
respondents i.e. IDOs is that they have through an anticompetitive
agreement/cartel, limited the provision of services by
delaying or denying POIs to RJIL, with a view to block its entry in
the market. As per him, such an agreement would raise a
presumption of ‘appreciable adverse effect’ on competition.
27) Explaining the scheme of the Act, Mr. Narasimha referred to the
provisions of Section 3 which prohibits anti-competitive
agreements of the nature mentioned therein. He also referred to
the definitions of ‘agreement’, ‘cartel’, ‘enterprise’ and ‘service’
contained in Section 2 of the Act and submitted that the definition
of ‘agreement’ is not restricted to written agreements, but even
extends to ‘action in concert’, which, according to him, is wide
enough to allegations of RJIL, if proved correct, within the
mischief of Section 3 of the Act. He also referred to Section 19(3)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 31 of 122
of the Act which lists certain factors to be considered in analysing
adverse effect on competition and submitted that creation of
barriers to new entrants in the market and foreclosure of
competition by hindering entry into the market are to be perceived
as having adverse effect on competition. He, thus, submitted that
having regard to the aforesaid provisions, the CCI wanted to
investigate the matter with focus on the aspect as to whether
there was an agreement between the respondent service
providers and they acted in concert pursuant to the said
agreement; whether it amounted to anti-competitive act on the
part of these respondents and had adverse effect on the
competition. In the process, the CCI was also supposed to
examine as to whether the respondents colluded with COAI and
abused their dominant position. His further argument was that
inquiry into these aspects was within the exclusive domain of the
CCI as it is the CCI which is supposed to ensure that no such
anti-competitive practices are adopted by anybody and if that has
happened, the CCI is empowered to issue directions in terms of
Section 27 of the Act and also impose penalties. It has power to
impose even lesser penalties as provided in Section 46 of the Act.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 32 of 122
28) Mr. Narasimha also referred to Section 60 of the Act which
provides for overriding effect for the Act and reads as under:
"60. Act to have overriding effect. - The provisions of this
Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in
force.”
It was emphasised that the case of the CCI is not that the
TRAI does not have power to exercise jurisdiction at all in the
present factual matrix and there is no conflict of jurisdiction or
legal regimes. Rather, both the TRAI and the CCI exercise their
jurisdiction in their respective fields. Exercise of jurisdiction by
the CCI to investigate an alleged cartel does not impinge upon
TRAI’s jurisdiction to regulate the industry in any way.
Submission in this behalf was that the TRAI exercises its
jurisdiction by ensuring compliance with the interconnect
agreements, license conditions, interconnection regulations,
quality of service norms and regulations etc. Based on past
experience, the TRAI frames regulations for the improvement of
the telecom industry in the future. For instance, the June 07,
2005 direction of TRAI which provided for a 90-day period for
interconnection has now been replaced by the interconnection
regulations of 2018, by which the time period for provision of
POIs has been reduced to 30 days, because it was found that
due to technical advancements, it was possible to give POIs in a
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 33 of 122
much shorter time frame, and parties were using the 90-day
period to delay the provision of POIs, as in the case of RJIL.
However, the TRAI does not have the power to penalize for past
conduct which was of anti-competitive nature. It was further
submitted that while the competition law seeks to promote
efficient allocation and utilization of resources by inter alia
lowering the entry barriers in the market, the primary objective of
the sectoral regulators like the TRAI is development of their
respective sector. However, what is important to bear in mind is
that the promotion of competition and prevention of competitive
behaviour may not be high on the agenda of a sectoral regulator
which makes it prone to ‘regulatory capture’. The position has
been very succinctly captured by the Report of the Working
Group on Competition Policy, Planning Commission of India,
Government of India, February 2007 which states as follows:
"7.2.3 The objective of a sectoral regulator is to provide
good quality service at affordable rates, but the promotion
of competition and prevention of anti-competitive
behaviour may not be high on its agenda or the laws
governing the regulator may be silent on this aspect. It is
not uncommon for sectoral regulators to be more closely
aligned with the interest of the firms being regulated,
which is also known as ‘regulatory capture’. Besides, a
sectoral regulator may not have an overall view of the
economy as a whole and may tend to apply yardsticks
which are different from the ones used by the other
sectoral regulators. In other words, there is a possibility of
the lack of consistency across sectors. On the other hand,
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 34 of 122
CCI will be able to apply uniform competition principles
across all sectors of economy.”
(emphasis added)
The National Competition Policy 2011 has also observed as
following:
"8.3 The objective of a sectoral regulator is to provide
good quality service at affordable rates, but the promotion
of competition and prevention of anti-competitive
behaviour may not be high on its agenda or the laws
governing the regulator may be silent on this aspect.
Besides, a sectoral regulator may not have an overall view
of the economy as a whole and may tend to apply
yardsticks which are different from the ones used by the
other sectoral regulators. In other words, there is a
possibility of the lack of consistency across sectors as
regards competition issues. On the other hand, the CCI,
which is expected to have developed the core
competence, expertise and capacity in competition related
issues, will be able to apply uniform competition principles
across all sectors of economy. Besides, enforcement
and penalizing violations of Competition Act is the
exclusive area of the CCI. Even otherwise, the general
principle for economic efficiency would be, whoever can
do a thing in best and most professional manner should do
it.”
(emphasis added)
29) The learned ASG, on taking support from the above, submitted
that the sectoral regulators, by contrast, will not be as
experienced in conducting competition analysis as the
competition authorities. Being susceptible to regulatory capture,
the day-to-day interactions between industry officials and
regulatory agency may lead to a commonality of interests that can
interfere with the perspective necessary to evaluate competitive
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 35 of 122
harms and to construct remedies that will protect competition for
the benefit of the economy as a whole. While the sector specific
regulators typically impose and monitor various behavioral
conditions, the competition agencies are more likely to opt for
structural remedies which would lead the sector to evolve to a
point where sufficient new entry is induced thereby promoting
genuine competition. According to him, keeping in view the
aforesaid respective roles in mind, the Parliament in its wisdom
and foresight has built in a mechanism within the Act to address
apparent conflicts of jurisdiction. The ‘comity’ between the
sectoral regulator (TRAI) and the market regulator (CCI) is
entirely addressed by a reading of Section 21 and Section 21A of
the Act. In any case, Section 60 of the Act had an overriding
effect. To support his argument, the learned ASG relied upon
State (NCT of Delhi) v. Sanjay2
wherein this Court dealt with the
issue of whether a prescription of offence under the Mines &
Minerals Development & Regulation (MMDR) Act would exclude
the application of the Indian Penal Code. The Court held that due
to the absence of a non-obstante clause, the application of the
Indian Penal Code was not excluded. In the present case, the
TRAI Act does not apply notwithstanding any other laws, and it
2 (2014) 9 SCC 772
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 36 of 122
does not contain an overriding effect provision containing a nonobstante
clause. The relevant paragraphs of the judgment have
been extracted below:
"62. Sub-section (1-A) of Section 4 of the MMDR Act puts
a restriction in transporting and storing any mineral
otherwise than in accordance with the provisions of the Act
and the Rules made thereunder. In other words no person
will do mining activity without a valid lease or licence.
Section 21 is a penal provision according to which if a
person contravenes the provisions of sub-section (1-A) of
Section 4, he shall be prosecuted and punished in the
manner and procedure provided in the Act. Sub-section (6)
has been inserted in Section 4 by amendment making the
offence cognizable notwithstanding anything contained in
the Code of Criminal Procedure, 1973. Section 22 of the
Act puts a restriction on the court to take cognizance of
any offence punishable under the Act or any Rule made
thereunder except upon a complaint made by a person
authorised in this behalf. It is very important to note that
Section 21 does not begin with a non obstante clause.
Instead of the words “notwithstanding anything contained
in any law for the time being in force no court shall take
cognizance….”, the section begins with the words “no
court shall take cognizance of any offence.
63. It is well known that a non obstante clause is a
legislative device which is usually employed to give
overriding effect to certain provisions over some contrary
provisions that may be found either in the same enactment
or some other enactment, that is to say, to avoid the
operation and effect of all contrary provisions.”
30) He also premised his argument on the basis that the Act is a
special statute in the field of telecommunications regulation,
including technical aspects connected thereto, and in case of
conflict between two special legislations, the later enactment
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 37 of 122
would prevail. In Solidaire India Ltd. v. Fairgrowth Financial
Services Ltd. & Ors.3
, this Court held as under:
"7. Coming to the second question, there is no doubt that
the 1985 Act is a special Act. Section 32(1) of the said Act
reads as follows:
“32. Effect of the Act on other laws.—(1) The
provisions of this Act and of any rules or schemes
made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any
other law except the provisions of the Foreign
Exchange Regulation Act, 1973 (46 of 1973) and the
Urban Land (Ceiling and Regulation) Act, 1976 (33 of
1976) for the time being in force or in the
Memorandum or Articles of Association of an
industrial company or in any other instrument having
effect by virtue of any law other than this Act.”
8. The effect of this provision is that the said Act will have
effect notwithstanding anything inconsistent therewith
contained in any other law except to the provisions of the
Foreign Exchange Regulation Act, 1973 and the Urban
Land (Ceiling and Regulation) Act, 1976. A similar non
obstante provision is contained in Section 13 of the
Special Court Act which reads as follows:
“13. Act to have overriding effect.—The provisions of
this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for
the time being in force or in any instrument having
effect by virtue of any law, other than this Act, or in
any decree or order of any court, tribunal or other
authority.”
9. It is clear that both these Acts are special Acts. This
Court has laid down in no uncertain terms that in such an
event it is the later Act which must prevail. The decisions
cited in the above context are as follows: Maharashtra
Tubes Ltd. v. State Industrial & Investment Corpn. of
Maharashtra Ltd. [(1993) 2 SCC 144]; Sarwan Singh v.
Kasturi Lal [(1977) 1 SCC 750 : (1977) 2 SCR 421];
Allahabad Bank v. Canara Bank [(2000) 4 SCC 406] and
Ram Narain v. Simla Banking & Industrial Co. Ltd. [AIR
1956 SC 614 : 1956 SCR 603]”
3 (2001) 3 SCC 71
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 38 of 122
31) The learned ASG endeavoured to support his proposition by
referring to the contrasting provision contained in Section 14 of
the TRAI Act which provides for dispute resolution in respect of
various categories of persons before the TDSAT, which
specifically carves out an exception in respect of monopolistic
trade practice, restrictive trade practice and unfair trade practice,
which was subject to the jurisdiction of the Monopolies and
Restrictive Trade Practices Commission (MRTP Commission).
He submitted that this was another indicator in the TRAI Act itself
from which it can be inferred that when it comes to anticompetitive
practices, an embargo is put on the TRAI to deal with
such practices, inasmuch as the Competition Act is enacted to
repeal and replace the obsolete regime of the MRTP Act. In this
behalf, he drew sustenance from Section 8 of the General
Clauses Act to submit that the Competition Act could be read in
place of MRTP Act while construing the provisions of Section 14
of the TRAI Act.
32) His another submission, in this hue, was that a distinction needs
to be drawn between facilitating competition (as provided in
Section 11 of the TRAI Act) on the one hand and curbing and
deterring anti-competitive conduct and practices on the other
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 39 of 122
hand. His submission in this behalf was that the function of the
TRAI under Section 11(1)(a)(iv) was to facilitate competition
which was purely recommendatory in nature and not part of
regulatory function of the TRAI, as held in Union of India and
Another v. Association of Unified Telecom Service Providers
of India and Others4
. He also argued that TRAI has no power to
enforce compliance, pass orders, or give directions of the nature
envisaged under the Act to curb anti-competitive conduct.
33) The learned ASG also relied upon the judgment of the European
Commission in Deutsche Telekom v. European Commission5
wherein it was held that it is only if the legislative framework
eliminates the possibility of competition (for example, a statutory
monopoly) that the jurisdiction of the Commission would be
excluded. Following passage from the said judgment was
specifically referred to:
"80. According to the case-law of the Court of Justice, it is
only if anti-competitive conduct is required of undertakings
by national legislation, or if the latter creates a legal
framework which itself eliminates any possibility of
competitive activity on their part, that Articles 81 EC and
82 EC do not apply. In such a situation, the restriction of
competition is not attributable, as those provisions
implicitly require, to the autonomous conduct of the
understandings. Articles 81 EC and 82 EC may apply,
however, if it is found that the national legislation leaves
open the possibility of competition which may be
4 (2011) 10 SCC 543
5 Case C-280/08 P, Judgment dated 14.10.2010
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 40 of 122
prevented, restricted or distorted by the autonomous
conduct of undertakings (Joined Cases C-359/95P and C379/95P
Commission and France v. Ladbroke Racing
(1997) ECR I-6265, paragraphs 33 and 34 and the caselaw
cited).”
34) Mr. Narasimha also referred to another judgment of the General
Court of the European Union in Telefonica SA v. European
Commission (T-336/07) wherein it was held that the European
Commission could intervene in the telecommunications market,
even though the entry was regulated through a sectorial regulator.
He pointed out that this decision of the General Court was upheld
in appeal by the European Court of Justice vide its judgment
dated July 10, 2014.
35) Mr. Narasimha also contrasted the investigative regime under the
two Acts, i.e. Section 12 of the TRAI Act vis-a-vis Section 41 read
with Section 36(2) of the Competition Act and submitted that the
Director General under the Competition Act is better equipped to
deal with detection and investigation of anti-competitive
agreements.
36) Labelling as erroneous, the approach of the High Court that CCI
should await the outcome of the proceedings before TRAI to
attain finality, answer given by Mr. Narasimha was that this
approach was erroneous for three reasons. First, the High Court
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 41 of 122
has failed to appreciate the different fields/domains in which the
CCI and the TRAI operate. Secondly, the course of action
proposed by the High Court would result in considerable delay
defeating the CCI’s investigation. Thirdly, the High Court has
failed to notice the role played by Section 21A of the Act.
37) He again emphasised that CCI is not inquiring into the adequacy
of POIs provided to RJIL by the respondents, or compliance with
the QoS standards of TRAI and licence conditions, but was
examining whether the conduct of the respondents was unilateral
or it was the result of anti-competitive agreement. Insofar as
requirement of speedy investigation by the CCI is concerned, he
submitted that such a requirement has already been
acknowledged and mandated by this Court in Competition
Commission of India v. Steel Authority of India Limited and
Another6
. Further, if at any stage, prior to or after taking a
decision, the CCI is of the view that opinion of TRAI is required, it
could always make reference under Section 21A of the
Competition Act.
38) On the second proposition, namely, the High Court could not
have entertained writ jurisdiction in respect of an order passed
6 (2010) 10 SCC 744
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 42 of 122
under Section 26(1) of the Competition Act, Mr. Narasimha
clarified that he was not taking the position that the High Court ,in
no circumstance/situation, exercise its extraordinary jurisdiction
under the said provision, in spite of an order passed under
Section 26 of the Competition Act. His submission, however, was
that as per the judgment in Steel Authority of India Limited
case, such jurisdiction would be very narrow and is to be
exercised in exceptional cases. According to him, no such
exceptional circumstance arises in the instant case as order in
question was only a prima facie view of the CCI and such an
order was administrative in nature. Learned ASG specifically
referred to the following discussion in the case of Steel Authority
of India Limited:
"38. In contradistinction, the direction under Section 26(1)
after formation of a prima facie opinion is a direction
simpliciter to cause an investigation into the matter.
Issuance of such a direction, at the face of it, is an
administrative direction to one of its own wings
departmentally and is without entering upon any
adjudicatory process. It does not effectively determine any
right or obligation of the parties to the lis. Closure of the
case causes determination of rights and affects a party i.e.
the informant; resultantly, the said party has a right to
appeal against such closure of case under Section 26(2) of
the Act. On the other hand, mere direction for investigation
to one of the wings of the Commission is akin to a
departmental proceeding which does not entail civil
consequences for any person, particularly, in light of the
strict confidentiality that is expected to be maintained by
the Commission in terms of Section 57 of the Act and
Regulation 35 of the Regulations.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 43 of 122
xx xx xx
97. The above reasoning and the principles enunciated,
which are consistent with the settled canons of law, we
would adopt even in this case. In the backdrop of these
determinants, we may refer to the provisions of the Act.
Section 26, under its different sub-sections, requires the
Commission to issue various directions, take decisions
and pass orders, some of which are even appealable
before the Tribunal. Even if it is a direction under any of
the provisions and not a decision, conclusion or order
passed on merits by the Commission, it is expected that
the same would be supported by some reasoning. At the
stage of forming a prima facie view, as required under
Section 26(1) of the Act, the Commission may not really
record detailed reasons, but must express its mind in no
uncertain terms that it is of the view that prima facie case
exists, requiring issuance of direction for investigation to
the Director General. Such view should be recorded with
reference to the information furnished to the Commission.
Such opinion should be formed on the basis of the
records, including the information furnished and reference
made to the Commission under the various provisions of
the Act, as aforereferred. However, other decisions and
orders, which are not directions simpliciter and determining
the rights of the parties, should be well reasoned analysing
and deciding the rival contentions raised before the
Commission by the parties. In other words, the
Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any
adjudicatory or determinative process and by recording
minimum reasons substantiating the formation of such
opinion, while all its other orders and decisions should be
well reasoned.”
39) He also drew the attention of the Court to paragraph 25 of the
CCI’s order dated April 21, 2017 as per which the Director
General was asked to conduct the investigation without being
swayed in any manner whatsoever by the observations made by
the CCI in the said order. He submitted that in these
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 44 of 122
circumstances the said order was merely administrative in nature
and could not be labelled as quasi-judicial order. In the same
vein his further submission was that the observations of the High
Court that the CCI has decided several issues and elements with
clear adverse consequences was clearly erroneous and contrary
to the well-established principle of law. In support, he also
referred to the judgments of the Bombay and the Allahabad High
Courts.
40) Dilating on his third proposition, namely, the CCI order was not
perverse, he submitted that there was sufficient material before
the CCI for formation of a prima facie opinion that the conduct of
the respondents was violative of Section 3(3)(b) of the
Competition Act. He submitted that such material was taken into
consideration and discussed in the order itself and he referred to
certain paragraphs of the order dated April 21, 2017 in this behalf.
In the process, he again emphasised that none of the
observations made in the said order are conclusive findings in
any way and not binding on the Director General and this was
only the starting point, as held in the case of Excel Crop Care
Limited.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 45 of 122
41) M/s. Harish Salve, Dr. A.M. Singhvi, Ramji Srinivasan and Amit
Sibal, learned senior advocates, argued on behalf of RJIL. Their
detailed submissions were almost on the lines on which Mr.
Narasimha, learned ASG, had argued on behalf of the CCI.
42) In the first place, it was emphasised that insofar as dragging of
COAI into this investigation is concerned, it was sought to be
justified by placing reliance on Section 3 of the Act which
specifically recognises possible mischief by an association of
persons or an association of enterprises. It was stressed that
Section 3(3) recognises certain agreements as per se violations,
and shall be presumed to have appreciable adverse effect on
competition. Submission was that associations of enterprises,
after the operation of the Act are now liable to be viewed with
great suspicion in view of the fact that by its very nature an
association of competing enterprises provides a convenient
platform for such competitors to assemble together.
43) The involvement of COAI was sought to be proved by arguing
that the IDOs have not argued that COAI letters must be ignored
since the decision to provide or not to provide POIs to its
competitor was taken by each of them independently either Airtel
by itself, or Vodafone by itself, or Idea by itself. But the facts of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 46 of 122
the case disclose active involvement by that common platform
called COAI. As per the Reliance Jio, the COAI admittedly
facilitated exchange of information between the three IDOs. It
draws references in its response to private letters exchanged
between Reliance Jio and each of the IDOs separately. The
decisions of the COAI are not decisions of a majority comprising
of a large and diverse pool of members that could suggest a
democratic decision making. By its very constitution, the COAI’s
majority views were nothing but the common views of the three
IDOs that controlled it. It was also argued that in the preliminary
conference and in the High Court defence raised was that COAI
was not a front for these three IDOs but was merely espousing
general industry issues. It does not explain how it chanced upon
private documents and correspondence exchanged bilaterally
between RJIL with each of the IDOs separately. It does not
explain how it voiced the common decisions on behalf of those
three IDOs. The COAI was not the fourth voice but was the
prohibited chorus of those three colluding competitors. Thus, no
legitimacy can be attributed to actions of the COAI. Attention of
the Court was drawn to the letter dated August 08, 2016 (before
the announcement of launch of services by Reliance Jio dated
September 01, 2016) and the letter dated September 02, 2016
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 47 of 122
(after the launch of Reliance Jio) which, according to Reliance
Jio, expose the common collusive conduct of these competitors to
first delay the launch and secondly to scuttle the launch. It was
also contended that the concerted, collusive conspiracy by the
three existing IDOs (having a collective market share of 65%) to
meet with each other under auspices of their association called
Cellular Operators Association of India (COAI) and evolve a
common strategy to respond to challenge posed by a new entrant
RJIL, is by itself violative of Section 3 of the Act. The learned
senior counsel pointed out that the defence of the COAI is that it
was merely lobbying the Government for enacting a change in
law or regulation to stop Reliance Jio from carrying out test on
such a large scale by introducing limits on number of Testsubscribers.
However, the letters of COAI revealed an active
participation of taking sides of certain operators whose interest
was to hinder, or at least slowdown the entry of the new operator.
COAI announced unilateral decisions like virtual boycott (which is
not the same as lobbying for change of regulation). To support
this argument, reference was made to the decisions of Supreme
Court of United States in FTC v. Supreme Court Trial Lawyers
Association7
wherein it has observed that:
7 493 US 411 (1990)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 48 of 122
"no violation of the Act can be predicated upon mere
attempts to influence the passage or enforcement of laws,”
even if the defendants’ sole purpose is to impose a
restraint upon the trade of their competitors. But in the
Noerr case the alleged restraint of trade was the intended
consequence of public action; in this case the boycott was
the mans by which respondents sought to obtain
favourable legislation. The restraint of trade that was
implemented while the boycott lasted would have had
precisely the same anticompetitive consequences during
that period even if no legislation had been enacted. In
Noerr, the desired legislation would have created the
restraint on the truckers’ competition; in this case the
emergency legislative response to the boycott put an end
to the restraint.”
44) On the submission that the dangers of a trade association being
hijacked to further the cause of only a few competitors and yet
attempt to give the entire exercise a veneer of respectability has
been also commented upon in the recent decision of this Court in
Competition Commission of India v. Coordination Committee
of Artistes and Technicians of West Bengal Film and
Television & Ors.8
wherein it has been observed that:
"47. In the instant case, admittedly the Coordination
Committee, which may be a “person” as per the definition
contained in Section 2(l) of the Act, is not undertaking any
economic activity by itself. Therefore, if we were to look
into the “agreement” of such a “person” i.e. Coordination
Committee, it may not fall under Section 3(1) of the Act as
it is not in respect of any production, supply, distribution,
storage, acquisition or control of goods or provision of
services. The Coordination Committee, which as a trade
union acting by itself, and without conjunction with any
other, would not be treated as an “enterprise” or the kind of
“association of persons” described in Section 3. A trade
union acts as on behalf of its members in collective
8 (2017) 5 SCC 17
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 49 of 122
bargaining and is not engaged in economic activity. In
such circumstances, had the Coordination Committee
acted only as trade unionists, things would have been
different. Then, perhaps, the view taken by the Tribunal
could be sustained. However, what is lost in translation by
the Tribunal i.e. in applying the aforesaid principle of the
activity of the trade union, is a very pertinent and
significant fact, which was taken note of by the DG as well
as CCI in its majority opinion. It is this: the Coordination
Committee (or for that matter even EIMPA) are, in fact,
association of enterprises (constituent members) and
these members are engaged in production, distribution
and exhibition of films. EIMPA is an association of film
producers, distributors and exhibitors, operating mainly in
the State of West Bengal. Likewise, the Coordination
Committee is the joint platform of Federation of Senior
Technician and Workers of Eastern India and West Bengal
Motion Pictures Artistes' Forum. Both EIMPA as well as the
Coordination Committee acted in a concerted and
coordinated manner. They joined together in giving call of
boycott of the competing members i.e. the informant in the
instant case and, therefore, the matter cannot be viewed
narrowly by treating Coordination Committee as a trade
union, ignoring the fact that it is backing the cause of those
which are “enterprises”. The constituent members of these
bodies take decision relating to production or distribution
or exhibition on behalf of the members who are engaged in
the similar or identical business of production, distribution
or exhibition of the films. Decision of these two bodies
reflected collective intent of the members. When some of
the members are found to be in the production, distribution
or exhibition line, the matter could not have been brushed
aside by merely giving it a cloak of trade unionism. For this
reason, the argument predicated on the right of trade
union under Article 19 of the Constitution, as professed by
the Coordination Committee, is also not available.”
(emphasis supplied)
Arguments: The respondents:
45) Mr. Darius J. Khambata, senior advocate, appeared on behalf of
Idea Cellular Ltd. Mr. Gopal Jain and Mr. Navroz Seervai, senior
advocates, appeared on behalf of Bharti Airtel Ltd. Mr. Ranjit
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 50 of 122
Kumar, Mr. Arvind Datar and Mr. Sidharth Luthra, senior
advocates, appeared on behalf of Vodafone India Ltd. Mr. P.
Chidambaram, senior advocate, appeared on behalf of the COAI.
TRAI had also intervened in the matter and supported the legal
submission of the IDOs, namely, that TRAI had the exclusive
jurisdiction to deal with the matter, i.e. there was a complete
absence of jurisdiction in CCI to deal with the issue at hand.
Instead of taking note of the submissions of these counsel
separately, we are taking note of the submissions in a
consolidated manner as that would avoid repetition.
46) The submissions of the respondents can be paraphrased as
under:
(i) The TRAI Act, being a special law, ousts the jurisdiction of
CCI to examine the telecom sector. In that sense, exclusive
jurisdiction vests in TRAI to regulate the telecom sector, including
competition related issues, thereby ousting the jurisdiction of the
CCI altogether.
(ii) Even if the CCI has the jurisdiction, TRAI’s jurisdiction will
prevail.
(iii) In the alternative, the jurisdictional facts, in any case, had to
be determined by the TRAI in the first place. Since there was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 51 of 122
absence of jurisdictional facts, the CCI could not have proceeded
with the matter and ordered the investigation. Thus, the CCI’s
order for carry out investigation is premature.
(iv) The impugned order passed by the CCI under Section 26(1)
of the Competition Act applies the ‘prima facie test’ and
consequences of such an order are grave. Such an order was
quasi-judicial in nature and, therefore, amenable to judicial review
under Article 226 of the Constitution of India. Thus, the writ
petitions filed by the IDOs challenging this order were
maintainable.
(v) On merits, the prima facie order passed by the CCI was
without considering the material submitted by the IDOs. In this
behalf it was argued that the IDOs had provided sufficient POIs
and given ample proof thereof, which was not taken into
consideration by the CCI while passing the impugned order under
Section 26(1) of the Competition Act. This also becomes a valid
ground to challenge the order by filing writ petition under Article
226 of the Constitution of India.
47) Insofar as the argument of the respondents that the TRAI Act is a
complete code and the jurisdiction of CCI is totally ousted, the
argument proceeded on the following basis:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 52 of 122
The real issue which arises is comparison of two regimes –
one regulated by TRAI under the Indian Telegraph Act, 1885,
Wireless Telegraphy Act, 1933 and the TRAI Act, 1997 which
together forms a comprehensive and complete code; and the
other being CCI under the Competition Act. The various
provisions under these legislations seen with the terms of the
License Agreement show that the issues arising out of
interconnection between different operators shall be determined
within the overall framework of the interconnection
regulations/directions/orders issued by TRAI from time to time.
The Object and Reasons of the TRAI Act itself lays down that it is
mandated to make arrangements for protection and promotion of
consumer interest and ensuring fair competition and to ensure
orderly and healthy growth of telecommunication infrastructure.
Moreover, the competition in the telecom sector is of a different
kind as it has to function under the constant monitoring and
regulation of TRAI. TRAI effectively plays the role of a watchdog
of the sector as otherwise the entire sector would collapse if there
is no interdependence between the telecom operators. Moreover,
under Section 11(1)(a)(iv) of the TRAI Act, the authority is
required to take measures to facilitate competition in the market.
CCI can ensure competition only in an unregulated sector and not
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 53 of 122
in the likes of the telecom sector wherein even the tariffs are
capped/determined by TRAI.
48) On the aforesaid basis, the submission was that:
(a) The TRAI Act is a complete code.
(b) Exclusive jurisdiction vests in TRAI to regulate the telecom
sector including competition related issues.
(c) The TDSAT has the exclusive jurisdiction to examine the
disputes between licensees including the one raised by RJIL
before CCI.
(d) CCI has no jurisdiction to decide disputes pertaining to the
telecom sector.
In this hue it was submitted that the Statement of Objects
and Reasons of the TRAI Act made it abundantly clear by
satisfying that TRAI was supposed to make "arrangements for
protection and promotion of consumer interest and ensuring fair
competition...". It was, thus, clear that even the competition
aspects of the telecom sector were within the domain of TRAI.
The respondents also drew comparison of the Preamble of the
Competition Act with that of the TRAI Act to point out that insofar
as dealing with the issue of fair competition in telecom sector is
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 54 of 122
concerned, it was overlapping to a great extent in the following
manner:
Competition Act TRAI Act
An Act to provide, keeping in view the
economic development of the country,
for the establishment of a Commission
to
“prevent practices having adverse effect
on competition
to promote and sustain competition in
markets
to protect interests of consumers and
to ensure freedom of trade carried on by
other participants in the markets, in
India
for matters connected therewith or
incidental thereto”
An Act to provide for the
establishment of the Telecom
Regulatory Authority of India and
the Telecom Dispute Settlement
and Appellate Tribunal (“TDSAT”)
to
[-]
[for protection and promotion of
consumer interest and ensuring
fair competition (Statement of
Object and Reasons)]
to protect the interest of the
service providers and consumers
of the telecom sector (Preamble)
to promote and ensure orderly
growth of the telecom sectoral
For matters connected therewith
and incidental thereto
49) It was submitted that pursuant to Section 11(1)(a)(iv) read with
Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act (including directions
and regulations issued by TRAI), the TRAI has been statutorily
mandated to perform functions on a variety of matters including
measures aimed at facilitating competition and regulated
interconnection between service providers. Reliance was also
placed on Section 12 of the TRAI Act which empowers TRAI with
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 55 of 122
vast powers to discharge its functions, including to call for
information, conduct investigations and issue such necessary
directions as it may deem necessary for the discharge of its
functions. Moreover, TRAI has also been empowered to issue
appropriate directions under Section 12 and make regulations
under Section 36 of the TRAI Act. Section 29 of the TRAI Act
provides for penalties for contravention of directions of the TRAI.
Further, under Section 14A of the TRAI Act, it has been provided
that any person may make an application before the TDSAT.
With regard to the jurisdiction, Section 15 and 27 of the TRAI Act
provide for explicit bar on jurisdiction of the civil courts to
determine any matter with regard to which TDSAT or TRAI have
been empowered by or under the TRAI Act.
50) It was submitted that in the present case, at the time RJIL filed its
Information before the CCI on November 08, 2016 as also when
the prima facie order was passed on April 21, 2017, TRAI was
seized of the matter pertaining to provisioning of POIs and even
made certain recommendations to the DoT on October 21, 2016.
Accordingly, TRAI had assumed jurisdiction and was exercising
the same. Thus, the dispute was being dealt with and was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 56 of 122
addressed by the TRAI and even on this ground, the jurisdiction
of the CCI stands ousted.
51) The TDSAT has the exclusive jurisdiction to examine the disputes
between licensees including the one raised by RJIL before CCI.
This very submission on the exclusion of CCI’s jurisdiction was
sought to be projected from another angle. It was submitted that
in the Information filed by RJIL before the CCI, Reliance Jio
stressed:
(a) The dispute raised by RJIL before the CCI pertains to the
specific performance of the Interconnect Agreement and the
rights and liabilities arising therefrom;
(b) The Interconnect Agreement is completely regulated by the
TRAI inter alia under Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act
read with the Quality of Service Regulations, 2009 issued
thereunder.
The argument was that the prayers sought by RJIL in the
Information filed before the CCI clearly demonstrate that RJIL
was seeking specific performance of the Interconnect Agreement.
Hence, RJIL has dressed up what is essentially a contractual
complaint into anti-competition clothing. In the present dispute,
upon a meaningful reading of the Information it can clearly be
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 57 of 122
seen that through clever drafting, RJIL has dressed up the
allegations of delay/denial of the POIs as alleged anti-competitive
behaviour. In this behalf, reliance was placed on the decision of
this Court in Begum Sabiha Sultan v. Nawab Mohd. Mansur Ali
Khan & Ors.9
, wherein it was held:
"10. There is no doubt that at the stage of consideration of
the return of the plaint under Order 7 Rule 10 of the Code,
what is to be looked into is the plaint and the averments
therein. At the same time, it is also necessary to read the
plaint in a meaningful manner to find out the real intention
behind the suit. In Moolji Jaitha and Co. v. Khandesh Spg.
and Wvg. Mills Co. Ltd. [AIR 1950 FC 83] the Federal
Court observed that: (AIR p. 92, para 24)
“The nature of the suit and its purpose have to be
determined by reading the plaint as a whole.”
It was further observed: (AIR p. 92, para 25)
“The inclusion or absence of a prayer is not decisive
of the true nature of the suit, nor is the order in which
the prayers are arrayed in the plaint. The substance
or object of the suit has to be gathered from the
averments made in the plaint and on which the reliefs
asked in the prayers are based.”
It was further observed: (AIR p. 98, para 59)
“It must be borne in mind that the function of a
pleading is only to state material facts and it is for the
court to determine the legal result of those facts and
to mould the relief in accordance with that result.”
52) In support of the submission that a special legislation i.e. the
TRAI Act, will prevail over the provisions of the Competition Act,
which according to the respondents is general in nature, reliance
9 (2007) 4 SCC 343
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 58 of 122
has been placed on the decisions of this Court in State of
Punjab v. Labour Court, Jullundur & Ors.10. In the said matter,
the Court was inter alia seized of the issue whether the
employee-respondents were at liberty to seek the payment of
gratuity by invoking the remedy available under Section 33-C(2)
of the Industrial Disputes Act, 1947 as opposed to the Payment of
Gratuity Act, 1972. In deciding the said dispute, it was held that:
"7. It is apparent that the Payment of Gratuity Act enacts a
complete code containing detailed provisions covering all
the essential features of a scheme for payment of gratuity.
It creates the right of payment of gratuity, indicates when
the right will accrue, and lays down the principles for
quantification of the gratuity. It provides further for recovery
of the amount, and contains an especial provision that
compound interest at nine per cent per annum will be
payable on delayed payment. For the enforcement of its
provisions, the Act provides for the appointment of a
controlling authority, who is entrusted with the task of
administering the Act. The fulfilment of the rights and
obligations of the parties are made his responsibility, and
he has been invested with an amplitude of power for the
full discharge of that responsibility. Any error committed by
him can be corrected in appeal by the appropriate
Government or an Appellate Authority particularly
constituted under the Act.
8. Upon all these considerations, the conclusion is
inescapable that Parliament intended that proceedings for
payment of gratuity due under the Payment of Gratuity Act
must be taken under that Act and not under any other.
That being so, it must be held that the applications filed by
the employee respondents under Section 33-C(2) of the
Industrial Disputes Act did not lie, and the Labour Court
had no jurisdiction to entertain and dispose of them. On
that ground, this appeal must succeed.”
(emphasis supplied)
10 (1980) 1 SCC 4
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 59 of 122
53) Applying the aforesaid tests to the present case, the submission
of the respondents is that:
(a) The subject area of competition law is dealt with by the
Competition Act, 2002.
(b) The TRAI Act, 1997 is a complete code in itself and
regulates the Telecom Sector.
(c) The Preamble, the Statement of Objects and Reasons and
Section 11(1) of the TRAI Act provide the TRAI with the power to
inter alia regulate competition in the telecom sector.
(d) Accordingly, being the special law regarding the telecom
sector, as regards competition issues arising in the telecom
sector, the TRAI Act would prevail over the Competition Act.
54) Replying to the argument of the appellants that the TRAI Act as
well as the Competition Act are both special statutes and hence,
the rule of statutory interpretation of special law prevailing over
the general law will be inapplicable in the present dispute, the
respondents referred to the decision of this Court in Ashoka
Marketing Ltd. & Anr. v. Punjab National Bank & Ors.11. In the
said case, the Court was seized of an issue on whether the
11 (1990) 4 SCC 406
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 60 of 122
provisions of the Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 would override the provisions of the Delhi
Rent Control Act, 1958 in relation to the premises belonging to
Punjab National Bank Ltd., a body corporate under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970.
Each side argued that the enactment relied upon by it is a special
statute and the other enactment is general. The Court held that
the Rent Control Act is a special statute regulating the
relationship of landlord and tenant in the Union Territory of Delhi
and even the Public Premises Act is a special statute relating to
eviction of unauthorised occupants from public premises. While
concluding that both the enactments are special statutes, the
Court held:
""61. ...in the case of inconsistency between the
provisions of two enactments, both of which can be
regarded as special in nature, the conflict has to be
resolved by reference to the purpose and policy underlying
the two enactments and the clear intendment conveyed by
the language of the relevant provisions therein.
64. ...In our opinion, therefore, keeping in view the
object and purpose underlying both the enactments viz.
the Rent Control Act and the Public Premises Act, the
provisions of the Public Premises Act have to be construed
as overriding the provisions contained in the Rent Control
Act.”
(emphasis supplied)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 61 of 122
55) Heavy reliance was placed on the judgment of the United States
Supreme Court in the case of Credit Suisse v. Billing et al12
.
Here the submission was that if the CCI is permitted to examine
the information of RJIL that it was to be provided POIs
immediately despite there being a period of 90 days in the ICA,
the following would be the consequences:
(i) The same may cause a threat and may alter the functioning
of telecom sector on account of threat of intervention of CCI even
where the acts are in accordance with TRAI’s Regulations. The
same would threaten efficient functioning of the telecom sector.
(ii) The additional benefits to competition would be very small
as the TRAI Regulations anyway have been framed keeping in
mind “facilitation of competition” in telecom sector.
(iii) The same would encourage future actions before CCI when
telecom related issues will be dressed up as competition issues.
It was the fervent plea that in order to avoid such conflict of
standards and norms, the TRAI Act being the sectoral law and the
TRAI is already seized of the matter, the CCI should not be
allowed to proceed.
56) According to the respondents, the jurisdictional facts in the
present matter would be:
12 551 US 264 (2007)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 62 of 122
(a) Failure to provide adequate POIs in the test phase; or
(b) Delay in providing POIs; or
(c) Providing inadequate POIs.
57) Mr. Datar, in particular, submitted that from a perusal of the
extensive pleadings and findings of the High Court, it is manifest
that the above issues are pending consideration before the
TRAI/DoT as well as in connected writ petitions pending
adjudication before the Delhi High Court. The emphasis was that
there must first be clear findings on the above issues in the
context of the TRAI Act, Rules and Regulations. According to
him, that alone is not enough. It is necessary to establish that
violation of the provisions of TRAI Act amounts to “abuse of
dominance” or “anti-competitive agreements”. As per him,
Section 21 and 21A of the Competition Act make it clear that
jurisdiction of the CCI is divided into parts, viz:
(a) Economic activity not regulated by any statutory authority.
(b) Economic activity regulated by a statutory authority.
In the latter case, Section 21A is mandatory and the CCI
can act only in accordance with Sections 21A(1) and (2).
Submission was that in economic activity that is regulated by a
statutory authority, CCI can exercise powers under Section 26
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 63 of 122
only after complying with Section 21A. It was predicated on the
principle that when the law prescribes things to be done in a
particular manner, all other modes of action are prohibited.
(Bhavnagar University v. Palitana Sugar Mill (P) Ltd. & Ors.13)
58) In this hue, it was also argued that the decision of this Court in
Competition Commission of India v. Steel Authority of India
Ltd. & Anr.14 has no application to the present case because it
does not deal with a sector that is regulated by a statutory
authority. On the other hand, reliance was placed on the
judgment in the case of Carona Ltd. v. Parvathy Swaminathan
& Sons15
.
59) It was submitted that the facts of the SAIL case are clearly
distinguishable from the present case as the main issue before
the Supreme Court in SAIL was whether an appeal can be filed
against an order passed under Section 26(1) of the Competition
Act. Distinction was sought to be drawn on the basis of the
following facts:
(a) in the present case, CCI issued notice and called the TSPs
including Vodafone for a preliminary conference to be held on
13 (2003) 2 SCC 111
14 (2010) 10 SCC 744
15 (2007) 8 SCC 559
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 64 of 122
January 31, 2017 and the parties were heard on January 31,
2017, February 07, 2017 and February 08, 2017;
(b) hearing was held before CCI and detailed notes on
arguments were submitted with supporting documents by the
TSPs including Vodafone;
(c) the prima facie order has been passed after hearing the
submissions of the TSPs holding that a prima facie case of
violation of the Competition Act has been made out; and
(d) the prima facie order also provide for reasons in support of
the decision arrived at by the CCI.
60) Justifying the observations of the High Court that the order of the
CCI cannot be treated as an 'administrative order', it was
submitted that the order was passed by the CCI after collecting
the detailed information from the parties and by holding the
conferences, calling material details, documents, affidavits and by
recording the opinion. It was also submitted that the High Court
had rightly noted that majority decision of the CCI has given
reasons by overlooking the law and the record. It was a
reasoned order/direction and, therefore, judicial review is
permissible. In this behalf it was submitted that the aforesaid
view was taken on the basis of the following:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 65 of 122
(a) whilst an order under Section 26(2) has been made
appealable, an order under Section 26(1) is not appealable;
(b) an order under Section 26(1) of the Competition Act is a
direction simpliciter to the Director General to cause an
investigation;
(c) at the stage of passing of the order under Section 26(1),
there is no adjudicatory process undertaken by the CCI as there
is no determination of any right or obligation of the parties to the
lis; and
(d) the order passed under Section 26(1) does not entail civil
consequences for any person as against a Section 26(2) order
wherein rights of the informant are affected.
61) In the alternative, it was argued that the observations of the Court
limited to the extent of the nature of powers vested in the CCI
under Section 26(1) needs reconsideration by this Court.
Our discussion:
62) We have noted of three propositions which were advanced by Mr.
Narasimha, learned Additional Solicitor General. These are the
main issues which arise for consideration. In fact, other counsel
for the parties have also made their submissions on these
aspects. We would, therefore, focus our discussion on the said
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 66 of 122
propositions. We would like to mention that while analysing the
arguments of all the parties, we have kept in mind their detailed
submissions as well as the principles laid down in various
judgments cited by them, even if we have not made specific
mention to these judgments in our discussion.
A. Jurisdiction of the CCI
63) This is the principal issue which is the bone of contention.
64) In order to discuss and analyse this aspect, it would be apt to
take note of the salient provisions of the Competition Act as well
as the TRAI Act inasmuch as that would facilitate appreciating the
arguments so advanced.
65) In the wake of globalisation and keeping in view the economic
development of the country, responding to opening of its
economy and resorting to liberalisation, need was felt to enact a
law that ensures fair competition in India by prohibiting trade
practices which cause an appreciable adverse effect on
competition within markets in India and for establishment of an
expert body in the form of Competition Commission of India,
which would discharge the duty of curbing negative aspects of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 67 of 122
competition, the Competition Act, 2002 has been enacted by the
Parliament.
66) Having regard to this specific objective which the Act seeks to
achieve, provisions contained therein, which are relevant for
deciding the instant appeals, are reproduced below:
"2. Definitions. –
xx xx xx
(b) “agreement” includes any arrangement or
understanding or action in concert, –
(i) whether or not, such arrangement, understanding
or action is formal or in writing; or
(ii) whether or not such arrangement, understanding
or action is intended to be enforceable by legal
proceedings;
xx xx xx
(c) “cartel” includes an association of producers, sellers,
distributors, traders or service providers who, by
agreement amongst themselves, limit control or attempt to
control the production, distribution, sale or price of, or,
trade in goods or provision of services;
xx xx xx
(g) “Director General” means the Director-General
appointed under sub-section (1) of section 16 and includes
any Additional, Joint, Deputy or Assistant Directors
General appointed under that section;
xx xx xx
(m) “practice” includes any practice relating to the carrying
on of any trade by a person or an enterprise;
xx xx xx
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 68 of 122
(u) “service” means service of any description which is
made available to potential users and includes the
provision of services in connection with business of any
industrial or commercial matters such as banking,
communication, education, financing, insurance, chit
funds, real estate, transport, storage, material treatment,
processing, supply of electrical or other energy, boarding,
lodging, entertainment, amusement, construction, repair,
conveying of news or information and advertising;
xx xx xx
3. Anti-competitive agreements. – (1) No enterprise or
association of enterprises or person or association of
persons shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition or
control of goods or provision of services, which causes or
is likely to case an appreciable adverse effect on
competition within India.
(2) Any agreement entered into in contravention of the
provisions contained in sub-section (1) shall be void.
(3) Any agreement entered into between enterprises or
associations of enterprises or persons or associations of
persons or between any person and enterprise or practice
carried on, or decision taken by, any association of
enterprises or association of persons, including cartels,
engaged in identical or similar trade of goods or provision
of services, which –
(a) directly or indirectly determines purchase or sale
prices;
(b) limits or controls production, supply, markets,
technical development, investment or provision of
services;
(c) shares the market or source of production or
provision of services by way of allocation of
geographical area of market, or type of goods or
services, or number of customers in the market or
any other similar way;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 69 of 122
(d) directly or indirectly results in bid rigging or
collusive bidding, shall be presumed to have an
appreciable adverse effect on competition:
Provided that nothing contained in this sub-section shall
apply to any agreement entered into by way of joint
ventures if such agreement increases efficiency in
production, supply, distribution, storage, acquisition or
control of goods or provisions of services.
Explanation. – For the purpose of this sub-section, “bid
rigging” means by agreement, between enterprises or
persons referred to in sub-section (3) engaged in identical
or similar production or trading of goods or provision of
services, which has the effect of eliminating or reducing
competition for bids or adversely affecting or manipulating
the process for bidding.
xx xx xx
19. Inquiry into certain agreements and dominant
position of enterprise. – (1) The Commission may inquire
into any alleged contravention of the provisions contained
in sub-section (1) of section 3 or sub-section (1) of section
4 either on its own motion or on -
“(a) receipt of any information, in such manner and
accompanied by such fee as may be determined by
regulations, from any person, consumer or their
association or trade association; or
(b) a reference made to it by the Central
Government or a State Government or a statutory
authority.
(2) Without prejudice to the provisions contained in subsection
(1), the powers and functions of the Commission
shall include the powers and functions specified in subsections
(3) to (7).
(3) The Commission shall, while determining whether an
agreement has an appreciable adverse effect on
competition under section 3, have due regard to all or any
of the following factors, namely:
(a) creation of barriers to new entrants in the market;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 70 of 122
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into
the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of
goods or provision of services;
(f) promotion of technical, scientific and economic
development by means of production or distribution
of goods or provision of services.
xx xx xx
21A. Reference by Commission. – (1) Where in the
course of a proceeding before the Commission an issue is
raised by any party that any decision, which the
Commission has taken during such proceeding or
proposes to take, is or would be contrary to any provision
of this Act whose implementation is entrusted to a statutory
authority, then the Commission may make a reference in
respect of such issue to the statutory authority:
Provided that the Commission, may, suo motu, make such
a reference to the statutory authority.
(2) On receipt of a reference under sub-section (1), the
statutory authority shall give its opinion, within sixty days of
receipt of such reference, to the Commission which shall
consider the opinion of the statutory authority, and
thereafter give its findings recording reasons therefor on
the issues referred to in the said opinion.
xx xx xx
26. Procedure for inquiry under section 19. – (1) On
receipt of a reference from the Central Government or a
State Government or a statutory authority or on its own
knowledge or information received under section 19, if the
Commission is of the opinion that there exists a prima
facie case, it shall direct the Director General to cause an
investigation to be made into the matter:
Provided that if the subject matter of an information
received is, in the opinion of the Commission, substantially
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 71 of 122
the same as or has been covered by any previous
information received, then the new information may be
clubbed with the previous information.
(2) Where on receipt of a reference from the Central
Government or a State Government or a statutory
authority or information received under section 19,the
Commission is of the opinion that there exists no prima
facie case, it shall close the matter forthwith and pass such
orders as it deems fit and send a copy of its order to the
Central Government or the State Government or the
statutory authority or the parties concerned, as the case
may be.
(3) The Director-General shall, on receipt of direction
under sub-section (1), submit a report on his findings
within such period as may be specified by the
Commission.
(4) The Commission may forward a copy of the report
referred to in sub-section (3) to the parties concerned:
Provided that in case the investigation is caused to be
made based on reference received from the Central
Government or the State Government or the statutory
authority, the Commission shall forward a copy of the
report referred to in sub-section (3) to the Central
Government or the State Government or the statutory
authority, as the case may be.
(5) If the report of the Director General referred to in subsection
(3) recommends that there is no contravention of
the provisions of this Act, the Commission shall invite
objections or suggestions from the Central Government or
the State Government or the statutory authority or the
parties concerned, as the case may be, on such report of
the Director-General.
(6) If, after consideration of the objections and suggestions
referred to in sub section (5), if any, the Commission
agrees with the recommendation of the Director General, it
shall close the matter forthwith and pass such orders as it
deems fit and communicate its order to the Central
Government or the State Government or the statutory
authority or the parties concerned, as the case may be.
(7) If, after consideration of the objections or suggestions
referred to in sub section (5), if any, the Commission is of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 72 of 122
the opinion that further investigations is called for, it may
direct further investigation in the matter by the Director
General or cause further inquiry to be made by in the
matter or itself proceed with further inquiry in the matter in
accordance with the provisions of this Act.
(8) If the report of the Director-General referred to in subsection
(3) recommends that there is contravention of any
of the provisions of this Act, and the Commission is of the
opinion that further inquiry is called for, it shall inquire into
such contravention in accordance with the provisions of
this Act.
xx xx xx
36. Power of Commission to regulate its own
procedure. –
xx xx xx
(2) The Commission shall have, for the purposes of
discharging its functions under this Act, the same powers
as are vested in a Civil Court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect
of the following matters, namely:–
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of
documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the examination of
witnesses or documents;
(e) requisitioning, subject to the provisions of
sections 123 and 124 of the Indian Evidence Act,
1872 (1 of 1972), any public record or document or
copy of such record or document from any office.
xx xx xx
41. Director General to investigate contraventions. –
(1) The Director General shall, when so directed by the
Commission, assist the Commission in investigating into
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 73 of 122
any contravention of the provisions of this Act or any rules
or regulations made thereunder.
(2) The Director General shall have all the powers as are
conferred upon the Commission under sub-section (2) of
section 36.
(3) Without prejudice to the provisions of sub-section (2),
sections 240 and 240A of the Companies Act, 1956 (1 of
1956), so far as may be, shall apply to an investigation
made by the Director General or any other person
investigating under his authority, as the apply to an
inspector appointed under that Act.
Explanation. – For the purposes of this section, –
(a) the words “the Central Government” under
section 240 of the Companies Act, 1956 (1 of 1956)
shall be construed as “the Commission”;
(b) the word “Magistrate” under Section 240A of the
Companies Act, 1956 (1 of 1956) shall be construed
as “the Chief Metropolitan Magistrate, Delhi”.
xx xx xx
45. Penalty for offences in relation to furnishing of
information. – (1) Without prejudice to the provisions of
section 44, if a person, who furnishes or is required to
furnish under this act any particulars, documents or any
information, –
(a) makes any statement or furnishes any document
which he knows or has reason to believe to be false
in any material particular; or
(b) omits to state any material fact knowing it to be
material; or
(c) wilfully alters, suppresses or destroys any
document which is required to be furnished as
aforesaid,
such person shall be punishable with fine which may
extend to rupees one crore as may be determined by the
Commission.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 74 of 122
(2) Without prejudice to the provisions of sub-section (1),
the Commission may also pass such other order as it
deems fit.
xx xx xx
60. Act to have overriding effect. – The provisions of
this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the
time being in force.
61. Exclusion of jurisdiction of civil courts. – No civil
court shall have jurisdiction to entertain any suit or
proceeding in respect of any matter which the Commission
or the Appellate Tribunal is empowered by or under this
Act to determine and no injunction shall be granted by any
court or other authority in respect of any action taken or to
be taken in pursuance of any power conferred by or under
this Act.
62. Application of other laws not barred. – The
provisions of this Act shall be in addition to, and not in
derogation of, the provisions of any other law for the time
being in force.”
67) The aforesaid provisions would indicate that the Act deals with
three kinds of practices which are treated as anti-competitive and
are prohibited. These are:
(a) where agreements are entered into by certain persons with
a view to cause an appreciable adverse effect on competition;
(b) where any enterprise or group of enterprises, which enjoys
dominant position, abuses the said dominant position; and
(c) regulating the combination of enterprises by means of
mergers or amalgamations to ensure that such mergers or
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 75 of 122
amalgamations do not become anti-competitive or abuse the
dominant position which they can attain.
The objective behind the Act and rationale in curbing the
aforesaid anti-competitive practices was taken note of in Excel
Crop Care Limited v. Competition Commission of India and
Another16 and we would like to reproduce the following passages
therefrom:
"21. In the instant case, we are concerned with the first
type of practices, namely, anti-competitive agreements.
The Act, which prohibits anti-competitive agreements, has
a laudable purpose behind it. It is to ensure that there is a
healthy competition in the market, as it brings about
various benefits for the public at large as well as economy
of the nation. In fact, the ultimate goal of competition policy
(or for that matter, even the consumer policies) is to
enhance consumer well-being. These policies are directed
at ensuring that markets function effectively. Competition
policy towards the supply side of the market aims to
ensure that consumers have adequate and affordable
choices. Another purpose in curbing anti-competitive
agreements is to ensure “level playing field” for all market
players that helps markets to be competitive. It sets “rules
of the game” that protect the competition process itself,
rather than competitors in the market. In this way, the
pursuit of fair and effective competition can contribute to
improvements in economic efficiency, economic growth
and development of consumer welfare. How these benefits
accrue is explained in the ASEAN Regional Guidelines on
Competition Policy, in the following manner:
“2.2. Main Objectives and Benefits of Competition
Policy
2.2.1.1. Economic efficiency: Economic efficiency
refers to the effective use and allocation of the
economy's resources. Competition tends to bring
about enhanced efficiency, in both a static and a
dynamic sense, by disciplining firms to produce at the
16 (2017) 8 SCC 47
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 76 of 122
lowest possible cost and pass these cost savings on
to consumers, and motivating firms to undertake
research and development to meet customer needs.
2.2.1.2. Economic growth and development:
Economic growth—the increase in the value of goods
and services produced by an economy—is a key
indicator of economic development. Economic
development refers to a broader definition of an
economy's well-being, including employment growth,
literacy and mortality rates and other measures of
quality of life. Competition may bring about greater
economic growth and development through
improvements in economic efficiency and the
reduction of wastage in the production of goods and
services. The market is therefore able to more rapidly
reallocate resources, improve productivity and attain
a higher level of economic growth. Over time,
sustained economic growth tends to lead to an
enhanced quality of life and greater economic
development.
2.2.1.3. Consumer Welfare: Competition policy
contributes to economic growth to the ultimate benefit
of consumers, in terms of better choice (new
products), better quality and lower prices. Consumer
welfare protection may be required in order to
redress a perceived imbalance between the market
power of consumers and producers. The imbalance
between consumers and producers may stem from
market failures such as information asymmetries, the
lack of bargaining position towards producers and
high transaction costs. Competition policy may serve
as a complement to consumer protection policies to
address such market failures.”
22. The aforesaid Guidelines also spell out few more
benefits of such laws incorporating competition policies by
highlighting the following advantages:
“2.2.2. In addition, competition policy is also
beneficial to developing countries. Due to worldwide
deregulation, privatisation and liberalisation of
markets, developing countries need a competition
policy, in order to monitor and control the growing
role of the private sector in the economy so as to
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 77 of 122
ensure that public monopolies are not simply
replaced by private monopolies.
2.2.3. Besides contributing to trade and investment
policies, competition policy can accommodate other
policy objectives (both economic and social) such as
the integration of national markets and promotion of
regional integration, the promotion or protection of
small businesses, the promotion of technological
advancement, the promotion of product and process
innovation, the promotion of industrial diversification,
environment protection, fighting inflation, job
creation, equal treatment of workers according to
race and gender or the promotion of welfare of
particular consumer groups.
In particular, competition policy may have a positive
impact on employment policies, reducing redundant
employment (which often results from inefficiencies
generated by large incumbents and from the fact that
more dynamic enterprises are prevented from
entering the market) and favouring jobs creation by
new efficient competitors.
2.2.4. Competition policy complements trade policy,
industrial policy and regulatory reform. Competition
policy targets business conduct that limits market
access and which reduces actual and potential
competition, while trade and industrial policies
encourage adjustment to the trade and industrial
structures in order to promote productivity-based
growth and regulatory reform eliminates domestic
regulation that restricts entry and exit in the markets.
Effective competition policy can also increase
investor confidence and prevent the benefits of trade
from being lost through anti-competitive practices. In
this way, competition policy can be an important
factor in enhancing the attractiveness of an economy
to foreign direct investment, and in maximising the
benefits of foreign investment.”
23. In fact, there is broad empirical evidence supporting
the proposition that competition is beneficial for the
economy. Economists agree that it has an important role to
play in improving productivity and, therefore, the growth
prospects of an economy. It is achieved in the following
manner:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 78 of 122
“International Competition Network — Economic
Growth and Productivity
Competition contributes to increased productivity
through:
Pressure on firms to control costs—In a competitive
environment, firms must constantly strive to lower
their production costs so that they can charge
competitive prices, and they must also improve their
goods and services so that they correspond to
consumer demands.
Easy market entry and exit—Entry and exit of firms
reallocates resources from less to more efficient
firms. Overall productivity increases when an entrant
is more efficient than the average incumbent and
when an existing firm is less efficient than the
average incumbent. Entry—and the threat of entry—
incentivises firms to continuously improve in order
not to lose market share to or be forced out of the
market by new entrants.
Encouraging innovation—Innovation acts as a strong
driver of economic growth through the introduction of
new or substantially improved products or services
and the development of new and improved
processes that lower the cost and increase the
efficiency of production. Incentives to innovate are
affected by the degree and type of competition in a
market.
Pressure to improve infrastructure—Competition puts
pressure on communities to keep local producers
competitive by improving roads, bridges, docks,
airports and communications, as well as improving
educational opportunities.
Benchmarking—Competition also can contribute to
increased productivity by creating the possibility of
benchmarking. The productivity of a monopolist
cannot be measured against rivals in the same
geographic market, but a dose of competition quickly
will expose inferior performance. A monopolist may
be content with mediocre productivity but a firm
battling in a competitive market cannot afford to fall
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 79 of 122
behind, especially if the investment community is
benchmarking it against its rivals.”
24. Productivity is increased through competition by
putting pressure on firms to control costs as the producers
strive to lower their production costs so that they can
charge competitive prices. It also improves the quality of
their goods and services so that they correspond to
consumers' demands.
25. Competition law enforcement deals with anticompetitive
practices arising from the acquisition or
exercise of undue market power by firms that result in
consumer harm in the forms of higher prices, lower quality,
limited choices and lack of innovation. Enforcement
provides remedies to avoid situations that will lead to
decreased competition in markets. Effective enforcement
is important not only to sanction anti-competitive conduct
but also to deter future anti-competitive practices.
26. When we recognise that competition has number of
benefits, it clearly follows that cartels or anti-competitive
agreements cause harm to consumers by fixing prices,
limiting outputs or allocating markets. Effective
enforcement against such practices has direct visible
effects in terms of reduced prices in the market and this is
also supported by various empirical studies.
27. Keeping in view the aforesaid objectives that need to
be achieved, Indian Parliament enacted the Competition
Act, 2002. Need to have such a law became all the more
important in the wake of liberalisation and privatisation as
it was found that the law prevailing at that time, namely,
Monopolies and Restrictive Trade Practices Act, 1969 was
not equipped adequately enough to tackle the competition
aspects of the Indian economy. The law enforcement
agencies, which include CCI and COMPAT, have to ensure
that these objectives are fulfilled by curbing anticompetitive
agreements.
28. Once the aforesaid purpose sought to be achieved is
kept in mind, and the same is applied to the facts of this
case after finding that the anti-competitive conduct of the
appellants continued after coming into force of provisions
of Section 3 of the Act as well, the argument predicated on
retrospectivity pales into insignificance.
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29. One has to keep in mind the aforesaid objective which
the legislation in question attempts to subserve and the
mischief which it seeks to remedy. As pointed out above,
Section 18 of the Act casts an obligation on CCI to
“eliminate” anti-competitive practices and promote
competition, interests of the consumers and free trade. It
was rightly pointed out by Mr Neeraj Kishan Kaul, the
learned Additional Solicitor General, that the Act is clearly
aimed at addressing the evils affecting the economic
landscape of the country in which interest of the society
and consumers at large is directly involved. This is so
eloquently emphasised by this Court in Competition
Commission of India v. SAIL in the following manner: (SCC
pp. 755-56 & 794, paras 6, 8-10 & 125)
“6. As far as the objectives of competition laws are
concerned, they vary from country to country and
even within a country they seem to change and
evolve over the time. However, it will be useful to
refer to some of the common objectives of
competition law. The main objective of competition
law is to promote economic efficiency using
competition as one of the means of assisting the
creation of market responsive to consumer
preferences. The advantages of perfect competition
are threefold: allocative efficiency, which ensures the
effective allocation of resources, productive
efficiency, which ensures that costs of production are
kept at a minimum and dynamic efficiency, which
promotes innovative practices. These factors by and
large have been accepted all over the world as the
guiding principles for effective implementation of
competition law.
xx xx xx
8. The Bill sought to ensure fair competition in India
by prohibiting trade practices which cause
appreciable adverse effect on the competition in
market within India and for this purpose
establishment of a quasi-judicial body was
considered essential. The other object was to curb
the negative aspects of competition through such a
body, namely, “the Competition Commission of India”
(for short “the Commission”) which has the power to
perform different kinds of functions, including passing
of interim orders and even awarding compensation
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 81 of 122
and imposing penalty. The Director General
appointed under Section 16(1) of the Act is a
specialised investigating wing of the Commission. In
short, the establishment of the Commission and
enactment of the Act was aimed at preventing
practices having adverse effect on competition, to
protect the interest of the consumer and to ensure
fair trade carried out by other participants in the
market in India and for matters connected therewith
or incidental thereto.
9. The various provisions of the Act deal with the
establishment, powers and functions as well as
discharge of adjudicatory functions by the
Commission. Under the scheme of the Act, this
Commission is vested with inquisitorial, investigative,
regulatory, adjudicatory and to a limited extent even
advisory jurisdiction. Vast powers have been given to
the Commission to deal with the complaints or
information leading to invocation of the provisions of
Sections 3 and 4 read with Section 19 of the Act. In
exercise of the powers vested in it under Section 64,
the Commission has framed regulations called the
Competition Commission of India (General)
Regulations, 2009 (for short “the Regulations”).
10. The Act and the Regulations framed thereunder
clearly indicate the legislative intent of dealing with
the matters related to contravention of the Act,
expeditiously and even in a time-bound programme.
Keeping in view the nature of the controversies
arising under the provisions of the Act and larger
public interest, the matters should be dealt with and
taken to the logical end of pronouncement of final
orders without any undue delay. In the event of delay,
the very purpose and object of the Act is likely to be
frustrated and the possibility of great damage to the
open market and resultantly, country's economy
cannot be ruled out.”
68) It is for the aforesaid reason that the CCI is entrusted with duties,
powers and functions to deal with three kinds of anti-competitive
practices mentioned above. The purpose is to eliminate such
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practices which are having adverse effect on the competition, to
promote and sustain competition and to protect the interest of the
consumers and ensure freedom of trade, carried on by the other
participants, in India. For the purpose of conducting such an
inquiry, the CCI is empowered to call any person for rendering
assistance and/or produce the records/material for arriving at
even the prima facie opinion. The regulations also empower the
CCI to hold conferences with the concerned persons/parties,
including their advocates/authorised persons.
69) It is also relevant to mention at this stage that while inquiring into
any alleged contravention and determining whether any
agreement has an appreciable adverse effect on competition,
factors which are to be taken into consideration are mentioned in
sub-section (3) of Section 19. These include creation of barriers
to new entrants in the market, driving existing competitors out of
the market and foreclosure of competition by hindering entry into
the market. All these activities have connection with the ‘market’.
The word ‘market’ has reference to ‘relevant market’. As per subsection
(5) of Section 19, such relevant market can be relevant
geographic market or relevant product market. In the present
case, we are concerned with the relevant product market, viz.
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telecommunication market. Sub-section (7) of Section 19
enumerates the factors which are to be kept in mind while
determining the relevant product market.
70) Market definition is a tool to identify and define the boundaries of
competition between firms. It serves to establish the framework
within which the competition policy is applied by the Commission.
The main purpose of market definition is to identify in a
systematic way the competitive constraints that the undertakings
involved face. The objective of defining a market in both its
product and geographic dimension is to identify those actual
competitors of the undertakings involved that are capable of
constraining those undertakings behaviour and of preventing
them from behaving independently of effective competitive
pressure. Therefore, the purpose of defining the ‘relevant market’
is to assess with identifying in a systematic way the competitive
constraints that undertakings face when operating in a market.
This is the case in particular for determining if undertakings are
competitors or potential competitors and when assessing the anticompetitive
effects of conduct in a market. The concept of
relevant market implies that there could be an effective
competition between the products which form part of it and this
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presupposes that there is a sufficient degree of interchangeability
between all the products forming part of the same market insofar
as specific use of such product is concerned. In essence, it is the
notion of ‘power over the market’ which is the key to analyse
many competitive issues.
71) It is an admitted position that in the instant case we are dealing
with the telecom market, which is the relevant market. An
interesting feature is that this telecom market is also regulated by
the statutory regime contained in the TRAI Act. Under the said
Act, TRAI is established as a regulator which exercises
control/supervision and also provides guidance to the
telecom/mobile market. This statutory body is required to
function as per the provisions of the TRAI Act as well as the
Rules and Regulations framed thereunder. Additionally, the
telecom companies are also governed by licence agreements
entered into between the Central Government and such service
providers, for providing telephone/telecommunication services to
the customers/subscribers. At this stage, therefore, we take note
of the relevant provisions of the TRAI Act:
"11. Functions of Authority. – (1) Notwithstanding
anything contained in the Indian Telegraph Act, 1885 (13 of
1885), the functions of the Authority shall be to –
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(a) make recommendations, either suo moto or on a
request from the licensor, on the following matters,
namely:
xx xx xx
(iv) measures to facilitate competition and promote
efficiency in the operation of telecommunication
services so as to facilitate growth in such services;
xx xx xx
(b) discharge the following functions, namely:–
(i) ensure compliance of terms and conditions of
licence;
(ii) notwithstanding anything contained in the terms
and conditions of the licence granted before the
commencement of the Telecom Regulatory Authority
of India (Amendment) Act, 2000, fix the terms and
conditions of inter-connectivity between the service
providers;
(iii) ensure technical compatibility and effective interconnection
between different service providers;
(iv) regulate arrangement amongst service providers
of sharing their revenue derived from providing
telecommunication services;
(v) lay-down the standards of quality of service to be
provided by the service providers and ensure the
quality of service and conduct the periodical survey
of such service provided by the service providers so
as to protect interest of the consumers of
telecommunication service;
(vi) lay-down and ensure the time period for
providing local and long distance circuits of
telecommunication between different service
providers;
(vii) maintain register of interconnect agreements
and of all such other matters as may be provided in
the regulations;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 86 of 122
(viii) keep register maintained under clause (vii)
open for inspection to any member of public on
payment of such fee and compliance of such other
requirement as may be provided in the regulations;
(ix) ensure effective compliance of universal service
obligations;
(c) levy fees and other charges at such rates and in
respect of such services as may be determined by
regulations;
(d) perform such other functions including such
administrative and financial functions as may be entrusted
to it by the Central Government or as may be necessary to
carry out the provisions of this Act:
Provided that the recommendations of the Authority
specified in clause (a) of this sub-section shall not be
binding upon the Central Government.
xx xx xx
14. Establishment of Appellate Tribunal. – The Central
Government shall, by notification, establish an Appellate
Tribunal to be known as the Telecom Disputes Settlement
and Appellate Tribunal to –
(a) adjudicate any dispute –
(i) between a licensor and a licensee;
(ii) between two or more service providers;
(iii) between a service provider and a group of
consumers:
Provided that nothing in this clause shall apply in
respect of matters relating to –
(A) the monopolistic trade practice, restrictive trade
practice and unfair trade practice which are subject to
the jurisdiction of the Monopolies and Restrictive
Trade Practices Commission established under subsection
(1) of section 5 of the Monopolies and
Restrictive Trade Practices Act, 1969 (54 of 1969);
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(B) the complaint of an individual consumer
maintainable before a Consumer Disputes Redressal
Forum or a Consumer Disputes Redressal
Commission or the National Consumer Redressal
Commission established under section 9 of the
Consumer Protection Act, 1986 (68 of 1986);
(C) dispute between telegraph authority and any
other person referred to in sub-section (1) of section
7B of the Indian Telegraph Act, 1885 (13 of 1885);
(b) hear and dispose of appeal against any direction,
decision or order of the Authority under this Act.
xx xx xx
16. Procedure and powers of Appellate Tribunal. – (1)
The Appellate Tribunal shall not be bound by the
procedure laid down by the Code of Civil Procedure, 1908
(5 of 1908), but shall be guided by the principles of natural
justice and, subject to the other provisions of this Act, the
Appellate Tribunal shall have powers to regulate its own
procedure.
(2) The Appellate Tribunal shall have, for the purposes of
discharging the functions under this Act, the same powers
as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect
of the following matters, namely:–
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of
documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of section 123 and 124
of the Indian Evidence Act, 1872 (1 of 1872),
requisitioning any public record or document or a
copy of such record or document, from any office;
(e) issuing commissions for the examination of
witnesses or documents;
(f) reviewing its decisions;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 88 of 122
(g) dismissing an application for default or deciding
it, ex parte;
(h) setting aside any order of dismissal of any
application for default or any order passed by it, ex
parte; and
(i) any other matter which may be prescribed.
(3) Every proceeding before the Appellate Tribunal shall
be deemed to be a judicial proceeding within the meaning
of sections 193 and 228, and for the purposes of section
196 of the Indian Penal Code (45 of 1860) and the
Appellate Tribunal shall be deemed to be a civil court for
the purposes of section 195 and Chapter XXVI of the Code
of Criminal Procedure, 1973 (2 of 1974).”
72) Other provisions in the telecom sector which are relevant for the
purposes of these appeals are taken note of by the High Court as
under:
"Telecommunication laws binds all
19. The relevant licenses
Unified License (UL) – The UL issued by Department of
Telecommunications, Government of India (“DoT”) for
providing telecommunication services on a pan India
basis. Licence under Section 4 of Indian Telegraph Act,
1885 therefore they become Telecom Service Provider
(“TSP”). Relevant clauses of the UL (UASL) are -
(a) Clause 16 of Part-I: Other conditions: The licensee is
bound by all TRAI Orders/Directions/Reglations;
(b) Clause 27 of Part-I: Network Interconnnection,
particularly, Clause 27.4, which requires a licensee to
interconnect subject to compliance with prevailing
regulations and determinations issued by TRAI, and
contemplates the execution of ICAs to establish
interconnection in sufficient capacity and number to enable
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transmission and reception of messages between the
interconnected systems;
(c) Clause 29 of Part-I, requiring a licensee to ensure QoS
standards as may be prescribed by DoT/TRAI.
Specifically, Clause 29.4, empowers DoT/TRAI to evaluate
QoS parameters prior to grant of permission for
commencement of services; and
(d) Clause 6.2 of Part-II, which requires a licensee to
provide interconnection to all TSPs to ensure that calls are
completed to all destinations.
Inter-connection Agreements
20. Similar separate Interconnection Agreements (ICAs)
are executed between the parties. The relevant clauses of
ICAs are as under:
Clause 2.4: “...RJIL will be required to establish
Interconnection at the Switches of IDEA as listed in
Schedule I. In addition to these specified locations,
the Parties may further agree to interconnect at an
additional location(s) as mutually agreed to by and
between the parties during the term of this
Agreement...”
Clause 5.7: “...At the end of two years, the Parties
shall convert the total E1s existing at the POIs into
one-way E1s for the Outgoing Traffic of each Party
on the basis of the traffic ratio existing 3 months prior
to the expiry of the initial period of two years. These
E1s shall thereafter be continued as one-way E1s for
the remaining term of the Agreement at the cost of
RJIL...”
Clause 9.1: “...A minimum notice of 4 weeks has to
be given by either Party for augmentations of
Interconnect Links...”
Clause 9.2: “...Augmentation shall be completed
within 90 days of receipt of requisite charges
specified in Schedule 2 from RJIL...”
Clause 9.3: “...Any request for augmentation of
capacity shall be in writing with Performance reports
as prescribed in Schedule 4...”
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 90 of 122
Clause 9.4: “...Traffic measurements for 7 days shall
be taken by both the parties during agreed busy
route hours, every 6 months after commencement of
traffic at the POIs to determine further capacity
requirements...”
Clause 9.5: “...RJIL shall provide a forecast in writing
in advance for its requirement of port capacity for
Telephony Traffic for the next 6 months to enable
IDEA to dimension the required capacity in its
network...”
21. The relevant clauses of the ICAs are:
(a) Clause 2 makes clear that the ICA will be
applicable and in effect from the date of execution;
(b) Clause 2.10 makes clear that the interconnection
facilities at each POI will conform to the applicable
QoS standards prescribed by TRAI;
(c) Clause 3 – Terms and Amendments – again
makes clear that the ICA becomes applicable,
effective and operational from the date of execution
and is valid until both parties hold a valid license for
providing access services;
(d) Clause 4 – Applicability and Providing Services –
reiterates that the ICA becomes applicable on signing
and is subject to the terms and conditions of the
telecom licence;
(e) Clause 5.2 specifically provides that for the initial
two years, provision and augmentation of
transmission links shall be at the cost of RJIL;
(f) Clause 5.7 contemplates conversion of two-way
E1s into one-way E1s only after two years, which in
other words mean that for two years all E1s must be
two-way E1s;
(g) Clause 9 provides modalities for enhancement of
ports; and
(h) Clause 10.7 again reiterates that Idea is bound to
maintain QoS standards prescribed by TRAI.
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22. Quality of Service Regulations, 2009
Quality of Service Regulations (“QoS Regulations,
2009”) issued by TRAI under Section 36 read with Section
11 of the TRAI Act. Clause 5Iiv) and Clause 14, as
relevant, are reproduced as under:
(a) Clause 5(iv) prescribes that the congestion at
each individual POI cannot exceed 0.5% over a
period of one month (no more than 5 out of every
100 calls can fail).
(b) Clause 14 provides that in the event of any doubt
regarding interpretation of any of the provisions of
the QoS regulations, the view of the TRAI shall be
final and binding.
23. The relevant clauses of the Standards of Quality of
Service of Basic Telephone Service (wireline) and Cellular
Mobile Telephone Service Regulations, 2009 includes
Cellular Mobile Telephone Services. The terms “Point of
Interconnection (POI)”, “Quality of Service (QoS)”, “Service
Provider, Telecommunication services” have been defined
in the Regulations. The term POI congestion is also
described in 3.12 and 4.7 of POI.”
73) Some of the features which govern the telecommunication
industry and noted by the High Court may also be captured at this
stage. These are:
(a) To protect the interest of the service providers and
consumers of the telecom sector and to permit and ensure
technical compatibility and effective inter-relationship between
different service providers and for ensuring compliance of licence
conditions by all the service providers, TRAI was constituted
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under the Telecom Regulatory Authority of India Act, 1997. TRAI
is a recommendatory/advisory and regulatory body discharging
the functions envisaged under sub-section (1) of Section 11 of the
said Act. TRAI, inter alia, is charged with ensuring fair
competition amongst service providers, including fixing the terms
and conditions of entire activity between the service providers
and laying down the standards of Quality of Service (QoS) to be
provided by each service provider. In exercise of its functions,
TRAI has issued detailed Regulations for telecom services,
including fixation and revision of tariffs (Tariff Order), fixation of
Inter-connect Usage Charges (IUC), prescription of quality of
service standards, etc.
(b) The Telecom Service Providers, which include the
respondents as well as RJIL, provide telecommunication access
service and are PAN India Telecom Service Providers. They are
governed by the Cellular Mobile Telephone Service (CMTS)/
Unified Access Service Licence (UASL) issued by the
Telecommunications Department, Government of India under
section 4 of the Telegraph Act.
(c) The Central Government has the exclusive privilege of
establishing, maintaining and working telegraphs under the
Telegraph Act and the Central Government is authorised to grant
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 93 of 122
licence on such terms and conditions and in consideration of such
payment as it thinks fit to any person to establish, maintain or
work as telegraph within any part of the country. By virtue of
Section 4 of the Telegraph Act, a service provider is duty bound to
enter into a licence agreement with the former for unified licence,
with authorisation for provision of services, as per the terms and
conditions prescribed in the Schedule. As a condition of the said
licence, the licensee agrees and unequivocally undertakes to fully
comply with the terms and conditions stipulated in the licence
agreement without any deviation or reservation of any kind. The
licence is governed by the provisions of the Telegraph Act, the
Indian Wireless Telegraphy Act, 1933, the TRAI Act and the
Information Technology Act, 2000, as modified or regulated from
time to time.
74) In order to ensure that there is smooth interconnectivity and a
consumer who is the subscriber of mobile phone of one service
provider, say for e.g. Vodafone, and wants to make call to a
mobile phone of his friend which is provided by another service
provider, say Idea Cellular, the unified licenses put an obligation
on all these licensees to interconnect with each other on the POI.
This is so mentioned in Clause 27.4 of Part I of the Schedule to
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the unified licence. Such interconnectivity of POI is subject to
compliance of regulation/directions issued by TRAI. The
interconnection agreement, inter alia, provides for the following
clauses:
(a) to meet all reasonable demand for the transmission and
reception of messages between the interconnect systems;
(b) to establish and maintain such one or more POIs as are
reasonably required and are of sufficient capacity and in sufficient
numbers to enable transmission and reception of the messages
by means of applicable systems; and
(c) to connect and keep connected to the applicable systems.
Some of the other clauses of the interconnection agreement
are as follows:
A minimum four weeks’ written notice has to be given by either
party for augmentation of interconnect links.
Augmentation shall be completed within 90 days of receipt of
requisite charges specified in the Schedule.
Either party shall provide a forecast in writing, in advance for
its requirements of port capacity for “Telephony Traffic” for the
next six months to enable the other party to dimension the
required capacity in its network.
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The interconnection tests for reach and every interface will be
carried out by mutual arrangement between signatories of the
agreement.
By virtue of the licence, the licensee is obligated to ensure
quality of service as prescribed by the licensor or TRAI and failure
on their part to adhere to the quality of service stipulated by TRAI
would make the licensor liable to be treated for breach of the
terms and conditions of the licence.
In order to render effective services, it is mandatory for the
licensee to interconnect/provide POIs to all eligible telecom
service providers to ensure that calls are completed to all
destinations and interconnection agreement is entered into
between the different service providers which mandates each of
the party to the agreement to provide to the other interconnection
traffic carriage and all the technical and operational quality
service and time lines, i.e. the equivalent to that which the party
provides to itself. The interconnection agreement separately
entered into different service providers is based on the format
prescribed in the Telecommunication Interconnection (Reference
Interconnect Offer) Regulations, 2002.
75) POI is defined in the agreement, in the following words:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 96 of 122
"POI are those points between two network operators
which allow voice call originating from the work of one
operator to terminate on the network by other operator.”
76) We may also note that on June 07, 2005 a direction was issued
under Section 13 read with sub-clause (i) to (v) of sub-clause (b)
of Section 11 of the TRAI Act, which provides as follows:
"In exercise of the powers vested in it under section 13
read with section 11(1)(b)(i), (ii), (iii), (iv) and (v) of the
Telecom Regulatory Authority of India Act, 1997 and in
order to ensure compliance of terms and conditions of
license and effective interconnection between service
providers and to protect consumer interest, the Authority
hereby directs all service providers to provide
interconnection on the request of the interconnection
seeker within 90 days of the applicable payments made by
the interconnection seeker. Further there is a direction
issued by the Government of India, Ministry of
Telecommunication dated 28th August, 2005 by which
directions have been issued to provide data of subscribers
in the prescribed format.”
77) From the aforesaid analysis of the scheme contained in the TRAI
Act, it becomes clear that the functioning of the telecom
companies which are granted licence under Section 4 of the
Telegraph Act is regulated by the provisions contained in the
TRAI Act. TRAI is a regulator which regulates the telecom
industry, which is a statutory body created under the TRAI Act.
The necessity of such regulators has been emphasised by a
Constitution Bench of this Court in Modern Dental College and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 97 of 122
Research Centre and Others v. State of Madhya Pradesh and
Others17 in the following words:
"Need for regulatory mechanism
87. Regulatory mechanism, or what is called regulatory
economics, is the order of the day. In the last 60-70 years,
economic policy of this country has travelled from laissez
faire to mixed economy to the present era of liberal
economy with regulatory regime. With the advent of mixed
economy, there was mushrooming of the public sector and
some of the key industries like aviation, insurance,
railways, electricity/power, telecommunication, etc. were
monopolised by the State. Licence/permit raj prevailed
during this period with strict control of the Government
even in respect of those industries where private sectors
were allowed to operate. However, Indian economy
experienced major policy changes in early 90s on LPG
Model i.e. liberalisation, privatisation and globalisation.
With the onset of reforms to liberalise the Indian economy,
in July 1991, a new chapter has dawned for India. This
period of economic transition has had a tremendous
impact on the overall economic development of almost all
major sectors of the economy.
88. When we have a liberal economy which is regulated by
the market forces (that is why it is also termed as market
economy), prices of goods and services in such an
economy are determined in a free price system set up by
supply and demand. This is often contrasted with a
planned economy in which a Central Government
determines the price of goods and services using a fixed
price system. Market economies are also contrasted with
mixed economy where the price system is not entirely free,
but under some government control or heavily regulated,
which is sometimes combined with State led economic
planning that is not extensive enough to constitute a
planned economy.
89. With the advent of globalisation and liberalisation,
though the market economy is restored, at the same time,
it is also felt that market economies should not exist in
pure form. Some regulation of the various industries is
required rather than allowing self-regulation by market
17 (2016) 7 SCC 353
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 98 of 122
forces. This intervention through regulatory bodies,
particularly in pricing, is considered necessary for the
welfare of the society and the economists point out that
such regulatory economy does not rob the character of a
market economy which still remains a market economy.
Justification for regulatory bodies even in such industries
managed by private sector lies in the welfare of people.
Regulatory measures are felt necessary to promote basic
well being for individuals in need. It is because of this
reason that we find regulatory bodies in all vital industries
like, insurance, electricity and power, telecommunications,
etc.”
78) Thus, with the advent of globalisation/liberalisation leading to free
market economy, regulators in respect of each sector have
assumed great significance and importance. It becomes their
bounden duty to ensure that such a regulator fulfils the objectives
enshrined in the Act under which a particular regulator is created.
Insofar as the telecom sector is concerned, the TRAI Act itself
mentions the objective which it seeks to achieve. It not only
exercises control/supervision over the telecom service providers/
licensees, TRAI is also supposed to provide guidance to the
telecom/mobile market. ‘Introduction’ to the TRAI Act itself
mentions that due to tremendous growth in the services it was
considered essential to regulate the telecommunication services
by a regulatory body which should be fully empowered to control
the services, in the best interest of the country as well as the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 99 of 122
service providers. Likewise, the Statement of Objects and
Reasons of this Act, inter alia, stipulates as under:
"1. In the context of the National Telecom Policy, 1994,
which amongst other things, stresses on achieving the
universal service, bringing the quality of telecom services
to world standards, provisions of wide range of services to
meet the customers demand at reasonable price, and
participation of the companies registered in India in the
area of basic as well as value added telecom services as
also making arrangements for protection and promotion of
consumer interest and ensuring fair competition, there is a
felt need to separate regulatory functions from service
providing functions which will be in keeping with the
general trend in the world. In the multi-operator situation
arising out of opening of basic as well as value added
services in which private operator will be competing with
Government operators, there is a pressing need for an
independent telecom regulatory body for regulation of
telecom services for orderly and healthy growth of
telecommunication infrastructure apart from protection of
consumer interest.
xx xx xx
4. The powers and functions of the Authority, inter alia,
are.–
(i) ensuring technical compatibility and effective
inter-relationship between different service providers;
(ii) regulation of arrangement amongst service
providers of sharing their revenue derived from
providing telecommunication services;
(iii) ensuring compliance of licence conditions by all
service providers;
(iv) protection of the interest of the consumers of
telecommunication service;
(v) settlement of disputes between service providers;
(vi) fixation of rates for providing telecommunication
service within India and outside India;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 100 of 122
(vii) ensuring effective compliance of universal
service obligations.”
79) TRAI is, thus, constituted for orderly and healthy growth of
telecommunication infrastructure apart from protection of
consumer interest. It is assigned the duty to achieve the
universal service which should be of world standard quality on the
one hand and also to ensure that it is provided to the customers
at a reasonable price, on the other hand. In the process, purpose
is to make arrangements for protection and promotion of
consumer interest and ensure fair competition. It is because of
this reason that the powers and functions which are assigned to
TRAI are highlighted in the Statement of Objects and Reasons.
Specific functions which are assigned to TRAI, amongst other,
including ensuring technical compatibility and effective interrelationship
between different service providers; ensuring
compliance of licence conditions by all service providers; and
settlement of disputes between service providers.
80) In the instant case, dispute raised by RJIL specifically touches
upon these aspects as the grievance raised is that the IDOs have
not given POIs as per the licence conditions resulting into noncompliance
and have failed to ensure inter se technical
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 101 of 122
compatibility thereby. Not only RJIL has raised this dispute, it has
even specifically approached TRAI for settlement of this dispute
which has arisen between various service providers, namely, RJIL
on the one hand and the IDOs on the other, wherein COAI is also
roped in. TRAI is seized of this particular dispute.
81) It is a matter of record that before the TRAI, IDOs have refuted
the aforesaid claim of RJIL. Their submission is that not only
required POIs were provided to RJIL, it is the RJIL which is in
breach as it was making unreasonable and excessive demand for
POIs. It is specifically pleaded by the IDOs that:
(i) RJIL raised its demand for POIs for the first time on June
21, 2016.
(ii) In the letter dated June 21, 2016, it was admitted that RJIL
was in test phase.
(iii) There was no express mention of any commercial launch
date.
(iv) As per the letter, immediately on commercial launch RJIL
would have a 22mn subscriber base for which number series was
already allotted.
(v) As per the DoT Circular dated August 29, 2005 test
customers are not considered as subscribers and test customers
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 102 of 122
can only be in the form of business partners. It was highlighted
that problem, if any, of congestion has been suffered on account
of provisioning of full-fledged services during test phase.
(vi) RJIL in its complaint before the TRAI was not considering
the period of 90 days as was prescribed in the Interconnection
Agreement. It was instead proceeding on the basis that the
demand for POIs should be met on an immediate basis.
(vii) There was several errors in the forecast made by RJIL.
(viii) The tables given by the RJIL are wrong as they take into
account its total demand at the end of nine months against what
was actually provided.
82) Learned counsel appearing for the IDOs had also argued that the
first firm demand for provisioning of POIs was made by RJIL on
June 21, 2016. According to the IDOs, in that letter, RJIL had
expressly admitted that it was under test phase and had not
commenced ‘commercial services’. RJIL had also stated that the
demand for POIs was being made to ‘provide seemless
connectivity to targeted subscribers’ as against ‘test consumers’.
Their submission was that it was not disclosed at all as to when
RJIL was going to launch commercial services. On the basis of
the aforesaid stand taken by the IDOs, their argument is that in
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the first instance it is the TRAI which is not only competent but
more appropriate authority to consider these aspects as it is the
TRAI which is the specialised body going by the nature of dispute
between the parties, following aspects have to be determined by
the TRAI:
(a) Whether IDOs were under any obligation to provide POIs
during test period?
(b) As per the letter dated June 21, 2016 from RJIL, when IDOs
were to commence provisioning of POIs to RJIL?
(c) Whether the demand for POIs made by RJIL were
reasonable or not?
(d) Whether there was any delay/denial at the end of Vodafone
in provisioning of POIs?
(e) Whether the POIs were to be provided ‘immediately’ and
during ‘test phase’?
(f) Whether IDOs have provided sufficient number of POIs to
RJIL in conformity with the licence conditions?
83) We are of the opinion that as the TRAI is constituted as an expert
regulatory body which specifically governs the telecom sector, the
aforesaid aspects of the disputes are to be decided by the TRAI
in the first instance. These are jurisdictional aspects. Unless the
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TRAI finds fault with the IDOs on the aforesaid aspects, the
matter cannot be taken further even if we proceed on the
assumption that the CCI has the jurisdiction to deal with the
complaints/information filed before it. It needs to be reiterated
that RJIL has approached the DoT in relation to its alleged
grievance of augmentation of POIs which in turn had informed
RJIL vide letter dated September 06, 2016 that the matter related
to inter-connectivity between service providers is within the
purview of TRAI. RJIL thereafter approached TRAI; TRAI
intervened and issued show-cause notice dated September 27,
2016; and post issuance of show-cause notice and directions,
TRAI issued recommendations dated October 21, 2016 on the
issue of inter-connection and provisioning of POIs to RJIL. The
sectoral authorities are, therefore, seized of the matter. TRAI,
being a specialised sectoral regulator and also armed with
sufficient power to ensure fair, non-discriminatory and competitive
market in the telecom sector, is better suited to decide the
aforesaid issues. After all, RJIL’s grievance is that interconnectivity
is not provided by the IDOs in terms of the licenses
granted to them. TRAI Act and Regulations framed thereunder
make detailed provisions dealing with intense obligations of the
service providers for providing POIS. These provisions also deal
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as to when, how and in what manner POIs are to be provisioned.
They also stipulate the charges to be realised for POIs that are to
be provided to another service provider. Even the consequences
for breach of such obligations are mentioned.
84) We, therefore, are of the opinion that the High Court is right in
concluding that till the jurisdictional issues are straightened and
answered by the TRAI which would bring on record findings on
the aforesaid aspects, the CCI is ill-equipped to proceed in the
matter. Having regard to the aforesaid nature of jurisdiction
conferred upon an expert regulator pertaining to this specific
sector, the High Court is right in concluding that the concepts of
“subscriber”, “test period”, “reasonable demand”, “test phase and
commercial phase rights and obligations”, “reciprocal obligations
of service providers” or “breaches of any contract and/or
practice”, arising out of TRAI Act and the policy so declared, are
the matters within the jurisdiction of the Authority/TDSAT under
the TRAI Act only. Only when the jurisdictional facts in the
present matter as mentioned in this judgment particularly in paras
56 and 82 above are determined by the TRAI against the IDOs,
the next question would arise as to whether it was a result of any
concerted agreement between the IDOs and COAI supported the
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IDOs in that endeavour. It would be at that stage the CCI can go
into the question as to whether violation of the provisions of TRAI
Act amounts to ‘abuse of dominance’ or ‘anti-competitive
agreements’. That also follows from the reading of Sections 21
and 21A of the Competition Act, as argued by the respondents.
85) The issue can be examined from another angle as well. If the
CCI is allowed to intervene at this juncture, it will have to
necessarily undertake an exercise of returning the findings on the
aforesaid issues/aspects which are mentioned in paragraph 82
above. Not only TRAI is better equipped as a sectoral regulator
to deal with these jurisdictional aspects, there may be a possibility
that the two authorities, namely, TRAI on the one hand and the
CCI on the other, arrive at a conflicting views. Such a situation
needs to be avoided. This analysis also leads to the same
conclusion, namely, in the first instance it is the TRAI which
should decide these jurisdictional issues, which come within the
domain of the TRAI Act as they not only arise out of the telecom
licenses granted to the service providers, the service providers
are governed by the TRAI Act and are supposed to follow various
regulations and directions issued by the TRAI itself.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 107 of 122
86) This takes us to the next level of the issue, viz. whether TRAI has
the exclusive jurisdiction to deal with matters involving anticompetitive
practices to the exclusion of CCI altogether because
of the reason that the matter pertains to telecom sector?
87) The IDOs have argued that not only TRAI is an expert body which
can deal with these issues and has been assigned this function
specifically under the TRAI Act, even the anti-competitive aspects
of telecom sector are specifically assigned to the TRAI in the
TRAI Act itself. On that premise the submission is that the TRAI
Act is a special legislation which prevails over the provisions of
the Competition Act as the Competition Act is general in nature. It
is also argued that even if the Competition Act is treated as a
special statute, between the two special statutes the TRAI Act
would prevail as it is a complete code in itself which regulates the
telecom sector in its entirety, including the aspects of competition.
88) Such a submission, on a cursory glance, may appear to be
attractive. However, the matter cannot be examined by looking
into the provisions of the TRAI Act alone. Comparison of the
regimes and purpose behind the two Acts becomes essential to
find an answer to this issue. We have discussed the scope and
ambit of the TRAI Act in the given context as well as the functions
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 108 of 122
of the TRAI. No doubt, we have accepted that insofar as the
telecom sector is concerned, the issues which arise and are to be
examined in the context of the TRAI Act and related regime need
to be examined by the TRAI. At the same time, it is also
imperative that specific purpose behind the Competition Act is
kept in mind. This has been taken note of and discussed in the
earlier part of the judgment. As pointed out above, the
Competition Act frowns the anti-competitive agreements. It deals
with three kinds of practices which are treated as anti-competitive
and are prohibited. To recapitulate, these are:
(a) where agreements are entered into by certain persons with
a view to cause an appreciable adverse effect on competition;
(b) where any enterprise or group of enterprises, which enjoys
dominant position, abuses the said dominant position; and
(c) regulating the combination of enterprises by means of
mergers or amalgamations to ensure that such mergers or
amalgamations do not become anti-competitive or abuse the
dominant position which they can attain.
89) The CCI is specifically entrusted with duties and functions, and in
the process empower as well, to deal with the aforesaid three
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kinds of anti-competitive practices. The purpose is to eliminate
such practices which are having adverse effect on the
competition, to promote and sustain competition and to protect
the interest of the consumers and ensure freedom of trade,
carried on by other participants, in India. To this extent, the
function that is assigned to the CCI is distinct from the function of
TRAI under the TRAI Act. Learned counsel for the appellants are
right in their submission that the CCI is supposed to find out as to
whether the IDOs were acting in concert and colluding, thereby
forming a cartel, with the intention to block or hinder entry of RJIL
in the market in violation of Section 3(3)(b) of the Competition Act.
Also, whether there was an anti-competitive agreement between
the IDOs, using the platform of COAI. The CCI, therefore, is to
determine whether the conduct of the parties was unilateral or it
was a collective action based on an agreement. Agreement
between the parties, if it was there, is pivotal to the issue. Such
an exercise has to be necessarily undertaken by the CCI. In
Haridas Exports, this Court held that where statutes operate in
different fields and have different purposes, it cannot be said that
there is an implied repeal of one by the other. The Competition
Act is also a special statute which deals with anti-competition. It
is also to be borne in mind that if the activity undertaken by some
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persons is anti-competitive and offends Section 3 of the
Competition Act, the consequences thereof are provided in the
Competition Act. Section 27 empowers the CCI to pass certain
kinds of orders, stipulated in the said provision, after inquiry into
the agreements for abuse of dominant position. The following
kinds of orders can be passed by the CCI under this provision:
"27. Orders by Commission after inquiry into
agreements or abuse of dominant position. - Where
after inquiry the Commission finds that any agreement
referred to in section 3 or action of an enterprise in a
dominant position, is in contravention of section 3 or
section 4, as the case may be, it may pass all or any of the
following orders, namely:—
(a) direct any enterprise or association of enterprises or
person or association of persons, as the case may be,
involved in such agreement, or abuse of dominant
position, to discontinue and not to re-enter such
agreement or discontinue such abuse of dominant
position, as the case may be;
(b) impose such penalty, as it may deem fit which shall be
not more than ten per cent of the average of the turnover
for the last three preceding financial years, upon each of
such person or enterprises which are parties to such
agreements or abuse:
Provided that in case any agreement referred to in
section 3 has been entered into by a cartel, the
Commission may impose upon each producer, seller,
distributor, trader or service provider included in that cartel,
a penalty of up to three times of its profit for each year of
the continuance of such agreement or ten percent. of its
turnover for each year of the continuance of such
agreement, whichever is higher.
(c) repealed;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 111 of 122
(d) direct that the agreements shall stand modified to the
extent and in the manner as may be specified in the order
by the Commission;
(e) direct the enterprises concerned to abide by such other
orders as the Commission may pass and comply with the
directions, including payment of costs, if any;
(f) repealed;
(g) pass such other [order or issue such directions] as it
may deem fit.
Provided that while passing orders under this
section, if the Commission comes to a finding, that an
enterprise in contravention to section 3 or section 4 of the
Act is a member of a group as defined in clause (b) of the
Explanation to section 5 of the Act, and other members of
such a group are also responsible for, or have contributed
to, such a contravention, then it may pass orders, under
this section, against such members of the group.
Moreover, it is within the exclusive domain of the CCI to find
out as to whether a particular agreement will have appreciable
adverse effect on competition within the relevant market in India.
For this purpose, CCI is to take into consideration the provisions
contained in the Competition Act, including Section 29 thereof.
Sections 45 and 46 also authorise the CCI to impose penalties in
certain situations.
90) Obviously, all the aforesaid functions not only come within the
domain of the CCI, TRAI is not at all equipped to deal with the
same. Even if TRAI also returns a finding that a particular activity
was anti-competitive, its powers would be limited to the action
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 112 of 122
that can be taken under the TRAI Act alone. It is only the CCI
which is empowered to deal with the same anti-competitive act
from the lens of the Competition Act. If such activities offend the
provisions of the Competition Act as well, the consequences
under that Act would also follow. Therefore, contention of the
IDOs that the jurisdiction of the CCI stands totally ousted cannot
be accepted. Insofar as the nuanced exercise from the stand
point of Competition Act is concerned, the CCI is the experienced
body in conducting competition analysis. Further, the CCI is more
likely to opt for structural remedies which would lead the sector to
evolve a point where sufficient new entry is induced thereby
promoting genuine competition. This specific and important role
assigned to the CCI cannot be completely wished away and the
‘comity’ between the sectoral regulator (i.e. TRAI) and the market
regulator (i.e. the CCI) is to be maintained.
91) The conclusion of the aforesaid discussion is to give primacy to
the respective objections of the two regulators under the two Acts.
At the same time, since the matter pertains to the telecom sector
which is specifically regulated by the TRAI Act, balance is
maintained by permitting TRAI in the first instance to deal with
and decide the jurisdictional aspects which can be more
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 113 of 122
competently handled by it. Once that exercise is done and there
are findings returned by the TRAI which lead to the prima facie
conclusion that the IDOs have indulged in anti-competitive
practices, the CCI can be activated to investigate the matter
going by the criteria laid down in the relevant provisions of the
Competition Act and take it to its logical conclusion. This
balanced approach in construing the two Acts would take care of
Section 60 of the Competition Act as well.
92) We, thus, do not agree with the appellants that CCI could have
dealt with this matter at this stage itself without availing the
inquiry by TRAI. We also do not agree with the respondents that
insofar as the telecom sector is concerned, jurisdiction of the CCI
under the Competition Act is totally ousted. In nutshell, that leads
to the conclusion that the view taken by the High Court is
perfectly justified. Even the argument of the learned ASG is that
the exercise of jurisdiction by the CCI to investigate an alleged
cartel does not impinge upon TRAI’s jurisdiction to regulate the
industry in any way. It was submitted that the promotion of
competition and prevention of competitive behaviour may not be
high on the change of sectoral regulator which makes it prone to
‘regulatory capture’ and, therefore, the CCI is competent to
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exercise its jurisdiction from the stand point of the Competition
Act. However, having taken note of the skillful exercise which the
TRAI is supposed to carry out, such a comment vis-a-vis TRAI
may not be appropriate. No doubt, as commented by the
Planning Commission in its report of February, 2007, a sectoral
regulator, may not have an overall view of the economy as a
whole, which the CCI is able to fathom. Therefore, our analysis
does not bar the jurisdiction of CCI altogether but only pushes it
to a later stage, after the TRAI has undertaken necessary
exercise in the first place, which it is more suitable to carry out.
B. Whether the writ petitions filed before the High Court of Bombay
were maintainable?
93) Here comes the scope of judicial interference under Article 226 of
the Constitution. As per the RJIL as well as CCI, the High Court
could not have entertained the writ petition against an order
passed under Section 26(1) of the Competition Act which was a
pure administrative order and was only a prima facie view
expressed therein, and did not result in serious adverse
consequences. It was submitted that the finding of the High
Court that such an order was quasi-judicial order is not only
erroneous but it is contrary to the law laid down in the case of
Steel Authority of India Limited. The respondents, on the other
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 115 of 122
hand, have submitted that the judgment in the above case had no
application in the instant case as it did not deal with the sector
that is regulated by a statutory authority. Moreover, such an order
was quasi-judicial in nature and cannot be treated as an
administrative order since it was passed by the CCI after
collecting the detailed information from the parties and by holding
the conferences, calling material details, documents, affidavits
and by recording the opinion. It was submitted that judicial review
against such an order is permissible and it was open to the
respondents to point out that the complete material, as submitted
by the respondents, was not taken into consideration which
resulted in an erroneous order, which had adverse civil
consequences inasmuch as the respondents were subjected to
further investigation by the Director General.
94) We may mention at the outset that in the case of Steel Authority
of India Limited, nature of the order passed by the CCI under
Section 26(1) of the Competition Act (here also we are concerned
with an order which is passed under Section 26(1) of the
Competition Act) was gone into. The Court, in no uncertain
terms, held that such an order would be an administrative order
and not a quasi-judicial order. It can be discerned from
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paragraphs 94, 97 and 98 of the said judgment, which are as
under:
"94. The Tribunal, in the impugned judgment, has taken
the view that there is a requirement to record reasons
which can be express, or, in any case, followed by
necessary implication and therefore, the authority is
required to record reasons for coming to the conclusion.
The proposition of law whether an administrative or quasijudicial
body, particularly judicial courts, should record
reasons in support of their decisions or orders is no more
res integra and has been settled by a recent judgment of
this Court in CCT v. Shukla & Bros. [(2010) 4 SCC 785:
(2010) 2 SCC (Cri) 1201 : (2010) 2 SCC (L&S) 133],
wherein this Court was primarily concerned with the High
Court dismissing the appeals without recording any
reasons. The Court also examined the practice and
requirement of providing reasons for conclusions, orders
and directions given by the quasi-judicial and
administrative bodies.
xx xx xx
97. The above reasoning and the principles enunciated,
which are consistent with the settled canons of law, we
would adopt even in this case. In the backdrop of these
determinants, we may refer to the provisions of the Act.
Section 26, under its different sub-sections, requires the
Commission to issue various directions, take decisions
and pass orders, some of which are even appealable
before the Tribunal. Even if it is a direction under any of
the provisions and not a decision, conclusion or order
passed on merits by the Commission, it is expected that
the same would be supported by some reasoning. At the
stage of forming a prima facie view, as required under
Section 26(1) of the Act, the Commission may not really
record detailed reasons, but must express its mind in no
uncertain terms that it is of the view that prima facie case
exists, requiring issuance of direction for investigation to
the Director General. Such view should be recorded with
reference to the information furnished to the Commission.
Such opinion should be formed on the basis of the
records, including the information furnished and reference
made to the Commission under the various provisions of
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the Act, as aforereferred. However, other decisions and
orders, which are not directions simpliciter and determining
the rights of the parties, should be well reasoned analysing
and deciding the rival contentions raised before the
Commission by the parties. In other words, the
Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any
adjudicatory or determinative process and by recording
minimum reasons substantiating the formation of such
opinion, while all its other orders and decisions should be
well reasoned.
98. Such an approach can also be justified with reference
to Regulation 20(4), which requires the Director General to
record, in his report, findings on each of the allegations
made by a party in the intimation or reference submitted to
the Commission and sent for investigation to the Director
General, as the case may be, together with all evidence
and documents collected during investigation. The
inevitable consequence is that the Commission is similarly
expected to write appropriate reasons on every issue while
passing an order under Sections 26 to 28 of the Act.”
95) There is no reason to take a contrary view. Therefore, we are not
inclined to refer the matter to a larger Bench for reconsideration.
96) It was, however, argued that since the case of Steel Authority of
India Limited was not dealing with the telecom sector, which is
regulated by the statutory regulator, namely, TRAI under the TRAI
Act, that judgment would not be applicable. Merely because the
present case deals with the telecom sector would not change the
nature of the order that is passed by the CCI under Section 26(1)
of the Competition Act. However, it raises another dimension.
Even if the order is administrative in nature, the question raised
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 118 of 122
before the High Court in the writ petitions filed by the respondents
touched upon the very jurisdiction of the CCI. As is evident, the
case set up by the respondents was that the CCI did not have the
jurisdiction to entertain any such request or Information which
was furnished by RJIL and two others. The question, thus,
pertained to the jurisdiction of the CCI to deal with such a matter
and in the process the High Court was called upon to decide as to
whether the jurisdiction of the CCI is entirely excluded or to what
extent the CCI can exercise its jurisdiction in these cases when
the matter could be dealt with by another regulator, namely, the
TRAI. When such jurisdictional issues arise, the writ petition
would clearly be maintainable as held in Barium Chemicals Ltd.
and Another v. Company Law Board and Others18 and Carona
Limited. In Carona Limited, this Court held as under:
"26. The learned counsel for the appellant company
submitted that the fact as to “paid-up share capital” of
rupees one crore or more of a company is a “jurisdictional
fact” and in absence of such fact, the court has no
jurisdiction to proceed on the basis that the Rent Act is not
applicable. The learned counsel is right. The fact as to
“paid-up share capital” of a company can be said to be a
“preliminary” or “jurisdictional fact” and said fact would
confer jurisdiction on the court to consider the question
whether the provisions of the Rent Act were applicable.
The question, however, is whether in the present case, the
learned counsel for the appellant tenant is right in
submitting that the “jurisdictional fact” did not exist and the
Rent Act was, therefore, applicable.
18 AIR 1967 SC 295
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 119 of 122
27. Stated simply, the fact or facts upon which the
jurisdiction of a court, a tribunal or an authority depends
can be said to be a “jurisdictional fact”. If the jurisdictional
fact exists, a court, tribunal or authority has jurisdiction to
decide other issues. If such fact does not exist, a court,
tribunal or authority cannot act. It is also well settled that a
court or a tribunal cannot wrongly assume existence of
jurisdictional fact and proceed to decide a matter. The
underlying principle is that by erroneously assuming
existence of a jurisdictional fact, a subordinate court or an
inferior tribunal cannot confer upon itself jurisdiction which
it otherwise does not posses.
28. In Halsbury's Laws of England (4th Edn.), Vol. 1, Para
55, p. 61; Reissue, Vol. 1(1), Para 68, pp. 114-15, it has
been stated:
“Where the jurisdiction of a tribunal is dependent on
the existence of a particular state of affairs, that state
of affairs may be described as preliminary to, or
collateral to the merits of, the issue. If, at the
inception of an inquiry by an inferior tribunal, a
challenge is made to its jurisdiction, the tribunal has
to make up its mind whether to act or not and can
give a ruling on the preliminary or collateral issue; but
that ruling is not conclusive.”
The existence of a jurisdictional fact is thus a sine qua non
or condition precedent to the assumption of jurisdiction by
a court or tribunal.
xx xx xx
36. It is thus clear that for assumption of jurisdiction by a
court or a tribunal, existence of jurisdictional fact is a
condition precedent. But once such jurisdictional fact is
found to exist, the court or tribunal has power to decide
adjudicatory facts or facts in issue.”
97) Thus, even when we do not agree with the approach of the High
Court in labeling the impugned order as quasi-judicial order and
assuming jurisdiction to entertain the writ petitions on that basis,
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 120 of 122
for our own and different reasons, we find that the High Court was
competent to deal with and decide the issues raised in exercise of
its power under Article 226 of the Constitution. The writ petitions
were, therefore, maintainable.
C. Whether the High Court could give its findings on merits?
98) Once we hold that the order under Section 26(1) of the
Competition Act is administrative in nature and further that it was
merely a prima facie opinion directing the Director General to
carry the investigation, the High Court would not be competent to
adjudge the validity of such an order on merits. The observations
of the High Court giving findings on merits, therefore, may not be
appropriate.
99) At the same time, since we are upholding the order of the High
Court on the aspect that the CCI could exercise jurisdiction only
after proceedings under the TRAI Act had concluded/attained
finality, i.e. only after the TRAI returns its findings on the
jurisdictional aspects which are mentioned above by us, the
ultimate direction given by the High Court quashing the order
passed by the CCI is not liable to be interfered with as such an
exercise carried out by the CCI was premature. The result of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 121 of 122
discussion would be to dismiss these appeals, subject to our
observations on certain aspects. Ordered accordingly.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
DECEMBER 05, 2018
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 122 of 122
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(S). 11843 OF 2018
(ARISING OUT OF SLP (C) NO. 35574 OF 2017)
COMPETITION COMMISSION OF INDIA .....APPELLANT(S)
VERSUS
BHARTI AIRTEL LIMITED AND OTHERS .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO(S). 11844-11845 OF 2018
(ARISING OUT OF SLP (C) NOS. 35532-35533 OF 2017)
CIVIL APPEAL NO(S). 11846 OF 2018
(ARISING OUT OF SLP (C) NO. 35497 OF 2017)
CIVIL APPEAL NO(S). 11852 OF 2018
(ARISING OUT OF SLP (C) NO. 115 OF 2018)
A N D
CIVIL APPEAL NO(S). 11847-11851 OF 2018
(ARISING OUT OF SLP (C) NOS. 37285-37289 OF 2017)
J U D G M E N T
A.K. SIKRI, J.
Leave granted.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 1 of 122
2) Reliance Jio Infocomm Limited (hereinafter referred to as 'RJIL')
has filed information under Section 19(1) of the Competition Act,
2002 (hereinafter referred to as the 'Competition Act') before the
Competition Commission of India (for short, 'CCI') alleging anticompetitive
agreement/cartel having been formed by three major
telecom operators, namely, Bharti Airtel Limited, Vodafone India
Limited and Idea Cellular Limited (Incumbent Dominant
Operators) (hereinafter referred to as the ‘IDOs’). Similar
Informations under Section 19 of the Competition Act were also
filed by one Mr. Ranjan Sardana, Chartered Accountant, and Mr.
Justice Kantilal Ambalal Puj (Retd.). These were registered by
the CCI as Case Nos. 80-81, 83 and 95 respectively. As per
Section 26 of the Competition Act, on receipt of such an
information, the CCI has to form an opinion as to whether there
exists a prima facie case or not. If it is of the opinion that there
exists a prima facie case, the CCI directs the Director General to
cause an investigation to be made into the matter. Apart from the
IDOs, certain allegations were also made against the Cellular
Operators Association of India (for short, 'COAI'). The CCI issued
notice to these parties and after hearing the RJIL, the aforesaid
cellular companies and COAI, it passed a common order dated
April 21, 2017 in all these cases (by clubbing them together)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 2 of 122
holding a view that prima facie case exists and an investigation is
warranted into the matter. It, accordingly, directed the Director
General to cause investigation in the case.
Introduction:
3) Four writ petitions came to be filed by the Bharti Airtel Limited,
Vodafone India Limited, Idea Cellular Limited and COAI
respectively. The prayed for quashing of the aforesaid order and
consequential action/proceedings on the ground that the CCI did
not have any jurisdiction to deal with such a matter. Show-cause
notices were issued pursuant to which the CCI as well as RJIL
filed their counter affidavits. The mater was heard and vide
judgment dated September 21, 2017 the High Court has allowed
these writ petitions and quashed/set aside the order dated April
21, 2017 passed by the CCI and consequently notices issued by
the Director General of the CCI have also been quashed. We
may reproduce the conclusions and operative portion of the order
passed by the Bombay High Court here itself, which are as under:
"130. Conclusions:
a) All the Writ Petitions are maintainable and
entertainable. This Court has territorial jurisdiction to deal
and decide the challenges so raised against impugned
order (majority decision) dated 21 April 2017, passed by
the Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002 in
case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 3 of 122
the consequential actions/notices of the Director General
under Section 41 of the Competition Act arising out of it.
b) The telecommunication Sector/Industry/Market is
governed, regulated, controlled and developed by the
Authorities under the Telegraph Act, the Telecom
Regulatory Authority of India Act (TRAI Act) and related
Regulations, Rules, Circulars, including all government
policies. All the “parties”, “persons”, “stakeholders”,
“service providers”, “consumers” and “enterprise” are
bound by the statutory agreements/contracts, apart from
related policy, usage, custom, practice so announced by
the Government/Authority, from time to time.
c) The question of interpretation of clarification of any
“contract clauses”, “unified license”, “interconnection
agreements”, “quality of service regulations”, “rights and
obligations of TSP between and related to the above
provisions”, are to be settled by the Authorities/TDSAT and
not by the Authorities under the Competition Act.
d) The concepts of “subscriber”, “test period”, “reasonable
demand”, “test phase and commercial phase rights and
obligations”, “reciprocal obligations of service providers” or
“breaches of any contract and/or practice”, arising out of
TRAI Act and the policy so declared, are the matters within
the jurisdiction of the Authority/TDSAT under the TRAI Act
only.
e) The Competition Act and the TRAI Act are independent
statutes. The statutory authorities under the respective
Acts are to discharge their power and jurisdiction in the
light of the object, for which they are established. There is
no conflict of the jurisdiction to be exercised by them. But
the Competition Act itself is not sufficient to decide and
deal with the issues, arising out of the provisions of the
TRAI Act and the contract conditions, under the
Regulations.
f) The Competition Act governs the anti-competitive
agreements and its effect – the issues about “abuse of
dominant position and combinations”. It cannot be used
and utilized to interpret the contract conditions/policies of
telecom Sector/Industry/Market, arising out of the
Telegraph Act and the TRAI Act.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 4 of 122
g) The Authority under the Competition Act has no
jurisdiction to decide and deal with the various statutory
agreements, contracts, including the rival
rights/obligations, of its own. Every aspects of
development of telecommunication market are to be
regulated and controlled by the concerned Department/
Government, based upon the policy so declared from time
to time, keeping in mind the need and the technology,
under the TRAI Act.
h) Impugned order dated 21 April 2017 passed by the
Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002
and all the consequential actions/notices of the Director
General under Section 41 of the Competition Act
proceeded on wrong presumption of law and usurpation of
jurisdiction, unless the contract agreements, terms and
clauses and/or the related issues are settled by the
Authority under the TRAI Act, there is no question to
initiating any proceedings under the Competition Act as
contracts/agreements go to the root of the alleged
controversy, even under the Competition Act.
i) The Authority, like the Commission and/or Director
General, has no power to deal and decide the stated
breaches including of “delay, “denial”, and “congestion” of
POIs unless settled finally by the Authorities/TDSAT under
the TRAI Act. Therefore, there is no question to initiate
any inquiry and investigations under Section 26(1) of the
Competition Act. It is without jurisdiction. Even at the time
of passing of final order, the Commission and the Authority,
will not be in a position to deal with the contractual terms
and conditions and/or any breaches, if any. The uncleared
and vague information are not sufficient to initiate inquiry
and/or investigation under the Competition Act, unless the
governing law and the policy of the concerned “market”
has clearly defined the respective rights and obligations of
the concerned parties/persons.
j) Impugned order dated 21 April 2017 and all the
consequential actions/notices of the Director General
under the Competition Act, therefore, in the present facts
and circumstances, are not mere “administrative
directions”.
k) Impugned order dated 21 April 2017 and all the
consequential actions/notices of the Director General
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 5 of 122
under the Competition Act are, therefore, illegal, perverse
and also in view of the fact that it takes into consideration
irrelevant material and ignores the relevant material and
the law.
l) Every majority decision cannot be termed as
“cartelisation”. Even ex-facie service providers and its
Association COAI have not committed any breaches of
any provisions of the Competition Act.
131. Hence the following
ORDER
a) Impugned order dated 21 April 2017, passed by the
Competition Commission of India (CCI) under the
provisions of Section 26(1) of the Competition Act, 2002 in
case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all
the consequential actions/notices of the Director General
under Section 41 of the Competition Act, are liable to be
quashed and set aside, in exercise of power under Article
226 of the Constitution of India. Order accordingly.
b) All the Writ Petitions are allowed.
c) There shall be no order as to costs.
d) In view of the above, nothing survives in Civil
Application (Stamp) No. 17736 of 2017 in Writ Petition No.
7164 of 2017 and the same is also disposed of. No costs.”
4) Gist of the aforesaid order, as per the High Court, is that insofar
as the telecom sector/industry/market is concerned, same is
governed, regulated, controlled and developed by the authorities
under the India Telegraph Act, 1885 (hereinafter referred to as the
‘Telegraph Act’), the Telecom Regulatory Authority of India Act,
1997 (for short, ‘TRAI Act’), and as well as the related
Regulations, Rules, Circulars, etc. Therefore, the question of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 6 of 122
interpretation or clarification of any “contract clauses”, “unified
license”, “interconnection agreements”, “quality of service
regulations”, “rights and obligations of TSP between and related
to the above provisions”, are to be settled by the
Authorities/Telecom Disputes Settlement and Appellate Tribunal
(TDSAT) and not by the Authorities under the Act. It has also
held that the Competition Act and the TRAI Act are independent
statutes and the statutory authorities under the respective Acts
are to discharge their power and jurisdiction in the light of the
objectives for which they are established. The Competition Act is
itself not sufficient to decide and deal with the issues arising out
of the provisions of the TRAI Act etc. Thus, the CCI has no
jurisdiction to decide and deal with the various statutory
agreements, contracts, including rival rights/obligations, of its
own. The issues arising out of contract agreements, terms and
clauses and/or the related issues are to be settled by the
authority under the TRAI Act in the first instance and unless these
issues are decided, there is no question of initiating any
proceedings under the Act. In a nutshell, it is held that insofar as
contracts, etc. which are regulated by the TRAI Act are
concerned, in the first instance, it is the authority under the TRAI
Act which has to decide these questions. Once there is a
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 7 of 122
determination of the respective rights and obligations under these
licenses by the authority under the TRAI Act, which provided an
information to the effect that the particular act appears to be anticompetitive,
only thereafter the CCI gets jurisdiction to go into the
question of such anti-competitive practice. Primarily the message
behind the decision of the High Court is that jurisdictional facts
are to be decided by the authorities under the TRAI Act which has
the exclusive jurisdiction to determine those issues as the TRAI is
the statutory authority established for this very purpose, and
unless there is a determination of these facts, the machinery
under the Competition Act cannot be invoked. To put it otherwise,
the judgment proceeds to decide that it was premature for the
CCI to entertain the Information for want of determination of such
issues that fall within the domain of the TRAI Act.
5) It is obvious that the RJIL is not happy with the aforesaid
outcome. Even the CCI feels aggrieved. CCI has impugned this
decision by filing four special leave petitions, while the other one
has been filed by the RJIL.
6) The material facts which are absolutely essential to determine the
controversy, eschewing the unnecessary details, may now be
recapitulated:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 8 of 122
Factual Background:
With the decision of the Government of India, more than 25
years ago, ushering into era of globalisation and liberalisation, lot
of avenues opened up. It led to the privatisation of business in
many sectors which were, hitherto, monopolistic domain of the
Government. These included aviation, insurance,
telecommunication etc. With the opening of the industrial and
other activities in all spheres by placing it in the hands of private
sector led to a significant economic development. The absolute
control of the Government through public enterprise or otherwise,
which had seen licence and quota raj, virtually withered away,
thereby reverting back to laissez faire economy to a great extent,
though not completely. It led to two significant developments:
In the first instance, though the private sector was given full
freedom to do the business without any shackles in the form of
controls etc., it was also deemed necessary at the same time that
in public interest, some of the aspects of the business need to be
regulated, of course, not by the Government but by an
independent regulatory authority. This necessity prompted the
Government to come out with regulatory regime in different
sectors. For example, in insurance sector, we have regulatory
authority constituted under Insurance Regulatory and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 9 of 122
Development Authority Act, 1999; for industries generating
electricity, there is an electricity regulatory authority constituted
under the Electricity Act, 2003; and for telecom sector, with which
we are concerned, the TRAI is constituted under the provisions of
TRAI Act.
Secondly, this requirement to do business thereby allowing
free entry to private enterprise led to competition between
different players in the private sector. Competition is perceived
as a phenomena which is in best public interest in so many ways.
Therefore, it becomes necessary to encourage competition. At
the same time, tendency of the business enterprises to adopt
practices which retard healthy competition needed to be curbed.
There was a governing law in the field known as Monopolistic and
Restrictive Trade Practice Act, 1969. However, it was felt that a
new robust statutory regime is required to take care of the needs
of the present day. This necessity prompted the Parliament to
come out with a new Act on the subject and the Competition Act,
2002 was passed by the Parliament. Under this Act, the CCI is
constituted as a statutory body which is to ensure healthy
competition in markets thereby preventing the practice of having
adverse effect on competition; to promote and sustain the
competition in markets; to protect the interest of consumers and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 10 of 122
to ensure freedom of trade. In that sense, the CCI is also a
regulator. But a unique feature of the CCI is that it is not sector
based body but has the jurisdiction across which transcends
sectoral boundaries, thereby covering all the industries, with
focus on the aforesaid object and purpose behind the
Competition Act, 2002.
7) In the instant appeals, width and scope of the powers of the CCI
under the Competition Act, 2002 pertaining to telecom sector i.e.
in respect of the companies in telecom industry providing telecom
services is to be defined vis-a-vis the scope of the powers of
TRAI under the TRAI Act, 1997. It has arisen in these appeals, in
the following background:
As mentioned above, TRAI is the regulatory which regulates
the functioning of the telecom service provider i.e. the telecom
sector. Section 11 of the TRAI Act enumerates various functions
which TRAI is supposed to perform under the Act. Section 13,
likewise, empowers the TRAI to issue directions, from time to
time, to the service provider. In exercise of powers under Section
13 read with Section 11 of the TRAI Act, the TRAI issued
directions dated June 07, 2005 to all the telecom service
providers to provide interconnection within ninety days of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 11 of 122
applicable payments made by the interconnection seeker. The
purpose behind providing interconnection by one service provider
to the other service provider is to ensure smooth communication
by a subscriber of one service provider to the cell number which
is provided by another service provider. In that sense, this
direction facilitates smooth functioning of the cell phone network
even when it is managed by different companies as it ensures
interconnectivity i.e. connectivity from one service provider to
other service provider.
8) On October 21, 2013, RJIL was granted Unified License and
Unified Access Service License under Section 4 of the Telegraph
Act by the Department of Telecom (DoT) for providing
telecommunication services in all 22 circles/licensed service
areas in India. Soon thereafter, RJIL executed interconnection
agreements (ICA) with existing telecom operators inter alia
including, Bharti Airtel Limited and Bharti Hexagon Limited
(hereinafter collectively referred to as the ‘Airtel’), Idea Cellular
Limited (hereinafter referred to as the ‘Idea’); Vodafone India
Limited/Vodafone Mobile Services Limited (hereinafter collectively
referred to as the ‘Vodafone’). RJIL commenced test trial of its
services after intimation and approval of the DoT and TRAI.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 12 of 122
9) By its ‘firm demand’ letter of June 21, 2016, RJIL vide separate
letters requested IDOs to augment Point of Interconnection
(POIs) for access, National Long Distance (NLD) and
International Long Distance (ILD) services, as according to it, the
capacity already provided to it was causing huge POI congestion,
resulting in call failures on its network. According to RJIL, these
companies intentionally ignored the aforesaid request.
Accordingly, RJIL sent a letter dated July 14, 2016 to TRAI stating
that the POIs provided by IDOs are substantially inadequate and
leading to congestion/call failures on its network in all circles.
Hence, TRAI was requested to intervene and direct these
telecom operators to augment the POI capacities as per the
demands made by RJIL. TRAI vide separate letters dated July
19, 2014 requested inter alia the aforementioned telecom
operators to augment POIs as per the RJIL’s request. Further,
responses of the respective companies were also sought on the
issues raised by RJIL, within seven days. Idea responded by
sending letter dated July 26, 2016 to RJIL denying that there had
been any delay in augmentation of POIs and further stated that it
is willing to fully support RJIL and that it had instructed its circle
teams to augment the POIs on the basis of traffic congestion as
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 13 of 122
per the ICA. Likewise, Airtel also sent reply dated August 03,
2016 to TRAI, inter alia stating that augmentation of POIs shall be
undertaken as per the terms and conditions of the ICA and on the
basis of traffic trends post their commercial launch. RJIL was not
satisfied with such responses. It sent another letter dated August
04, 2016 to TRAI reiterating its earlier request for augmentation of
POIs by the subject telecom operators. In the meantime, even
Cellular Operators Association of India (COAI) intervened by
addressing communication dated August 08, 2016 to TRAI
wherein it took a stand by stating that the RJIL was providing free
service to millions of users under the guise of testing which led to
choking of POIs. It was further suggested that due to the free
service provided by RJIL, a substantial imbalance in voice traffic
had occurred for which the existing operators were not
adequately compensated under the Interconnection Usage
Charges regulations (IUC) in place.
10) There was further exchange of correspondence between the
parties and even by the parties to the TRAI which shows that the
parties stuck to their respective positions and it may not be
necessary to refer to those communications in detail. Suffice it is
to mention that RJIL fixed September 05, 2016 as the launch
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 14 of 122
date, which fact was informed to other service providers as well
who were also told that the subscriber base was expected to
substantially and swiftly increase resulting in even more POI
congestion. On that basis, request was made for urgent POI
augmentation vide letter dated September 02, 2016. The TRAI
even facilitated a meeting between the representatives of RJIL
and other service providers (respondents herein) to sort out and
resolve the differences in the interest of the consumers. At the
same time, in the said meeting, the three telecom operators
(respondents herein) also raised a grievance that free calls being
provided by RJIL has resulted in an unprecedented traffic
congestion on their respective networks and the current IUC
regime is inadequate to cover the cost of efficiently maintaining
such high traffic. Thereafter, vide letter dated September 14,
2016, addressed by Airtel to RJIL, it stated that the POIs (also
known as E1s) would be converted into 50:50 ratio to outgoing
and incoming E1s. In other words, the E1s provided would be
converted to ‘only outgoing’ or ‘only incoming’ i.e. one-way E1s.
RJIL replied by stating that it was acceptable to them.
11) Soon thereafter, i.e. in September 2016 itself, Mr. Rajan Sardana,
a Chartered Accountant, filed information under Section 19 of the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 15 of 122
Competition Act (registered as Case No. 81 of 2016) and similar
application was filed by Justice K.A. Puj (retired) (registered as
Case No. 83 of 2016). Then, it was followed by information under
Section 19 of the Competition Act by RJIL in November, 2016
(registered as Case No. 95 of 2016).
Proceedings before TRAI:
12) As the matter was with the TRAI as well, it issued show cause
notices dated September 27, 2016 to IDOs and RJIL for violation
of Standard of Quality of Service of Basic Telephone Service
(Wireline) and Cellular Mobile Telephone Service Regulations,
2009 (hereinafter referred to as the ‘QoS’) and for provision of the
License Agreements. Similar show cause notices were also sent
to other telecom operators. On October 21, 2016, TRAI issued
recommendations to DoT after finding that IDOs have violated
conditions under the QoS, interconnection agreements and
Unified License. The TRAI inter alia stated in its recommendation
as under:
"21. … (vii) It is evident from the above clauses that the
licensees are mandated to provide interconnection to all
eligible telecom service provider. However, as mentioned
in para 6 above, Airtel along with other service providers
have jointly through their association (COAI), declined
Point of Interconnection to RJIL which is willful violation of
the above mentioned license conditions.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 16 of 122
...(x) COAI’s letter dated 2nd September, 2016 which was
confirmed by Airtel in the meeting held on 9th September,
2016 clearly indicates attempt by three service providers
namely, Airtel, Vodafone India Limited and Idea Cellular
Limited to stifle competition in the market and willfully
violate the license conditions;…
23. While the Authority has been taking necessary steps
to ensure effective interconnection between Airtel and
RJIL, it is evident from Para 21 that Airtel is in noncompliance
of the terms and conditions of license and
denial of interconnection to RJIL appears to be with ulterior
motive to stifle competition and is anti-consumer.”
13) TRAI recommended that Rs. 50 crore per local service area
(LSA) be imposed on all the above three telecom operators for
failure to adhere to TRAI norms and regulations. Similar
recommendations were also issued to DoT against other telecom
operators. Against the recommendations dated October 21, 2016
of TRAI, Vodafone filed a Writ Petition being Writ Petition (C) No.
11740 of 2016 before the High Court at Delhi. Meanwhile, on
January 17, 2017, TRAI also recommended imposition of penalty
of Rs. 1,90,000/- on Idea for its rejection of mobile number
portability (MNP) requests to RJIL’s network. Against the
aforesaid recommendation, Idea has preferred a Writ Petition
being Writ Petition (C) No. 685 of 2017 before the High Court at
Delhi. The DoT after examining the matter referred it back to
TRAI for fresh consideration vide DoT’s reference dated April 05,
2017 whereby its recommendations imposing penalty upon IDOs
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 17 of 122
were sent back for reconsideration. The TRAI sent its response
dated May 24, 2017 to the DoT, wherein it took a categorical
stand that telecom operators have intentionally denied and
delayed the augmentation of POIs to RJIL.
Proceedings before CCI:
14) The CCI took the cognizance of the three informations given to it
under Section 19 of the Competition Act which were registered as
Case Nos. 81, 83 and 95 of 2016. It gave hearing to the
respondents service providers as well as COAI and passed order
dated April 21, 2017 under Section 26(1) of the Competition Act
as per which it came to a prima facie conclusion that case for
investigation was made out and directed the Director General to
cause investigation in the case. This order was passed by
majority of 3:2 as two members of CCI dissented from the said
order. Operative portion of the majority order holds as under:
"23. The Commission notes that allegations of anticompetitive
agreement as well as abuse of dominant
position have been made for the same conduct of refusal
to facilitate call termination services and denial of mobile
number portability. As discussed earlier, the Commission
is satisfied that there exist a prima facie contravention of
Section 3(3)(b) of Act, as the ITOs appear to have entered
into an agreement amongst themselves through the
platform of COAI, to deny POIs to RJIL. Having been
prima facie convinced that the impugned conduct is an
outcome of the anti-competitive agreement amongst ITOs,
Commission does not find it appropriate to consider the
same impugned conduct as unilateral action by each of the
ITOs. The Commission therefore at this stage does not
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 18 of 122
find it necessary to deal with the allegations and
submissions regarding abuse of dominance in
contravention of the provisions of Section 4 of Act.
24. In view of the foregoing, the Commission directs the
DG to cause an investigation into the matter under the
provisions of Section 26(1) of the Act. Considering the
substantial similarity of allegations in all the informations,
the Commission clubs them in terms of the proviso to
Section 26(1) of the Act read with Regulation 27 of the
Competition Commission of India (General) Regulations,
2009. The DO is directed to complete the investigation
and submit investigation report within a period of 60 days
from the date of receipt of this Order, if the DG finds
contravention, he shall also investigate the role of the
persons who at the time of such contravention were incharge
of and responsible for the conduct of the business
of the contravening entity/entities. During the course of
investigation, if involvement of any other party is found,
DG shall investigate the conduct of such other parties also
who may have indulged in the said contravention. In case
the DG finds the conduct of the Opposite Parties in
violation of the Act, the DG shall also investigate the role of
the persons who were responsible for the conduct of the
Opposite Parties so as to proceed against them in
accordance with Section 48 of the Act.
25. The Commission makes it clear that nothing stated
in this order shall tantamount to final expression of opinion
on the merits of the case and DG shall conduct the
investigation without being swayed in any manner
whatsoever by the observations made herein.”
15) Likewise, two members who dissented inter alia held as follows:
"...As stated above, from the various charts placed on
record by the ITOs showing the number of POIs provided
by them to RJIL, the respective learned senior counsel for
Ops have tried to show that the number of POIs provided
to RJIL by 08.11.2016 i.e. within the first quarter itself,
were much more than what was demanded. In fact, the
charts filed by RJIL itself corroborate this fact. The charts
show that even if some of the POIs provided (one-way
POIs for connecting outgoing calls from ITOs to RJIL) are
not taken into consideration, the number of POIs provided
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 19 of 122
by OP-5 and OP-7 were much more than what was
demanded by RJIL. Even in case of OP-2, the same were
approximately 64% (NLD POIs) and 85.53% (Access
POIs) as on 08.11.2016. However, as we have already
observed above, we are not expected to go into the
question of providing adequate number of POIs. Yet there
is ample material on record to show that RJIL was more to
be blamed for congestion in its traffic than the ITOs...”
“...we are of the considered opinion that on the basis of
material available with the Commission, it is difficult to say
that there is a prima facie case...” made out against the
Petitioner and others and accordingly, “...the instant cases
ought to be closed under Section 26(2) of the Act...”
(hereafter “Dissent Note”).”
16) On June 08, 2017, the Director General issued a letter of
investigation to the appellant seeking call data records in respect
of certain identified mobile numbers by June 19, 2017. On June
19, 2017, respondent No. 2 issued a letter of investigation to the
appellant seeking detailed information/documents to be furnished
by June 30, 2017. Immediately thereafter, writ petitions were filed
challenging the aforesaid order of the CCI as well as action of the
Director General seeking information for holding inquiry. After
preliminary hearing, the High Court passed interim orders dated
June 30, 2017 on the basis of statement of the counsel for CCI
that they shall not proceed with the investigation, which order
continued till the disposal of the writ petitions. The High Court
after hearing the matter finally allowed the writ petitions, as
already mentioned.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 20 of 122
17) It is clear from the above that as per RJIL, the respondent service
providers, along with COAI, entered into an anti-competitive
agreement/formed a cartel and acted in an anti-competitive
manner which is prohibited by the Act. On these allegations, it
approached the CCI for initiating inquiry into this anti-competitive
practices. Insofar as the nature of alleged anti-competitive
agreement is concerned, the allegations of RJIL are the following:
(i) Delay in provisioning or denial in provisioning of POIs, also
known as ‘E1’ in telecom parlance, to RJIL by IDOs during the
testing phase and after commercial launch of RJIL services.
POIs are the points where the networks of telecom operators
connect. Without sufficient POIs it is not possible for subscribers
of one service provider to make calls to subscribers of another
service provider.
(ii) It was also alleged, inter alia, that IDOs are denying Mobile
Number Portability (MNP) requests of customers who wanted to
switch to RJIL competing service.
(iii) It was also alleged that COAI was acting at the behest of
IDOs against the interest of a competing member, i.e. RJIL, and
not for the common interest of the industry and consumers as a
whole.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 21 of 122
Proceedings before the High Court:
18) Against the order passed by the CCI directing investigation into
the aforesaid allegations, in the writ petitions filed by the IDOs
and also by COAI, challenge laid to the aforesaid order was
premised on the ground that the CCI lacked jurisdiction to
entertain such complaints/information filed under Section 19 of
the Competition Act as such a matter falls within the exclusive
jurisdiction of another regulatory authority, namely, TRAI.
19) In nutshell, it was pleaded that the violation alleged by RJIL,
namely, whether there was a delay or denial in provisioning POIs,
comes within the domain of TRAI as it is the TRAI which has the
exclusive jurisdiction to deal with such a matter under the TRAI
Act and, in fact, the complaint was also made by TRAI as well
which was seized of the matter.
20) The plea of the appellants, on the other hand, was that violation
of telecom regulations, etc. was undoubtedly a matter which
could be looked into by the TRAI for which RJIL has approached
the TRAI. However, the subject matter of inquiry before the CCI
was entirely different, namely, formation of cartel and a concerted
effort on the part of the service providers, in collusion with COAI,
to curb the competition in the market and, thus, the CCI was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 22 of 122
competent and had requisite jurisdiction to look into this aspect.
To put it otherwise, according to the appellants, the CCI had
decided to examine the facts purely from the stand point as to
whether the alleged Act constituted anti-competitive practice on
the part of the respondents and, therefore, contravened the
provisions contained in Section 3 or Section 4 of the Act. This
aspect, they had argued, could not be gone into by the TRAI as
the CCI was the only statutory authority constituted under the Act
to examine such an issue.
21) The Bombay High Court in the impugned judgment has, thus,
inter alia, held as under:
"(i) the Competition Commission of India (CCI) had no
jurisdiction in view of the Telecom Regulatory Authority of
India Act, 1997 and the authorities and regulations made
thereunder;
(ii) the CCI could exercise jurisdiction only after
proceedings under the TRAI Act had concluded/attained
finality;
(iii) the order dated 21.04.2017 passed under section
26(1) of the Competition Act was not an administrative
direction, but rather a quasi judicial one that finally decided
the rights of parties and caused serious adverse
consequences, because a detailed hearing had been
given and many materials had been tendered in the courts
of the hearings;
(iv) on the merits of the matter, there was no cartelisation
as alleged and COAI was exonerated; and
(v) the order of the CCI was perverse and liable to be
interfered with under writ jurisdiction.”
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 23 of 122
Arguments: The appellants:
22) Mr. P.S. Narasimha, learned Additional Solicitor General,
appeared on behalf of the CCI and submitted that the impugned
judgment is contrary to the law. His attack was premised on three
principal propositions, which are follows:
(i) Jurisdiction of the CCI: The CCI has jurisdiction in the
present case and it need not wait till the conclusion of
proceedings under the TRAI Act to conclude.
(ii) Scope of Judicial Interference under Article 226: The High
Court erred in holding that the order passed under section 26(1)
was an order resulting in serious adverse consequences merely
because the CCI had granted a hearing.
(iii) The order of CCI was not perverse and the High Court erred
in giving findings on merits. The High Court erroneously
exercised writ jurisdiction.
23) With respect to the first proposition, his argument was that the
High Court had failed to appreciate that issues before the CCI are
altogether different than the issues before the TRAI and they
necessarily be treated differently. He argued that the CCI and
TRAI operate in entirely different fields, which is discernible from
the Preambles of the respective legislations. The TRAI Act was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 24 of 122
supposed to enable it to regulate the telecommunication services,
adjudicate dispute, dispose of appeals and protect the interests of
service providers and consumers of the telecom sector, to
promote and ensure orderly growth of the telecom sector. The
CCI, on the other hand, is a body that has been established to
prevent practices having an adverse effect on competition, to
promote and sustain competition in markets, to protect the
interests of consumers and to ensure freedom of trade carried on
by other participants in markets, in India.
24) Mr. Narasimha emphasised that the issue before the CCI was
whether the opposite parties/respondents, i.e. the IDOs, were
acting in concert and colluding (forming a cartel) so as to block or
hinder the entry of RJIL in the market in violation of section 3(3)
(b) of the Act. The key issue is whether there was an anticompetitive
agreement between the IDOs, using the platform of
COAI. The issue before the TRAI, on the other hand, is whether
the delay/denial of POIs has violated terms of the licence
agreement and QoS regulations. The learned ASG pointed out
that all the opposite parties have argued that they were justified in
declining POIs to RJIL. However, the question before the CCI is
whether the conduct of the parties was unilateral or collective
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 25 of 122
action based on an agreement? It is precisely this issue that
requires investigation by the Director General. If the conduct of
the respondents in delaying/denying POIs was unilateral (i.e. an
independent decision made by each of them), then the conduct
cannot be faulted under Section 3 of the Act since Section 3 is
premised on existence of an ‘agreement’ as defined in Section
2(b). However, if the conduct of the respondents was based on
an ‘agreement’, it would become illegal under Section 3(3)(b) of
the Act because its intent and effect is to ‘limit or control
production, supply, markets, technical development, investment
or provision of services”. It was contended that the conduct may
well be legal under the TRAI Act and regulations or other laws.
However, it is the collusive/concerted nature of the action coupled
with the effect that makes it illegal under the Competition Act.
25) He adverted to the order dated April 21, 2017 of the CCI, while
taking its prima facie view and submitted that the CCI has
recognised the distinction between the issues before the TRAI
and the issues arising under the Act, as follows:
"9. It is observed that telecom sector is regulated by
TRAI as the sectoral regulator. On the allegation of
insufficient POIs being provided to RJIL, the Commission
notes from the information available on TRAI’s website
that, on 21st October 2016, TRAI had recommended,
through three separate communications to the Department
of Telecommunications, imposition of penalty of Rs.50
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 26 of 122
crore per License Service Area (LSA) against Airtel,
Vodafone and Idea, for violation of the provisions of
License Agreements and the Standards of QoS of Basic
Telephone Service (Wireline) and Cellular Mobile
Telephone Service Regulations, 2009. Thus, TRAI as a
sectoral regulator, has held the said conduct of ITOs in
violation of relevant TRAI regulations and recommended
penal action against them. However, the
recommendations of TRAI is in respect of violations of the
provisions of License Agreements and the Standards of
QoS of Basic Telephone Service (Wireline) and Cellular
Mobile Telephone Service Regulations, 2009 by these
OPs. Against this, mandate of the Commission under
Section 18 of the Act is ‘...to eliminate practices having
adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure
freedom of trade carried on by other participants, in
markets in India.’ Accordingly, it becomes the duty and
responsibility of the Commission to eliminate practices in
the market that have an adverse effect on competition and
promote and sustain competition so as to protect the
interest of consumers and ensure freedom of trade.
Further, as per Section 62 of the Act, provisions of the Act
are in addition to and not in derogation of the provisions of
any other law for the time being in force. Section 61 of the
Act grants exclusive power to the Commission and the
Competition Appellate Tribunal to exercise its jurisdiction in
respect of any matter which the Act empowers the
Commission or the Competition Appellate Tribunal to
determine to the exclusion of civil courts. A careful reading
of these provisions show that the Commission has the
jurisdiction to inquire into the issues alleged in the present
information insofar as the same may result in
contravention of the provisions of the Act.
10. It may be noted that the primary grievance of the
Informants relates to cartelization by the Opposite
Parties, amounting to violation of the provisions of
Section 3 of the Act. In this regard, it must be noted
that none of the areas covered under Section 3 of the
Act are covered by TRAI in its mandate as a sector
regulator for TSPs. No doubt, TRAI has the
responsibility/obligation to determine whether Quality
of Service regulations and interconnection norms on
the levels of congestion at the points of
interconnection are complied with it not. But apart
from that, none of the other issues as envisaged under
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 27 of 122
Section 3 of the Act are looked into by TRAI.
Specifically, TRAI cannot arrive at a determination as
to whether the ITOs have colluded and cartelized to
deny POIs to the detriment of RJIL in violation of
Section 3(3) read with Section 3(1) of the Act. The
scope of the Section 3 allegation is not whether the
ITOs have breached the terms of their respective
License agreement or ICA, rather, the scope of the
Section 3 allegations pertains to whether the ITOs
have entered into an anti-competitive agreement to
provide insufficient POIs or delay the provisions of
POIs to RJIL. It is within the mandate of the Commission
which can adjudicate on the issue of cartelization amongst
enterprises/associations and arrive at a finding on the
alleged cartelization. The Commission accordingly holds
that the issue of whether such conduct on the part of ITOs
(including COAI) has resulted in any anti-competitive effect
in the market in violation of the provisions of the Act can
and needs to be examined by it.
11. The Commission recognizes the role and
importance of sectoral regulators and exercises its
jurisdiction keeping in mind their role and responsibilities.
The Commission is a market regulator and has the
jurisdiction to look at those issues which affect
competition in markets in India, including that of an
alleged cartelization amongst enterprises/
associations. The nature of the proceedings before
TRAI involving ITOs on the other hand different and
related to whether interconnection norms and quality
of service regulations are complied with or whether
the contractual terms of ICAs have been breached or
met. Palpably, these issues are not relevant for
determination in the current proceedings before the
Commission.
12. The informants have alleged that the conduct of
ITOs amounts to a “cartel” in relation to denial of POIs
to RJIL. The definition of cartel has been provided under
Section 2(c) of the Act which reads as follows: ‘cartel
includes an association of producers, sellers, distributors,
traders or service providers who by agreement amongst
themselves limit, control or attempt to control the
production, distribution, sale or price of or, trade in goods
or provision of services.’ Further, any alleged agreement
amongst enterprises and an association of enterprises,
engaged in identical or similar trade or provision of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 28 of 122
services is covered under Section 3(3) of the act which
states that:
Any agreement entered into between enterprises or
associations of enterprises or persons or
associations of persons or between any person and
enterprise or practice carried on, or decision taken
by, any association of enterprises or association of
persons, including cartels, engaged in identical or
similar trade of goods or provision of services, which-
(a) directly or indirectly determines purchase or sale
prices;
(b) limits or controls production, supply, markets,
technical development, investment or provision of
services;
(c) …..
(d) …..
shall be presumed to have an appreciable adverse
effect on competition.
13. On the basis of the above, the Commission notes
that in addition to ITOs, conduct of COAI also needs to be
examined under the provisions of Section 3(3) of the Act.”
(emphasis added)
26) He submitted that it was the statutory duty of the CCI,
enumerated in Section 18 of the Act, to eliminate anti-competitive
practices and the focus of the CCI was confined to this Court’s
judgment in the case of Haridas Exports v. All India Float
Glass Manufacturers’ Assn. & Ors.1
wherein it was held that
where statutes operate in different fields and have different
purposes, it cannot be said that there is implied repeal by one, of
1 (2002) 6 SCC 600
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 29 of 122
the other. In the said case, this Court was considering alleged
conflict between the Monopolies & Restrictive Trade Practices
Act, 1969 and the Anti-Dumping Rules under the Customs
Act/Customs Tariff Act. It was held:
"48. The jurisdiction of the MRTP Commission, in our
opinion, is not ousted by the anti-dumping provisions in the
Customs Act. The two Acts operate in different fields and
have different purposes. The Import Control Act and the
Customs Tariff Act are concerned with import of goods into
India and the duty which could be imposed on the
imported items. Import may be allowed on the basis of an
import licence or, depending upon the policy, import may
be allowed under OGL — open general licence — where
no specific licence for import is required. Whether to allow
import or not and the terms on which an item may be
imported is a matter of policy and regulated by law.
xx xx xx
52. The levy or non-levy of anti-dumping or other duty
being a legislative act pursuant to the exercise of powers
under the Customs Tariff Act can also not be a subjectmatter
of judicial review by the MRTP Commission. The
two Acts substantially operate in different fields and the
following table brings out some of the distinctions between
the MRTP Act and the anti-dumping provisions:
[table omitted]
A perusal of the above chart indicates that the two statutes
and regimes operate in different and distinct spheres and
there is no conflict between the two regimes/statutes.
Hence, the question of implied repeal of the provisions of
Section 33(1)(j) of the MRTP Act, 1969 on account of the
provisions of Section 9-A of the Customs Tariff Act, 1975
does not arise.
53. It is thus seen that the provisions relating to antidumping
contained in the Customs Tariff Act do not in any
way affect the power or jurisdiction of the MRTP
Commission. The Import Control Act and the Customs
Tariff Act on the one hand and the MRTP Act on the other
operate in different independent fields and the authority
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 30 of 122
under one has no jurisdiction over the other. In other
words, their paths do not cross each other. While the
provisions of the Anti-Dumping Act are concerned with the
levy of anti-dumping duty, the MRTP Act in the present
case would be concerned with the agreements between
the parties which relate to the restrictive trade practices.
Therefore, it would be incorrect to say that the
incorporation of the anti-dumping provisions ousts the
jurisdiction of the MRTP Commission to inquire and pass
orders, inter alia, with regard to restrictive trade practice in
India.”
The learned ASG pointed out that the allegation against the
respondents i.e. IDOs is that they have through an anticompetitive
agreement/cartel, limited the provision of services by
delaying or denying POIs to RJIL, with a view to block its entry in
the market. As per him, such an agreement would raise a
presumption of ‘appreciable adverse effect’ on competition.
27) Explaining the scheme of the Act, Mr. Narasimha referred to the
provisions of Section 3 which prohibits anti-competitive
agreements of the nature mentioned therein. He also referred to
the definitions of ‘agreement’, ‘cartel’, ‘enterprise’ and ‘service’
contained in Section 2 of the Act and submitted that the definition
of ‘agreement’ is not restricted to written agreements, but even
extends to ‘action in concert’, which, according to him, is wide
enough to allegations of RJIL, if proved correct, within the
mischief of Section 3 of the Act. He also referred to Section 19(3)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 31 of 122
of the Act which lists certain factors to be considered in analysing
adverse effect on competition and submitted that creation of
barriers to new entrants in the market and foreclosure of
competition by hindering entry into the market are to be perceived
as having adverse effect on competition. He, thus, submitted that
having regard to the aforesaid provisions, the CCI wanted to
investigate the matter with focus on the aspect as to whether
there was an agreement between the respondent service
providers and they acted in concert pursuant to the said
agreement; whether it amounted to anti-competitive act on the
part of these respondents and had adverse effect on the
competition. In the process, the CCI was also supposed to
examine as to whether the respondents colluded with COAI and
abused their dominant position. His further argument was that
inquiry into these aspects was within the exclusive domain of the
CCI as it is the CCI which is supposed to ensure that no such
anti-competitive practices are adopted by anybody and if that has
happened, the CCI is empowered to issue directions in terms of
Section 27 of the Act and also impose penalties. It has power to
impose even lesser penalties as provided in Section 46 of the Act.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 32 of 122
28) Mr. Narasimha also referred to Section 60 of the Act which
provides for overriding effect for the Act and reads as under:
"60. Act to have overriding effect. - The provisions of this
Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in
force.”
It was emphasised that the case of the CCI is not that the
TRAI does not have power to exercise jurisdiction at all in the
present factual matrix and there is no conflict of jurisdiction or
legal regimes. Rather, both the TRAI and the CCI exercise their
jurisdiction in their respective fields. Exercise of jurisdiction by
the CCI to investigate an alleged cartel does not impinge upon
TRAI’s jurisdiction to regulate the industry in any way.
Submission in this behalf was that the TRAI exercises its
jurisdiction by ensuring compliance with the interconnect
agreements, license conditions, interconnection regulations,
quality of service norms and regulations etc. Based on past
experience, the TRAI frames regulations for the improvement of
the telecom industry in the future. For instance, the June 07,
2005 direction of TRAI which provided for a 90-day period for
interconnection has now been replaced by the interconnection
regulations of 2018, by which the time period for provision of
POIs has been reduced to 30 days, because it was found that
due to technical advancements, it was possible to give POIs in a
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 33 of 122
much shorter time frame, and parties were using the 90-day
period to delay the provision of POIs, as in the case of RJIL.
However, the TRAI does not have the power to penalize for past
conduct which was of anti-competitive nature. It was further
submitted that while the competition law seeks to promote
efficient allocation and utilization of resources by inter alia
lowering the entry barriers in the market, the primary objective of
the sectoral regulators like the TRAI is development of their
respective sector. However, what is important to bear in mind is
that the promotion of competition and prevention of competitive
behaviour may not be high on the agenda of a sectoral regulator
which makes it prone to ‘regulatory capture’. The position has
been very succinctly captured by the Report of the Working
Group on Competition Policy, Planning Commission of India,
Government of India, February 2007 which states as follows:
"7.2.3 The objective of a sectoral regulator is to provide
good quality service at affordable rates, but the promotion
of competition and prevention of anti-competitive
behaviour may not be high on its agenda or the laws
governing the regulator may be silent on this aspect. It is
not uncommon for sectoral regulators to be more closely
aligned with the interest of the firms being regulated,
which is also known as ‘regulatory capture’. Besides, a
sectoral regulator may not have an overall view of the
economy as a whole and may tend to apply yardsticks
which are different from the ones used by the other
sectoral regulators. In other words, there is a possibility of
the lack of consistency across sectors. On the other hand,
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 34 of 122
CCI will be able to apply uniform competition principles
across all sectors of economy.”
(emphasis added)
The National Competition Policy 2011 has also observed as
following:
"8.3 The objective of a sectoral regulator is to provide
good quality service at affordable rates, but the promotion
of competition and prevention of anti-competitive
behaviour may not be high on its agenda or the laws
governing the regulator may be silent on this aspect.
Besides, a sectoral regulator may not have an overall view
of the economy as a whole and may tend to apply
yardsticks which are different from the ones used by the
other sectoral regulators. In other words, there is a
possibility of the lack of consistency across sectors as
regards competition issues. On the other hand, the CCI,
which is expected to have developed the core
competence, expertise and capacity in competition related
issues, will be able to apply uniform competition principles
across all sectors of economy. Besides, enforcement
and penalizing violations of Competition Act is the
exclusive area of the CCI. Even otherwise, the general
principle for economic efficiency would be, whoever can
do a thing in best and most professional manner should do
it.”
(emphasis added)
29) The learned ASG, on taking support from the above, submitted
that the sectoral regulators, by contrast, will not be as
experienced in conducting competition analysis as the
competition authorities. Being susceptible to regulatory capture,
the day-to-day interactions between industry officials and
regulatory agency may lead to a commonality of interests that can
interfere with the perspective necessary to evaluate competitive
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 35 of 122
harms and to construct remedies that will protect competition for
the benefit of the economy as a whole. While the sector specific
regulators typically impose and monitor various behavioral
conditions, the competition agencies are more likely to opt for
structural remedies which would lead the sector to evolve to a
point where sufficient new entry is induced thereby promoting
genuine competition. According to him, keeping in view the
aforesaid respective roles in mind, the Parliament in its wisdom
and foresight has built in a mechanism within the Act to address
apparent conflicts of jurisdiction. The ‘comity’ between the
sectoral regulator (TRAI) and the market regulator (CCI) is
entirely addressed by a reading of Section 21 and Section 21A of
the Act. In any case, Section 60 of the Act had an overriding
effect. To support his argument, the learned ASG relied upon
State (NCT of Delhi) v. Sanjay2
wherein this Court dealt with the
issue of whether a prescription of offence under the Mines &
Minerals Development & Regulation (MMDR) Act would exclude
the application of the Indian Penal Code. The Court held that due
to the absence of a non-obstante clause, the application of the
Indian Penal Code was not excluded. In the present case, the
TRAI Act does not apply notwithstanding any other laws, and it
2 (2014) 9 SCC 772
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 36 of 122
does not contain an overriding effect provision containing a nonobstante
clause. The relevant paragraphs of the judgment have
been extracted below:
"62. Sub-section (1-A) of Section 4 of the MMDR Act puts
a restriction in transporting and storing any mineral
otherwise than in accordance with the provisions of the Act
and the Rules made thereunder. In other words no person
will do mining activity without a valid lease or licence.
Section 21 is a penal provision according to which if a
person contravenes the provisions of sub-section (1-A) of
Section 4, he shall be prosecuted and punished in the
manner and procedure provided in the Act. Sub-section (6)
has been inserted in Section 4 by amendment making the
offence cognizable notwithstanding anything contained in
the Code of Criminal Procedure, 1973. Section 22 of the
Act puts a restriction on the court to take cognizance of
any offence punishable under the Act or any Rule made
thereunder except upon a complaint made by a person
authorised in this behalf. It is very important to note that
Section 21 does not begin with a non obstante clause.
Instead of the words “notwithstanding anything contained
in any law for the time being in force no court shall take
cognizance….”, the section begins with the words “no
court shall take cognizance of any offence.
63. It is well known that a non obstante clause is a
legislative device which is usually employed to give
overriding effect to certain provisions over some contrary
provisions that may be found either in the same enactment
or some other enactment, that is to say, to avoid the
operation and effect of all contrary provisions.”
30) He also premised his argument on the basis that the Act is a
special statute in the field of telecommunications regulation,
including technical aspects connected thereto, and in case of
conflict between two special legislations, the later enactment
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 37 of 122
would prevail. In Solidaire India Ltd. v. Fairgrowth Financial
Services Ltd. & Ors.3
, this Court held as under:
"7. Coming to the second question, there is no doubt that
the 1985 Act is a special Act. Section 32(1) of the said Act
reads as follows:
“32. Effect of the Act on other laws.—(1) The
provisions of this Act and of any rules or schemes
made thereunder shall have effect notwithstanding
anything inconsistent therewith contained in any
other law except the provisions of the Foreign
Exchange Regulation Act, 1973 (46 of 1973) and the
Urban Land (Ceiling and Regulation) Act, 1976 (33 of
1976) for the time being in force or in the
Memorandum or Articles of Association of an
industrial company or in any other instrument having
effect by virtue of any law other than this Act.”
8. The effect of this provision is that the said Act will have
effect notwithstanding anything inconsistent therewith
contained in any other law except to the provisions of the
Foreign Exchange Regulation Act, 1973 and the Urban
Land (Ceiling and Regulation) Act, 1976. A similar non
obstante provision is contained in Section 13 of the
Special Court Act which reads as follows:
“13. Act to have overriding effect.—The provisions of
this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for
the time being in force or in any instrument having
effect by virtue of any law, other than this Act, or in
any decree or order of any court, tribunal or other
authority.”
9. It is clear that both these Acts are special Acts. This
Court has laid down in no uncertain terms that in such an
event it is the later Act which must prevail. The decisions
cited in the above context are as follows: Maharashtra
Tubes Ltd. v. State Industrial & Investment Corpn. of
Maharashtra Ltd. [(1993) 2 SCC 144]; Sarwan Singh v.
Kasturi Lal [(1977) 1 SCC 750 : (1977) 2 SCR 421];
Allahabad Bank v. Canara Bank [(2000) 4 SCC 406] and
Ram Narain v. Simla Banking & Industrial Co. Ltd. [AIR
1956 SC 614 : 1956 SCR 603]”
3 (2001) 3 SCC 71
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 38 of 122
31) The learned ASG endeavoured to support his proposition by
referring to the contrasting provision contained in Section 14 of
the TRAI Act which provides for dispute resolution in respect of
various categories of persons before the TDSAT, which
specifically carves out an exception in respect of monopolistic
trade practice, restrictive trade practice and unfair trade practice,
which was subject to the jurisdiction of the Monopolies and
Restrictive Trade Practices Commission (MRTP Commission).
He submitted that this was another indicator in the TRAI Act itself
from which it can be inferred that when it comes to anticompetitive
practices, an embargo is put on the TRAI to deal with
such practices, inasmuch as the Competition Act is enacted to
repeal and replace the obsolete regime of the MRTP Act. In this
behalf, he drew sustenance from Section 8 of the General
Clauses Act to submit that the Competition Act could be read in
place of MRTP Act while construing the provisions of Section 14
of the TRAI Act.
32) His another submission, in this hue, was that a distinction needs
to be drawn between facilitating competition (as provided in
Section 11 of the TRAI Act) on the one hand and curbing and
deterring anti-competitive conduct and practices on the other
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 39 of 122
hand. His submission in this behalf was that the function of the
TRAI under Section 11(1)(a)(iv) was to facilitate competition
which was purely recommendatory in nature and not part of
regulatory function of the TRAI, as held in Union of India and
Another v. Association of Unified Telecom Service Providers
of India and Others4
. He also argued that TRAI has no power to
enforce compliance, pass orders, or give directions of the nature
envisaged under the Act to curb anti-competitive conduct.
33) The learned ASG also relied upon the judgment of the European
Commission in Deutsche Telekom v. European Commission5
wherein it was held that it is only if the legislative framework
eliminates the possibility of competition (for example, a statutory
monopoly) that the jurisdiction of the Commission would be
excluded. Following passage from the said judgment was
specifically referred to:
"80. According to the case-law of the Court of Justice, it is
only if anti-competitive conduct is required of undertakings
by national legislation, or if the latter creates a legal
framework which itself eliminates any possibility of
competitive activity on their part, that Articles 81 EC and
82 EC do not apply. In such a situation, the restriction of
competition is not attributable, as those provisions
implicitly require, to the autonomous conduct of the
understandings. Articles 81 EC and 82 EC may apply,
however, if it is found that the national legislation leaves
open the possibility of competition which may be
4 (2011) 10 SCC 543
5 Case C-280/08 P, Judgment dated 14.10.2010
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 40 of 122
prevented, restricted or distorted by the autonomous
conduct of undertakings (Joined Cases C-359/95P and C379/95P
Commission and France v. Ladbroke Racing
(1997) ECR I-6265, paragraphs 33 and 34 and the caselaw
cited).”
34) Mr. Narasimha also referred to another judgment of the General
Court of the European Union in Telefonica SA v. European
Commission (T-336/07) wherein it was held that the European
Commission could intervene in the telecommunications market,
even though the entry was regulated through a sectorial regulator.
He pointed out that this decision of the General Court was upheld
in appeal by the European Court of Justice vide its judgment
dated July 10, 2014.
35) Mr. Narasimha also contrasted the investigative regime under the
two Acts, i.e. Section 12 of the TRAI Act vis-a-vis Section 41 read
with Section 36(2) of the Competition Act and submitted that the
Director General under the Competition Act is better equipped to
deal with detection and investigation of anti-competitive
agreements.
36) Labelling as erroneous, the approach of the High Court that CCI
should await the outcome of the proceedings before TRAI to
attain finality, answer given by Mr. Narasimha was that this
approach was erroneous for three reasons. First, the High Court
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 41 of 122
has failed to appreciate the different fields/domains in which the
CCI and the TRAI operate. Secondly, the course of action
proposed by the High Court would result in considerable delay
defeating the CCI’s investigation. Thirdly, the High Court has
failed to notice the role played by Section 21A of the Act.
37) He again emphasised that CCI is not inquiring into the adequacy
of POIs provided to RJIL by the respondents, or compliance with
the QoS standards of TRAI and licence conditions, but was
examining whether the conduct of the respondents was unilateral
or it was the result of anti-competitive agreement. Insofar as
requirement of speedy investigation by the CCI is concerned, he
submitted that such a requirement has already been
acknowledged and mandated by this Court in Competition
Commission of India v. Steel Authority of India Limited and
Another6
. Further, if at any stage, prior to or after taking a
decision, the CCI is of the view that opinion of TRAI is required, it
could always make reference under Section 21A of the
Competition Act.
38) On the second proposition, namely, the High Court could not
have entertained writ jurisdiction in respect of an order passed
6 (2010) 10 SCC 744
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under Section 26(1) of the Competition Act, Mr. Narasimha
clarified that he was not taking the position that the High Court ,in
no circumstance/situation, exercise its extraordinary jurisdiction
under the said provision, in spite of an order passed under
Section 26 of the Competition Act. His submission, however, was
that as per the judgment in Steel Authority of India Limited
case, such jurisdiction would be very narrow and is to be
exercised in exceptional cases. According to him, no such
exceptional circumstance arises in the instant case as order in
question was only a prima facie view of the CCI and such an
order was administrative in nature. Learned ASG specifically
referred to the following discussion in the case of Steel Authority
of India Limited:
"38. In contradistinction, the direction under Section 26(1)
after formation of a prima facie opinion is a direction
simpliciter to cause an investigation into the matter.
Issuance of such a direction, at the face of it, is an
administrative direction to one of its own wings
departmentally and is without entering upon any
adjudicatory process. It does not effectively determine any
right or obligation of the parties to the lis. Closure of the
case causes determination of rights and affects a party i.e.
the informant; resultantly, the said party has a right to
appeal against such closure of case under Section 26(2) of
the Act. On the other hand, mere direction for investigation
to one of the wings of the Commission is akin to a
departmental proceeding which does not entail civil
consequences for any person, particularly, in light of the
strict confidentiality that is expected to be maintained by
the Commission in terms of Section 57 of the Act and
Regulation 35 of the Regulations.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 43 of 122
xx xx xx
97. The above reasoning and the principles enunciated,
which are consistent with the settled canons of law, we
would adopt even in this case. In the backdrop of these
determinants, we may refer to the provisions of the Act.
Section 26, under its different sub-sections, requires the
Commission to issue various directions, take decisions
and pass orders, some of which are even appealable
before the Tribunal. Even if it is a direction under any of
the provisions and not a decision, conclusion or order
passed on merits by the Commission, it is expected that
the same would be supported by some reasoning. At the
stage of forming a prima facie view, as required under
Section 26(1) of the Act, the Commission may not really
record detailed reasons, but must express its mind in no
uncertain terms that it is of the view that prima facie case
exists, requiring issuance of direction for investigation to
the Director General. Such view should be recorded with
reference to the information furnished to the Commission.
Such opinion should be formed on the basis of the
records, including the information furnished and reference
made to the Commission under the various provisions of
the Act, as aforereferred. However, other decisions and
orders, which are not directions simpliciter and determining
the rights of the parties, should be well reasoned analysing
and deciding the rival contentions raised before the
Commission by the parties. In other words, the
Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any
adjudicatory or determinative process and by recording
minimum reasons substantiating the formation of such
opinion, while all its other orders and decisions should be
well reasoned.”
39) He also drew the attention of the Court to paragraph 25 of the
CCI’s order dated April 21, 2017 as per which the Director
General was asked to conduct the investigation without being
swayed in any manner whatsoever by the observations made by
the CCI in the said order. He submitted that in these
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 44 of 122
circumstances the said order was merely administrative in nature
and could not be labelled as quasi-judicial order. In the same
vein his further submission was that the observations of the High
Court that the CCI has decided several issues and elements with
clear adverse consequences was clearly erroneous and contrary
to the well-established principle of law. In support, he also
referred to the judgments of the Bombay and the Allahabad High
Courts.
40) Dilating on his third proposition, namely, the CCI order was not
perverse, he submitted that there was sufficient material before
the CCI for formation of a prima facie opinion that the conduct of
the respondents was violative of Section 3(3)(b) of the
Competition Act. He submitted that such material was taken into
consideration and discussed in the order itself and he referred to
certain paragraphs of the order dated April 21, 2017 in this behalf.
In the process, he again emphasised that none of the
observations made in the said order are conclusive findings in
any way and not binding on the Director General and this was
only the starting point, as held in the case of Excel Crop Care
Limited.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 45 of 122
41) M/s. Harish Salve, Dr. A.M. Singhvi, Ramji Srinivasan and Amit
Sibal, learned senior advocates, argued on behalf of RJIL. Their
detailed submissions were almost on the lines on which Mr.
Narasimha, learned ASG, had argued on behalf of the CCI.
42) In the first place, it was emphasised that insofar as dragging of
COAI into this investigation is concerned, it was sought to be
justified by placing reliance on Section 3 of the Act which
specifically recognises possible mischief by an association of
persons or an association of enterprises. It was stressed that
Section 3(3) recognises certain agreements as per se violations,
and shall be presumed to have appreciable adverse effect on
competition. Submission was that associations of enterprises,
after the operation of the Act are now liable to be viewed with
great suspicion in view of the fact that by its very nature an
association of competing enterprises provides a convenient
platform for such competitors to assemble together.
43) The involvement of COAI was sought to be proved by arguing
that the IDOs have not argued that COAI letters must be ignored
since the decision to provide or not to provide POIs to its
competitor was taken by each of them independently either Airtel
by itself, or Vodafone by itself, or Idea by itself. But the facts of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 46 of 122
the case disclose active involvement by that common platform
called COAI. As per the Reliance Jio, the COAI admittedly
facilitated exchange of information between the three IDOs. It
draws references in its response to private letters exchanged
between Reliance Jio and each of the IDOs separately. The
decisions of the COAI are not decisions of a majority comprising
of a large and diverse pool of members that could suggest a
democratic decision making. By its very constitution, the COAI’s
majority views were nothing but the common views of the three
IDOs that controlled it. It was also argued that in the preliminary
conference and in the High Court defence raised was that COAI
was not a front for these three IDOs but was merely espousing
general industry issues. It does not explain how it chanced upon
private documents and correspondence exchanged bilaterally
between RJIL with each of the IDOs separately. It does not
explain how it voiced the common decisions on behalf of those
three IDOs. The COAI was not the fourth voice but was the
prohibited chorus of those three colluding competitors. Thus, no
legitimacy can be attributed to actions of the COAI. Attention of
the Court was drawn to the letter dated August 08, 2016 (before
the announcement of launch of services by Reliance Jio dated
September 01, 2016) and the letter dated September 02, 2016
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 47 of 122
(after the launch of Reliance Jio) which, according to Reliance
Jio, expose the common collusive conduct of these competitors to
first delay the launch and secondly to scuttle the launch. It was
also contended that the concerted, collusive conspiracy by the
three existing IDOs (having a collective market share of 65%) to
meet with each other under auspices of their association called
Cellular Operators Association of India (COAI) and evolve a
common strategy to respond to challenge posed by a new entrant
RJIL, is by itself violative of Section 3 of the Act. The learned
senior counsel pointed out that the defence of the COAI is that it
was merely lobbying the Government for enacting a change in
law or regulation to stop Reliance Jio from carrying out test on
such a large scale by introducing limits on number of Testsubscribers.
However, the letters of COAI revealed an active
participation of taking sides of certain operators whose interest
was to hinder, or at least slowdown the entry of the new operator.
COAI announced unilateral decisions like virtual boycott (which is
not the same as lobbying for change of regulation). To support
this argument, reference was made to the decisions of Supreme
Court of United States in FTC v. Supreme Court Trial Lawyers
Association7
wherein it has observed that:
7 493 US 411 (1990)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 48 of 122
"no violation of the Act can be predicated upon mere
attempts to influence the passage or enforcement of laws,”
even if the defendants’ sole purpose is to impose a
restraint upon the trade of their competitors. But in the
Noerr case the alleged restraint of trade was the intended
consequence of public action; in this case the boycott was
the mans by which respondents sought to obtain
favourable legislation. The restraint of trade that was
implemented while the boycott lasted would have had
precisely the same anticompetitive consequences during
that period even if no legislation had been enacted. In
Noerr, the desired legislation would have created the
restraint on the truckers’ competition; in this case the
emergency legislative response to the boycott put an end
to the restraint.”
44) On the submission that the dangers of a trade association being
hijacked to further the cause of only a few competitors and yet
attempt to give the entire exercise a veneer of respectability has
been also commented upon in the recent decision of this Court in
Competition Commission of India v. Coordination Committee
of Artistes and Technicians of West Bengal Film and
Television & Ors.8
wherein it has been observed that:
"47. In the instant case, admittedly the Coordination
Committee, which may be a “person” as per the definition
contained in Section 2(l) of the Act, is not undertaking any
economic activity by itself. Therefore, if we were to look
into the “agreement” of such a “person” i.e. Coordination
Committee, it may not fall under Section 3(1) of the Act as
it is not in respect of any production, supply, distribution,
storage, acquisition or control of goods or provision of
services. The Coordination Committee, which as a trade
union acting by itself, and without conjunction with any
other, would not be treated as an “enterprise” or the kind of
“association of persons” described in Section 3. A trade
union acts as on behalf of its members in collective
8 (2017) 5 SCC 17
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 49 of 122
bargaining and is not engaged in economic activity. In
such circumstances, had the Coordination Committee
acted only as trade unionists, things would have been
different. Then, perhaps, the view taken by the Tribunal
could be sustained. However, what is lost in translation by
the Tribunal i.e. in applying the aforesaid principle of the
activity of the trade union, is a very pertinent and
significant fact, which was taken note of by the DG as well
as CCI in its majority opinion. It is this: the Coordination
Committee (or for that matter even EIMPA) are, in fact,
association of enterprises (constituent members) and
these members are engaged in production, distribution
and exhibition of films. EIMPA is an association of film
producers, distributors and exhibitors, operating mainly in
the State of West Bengal. Likewise, the Coordination
Committee is the joint platform of Federation of Senior
Technician and Workers of Eastern India and West Bengal
Motion Pictures Artistes' Forum. Both EIMPA as well as the
Coordination Committee acted in a concerted and
coordinated manner. They joined together in giving call of
boycott of the competing members i.e. the informant in the
instant case and, therefore, the matter cannot be viewed
narrowly by treating Coordination Committee as a trade
union, ignoring the fact that it is backing the cause of those
which are “enterprises”. The constituent members of these
bodies take decision relating to production or distribution
or exhibition on behalf of the members who are engaged in
the similar or identical business of production, distribution
or exhibition of the films. Decision of these two bodies
reflected collective intent of the members. When some of
the members are found to be in the production, distribution
or exhibition line, the matter could not have been brushed
aside by merely giving it a cloak of trade unionism. For this
reason, the argument predicated on the right of trade
union under Article 19 of the Constitution, as professed by
the Coordination Committee, is also not available.”
(emphasis supplied)
Arguments: The respondents:
45) Mr. Darius J. Khambata, senior advocate, appeared on behalf of
Idea Cellular Ltd. Mr. Gopal Jain and Mr. Navroz Seervai, senior
advocates, appeared on behalf of Bharti Airtel Ltd. Mr. Ranjit
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 50 of 122
Kumar, Mr. Arvind Datar and Mr. Sidharth Luthra, senior
advocates, appeared on behalf of Vodafone India Ltd. Mr. P.
Chidambaram, senior advocate, appeared on behalf of the COAI.
TRAI had also intervened in the matter and supported the legal
submission of the IDOs, namely, that TRAI had the exclusive
jurisdiction to deal with the matter, i.e. there was a complete
absence of jurisdiction in CCI to deal with the issue at hand.
Instead of taking note of the submissions of these counsel
separately, we are taking note of the submissions in a
consolidated manner as that would avoid repetition.
46) The submissions of the respondents can be paraphrased as
under:
(i) The TRAI Act, being a special law, ousts the jurisdiction of
CCI to examine the telecom sector. In that sense, exclusive
jurisdiction vests in TRAI to regulate the telecom sector, including
competition related issues, thereby ousting the jurisdiction of the
CCI altogether.
(ii) Even if the CCI has the jurisdiction, TRAI’s jurisdiction will
prevail.
(iii) In the alternative, the jurisdictional facts, in any case, had to
be determined by the TRAI in the first place. Since there was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 51 of 122
absence of jurisdictional facts, the CCI could not have proceeded
with the matter and ordered the investigation. Thus, the CCI’s
order for carry out investigation is premature.
(iv) The impugned order passed by the CCI under Section 26(1)
of the Competition Act applies the ‘prima facie test’ and
consequences of such an order are grave. Such an order was
quasi-judicial in nature and, therefore, amenable to judicial review
under Article 226 of the Constitution of India. Thus, the writ
petitions filed by the IDOs challenging this order were
maintainable.
(v) On merits, the prima facie order passed by the CCI was
without considering the material submitted by the IDOs. In this
behalf it was argued that the IDOs had provided sufficient POIs
and given ample proof thereof, which was not taken into
consideration by the CCI while passing the impugned order under
Section 26(1) of the Competition Act. This also becomes a valid
ground to challenge the order by filing writ petition under Article
226 of the Constitution of India.
47) Insofar as the argument of the respondents that the TRAI Act is a
complete code and the jurisdiction of CCI is totally ousted, the
argument proceeded on the following basis:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 52 of 122
The real issue which arises is comparison of two regimes –
one regulated by TRAI under the Indian Telegraph Act, 1885,
Wireless Telegraphy Act, 1933 and the TRAI Act, 1997 which
together forms a comprehensive and complete code; and the
other being CCI under the Competition Act. The various
provisions under these legislations seen with the terms of the
License Agreement show that the issues arising out of
interconnection between different operators shall be determined
within the overall framework of the interconnection
regulations/directions/orders issued by TRAI from time to time.
The Object and Reasons of the TRAI Act itself lays down that it is
mandated to make arrangements for protection and promotion of
consumer interest and ensuring fair competition and to ensure
orderly and healthy growth of telecommunication infrastructure.
Moreover, the competition in the telecom sector is of a different
kind as it has to function under the constant monitoring and
regulation of TRAI. TRAI effectively plays the role of a watchdog
of the sector as otherwise the entire sector would collapse if there
is no interdependence between the telecom operators. Moreover,
under Section 11(1)(a)(iv) of the TRAI Act, the authority is
required to take measures to facilitate competition in the market.
CCI can ensure competition only in an unregulated sector and not
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 53 of 122
in the likes of the telecom sector wherein even the tariffs are
capped/determined by TRAI.
48) On the aforesaid basis, the submission was that:
(a) The TRAI Act is a complete code.
(b) Exclusive jurisdiction vests in TRAI to regulate the telecom
sector including competition related issues.
(c) The TDSAT has the exclusive jurisdiction to examine the
disputes between licensees including the one raised by RJIL
before CCI.
(d) CCI has no jurisdiction to decide disputes pertaining to the
telecom sector.
In this hue it was submitted that the Statement of Objects
and Reasons of the TRAI Act made it abundantly clear by
satisfying that TRAI was supposed to make "arrangements for
protection and promotion of consumer interest and ensuring fair
competition...". It was, thus, clear that even the competition
aspects of the telecom sector were within the domain of TRAI.
The respondents also drew comparison of the Preamble of the
Competition Act with that of the TRAI Act to point out that insofar
as dealing with the issue of fair competition in telecom sector is
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 54 of 122
concerned, it was overlapping to a great extent in the following
manner:
Competition Act TRAI Act
An Act to provide, keeping in view the
economic development of the country,
for the establishment of a Commission
to
“prevent practices having adverse effect
on competition
to promote and sustain competition in
markets
to protect interests of consumers and
to ensure freedom of trade carried on by
other participants in the markets, in
India
for matters connected therewith or
incidental thereto”
An Act to provide for the
establishment of the Telecom
Regulatory Authority of India and
the Telecom Dispute Settlement
and Appellate Tribunal (“TDSAT”)
to
[-]
[for protection and promotion of
consumer interest and ensuring
fair competition (Statement of
Object and Reasons)]
to protect the interest of the
service providers and consumers
of the telecom sector (Preamble)
to promote and ensure orderly
growth of the telecom sectoral
For matters connected therewith
and incidental thereto
49) It was submitted that pursuant to Section 11(1)(a)(iv) read with
Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act (including directions
and regulations issued by TRAI), the TRAI has been statutorily
mandated to perform functions on a variety of matters including
measures aimed at facilitating competition and regulated
interconnection between service providers. Reliance was also
placed on Section 12 of the TRAI Act which empowers TRAI with
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 55 of 122
vast powers to discharge its functions, including to call for
information, conduct investigations and issue such necessary
directions as it may deem necessary for the discharge of its
functions. Moreover, TRAI has also been empowered to issue
appropriate directions under Section 12 and make regulations
under Section 36 of the TRAI Act. Section 29 of the TRAI Act
provides for penalties for contravention of directions of the TRAI.
Further, under Section 14A of the TRAI Act, it has been provided
that any person may make an application before the TDSAT.
With regard to the jurisdiction, Section 15 and 27 of the TRAI Act
provide for explicit bar on jurisdiction of the civil courts to
determine any matter with regard to which TDSAT or TRAI have
been empowered by or under the TRAI Act.
50) It was submitted that in the present case, at the time RJIL filed its
Information before the CCI on November 08, 2016 as also when
the prima facie order was passed on April 21, 2017, TRAI was
seized of the matter pertaining to provisioning of POIs and even
made certain recommendations to the DoT on October 21, 2016.
Accordingly, TRAI had assumed jurisdiction and was exercising
the same. Thus, the dispute was being dealt with and was
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 56 of 122
addressed by the TRAI and even on this ground, the jurisdiction
of the CCI stands ousted.
51) The TDSAT has the exclusive jurisdiction to examine the disputes
between licensees including the one raised by RJIL before CCI.
This very submission on the exclusion of CCI’s jurisdiction was
sought to be projected from another angle. It was submitted that
in the Information filed by RJIL before the CCI, Reliance Jio
stressed:
(a) The dispute raised by RJIL before the CCI pertains to the
specific performance of the Interconnect Agreement and the
rights and liabilities arising therefrom;
(b) The Interconnect Agreement is completely regulated by the
TRAI inter alia under Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act
read with the Quality of Service Regulations, 2009 issued
thereunder.
The argument was that the prayers sought by RJIL in the
Information filed before the CCI clearly demonstrate that RJIL
was seeking specific performance of the Interconnect Agreement.
Hence, RJIL has dressed up what is essentially a contractual
complaint into anti-competition clothing. In the present dispute,
upon a meaningful reading of the Information it can clearly be
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 57 of 122
seen that through clever drafting, RJIL has dressed up the
allegations of delay/denial of the POIs as alleged anti-competitive
behaviour. In this behalf, reliance was placed on the decision of
this Court in Begum Sabiha Sultan v. Nawab Mohd. Mansur Ali
Khan & Ors.9
, wherein it was held:
"10. There is no doubt that at the stage of consideration of
the return of the plaint under Order 7 Rule 10 of the Code,
what is to be looked into is the plaint and the averments
therein. At the same time, it is also necessary to read the
plaint in a meaningful manner to find out the real intention
behind the suit. In Moolji Jaitha and Co. v. Khandesh Spg.
and Wvg. Mills Co. Ltd. [AIR 1950 FC 83] the Federal
Court observed that: (AIR p. 92, para 24)
“The nature of the suit and its purpose have to be
determined by reading the plaint as a whole.”
It was further observed: (AIR p. 92, para 25)
“The inclusion or absence of a prayer is not decisive
of the true nature of the suit, nor is the order in which
the prayers are arrayed in the plaint. The substance
or object of the suit has to be gathered from the
averments made in the plaint and on which the reliefs
asked in the prayers are based.”
It was further observed: (AIR p. 98, para 59)
“It must be borne in mind that the function of a
pleading is only to state material facts and it is for the
court to determine the legal result of those facts and
to mould the relief in accordance with that result.”
52) In support of the submission that a special legislation i.e. the
TRAI Act, will prevail over the provisions of the Competition Act,
which according to the respondents is general in nature, reliance
9 (2007) 4 SCC 343
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 58 of 122
has been placed on the decisions of this Court in State of
Punjab v. Labour Court, Jullundur & Ors.10. In the said matter,
the Court was inter alia seized of the issue whether the
employee-respondents were at liberty to seek the payment of
gratuity by invoking the remedy available under Section 33-C(2)
of the Industrial Disputes Act, 1947 as opposed to the Payment of
Gratuity Act, 1972. In deciding the said dispute, it was held that:
"7. It is apparent that the Payment of Gratuity Act enacts a
complete code containing detailed provisions covering all
the essential features of a scheme for payment of gratuity.
It creates the right of payment of gratuity, indicates when
the right will accrue, and lays down the principles for
quantification of the gratuity. It provides further for recovery
of the amount, and contains an especial provision that
compound interest at nine per cent per annum will be
payable on delayed payment. For the enforcement of its
provisions, the Act provides for the appointment of a
controlling authority, who is entrusted with the task of
administering the Act. The fulfilment of the rights and
obligations of the parties are made his responsibility, and
he has been invested with an amplitude of power for the
full discharge of that responsibility. Any error committed by
him can be corrected in appeal by the appropriate
Government or an Appellate Authority particularly
constituted under the Act.
8. Upon all these considerations, the conclusion is
inescapable that Parliament intended that proceedings for
payment of gratuity due under the Payment of Gratuity Act
must be taken under that Act and not under any other.
That being so, it must be held that the applications filed by
the employee respondents under Section 33-C(2) of the
Industrial Disputes Act did not lie, and the Labour Court
had no jurisdiction to entertain and dispose of them. On
that ground, this appeal must succeed.”
(emphasis supplied)
10 (1980) 1 SCC 4
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 59 of 122
53) Applying the aforesaid tests to the present case, the submission
of the respondents is that:
(a) The subject area of competition law is dealt with by the
Competition Act, 2002.
(b) The TRAI Act, 1997 is a complete code in itself and
regulates the Telecom Sector.
(c) The Preamble, the Statement of Objects and Reasons and
Section 11(1) of the TRAI Act provide the TRAI with the power to
inter alia regulate competition in the telecom sector.
(d) Accordingly, being the special law regarding the telecom
sector, as regards competition issues arising in the telecom
sector, the TRAI Act would prevail over the Competition Act.
54) Replying to the argument of the appellants that the TRAI Act as
well as the Competition Act are both special statutes and hence,
the rule of statutory interpretation of special law prevailing over
the general law will be inapplicable in the present dispute, the
respondents referred to the decision of this Court in Ashoka
Marketing Ltd. & Anr. v. Punjab National Bank & Ors.11. In the
said case, the Court was seized of an issue on whether the
11 (1990) 4 SCC 406
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 60 of 122
provisions of the Public Premises (Eviction of Unauthorised
Occupants) Act, 1971 would override the provisions of the Delhi
Rent Control Act, 1958 in relation to the premises belonging to
Punjab National Bank Ltd., a body corporate under the Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970.
Each side argued that the enactment relied upon by it is a special
statute and the other enactment is general. The Court held that
the Rent Control Act is a special statute regulating the
relationship of landlord and tenant in the Union Territory of Delhi
and even the Public Premises Act is a special statute relating to
eviction of unauthorised occupants from public premises. While
concluding that both the enactments are special statutes, the
Court held:
""61. ...in the case of inconsistency between the
provisions of two enactments, both of which can be
regarded as special in nature, the conflict has to be
resolved by reference to the purpose and policy underlying
the two enactments and the clear intendment conveyed by
the language of the relevant provisions therein.
64. ...In our opinion, therefore, keeping in view the
object and purpose underlying both the enactments viz.
the Rent Control Act and the Public Premises Act, the
provisions of the Public Premises Act have to be construed
as overriding the provisions contained in the Rent Control
Act.”
(emphasis supplied)
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 61 of 122
55) Heavy reliance was placed on the judgment of the United States
Supreme Court in the case of Credit Suisse v. Billing et al12
.
Here the submission was that if the CCI is permitted to examine
the information of RJIL that it was to be provided POIs
immediately despite there being a period of 90 days in the ICA,
the following would be the consequences:
(i) The same may cause a threat and may alter the functioning
of telecom sector on account of threat of intervention of CCI even
where the acts are in accordance with TRAI’s Regulations. The
same would threaten efficient functioning of the telecom sector.
(ii) The additional benefits to competition would be very small
as the TRAI Regulations anyway have been framed keeping in
mind “facilitation of competition” in telecom sector.
(iii) The same would encourage future actions before CCI when
telecom related issues will be dressed up as competition issues.
It was the fervent plea that in order to avoid such conflict of
standards and norms, the TRAI Act being the sectoral law and the
TRAI is already seized of the matter, the CCI should not be
allowed to proceed.
56) According to the respondents, the jurisdictional facts in the
present matter would be:
12 551 US 264 (2007)
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(a) Failure to provide adequate POIs in the test phase; or
(b) Delay in providing POIs; or
(c) Providing inadequate POIs.
57) Mr. Datar, in particular, submitted that from a perusal of the
extensive pleadings and findings of the High Court, it is manifest
that the above issues are pending consideration before the
TRAI/DoT as well as in connected writ petitions pending
adjudication before the Delhi High Court. The emphasis was that
there must first be clear findings on the above issues in the
context of the TRAI Act, Rules and Regulations. According to
him, that alone is not enough. It is necessary to establish that
violation of the provisions of TRAI Act amounts to “abuse of
dominance” or “anti-competitive agreements”. As per him,
Section 21 and 21A of the Competition Act make it clear that
jurisdiction of the CCI is divided into parts, viz:
(a) Economic activity not regulated by any statutory authority.
(b) Economic activity regulated by a statutory authority.
In the latter case, Section 21A is mandatory and the CCI
can act only in accordance with Sections 21A(1) and (2).
Submission was that in economic activity that is regulated by a
statutory authority, CCI can exercise powers under Section 26
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 63 of 122
only after complying with Section 21A. It was predicated on the
principle that when the law prescribes things to be done in a
particular manner, all other modes of action are prohibited.
(Bhavnagar University v. Palitana Sugar Mill (P) Ltd. & Ors.13)
58) In this hue, it was also argued that the decision of this Court in
Competition Commission of India v. Steel Authority of India
Ltd. & Anr.14 has no application to the present case because it
does not deal with a sector that is regulated by a statutory
authority. On the other hand, reliance was placed on the
judgment in the case of Carona Ltd. v. Parvathy Swaminathan
& Sons15
.
59) It was submitted that the facts of the SAIL case are clearly
distinguishable from the present case as the main issue before
the Supreme Court in SAIL was whether an appeal can be filed
against an order passed under Section 26(1) of the Competition
Act. Distinction was sought to be drawn on the basis of the
following facts:
(a) in the present case, CCI issued notice and called the TSPs
including Vodafone for a preliminary conference to be held on
13 (2003) 2 SCC 111
14 (2010) 10 SCC 744
15 (2007) 8 SCC 559
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 64 of 122
January 31, 2017 and the parties were heard on January 31,
2017, February 07, 2017 and February 08, 2017;
(b) hearing was held before CCI and detailed notes on
arguments were submitted with supporting documents by the
TSPs including Vodafone;
(c) the prima facie order has been passed after hearing the
submissions of the TSPs holding that a prima facie case of
violation of the Competition Act has been made out; and
(d) the prima facie order also provide for reasons in support of
the decision arrived at by the CCI.
60) Justifying the observations of the High Court that the order of the
CCI cannot be treated as an 'administrative order', it was
submitted that the order was passed by the CCI after collecting
the detailed information from the parties and by holding the
conferences, calling material details, documents, affidavits and by
recording the opinion. It was also submitted that the High Court
had rightly noted that majority decision of the CCI has given
reasons by overlooking the law and the record. It was a
reasoned order/direction and, therefore, judicial review is
permissible. In this behalf it was submitted that the aforesaid
view was taken on the basis of the following:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 65 of 122
(a) whilst an order under Section 26(2) has been made
appealable, an order under Section 26(1) is not appealable;
(b) an order under Section 26(1) of the Competition Act is a
direction simpliciter to the Director General to cause an
investigation;
(c) at the stage of passing of the order under Section 26(1),
there is no adjudicatory process undertaken by the CCI as there
is no determination of any right or obligation of the parties to the
lis; and
(d) the order passed under Section 26(1) does not entail civil
consequences for any person as against a Section 26(2) order
wherein rights of the informant are affected.
61) In the alternative, it was argued that the observations of the Court
limited to the extent of the nature of powers vested in the CCI
under Section 26(1) needs reconsideration by this Court.
Our discussion:
62) We have noted of three propositions which were advanced by Mr.
Narasimha, learned Additional Solicitor General. These are the
main issues which arise for consideration. In fact, other counsel
for the parties have also made their submissions on these
aspects. We would, therefore, focus our discussion on the said
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 66 of 122
propositions. We would like to mention that while analysing the
arguments of all the parties, we have kept in mind their detailed
submissions as well as the principles laid down in various
judgments cited by them, even if we have not made specific
mention to these judgments in our discussion.
A. Jurisdiction of the CCI
63) This is the principal issue which is the bone of contention.
64) In order to discuss and analyse this aspect, it would be apt to
take note of the salient provisions of the Competition Act as well
as the TRAI Act inasmuch as that would facilitate appreciating the
arguments so advanced.
65) In the wake of globalisation and keeping in view the economic
development of the country, responding to opening of its
economy and resorting to liberalisation, need was felt to enact a
law that ensures fair competition in India by prohibiting trade
practices which cause an appreciable adverse effect on
competition within markets in India and for establishment of an
expert body in the form of Competition Commission of India,
which would discharge the duty of curbing negative aspects of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 67 of 122
competition, the Competition Act, 2002 has been enacted by the
Parliament.
66) Having regard to this specific objective which the Act seeks to
achieve, provisions contained therein, which are relevant for
deciding the instant appeals, are reproduced below:
"2. Definitions. –
xx xx xx
(b) “agreement” includes any arrangement or
understanding or action in concert, –
(i) whether or not, such arrangement, understanding
or action is formal or in writing; or
(ii) whether or not such arrangement, understanding
or action is intended to be enforceable by legal
proceedings;
xx xx xx
(c) “cartel” includes an association of producers, sellers,
distributors, traders or service providers who, by
agreement amongst themselves, limit control or attempt to
control the production, distribution, sale or price of, or,
trade in goods or provision of services;
xx xx xx
(g) “Director General” means the Director-General
appointed under sub-section (1) of section 16 and includes
any Additional, Joint, Deputy or Assistant Directors
General appointed under that section;
xx xx xx
(m) “practice” includes any practice relating to the carrying
on of any trade by a person or an enterprise;
xx xx xx
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 68 of 122
(u) “service” means service of any description which is
made available to potential users and includes the
provision of services in connection with business of any
industrial or commercial matters such as banking,
communication, education, financing, insurance, chit
funds, real estate, transport, storage, material treatment,
processing, supply of electrical or other energy, boarding,
lodging, entertainment, amusement, construction, repair,
conveying of news or information and advertising;
xx xx xx
3. Anti-competitive agreements. – (1) No enterprise or
association of enterprises or person or association of
persons shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition or
control of goods or provision of services, which causes or
is likely to case an appreciable adverse effect on
competition within India.
(2) Any agreement entered into in contravention of the
provisions contained in sub-section (1) shall be void.
(3) Any agreement entered into between enterprises or
associations of enterprises or persons or associations of
persons or between any person and enterprise or practice
carried on, or decision taken by, any association of
enterprises or association of persons, including cartels,
engaged in identical or similar trade of goods or provision
of services, which –
(a) directly or indirectly determines purchase or sale
prices;
(b) limits or controls production, supply, markets,
technical development, investment or provision of
services;
(c) shares the market or source of production or
provision of services by way of allocation of
geographical area of market, or type of goods or
services, or number of customers in the market or
any other similar way;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 69 of 122
(d) directly or indirectly results in bid rigging or
collusive bidding, shall be presumed to have an
appreciable adverse effect on competition:
Provided that nothing contained in this sub-section shall
apply to any agreement entered into by way of joint
ventures if such agreement increases efficiency in
production, supply, distribution, storage, acquisition or
control of goods or provisions of services.
Explanation. – For the purpose of this sub-section, “bid
rigging” means by agreement, between enterprises or
persons referred to in sub-section (3) engaged in identical
or similar production or trading of goods or provision of
services, which has the effect of eliminating or reducing
competition for bids or adversely affecting or manipulating
the process for bidding.
xx xx xx
19. Inquiry into certain agreements and dominant
position of enterprise. – (1) The Commission may inquire
into any alleged contravention of the provisions contained
in sub-section (1) of section 3 or sub-section (1) of section
4 either on its own motion or on -
“(a) receipt of any information, in such manner and
accompanied by such fee as may be determined by
regulations, from any person, consumer or their
association or trade association; or
(b) a reference made to it by the Central
Government or a State Government or a statutory
authority.
(2) Without prejudice to the provisions contained in subsection
(1), the powers and functions of the Commission
shall include the powers and functions specified in subsections
(3) to (7).
(3) The Commission shall, while determining whether an
agreement has an appreciable adverse effect on
competition under section 3, have due regard to all or any
of the following factors, namely:
(a) creation of barriers to new entrants in the market;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 70 of 122
(b) driving existing competitors out of the market;
(c) foreclosure of competition by hindering entry into
the market;
(d) accrual of benefits to consumers;
(e) improvements in production or distribution of
goods or provision of services;
(f) promotion of technical, scientific and economic
development by means of production or distribution
of goods or provision of services.
xx xx xx
21A. Reference by Commission. – (1) Where in the
course of a proceeding before the Commission an issue is
raised by any party that any decision, which the
Commission has taken during such proceeding or
proposes to take, is or would be contrary to any provision
of this Act whose implementation is entrusted to a statutory
authority, then the Commission may make a reference in
respect of such issue to the statutory authority:
Provided that the Commission, may, suo motu, make such
a reference to the statutory authority.
(2) On receipt of a reference under sub-section (1), the
statutory authority shall give its opinion, within sixty days of
receipt of such reference, to the Commission which shall
consider the opinion of the statutory authority, and
thereafter give its findings recording reasons therefor on
the issues referred to in the said opinion.
xx xx xx
26. Procedure for inquiry under section 19. – (1) On
receipt of a reference from the Central Government or a
State Government or a statutory authority or on its own
knowledge or information received under section 19, if the
Commission is of the opinion that there exists a prima
facie case, it shall direct the Director General to cause an
investigation to be made into the matter:
Provided that if the subject matter of an information
received is, in the opinion of the Commission, substantially
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 71 of 122
the same as or has been covered by any previous
information received, then the new information may be
clubbed with the previous information.
(2) Where on receipt of a reference from the Central
Government or a State Government or a statutory
authority or information received under section 19,the
Commission is of the opinion that there exists no prima
facie case, it shall close the matter forthwith and pass such
orders as it deems fit and send a copy of its order to the
Central Government or the State Government or the
statutory authority or the parties concerned, as the case
may be.
(3) The Director-General shall, on receipt of direction
under sub-section (1), submit a report on his findings
within such period as may be specified by the
Commission.
(4) The Commission may forward a copy of the report
referred to in sub-section (3) to the parties concerned:
Provided that in case the investigation is caused to be
made based on reference received from the Central
Government or the State Government or the statutory
authority, the Commission shall forward a copy of the
report referred to in sub-section (3) to the Central
Government or the State Government or the statutory
authority, as the case may be.
(5) If the report of the Director General referred to in subsection
(3) recommends that there is no contravention of
the provisions of this Act, the Commission shall invite
objections or suggestions from the Central Government or
the State Government or the statutory authority or the
parties concerned, as the case may be, on such report of
the Director-General.
(6) If, after consideration of the objections and suggestions
referred to in sub section (5), if any, the Commission
agrees with the recommendation of the Director General, it
shall close the matter forthwith and pass such orders as it
deems fit and communicate its order to the Central
Government or the State Government or the statutory
authority or the parties concerned, as the case may be.
(7) If, after consideration of the objections or suggestions
referred to in sub section (5), if any, the Commission is of
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 72 of 122
the opinion that further investigations is called for, it may
direct further investigation in the matter by the Director
General or cause further inquiry to be made by in the
matter or itself proceed with further inquiry in the matter in
accordance with the provisions of this Act.
(8) If the report of the Director-General referred to in subsection
(3) recommends that there is contravention of any
of the provisions of this Act, and the Commission is of the
opinion that further inquiry is called for, it shall inquire into
such contravention in accordance with the provisions of
this Act.
xx xx xx
36. Power of Commission to regulate its own
procedure. –
xx xx xx
(2) The Commission shall have, for the purposes of
discharging its functions under this Act, the same powers
as are vested in a Civil Court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect
of the following matters, namely:–
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of
documents;
(c) receiving evidence on affidavit;
(d) issuing commissions for the examination of
witnesses or documents;
(e) requisitioning, subject to the provisions of
sections 123 and 124 of the Indian Evidence Act,
1872 (1 of 1972), any public record or document or
copy of such record or document from any office.
xx xx xx
41. Director General to investigate contraventions. –
(1) The Director General shall, when so directed by the
Commission, assist the Commission in investigating into
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 73 of 122
any contravention of the provisions of this Act or any rules
or regulations made thereunder.
(2) The Director General shall have all the powers as are
conferred upon the Commission under sub-section (2) of
section 36.
(3) Without prejudice to the provisions of sub-section (2),
sections 240 and 240A of the Companies Act, 1956 (1 of
1956), so far as may be, shall apply to an investigation
made by the Director General or any other person
investigating under his authority, as the apply to an
inspector appointed under that Act.
Explanation. – For the purposes of this section, –
(a) the words “the Central Government” under
section 240 of the Companies Act, 1956 (1 of 1956)
shall be construed as “the Commission”;
(b) the word “Magistrate” under Section 240A of the
Companies Act, 1956 (1 of 1956) shall be construed
as “the Chief Metropolitan Magistrate, Delhi”.
xx xx xx
45. Penalty for offences in relation to furnishing of
information. – (1) Without prejudice to the provisions of
section 44, if a person, who furnishes or is required to
furnish under this act any particulars, documents or any
information, –
(a) makes any statement or furnishes any document
which he knows or has reason to believe to be false
in any material particular; or
(b) omits to state any material fact knowing it to be
material; or
(c) wilfully alters, suppresses or destroys any
document which is required to be furnished as
aforesaid,
such person shall be punishable with fine which may
extend to rupees one crore as may be determined by the
Commission.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 74 of 122
(2) Without prejudice to the provisions of sub-section (1),
the Commission may also pass such other order as it
deems fit.
xx xx xx
60. Act to have overriding effect. – The provisions of
this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the
time being in force.
61. Exclusion of jurisdiction of civil courts. – No civil
court shall have jurisdiction to entertain any suit or
proceeding in respect of any matter which the Commission
or the Appellate Tribunal is empowered by or under this
Act to determine and no injunction shall be granted by any
court or other authority in respect of any action taken or to
be taken in pursuance of any power conferred by or under
this Act.
62. Application of other laws not barred. – The
provisions of this Act shall be in addition to, and not in
derogation of, the provisions of any other law for the time
being in force.”
67) The aforesaid provisions would indicate that the Act deals with
three kinds of practices which are treated as anti-competitive and
are prohibited. These are:
(a) where agreements are entered into by certain persons with
a view to cause an appreciable adverse effect on competition;
(b) where any enterprise or group of enterprises, which enjoys
dominant position, abuses the said dominant position; and
(c) regulating the combination of enterprises by means of
mergers or amalgamations to ensure that such mergers or
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 75 of 122
amalgamations do not become anti-competitive or abuse the
dominant position which they can attain.
The objective behind the Act and rationale in curbing the
aforesaid anti-competitive practices was taken note of in Excel
Crop Care Limited v. Competition Commission of India and
Another16 and we would like to reproduce the following passages
therefrom:
"21. In the instant case, we are concerned with the first
type of practices, namely, anti-competitive agreements.
The Act, which prohibits anti-competitive agreements, has
a laudable purpose behind it. It is to ensure that there is a
healthy competition in the market, as it brings about
various benefits for the public at large as well as economy
of the nation. In fact, the ultimate goal of competition policy
(or for that matter, even the consumer policies) is to
enhance consumer well-being. These policies are directed
at ensuring that markets function effectively. Competition
policy towards the supply side of the market aims to
ensure that consumers have adequate and affordable
choices. Another purpose in curbing anti-competitive
agreements is to ensure “level playing field” for all market
players that helps markets to be competitive. It sets “rules
of the game” that protect the competition process itself,
rather than competitors in the market. In this way, the
pursuit of fair and effective competition can contribute to
improvements in economic efficiency, economic growth
and development of consumer welfare. How these benefits
accrue is explained in the ASEAN Regional Guidelines on
Competition Policy, in the following manner:
“2.2. Main Objectives and Benefits of Competition
Policy
2.2.1.1. Economic efficiency: Economic efficiency
refers to the effective use and allocation of the
economy's resources. Competition tends to bring
about enhanced efficiency, in both a static and a
dynamic sense, by disciplining firms to produce at the
16 (2017) 8 SCC 47
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 76 of 122
lowest possible cost and pass these cost savings on
to consumers, and motivating firms to undertake
research and development to meet customer needs.
2.2.1.2. Economic growth and development:
Economic growth—the increase in the value of goods
and services produced by an economy—is a key
indicator of economic development. Economic
development refers to a broader definition of an
economy's well-being, including employment growth,
literacy and mortality rates and other measures of
quality of life. Competition may bring about greater
economic growth and development through
improvements in economic efficiency and the
reduction of wastage in the production of goods and
services. The market is therefore able to more rapidly
reallocate resources, improve productivity and attain
a higher level of economic growth. Over time,
sustained economic growth tends to lead to an
enhanced quality of life and greater economic
development.
2.2.1.3. Consumer Welfare: Competition policy
contributes to economic growth to the ultimate benefit
of consumers, in terms of better choice (new
products), better quality and lower prices. Consumer
welfare protection may be required in order to
redress a perceived imbalance between the market
power of consumers and producers. The imbalance
between consumers and producers may stem from
market failures such as information asymmetries, the
lack of bargaining position towards producers and
high transaction costs. Competition policy may serve
as a complement to consumer protection policies to
address such market failures.”
22. The aforesaid Guidelines also spell out few more
benefits of such laws incorporating competition policies by
highlighting the following advantages:
“2.2.2. In addition, competition policy is also
beneficial to developing countries. Due to worldwide
deregulation, privatisation and liberalisation of
markets, developing countries need a competition
policy, in order to monitor and control the growing
role of the private sector in the economy so as to
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 77 of 122
ensure that public monopolies are not simply
replaced by private monopolies.
2.2.3. Besides contributing to trade and investment
policies, competition policy can accommodate other
policy objectives (both economic and social) such as
the integration of national markets and promotion of
regional integration, the promotion or protection of
small businesses, the promotion of technological
advancement, the promotion of product and process
innovation, the promotion of industrial diversification,
environment protection, fighting inflation, job
creation, equal treatment of workers according to
race and gender or the promotion of welfare of
particular consumer groups.
In particular, competition policy may have a positive
impact on employment policies, reducing redundant
employment (which often results from inefficiencies
generated by large incumbents and from the fact that
more dynamic enterprises are prevented from
entering the market) and favouring jobs creation by
new efficient competitors.
2.2.4. Competition policy complements trade policy,
industrial policy and regulatory reform. Competition
policy targets business conduct that limits market
access and which reduces actual and potential
competition, while trade and industrial policies
encourage adjustment to the trade and industrial
structures in order to promote productivity-based
growth and regulatory reform eliminates domestic
regulation that restricts entry and exit in the markets.
Effective competition policy can also increase
investor confidence and prevent the benefits of trade
from being lost through anti-competitive practices. In
this way, competition policy can be an important
factor in enhancing the attractiveness of an economy
to foreign direct investment, and in maximising the
benefits of foreign investment.”
23. In fact, there is broad empirical evidence supporting
the proposition that competition is beneficial for the
economy. Economists agree that it has an important role to
play in improving productivity and, therefore, the growth
prospects of an economy. It is achieved in the following
manner:
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 78 of 122
“International Competition Network — Economic
Growth and Productivity
Competition contributes to increased productivity
through:
Pressure on firms to control costs—In a competitive
environment, firms must constantly strive to lower
their production costs so that they can charge
competitive prices, and they must also improve their
goods and services so that they correspond to
consumer demands.
Easy market entry and exit—Entry and exit of firms
reallocates resources from less to more efficient
firms. Overall productivity increases when an entrant
is more efficient than the average incumbent and
when an existing firm is less efficient than the
average incumbent. Entry—and the threat of entry—
incentivises firms to continuously improve in order
not to lose market share to or be forced out of the
market by new entrants.
Encouraging innovation—Innovation acts as a strong
driver of economic growth through the introduction of
new or substantially improved products or services
and the development of new and improved
processes that lower the cost and increase the
efficiency of production. Incentives to innovate are
affected by the degree and type of competition in a
market.
Pressure to improve infrastructure—Competition puts
pressure on communities to keep local producers
competitive by improving roads, bridges, docks,
airports and communications, as well as improving
educational opportunities.
Benchmarking—Competition also can contribute to
increased productivity by creating the possibility of
benchmarking. The productivity of a monopolist
cannot be measured against rivals in the same
geographic market, but a dose of competition quickly
will expose inferior performance. A monopolist may
be content with mediocre productivity but a firm
battling in a competitive market cannot afford to fall
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 79 of 122
behind, especially if the investment community is
benchmarking it against its rivals.”
24. Productivity is increased through competition by
putting pressure on firms to control costs as the producers
strive to lower their production costs so that they can
charge competitive prices. It also improves the quality of
their goods and services so that they correspond to
consumers' demands.
25. Competition law enforcement deals with anticompetitive
practices arising from the acquisition or
exercise of undue market power by firms that result in
consumer harm in the forms of higher prices, lower quality,
limited choices and lack of innovation. Enforcement
provides remedies to avoid situations that will lead to
decreased competition in markets. Effective enforcement
is important not only to sanction anti-competitive conduct
but also to deter future anti-competitive practices.
26. When we recognise that competition has number of
benefits, it clearly follows that cartels or anti-competitive
agreements cause harm to consumers by fixing prices,
limiting outputs or allocating markets. Effective
enforcement against such practices has direct visible
effects in terms of reduced prices in the market and this is
also supported by various empirical studies.
27. Keeping in view the aforesaid objectives that need to
be achieved, Indian Parliament enacted the Competition
Act, 2002. Need to have such a law became all the more
important in the wake of liberalisation and privatisation as
it was found that the law prevailing at that time, namely,
Monopolies and Restrictive Trade Practices Act, 1969 was
not equipped adequately enough to tackle the competition
aspects of the Indian economy. The law enforcement
agencies, which include CCI and COMPAT, have to ensure
that these objectives are fulfilled by curbing anticompetitive
agreements.
28. Once the aforesaid purpose sought to be achieved is
kept in mind, and the same is applied to the facts of this
case after finding that the anti-competitive conduct of the
appellants continued after coming into force of provisions
of Section 3 of the Act as well, the argument predicated on
retrospectivity pales into insignificance.
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29. One has to keep in mind the aforesaid objective which
the legislation in question attempts to subserve and the
mischief which it seeks to remedy. As pointed out above,
Section 18 of the Act casts an obligation on CCI to
“eliminate” anti-competitive practices and promote
competition, interests of the consumers and free trade. It
was rightly pointed out by Mr Neeraj Kishan Kaul, the
learned Additional Solicitor General, that the Act is clearly
aimed at addressing the evils affecting the economic
landscape of the country in which interest of the society
and consumers at large is directly involved. This is so
eloquently emphasised by this Court in Competition
Commission of India v. SAIL in the following manner: (SCC
pp. 755-56 & 794, paras 6, 8-10 & 125)
“6. As far as the objectives of competition laws are
concerned, they vary from country to country and
even within a country they seem to change and
evolve over the time. However, it will be useful to
refer to some of the common objectives of
competition law. The main objective of competition
law is to promote economic efficiency using
competition as one of the means of assisting the
creation of market responsive to consumer
preferences. The advantages of perfect competition
are threefold: allocative efficiency, which ensures the
effective allocation of resources, productive
efficiency, which ensures that costs of production are
kept at a minimum and dynamic efficiency, which
promotes innovative practices. These factors by and
large have been accepted all over the world as the
guiding principles for effective implementation of
competition law.
xx xx xx
8. The Bill sought to ensure fair competition in India
by prohibiting trade practices which cause
appreciable adverse effect on the competition in
market within India and for this purpose
establishment of a quasi-judicial body was
considered essential. The other object was to curb
the negative aspects of competition through such a
body, namely, “the Competition Commission of India”
(for short “the Commission”) which has the power to
perform different kinds of functions, including passing
of interim orders and even awarding compensation
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and imposing penalty. The Director General
appointed under Section 16(1) of the Act is a
specialised investigating wing of the Commission. In
short, the establishment of the Commission and
enactment of the Act was aimed at preventing
practices having adverse effect on competition, to
protect the interest of the consumer and to ensure
fair trade carried out by other participants in the
market in India and for matters connected therewith
or incidental thereto.
9. The various provisions of the Act deal with the
establishment, powers and functions as well as
discharge of adjudicatory functions by the
Commission. Under the scheme of the Act, this
Commission is vested with inquisitorial, investigative,
regulatory, adjudicatory and to a limited extent even
advisory jurisdiction. Vast powers have been given to
the Commission to deal with the complaints or
information leading to invocation of the provisions of
Sections 3 and 4 read with Section 19 of the Act. In
exercise of the powers vested in it under Section 64,
the Commission has framed regulations called the
Competition Commission of India (General)
Regulations, 2009 (for short “the Regulations”).
10. The Act and the Regulations framed thereunder
clearly indicate the legislative intent of dealing with
the matters related to contravention of the Act,
expeditiously and even in a time-bound programme.
Keeping in view the nature of the controversies
arising under the provisions of the Act and larger
public interest, the matters should be dealt with and
taken to the logical end of pronouncement of final
orders without any undue delay. In the event of delay,
the very purpose and object of the Act is likely to be
frustrated and the possibility of great damage to the
open market and resultantly, country's economy
cannot be ruled out.”
68) It is for the aforesaid reason that the CCI is entrusted with duties,
powers and functions to deal with three kinds of anti-competitive
practices mentioned above. The purpose is to eliminate such
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practices which are having adverse effect on the competition, to
promote and sustain competition and to protect the interest of the
consumers and ensure freedom of trade, carried on by the other
participants, in India. For the purpose of conducting such an
inquiry, the CCI is empowered to call any person for rendering
assistance and/or produce the records/material for arriving at
even the prima facie opinion. The regulations also empower the
CCI to hold conferences with the concerned persons/parties,
including their advocates/authorised persons.
69) It is also relevant to mention at this stage that while inquiring into
any alleged contravention and determining whether any
agreement has an appreciable adverse effect on competition,
factors which are to be taken into consideration are mentioned in
sub-section (3) of Section 19. These include creation of barriers
to new entrants in the market, driving existing competitors out of
the market and foreclosure of competition by hindering entry into
the market. All these activities have connection with the ‘market’.
The word ‘market’ has reference to ‘relevant market’. As per subsection
(5) of Section 19, such relevant market can be relevant
geographic market or relevant product market. In the present
case, we are concerned with the relevant product market, viz.
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telecommunication market. Sub-section (7) of Section 19
enumerates the factors which are to be kept in mind while
determining the relevant product market.
70) Market definition is a tool to identify and define the boundaries of
competition between firms. It serves to establish the framework
within which the competition policy is applied by the Commission.
The main purpose of market definition is to identify in a
systematic way the competitive constraints that the undertakings
involved face. The objective of defining a market in both its
product and geographic dimension is to identify those actual
competitors of the undertakings involved that are capable of
constraining those undertakings behaviour and of preventing
them from behaving independently of effective competitive
pressure. Therefore, the purpose of defining the ‘relevant market’
is to assess with identifying in a systematic way the competitive
constraints that undertakings face when operating in a market.
This is the case in particular for determining if undertakings are
competitors or potential competitors and when assessing the anticompetitive
effects of conduct in a market. The concept of
relevant market implies that there could be an effective
competition between the products which form part of it and this
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presupposes that there is a sufficient degree of interchangeability
between all the products forming part of the same market insofar
as specific use of such product is concerned. In essence, it is the
notion of ‘power over the market’ which is the key to analyse
many competitive issues.
71) It is an admitted position that in the instant case we are dealing
with the telecom market, which is the relevant market. An
interesting feature is that this telecom market is also regulated by
the statutory regime contained in the TRAI Act. Under the said
Act, TRAI is established as a regulator which exercises
control/supervision and also provides guidance to the
telecom/mobile market. This statutory body is required to
function as per the provisions of the TRAI Act as well as the
Rules and Regulations framed thereunder. Additionally, the
telecom companies are also governed by licence agreements
entered into between the Central Government and such service
providers, for providing telephone/telecommunication services to
the customers/subscribers. At this stage, therefore, we take note
of the relevant provisions of the TRAI Act:
"11. Functions of Authority. – (1) Notwithstanding
anything contained in the Indian Telegraph Act, 1885 (13 of
1885), the functions of the Authority shall be to –
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(a) make recommendations, either suo moto or on a
request from the licensor, on the following matters,
namely:
xx xx xx
(iv) measures to facilitate competition and promote
efficiency in the operation of telecommunication
services so as to facilitate growth in such services;
xx xx xx
(b) discharge the following functions, namely:–
(i) ensure compliance of terms and conditions of
licence;
(ii) notwithstanding anything contained in the terms
and conditions of the licence granted before the
commencement of the Telecom Regulatory Authority
of India (Amendment) Act, 2000, fix the terms and
conditions of inter-connectivity between the service
providers;
(iii) ensure technical compatibility and effective interconnection
between different service providers;
(iv) regulate arrangement amongst service providers
of sharing their revenue derived from providing
telecommunication services;
(v) lay-down the standards of quality of service to be
provided by the service providers and ensure the
quality of service and conduct the periodical survey
of such service provided by the service providers so
as to protect interest of the consumers of
telecommunication service;
(vi) lay-down and ensure the time period for
providing local and long distance circuits of
telecommunication between different service
providers;
(vii) maintain register of interconnect agreements
and of all such other matters as may be provided in
the regulations;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 86 of 122
(viii) keep register maintained under clause (vii)
open for inspection to any member of public on
payment of such fee and compliance of such other
requirement as may be provided in the regulations;
(ix) ensure effective compliance of universal service
obligations;
(c) levy fees and other charges at such rates and in
respect of such services as may be determined by
regulations;
(d) perform such other functions including such
administrative and financial functions as may be entrusted
to it by the Central Government or as may be necessary to
carry out the provisions of this Act:
Provided that the recommendations of the Authority
specified in clause (a) of this sub-section shall not be
binding upon the Central Government.
xx xx xx
14. Establishment of Appellate Tribunal. – The Central
Government shall, by notification, establish an Appellate
Tribunal to be known as the Telecom Disputes Settlement
and Appellate Tribunal to –
(a) adjudicate any dispute –
(i) between a licensor and a licensee;
(ii) between two or more service providers;
(iii) between a service provider and a group of
consumers:
Provided that nothing in this clause shall apply in
respect of matters relating to –
(A) the monopolistic trade practice, restrictive trade
practice and unfair trade practice which are subject to
the jurisdiction of the Monopolies and Restrictive
Trade Practices Commission established under subsection
(1) of section 5 of the Monopolies and
Restrictive Trade Practices Act, 1969 (54 of 1969);
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(B) the complaint of an individual consumer
maintainable before a Consumer Disputes Redressal
Forum or a Consumer Disputes Redressal
Commission or the National Consumer Redressal
Commission established under section 9 of the
Consumer Protection Act, 1986 (68 of 1986);
(C) dispute between telegraph authority and any
other person referred to in sub-section (1) of section
7B of the Indian Telegraph Act, 1885 (13 of 1885);
(b) hear and dispose of appeal against any direction,
decision or order of the Authority under this Act.
xx xx xx
16. Procedure and powers of Appellate Tribunal. – (1)
The Appellate Tribunal shall not be bound by the
procedure laid down by the Code of Civil Procedure, 1908
(5 of 1908), but shall be guided by the principles of natural
justice and, subject to the other provisions of this Act, the
Appellate Tribunal shall have powers to regulate its own
procedure.
(2) The Appellate Tribunal shall have, for the purposes of
discharging the functions under this Act, the same powers
as are vested in a civil court under the Code of Civil
Procedure, 1908 (5 of 1908), while trying a suit, in respect
of the following matters, namely:–
(a) summoning and enforcing the attendance of any
person and examining him on oath;
(b) requiring the discovery and production of
documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of section 123 and 124
of the Indian Evidence Act, 1872 (1 of 1872),
requisitioning any public record or document or a
copy of such record or document, from any office;
(e) issuing commissions for the examination of
witnesses or documents;
(f) reviewing its decisions;
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(g) dismissing an application for default or deciding
it, ex parte;
(h) setting aside any order of dismissal of any
application for default or any order passed by it, ex
parte; and
(i) any other matter which may be prescribed.
(3) Every proceeding before the Appellate Tribunal shall
be deemed to be a judicial proceeding within the meaning
of sections 193 and 228, and for the purposes of section
196 of the Indian Penal Code (45 of 1860) and the
Appellate Tribunal shall be deemed to be a civil court for
the purposes of section 195 and Chapter XXVI of the Code
of Criminal Procedure, 1973 (2 of 1974).”
72) Other provisions in the telecom sector which are relevant for the
purposes of these appeals are taken note of by the High Court as
under:
"Telecommunication laws binds all
19. The relevant licenses
Unified License (UL) – The UL issued by Department of
Telecommunications, Government of India (“DoT”) for
providing telecommunication services on a pan India
basis. Licence under Section 4 of Indian Telegraph Act,
1885 therefore they become Telecom Service Provider
(“TSP”). Relevant clauses of the UL (UASL) are -
(a) Clause 16 of Part-I: Other conditions: The licensee is
bound by all TRAI Orders/Directions/Reglations;
(b) Clause 27 of Part-I: Network Interconnnection,
particularly, Clause 27.4, which requires a licensee to
interconnect subject to compliance with prevailing
regulations and determinations issued by TRAI, and
contemplates the execution of ICAs to establish
interconnection in sufficient capacity and number to enable
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transmission and reception of messages between the
interconnected systems;
(c) Clause 29 of Part-I, requiring a licensee to ensure QoS
standards as may be prescribed by DoT/TRAI.
Specifically, Clause 29.4, empowers DoT/TRAI to evaluate
QoS parameters prior to grant of permission for
commencement of services; and
(d) Clause 6.2 of Part-II, which requires a licensee to
provide interconnection to all TSPs to ensure that calls are
completed to all destinations.
Inter-connection Agreements
20. Similar separate Interconnection Agreements (ICAs)
are executed between the parties. The relevant clauses of
ICAs are as under:
Clause 2.4: “...RJIL will be required to establish
Interconnection at the Switches of IDEA as listed in
Schedule I. In addition to these specified locations,
the Parties may further agree to interconnect at an
additional location(s) as mutually agreed to by and
between the parties during the term of this
Agreement...”
Clause 5.7: “...At the end of two years, the Parties
shall convert the total E1s existing at the POIs into
one-way E1s for the Outgoing Traffic of each Party
on the basis of the traffic ratio existing 3 months prior
to the expiry of the initial period of two years. These
E1s shall thereafter be continued as one-way E1s for
the remaining term of the Agreement at the cost of
RJIL...”
Clause 9.1: “...A minimum notice of 4 weeks has to
be given by either Party for augmentations of
Interconnect Links...”
Clause 9.2: “...Augmentation shall be completed
within 90 days of receipt of requisite charges
specified in Schedule 2 from RJIL...”
Clause 9.3: “...Any request for augmentation of
capacity shall be in writing with Performance reports
as prescribed in Schedule 4...”
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Clause 9.4: “...Traffic measurements for 7 days shall
be taken by both the parties during agreed busy
route hours, every 6 months after commencement of
traffic at the POIs to determine further capacity
requirements...”
Clause 9.5: “...RJIL shall provide a forecast in writing
in advance for its requirement of port capacity for
Telephony Traffic for the next 6 months to enable
IDEA to dimension the required capacity in its
network...”
21. The relevant clauses of the ICAs are:
(a) Clause 2 makes clear that the ICA will be
applicable and in effect from the date of execution;
(b) Clause 2.10 makes clear that the interconnection
facilities at each POI will conform to the applicable
QoS standards prescribed by TRAI;
(c) Clause 3 – Terms and Amendments – again
makes clear that the ICA becomes applicable,
effective and operational from the date of execution
and is valid until both parties hold a valid license for
providing access services;
(d) Clause 4 – Applicability and Providing Services –
reiterates that the ICA becomes applicable on signing
and is subject to the terms and conditions of the
telecom licence;
(e) Clause 5.2 specifically provides that for the initial
two years, provision and augmentation of
transmission links shall be at the cost of RJIL;
(f) Clause 5.7 contemplates conversion of two-way
E1s into one-way E1s only after two years, which in
other words mean that for two years all E1s must be
two-way E1s;
(g) Clause 9 provides modalities for enhancement of
ports; and
(h) Clause 10.7 again reiterates that Idea is bound to
maintain QoS standards prescribed by TRAI.
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22. Quality of Service Regulations, 2009
Quality of Service Regulations (“QoS Regulations,
2009”) issued by TRAI under Section 36 read with Section
11 of the TRAI Act. Clause 5Iiv) and Clause 14, as
relevant, are reproduced as under:
(a) Clause 5(iv) prescribes that the congestion at
each individual POI cannot exceed 0.5% over a
period of one month (no more than 5 out of every
100 calls can fail).
(b) Clause 14 provides that in the event of any doubt
regarding interpretation of any of the provisions of
the QoS regulations, the view of the TRAI shall be
final and binding.
23. The relevant clauses of the Standards of Quality of
Service of Basic Telephone Service (wireline) and Cellular
Mobile Telephone Service Regulations, 2009 includes
Cellular Mobile Telephone Services. The terms “Point of
Interconnection (POI)”, “Quality of Service (QoS)”, “Service
Provider, Telecommunication services” have been defined
in the Regulations. The term POI congestion is also
described in 3.12 and 4.7 of POI.”
73) Some of the features which govern the telecommunication
industry and noted by the High Court may also be captured at this
stage. These are:
(a) To protect the interest of the service providers and
consumers of the telecom sector and to permit and ensure
technical compatibility and effective inter-relationship between
different service providers and for ensuring compliance of licence
conditions by all the service providers, TRAI was constituted
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under the Telecom Regulatory Authority of India Act, 1997. TRAI
is a recommendatory/advisory and regulatory body discharging
the functions envisaged under sub-section (1) of Section 11 of the
said Act. TRAI, inter alia, is charged with ensuring fair
competition amongst service providers, including fixing the terms
and conditions of entire activity between the service providers
and laying down the standards of Quality of Service (QoS) to be
provided by each service provider. In exercise of its functions,
TRAI has issued detailed Regulations for telecom services,
including fixation and revision of tariffs (Tariff Order), fixation of
Inter-connect Usage Charges (IUC), prescription of quality of
service standards, etc.
(b) The Telecom Service Providers, which include the
respondents as well as RJIL, provide telecommunication access
service and are PAN India Telecom Service Providers. They are
governed by the Cellular Mobile Telephone Service (CMTS)/
Unified Access Service Licence (UASL) issued by the
Telecommunications Department, Government of India under
section 4 of the Telegraph Act.
(c) The Central Government has the exclusive privilege of
establishing, maintaining and working telegraphs under the
Telegraph Act and the Central Government is authorised to grant
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 93 of 122
licence on such terms and conditions and in consideration of such
payment as it thinks fit to any person to establish, maintain or
work as telegraph within any part of the country. By virtue of
Section 4 of the Telegraph Act, a service provider is duty bound to
enter into a licence agreement with the former for unified licence,
with authorisation for provision of services, as per the terms and
conditions prescribed in the Schedule. As a condition of the said
licence, the licensee agrees and unequivocally undertakes to fully
comply with the terms and conditions stipulated in the licence
agreement without any deviation or reservation of any kind. The
licence is governed by the provisions of the Telegraph Act, the
Indian Wireless Telegraphy Act, 1933, the TRAI Act and the
Information Technology Act, 2000, as modified or regulated from
time to time.
74) In order to ensure that there is smooth interconnectivity and a
consumer who is the subscriber of mobile phone of one service
provider, say for e.g. Vodafone, and wants to make call to a
mobile phone of his friend which is provided by another service
provider, say Idea Cellular, the unified licenses put an obligation
on all these licensees to interconnect with each other on the POI.
This is so mentioned in Clause 27.4 of Part I of the Schedule to
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the unified licence. Such interconnectivity of POI is subject to
compliance of regulation/directions issued by TRAI. The
interconnection agreement, inter alia, provides for the following
clauses:
(a) to meet all reasonable demand for the transmission and
reception of messages between the interconnect systems;
(b) to establish and maintain such one or more POIs as are
reasonably required and are of sufficient capacity and in sufficient
numbers to enable transmission and reception of the messages
by means of applicable systems; and
(c) to connect and keep connected to the applicable systems.
Some of the other clauses of the interconnection agreement
are as follows:
A minimum four weeks’ written notice has to be given by either
party for augmentation of interconnect links.
Augmentation shall be completed within 90 days of receipt of
requisite charges specified in the Schedule.
Either party shall provide a forecast in writing, in advance for
its requirements of port capacity for “Telephony Traffic” for the
next six months to enable the other party to dimension the
required capacity in its network.
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The interconnection tests for reach and every interface will be
carried out by mutual arrangement between signatories of the
agreement.
By virtue of the licence, the licensee is obligated to ensure
quality of service as prescribed by the licensor or TRAI and failure
on their part to adhere to the quality of service stipulated by TRAI
would make the licensor liable to be treated for breach of the
terms and conditions of the licence.
In order to render effective services, it is mandatory for the
licensee to interconnect/provide POIs to all eligible telecom
service providers to ensure that calls are completed to all
destinations and interconnection agreement is entered into
between the different service providers which mandates each of
the party to the agreement to provide to the other interconnection
traffic carriage and all the technical and operational quality
service and time lines, i.e. the equivalent to that which the party
provides to itself. The interconnection agreement separately
entered into different service providers is based on the format
prescribed in the Telecommunication Interconnection (Reference
Interconnect Offer) Regulations, 2002.
75) POI is defined in the agreement, in the following words:
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"POI are those points between two network operators
which allow voice call originating from the work of one
operator to terminate on the network by other operator.”
76) We may also note that on June 07, 2005 a direction was issued
under Section 13 read with sub-clause (i) to (v) of sub-clause (b)
of Section 11 of the TRAI Act, which provides as follows:
"In exercise of the powers vested in it under section 13
read with section 11(1)(b)(i), (ii), (iii), (iv) and (v) of the
Telecom Regulatory Authority of India Act, 1997 and in
order to ensure compliance of terms and conditions of
license and effective interconnection between service
providers and to protect consumer interest, the Authority
hereby directs all service providers to provide
interconnection on the request of the interconnection
seeker within 90 days of the applicable payments made by
the interconnection seeker. Further there is a direction
issued by the Government of India, Ministry of
Telecommunication dated 28th August, 2005 by which
directions have been issued to provide data of subscribers
in the prescribed format.”
77) From the aforesaid analysis of the scheme contained in the TRAI
Act, it becomes clear that the functioning of the telecom
companies which are granted licence under Section 4 of the
Telegraph Act is regulated by the provisions contained in the
TRAI Act. TRAI is a regulator which regulates the telecom
industry, which is a statutory body created under the TRAI Act.
The necessity of such regulators has been emphasised by a
Constitution Bench of this Court in Modern Dental College and
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 97 of 122
Research Centre and Others v. State of Madhya Pradesh and
Others17 in the following words:
"Need for regulatory mechanism
87. Regulatory mechanism, or what is called regulatory
economics, is the order of the day. In the last 60-70 years,
economic policy of this country has travelled from laissez
faire to mixed economy to the present era of liberal
economy with regulatory regime. With the advent of mixed
economy, there was mushrooming of the public sector and
some of the key industries like aviation, insurance,
railways, electricity/power, telecommunication, etc. were
monopolised by the State. Licence/permit raj prevailed
during this period with strict control of the Government
even in respect of those industries where private sectors
were allowed to operate. However, Indian economy
experienced major policy changes in early 90s on LPG
Model i.e. liberalisation, privatisation and globalisation.
With the onset of reforms to liberalise the Indian economy,
in July 1991, a new chapter has dawned for India. This
period of economic transition has had a tremendous
impact on the overall economic development of almost all
major sectors of the economy.
88. When we have a liberal economy which is regulated by
the market forces (that is why it is also termed as market
economy), prices of goods and services in such an
economy are determined in a free price system set up by
supply and demand. This is often contrasted with a
planned economy in which a Central Government
determines the price of goods and services using a fixed
price system. Market economies are also contrasted with
mixed economy where the price system is not entirely free,
but under some government control or heavily regulated,
which is sometimes combined with State led economic
planning that is not extensive enough to constitute a
planned economy.
89. With the advent of globalisation and liberalisation,
though the market economy is restored, at the same time,
it is also felt that market economies should not exist in
pure form. Some regulation of the various industries is
required rather than allowing self-regulation by market
17 (2016) 7 SCC 353
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 98 of 122
forces. This intervention through regulatory bodies,
particularly in pricing, is considered necessary for the
welfare of the society and the economists point out that
such regulatory economy does not rob the character of a
market economy which still remains a market economy.
Justification for regulatory bodies even in such industries
managed by private sector lies in the welfare of people.
Regulatory measures are felt necessary to promote basic
well being for individuals in need. It is because of this
reason that we find regulatory bodies in all vital industries
like, insurance, electricity and power, telecommunications,
etc.”
78) Thus, with the advent of globalisation/liberalisation leading to free
market economy, regulators in respect of each sector have
assumed great significance and importance. It becomes their
bounden duty to ensure that such a regulator fulfils the objectives
enshrined in the Act under which a particular regulator is created.
Insofar as the telecom sector is concerned, the TRAI Act itself
mentions the objective which it seeks to achieve. It not only
exercises control/supervision over the telecom service providers/
licensees, TRAI is also supposed to provide guidance to the
telecom/mobile market. ‘Introduction’ to the TRAI Act itself
mentions that due to tremendous growth in the services it was
considered essential to regulate the telecommunication services
by a regulatory body which should be fully empowered to control
the services, in the best interest of the country as well as the
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service providers. Likewise, the Statement of Objects and
Reasons of this Act, inter alia, stipulates as under:
"1. In the context of the National Telecom Policy, 1994,
which amongst other things, stresses on achieving the
universal service, bringing the quality of telecom services
to world standards, provisions of wide range of services to
meet the customers demand at reasonable price, and
participation of the companies registered in India in the
area of basic as well as value added telecom services as
also making arrangements for protection and promotion of
consumer interest and ensuring fair competition, there is a
felt need to separate regulatory functions from service
providing functions which will be in keeping with the
general trend in the world. In the multi-operator situation
arising out of opening of basic as well as value added
services in which private operator will be competing with
Government operators, there is a pressing need for an
independent telecom regulatory body for regulation of
telecom services for orderly and healthy growth of
telecommunication infrastructure apart from protection of
consumer interest.
xx xx xx
4. The powers and functions of the Authority, inter alia,
are.–
(i) ensuring technical compatibility and effective
inter-relationship between different service providers;
(ii) regulation of arrangement amongst service
providers of sharing their revenue derived from
providing telecommunication services;
(iii) ensuring compliance of licence conditions by all
service providers;
(iv) protection of the interest of the consumers of
telecommunication service;
(v) settlement of disputes between service providers;
(vi) fixation of rates for providing telecommunication
service within India and outside India;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 100 of 122
(vii) ensuring effective compliance of universal
service obligations.”
79) TRAI is, thus, constituted for orderly and healthy growth of
telecommunication infrastructure apart from protection of
consumer interest. It is assigned the duty to achieve the
universal service which should be of world standard quality on the
one hand and also to ensure that it is provided to the customers
at a reasonable price, on the other hand. In the process, purpose
is to make arrangements for protection and promotion of
consumer interest and ensure fair competition. It is because of
this reason that the powers and functions which are assigned to
TRAI are highlighted in the Statement of Objects and Reasons.
Specific functions which are assigned to TRAI, amongst other,
including ensuring technical compatibility and effective interrelationship
between different service providers; ensuring
compliance of licence conditions by all service providers; and
settlement of disputes between service providers.
80) In the instant case, dispute raised by RJIL specifically touches
upon these aspects as the grievance raised is that the IDOs have
not given POIs as per the licence conditions resulting into noncompliance
and have failed to ensure inter se technical
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 101 of 122
compatibility thereby. Not only RJIL has raised this dispute, it has
even specifically approached TRAI for settlement of this dispute
which has arisen between various service providers, namely, RJIL
on the one hand and the IDOs on the other, wherein COAI is also
roped in. TRAI is seized of this particular dispute.
81) It is a matter of record that before the TRAI, IDOs have refuted
the aforesaid claim of RJIL. Their submission is that not only
required POIs were provided to RJIL, it is the RJIL which is in
breach as it was making unreasonable and excessive demand for
POIs. It is specifically pleaded by the IDOs that:
(i) RJIL raised its demand for POIs for the first time on June
21, 2016.
(ii) In the letter dated June 21, 2016, it was admitted that RJIL
was in test phase.
(iii) There was no express mention of any commercial launch
date.
(iv) As per the letter, immediately on commercial launch RJIL
would have a 22mn subscriber base for which number series was
already allotted.
(v) As per the DoT Circular dated August 29, 2005 test
customers are not considered as subscribers and test customers
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 102 of 122
can only be in the form of business partners. It was highlighted
that problem, if any, of congestion has been suffered on account
of provisioning of full-fledged services during test phase.
(vi) RJIL in its complaint before the TRAI was not considering
the period of 90 days as was prescribed in the Interconnection
Agreement. It was instead proceeding on the basis that the
demand for POIs should be met on an immediate basis.
(vii) There was several errors in the forecast made by RJIL.
(viii) The tables given by the RJIL are wrong as they take into
account its total demand at the end of nine months against what
was actually provided.
82) Learned counsel appearing for the IDOs had also argued that the
first firm demand for provisioning of POIs was made by RJIL on
June 21, 2016. According to the IDOs, in that letter, RJIL had
expressly admitted that it was under test phase and had not
commenced ‘commercial services’. RJIL had also stated that the
demand for POIs was being made to ‘provide seemless
connectivity to targeted subscribers’ as against ‘test consumers’.
Their submission was that it was not disclosed at all as to when
RJIL was going to launch commercial services. On the basis of
the aforesaid stand taken by the IDOs, their argument is that in
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 103 of 122
the first instance it is the TRAI which is not only competent but
more appropriate authority to consider these aspects as it is the
TRAI which is the specialised body going by the nature of dispute
between the parties, following aspects have to be determined by
the TRAI:
(a) Whether IDOs were under any obligation to provide POIs
during test period?
(b) As per the letter dated June 21, 2016 from RJIL, when IDOs
were to commence provisioning of POIs to RJIL?
(c) Whether the demand for POIs made by RJIL were
reasonable or not?
(d) Whether there was any delay/denial at the end of Vodafone
in provisioning of POIs?
(e) Whether the POIs were to be provided ‘immediately’ and
during ‘test phase’?
(f) Whether IDOs have provided sufficient number of POIs to
RJIL in conformity with the licence conditions?
83) We are of the opinion that as the TRAI is constituted as an expert
regulatory body which specifically governs the telecom sector, the
aforesaid aspects of the disputes are to be decided by the TRAI
in the first instance. These are jurisdictional aspects. Unless the
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 104 of 122
TRAI finds fault with the IDOs on the aforesaid aspects, the
matter cannot be taken further even if we proceed on the
assumption that the CCI has the jurisdiction to deal with the
complaints/information filed before it. It needs to be reiterated
that RJIL has approached the DoT in relation to its alleged
grievance of augmentation of POIs which in turn had informed
RJIL vide letter dated September 06, 2016 that the matter related
to inter-connectivity between service providers is within the
purview of TRAI. RJIL thereafter approached TRAI; TRAI
intervened and issued show-cause notice dated September 27,
2016; and post issuance of show-cause notice and directions,
TRAI issued recommendations dated October 21, 2016 on the
issue of inter-connection and provisioning of POIs to RJIL. The
sectoral authorities are, therefore, seized of the matter. TRAI,
being a specialised sectoral regulator and also armed with
sufficient power to ensure fair, non-discriminatory and competitive
market in the telecom sector, is better suited to decide the
aforesaid issues. After all, RJIL’s grievance is that interconnectivity
is not provided by the IDOs in terms of the licenses
granted to them. TRAI Act and Regulations framed thereunder
make detailed provisions dealing with intense obligations of the
service providers for providing POIS. These provisions also deal
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as to when, how and in what manner POIs are to be provisioned.
They also stipulate the charges to be realised for POIs that are to
be provided to another service provider. Even the consequences
for breach of such obligations are mentioned.
84) We, therefore, are of the opinion that the High Court is right in
concluding that till the jurisdictional issues are straightened and
answered by the TRAI which would bring on record findings on
the aforesaid aspects, the CCI is ill-equipped to proceed in the
matter. Having regard to the aforesaid nature of jurisdiction
conferred upon an expert regulator pertaining to this specific
sector, the High Court is right in concluding that the concepts of
“subscriber”, “test period”, “reasonable demand”, “test phase and
commercial phase rights and obligations”, “reciprocal obligations
of service providers” or “breaches of any contract and/or
practice”, arising out of TRAI Act and the policy so declared, are
the matters within the jurisdiction of the Authority/TDSAT under
the TRAI Act only. Only when the jurisdictional facts in the
present matter as mentioned in this judgment particularly in paras
56 and 82 above are determined by the TRAI against the IDOs,
the next question would arise as to whether it was a result of any
concerted agreement between the IDOs and COAI supported the
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IDOs in that endeavour. It would be at that stage the CCI can go
into the question as to whether violation of the provisions of TRAI
Act amounts to ‘abuse of dominance’ or ‘anti-competitive
agreements’. That also follows from the reading of Sections 21
and 21A of the Competition Act, as argued by the respondents.
85) The issue can be examined from another angle as well. If the
CCI is allowed to intervene at this juncture, it will have to
necessarily undertake an exercise of returning the findings on the
aforesaid issues/aspects which are mentioned in paragraph 82
above. Not only TRAI is better equipped as a sectoral regulator
to deal with these jurisdictional aspects, there may be a possibility
that the two authorities, namely, TRAI on the one hand and the
CCI on the other, arrive at a conflicting views. Such a situation
needs to be avoided. This analysis also leads to the same
conclusion, namely, in the first instance it is the TRAI which
should decide these jurisdictional issues, which come within the
domain of the TRAI Act as they not only arise out of the telecom
licenses granted to the service providers, the service providers
are governed by the TRAI Act and are supposed to follow various
regulations and directions issued by the TRAI itself.
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 107 of 122
86) This takes us to the next level of the issue, viz. whether TRAI has
the exclusive jurisdiction to deal with matters involving anticompetitive
practices to the exclusion of CCI altogether because
of the reason that the matter pertains to telecom sector?
87) The IDOs have argued that not only TRAI is an expert body which
can deal with these issues and has been assigned this function
specifically under the TRAI Act, even the anti-competitive aspects
of telecom sector are specifically assigned to the TRAI in the
TRAI Act itself. On that premise the submission is that the TRAI
Act is a special legislation which prevails over the provisions of
the Competition Act as the Competition Act is general in nature. It
is also argued that even if the Competition Act is treated as a
special statute, between the two special statutes the TRAI Act
would prevail as it is a complete code in itself which regulates the
telecom sector in its entirety, including the aspects of competition.
88) Such a submission, on a cursory glance, may appear to be
attractive. However, the matter cannot be examined by looking
into the provisions of the TRAI Act alone. Comparison of the
regimes and purpose behind the two Acts becomes essential to
find an answer to this issue. We have discussed the scope and
ambit of the TRAI Act in the given context as well as the functions
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 108 of 122
of the TRAI. No doubt, we have accepted that insofar as the
telecom sector is concerned, the issues which arise and are to be
examined in the context of the TRAI Act and related regime need
to be examined by the TRAI. At the same time, it is also
imperative that specific purpose behind the Competition Act is
kept in mind. This has been taken note of and discussed in the
earlier part of the judgment. As pointed out above, the
Competition Act frowns the anti-competitive agreements. It deals
with three kinds of practices which are treated as anti-competitive
and are prohibited. To recapitulate, these are:
(a) where agreements are entered into by certain persons with
a view to cause an appreciable adverse effect on competition;
(b) where any enterprise or group of enterprises, which enjoys
dominant position, abuses the said dominant position; and
(c) regulating the combination of enterprises by means of
mergers or amalgamations to ensure that such mergers or
amalgamations do not become anti-competitive or abuse the
dominant position which they can attain.
89) The CCI is specifically entrusted with duties and functions, and in
the process empower as well, to deal with the aforesaid three
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kinds of anti-competitive practices. The purpose is to eliminate
such practices which are having adverse effect on the
competition, to promote and sustain competition and to protect
the interest of the consumers and ensure freedom of trade,
carried on by other participants, in India. To this extent, the
function that is assigned to the CCI is distinct from the function of
TRAI under the TRAI Act. Learned counsel for the appellants are
right in their submission that the CCI is supposed to find out as to
whether the IDOs were acting in concert and colluding, thereby
forming a cartel, with the intention to block or hinder entry of RJIL
in the market in violation of Section 3(3)(b) of the Competition Act.
Also, whether there was an anti-competitive agreement between
the IDOs, using the platform of COAI. The CCI, therefore, is to
determine whether the conduct of the parties was unilateral or it
was a collective action based on an agreement. Agreement
between the parties, if it was there, is pivotal to the issue. Such
an exercise has to be necessarily undertaken by the CCI. In
Haridas Exports, this Court held that where statutes operate in
different fields and have different purposes, it cannot be said that
there is an implied repeal of one by the other. The Competition
Act is also a special statute which deals with anti-competition. It
is also to be borne in mind that if the activity undertaken by some
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persons is anti-competitive and offends Section 3 of the
Competition Act, the consequences thereof are provided in the
Competition Act. Section 27 empowers the CCI to pass certain
kinds of orders, stipulated in the said provision, after inquiry into
the agreements for abuse of dominant position. The following
kinds of orders can be passed by the CCI under this provision:
"27. Orders by Commission after inquiry into
agreements or abuse of dominant position. - Where
after inquiry the Commission finds that any agreement
referred to in section 3 or action of an enterprise in a
dominant position, is in contravention of section 3 or
section 4, as the case may be, it may pass all or any of the
following orders, namely:—
(a) direct any enterprise or association of enterprises or
person or association of persons, as the case may be,
involved in such agreement, or abuse of dominant
position, to discontinue and not to re-enter such
agreement or discontinue such abuse of dominant
position, as the case may be;
(b) impose such penalty, as it may deem fit which shall be
not more than ten per cent of the average of the turnover
for the last three preceding financial years, upon each of
such person or enterprises which are parties to such
agreements or abuse:
Provided that in case any agreement referred to in
section 3 has been entered into by a cartel, the
Commission may impose upon each producer, seller,
distributor, trader or service provider included in that cartel,
a penalty of up to three times of its profit for each year of
the continuance of such agreement or ten percent. of its
turnover for each year of the continuance of such
agreement, whichever is higher.
(c) repealed;
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 111 of 122
(d) direct that the agreements shall stand modified to the
extent and in the manner as may be specified in the order
by the Commission;
(e) direct the enterprises concerned to abide by such other
orders as the Commission may pass and comply with the
directions, including payment of costs, if any;
(f) repealed;
(g) pass such other [order or issue such directions] as it
may deem fit.
Provided that while passing orders under this
section, if the Commission comes to a finding, that an
enterprise in contravention to section 3 or section 4 of the
Act is a member of a group as defined in clause (b) of the
Explanation to section 5 of the Act, and other members of
such a group are also responsible for, or have contributed
to, such a contravention, then it may pass orders, under
this section, against such members of the group.
Moreover, it is within the exclusive domain of the CCI to find
out as to whether a particular agreement will have appreciable
adverse effect on competition within the relevant market in India.
For this purpose, CCI is to take into consideration the provisions
contained in the Competition Act, including Section 29 thereof.
Sections 45 and 46 also authorise the CCI to impose penalties in
certain situations.
90) Obviously, all the aforesaid functions not only come within the
domain of the CCI, TRAI is not at all equipped to deal with the
same. Even if TRAI also returns a finding that a particular activity
was anti-competitive, its powers would be limited to the action
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that can be taken under the TRAI Act alone. It is only the CCI
which is empowered to deal with the same anti-competitive act
from the lens of the Competition Act. If such activities offend the
provisions of the Competition Act as well, the consequences
under that Act would also follow. Therefore, contention of the
IDOs that the jurisdiction of the CCI stands totally ousted cannot
be accepted. Insofar as the nuanced exercise from the stand
point of Competition Act is concerned, the CCI is the experienced
body in conducting competition analysis. Further, the CCI is more
likely to opt for structural remedies which would lead the sector to
evolve a point where sufficient new entry is induced thereby
promoting genuine competition. This specific and important role
assigned to the CCI cannot be completely wished away and the
‘comity’ between the sectoral regulator (i.e. TRAI) and the market
regulator (i.e. the CCI) is to be maintained.
91) The conclusion of the aforesaid discussion is to give primacy to
the respective objections of the two regulators under the two Acts.
At the same time, since the matter pertains to the telecom sector
which is specifically regulated by the TRAI Act, balance is
maintained by permitting TRAI in the first instance to deal with
and decide the jurisdictional aspects which can be more
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 113 of 122
competently handled by it. Once that exercise is done and there
are findings returned by the TRAI which lead to the prima facie
conclusion that the IDOs have indulged in anti-competitive
practices, the CCI can be activated to investigate the matter
going by the criteria laid down in the relevant provisions of the
Competition Act and take it to its logical conclusion. This
balanced approach in construing the two Acts would take care of
Section 60 of the Competition Act as well.
92) We, thus, do not agree with the appellants that CCI could have
dealt with this matter at this stage itself without availing the
inquiry by TRAI. We also do not agree with the respondents that
insofar as the telecom sector is concerned, jurisdiction of the CCI
under the Competition Act is totally ousted. In nutshell, that leads
to the conclusion that the view taken by the High Court is
perfectly justified. Even the argument of the learned ASG is that
the exercise of jurisdiction by the CCI to investigate an alleged
cartel does not impinge upon TRAI’s jurisdiction to regulate the
industry in any way. It was submitted that the promotion of
competition and prevention of competitive behaviour may not be
high on the change of sectoral regulator which makes it prone to
‘regulatory capture’ and, therefore, the CCI is competent to
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exercise its jurisdiction from the stand point of the Competition
Act. However, having taken note of the skillful exercise which the
TRAI is supposed to carry out, such a comment vis-a-vis TRAI
may not be appropriate. No doubt, as commented by the
Planning Commission in its report of February, 2007, a sectoral
regulator, may not have an overall view of the economy as a
whole, which the CCI is able to fathom. Therefore, our analysis
does not bar the jurisdiction of CCI altogether but only pushes it
to a later stage, after the TRAI has undertaken necessary
exercise in the first place, which it is more suitable to carry out.
B. Whether the writ petitions filed before the High Court of Bombay
were maintainable?
93) Here comes the scope of judicial interference under Article 226 of
the Constitution. As per the RJIL as well as CCI, the High Court
could not have entertained the writ petition against an order
passed under Section 26(1) of the Competition Act which was a
pure administrative order and was only a prima facie view
expressed therein, and did not result in serious adverse
consequences. It was submitted that the finding of the High
Court that such an order was quasi-judicial order is not only
erroneous but it is contrary to the law laid down in the case of
Steel Authority of India Limited. The respondents, on the other
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hand, have submitted that the judgment in the above case had no
application in the instant case as it did not deal with the sector
that is regulated by a statutory authority. Moreover, such an order
was quasi-judicial in nature and cannot be treated as an
administrative order since it was passed by the CCI after
collecting the detailed information from the parties and by holding
the conferences, calling material details, documents, affidavits
and by recording the opinion. It was submitted that judicial review
against such an order is permissible and it was open to the
respondents to point out that the complete material, as submitted
by the respondents, was not taken into consideration which
resulted in an erroneous order, which had adverse civil
consequences inasmuch as the respondents were subjected to
further investigation by the Director General.
94) We may mention at the outset that in the case of Steel Authority
of India Limited, nature of the order passed by the CCI under
Section 26(1) of the Competition Act (here also we are concerned
with an order which is passed under Section 26(1) of the
Competition Act) was gone into. The Court, in no uncertain
terms, held that such an order would be an administrative order
and not a quasi-judicial order. It can be discerned from
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paragraphs 94, 97 and 98 of the said judgment, which are as
under:
"94. The Tribunal, in the impugned judgment, has taken
the view that there is a requirement to record reasons
which can be express, or, in any case, followed by
necessary implication and therefore, the authority is
required to record reasons for coming to the conclusion.
The proposition of law whether an administrative or quasijudicial
body, particularly judicial courts, should record
reasons in support of their decisions or orders is no more
res integra and has been settled by a recent judgment of
this Court in CCT v. Shukla & Bros. [(2010) 4 SCC 785:
(2010) 2 SCC (Cri) 1201 : (2010) 2 SCC (L&S) 133],
wherein this Court was primarily concerned with the High
Court dismissing the appeals without recording any
reasons. The Court also examined the practice and
requirement of providing reasons for conclusions, orders
and directions given by the quasi-judicial and
administrative bodies.
xx xx xx
97. The above reasoning and the principles enunciated,
which are consistent with the settled canons of law, we
would adopt even in this case. In the backdrop of these
determinants, we may refer to the provisions of the Act.
Section 26, under its different sub-sections, requires the
Commission to issue various directions, take decisions
and pass orders, some of which are even appealable
before the Tribunal. Even if it is a direction under any of
the provisions and not a decision, conclusion or order
passed on merits by the Commission, it is expected that
the same would be supported by some reasoning. At the
stage of forming a prima facie view, as required under
Section 26(1) of the Act, the Commission may not really
record detailed reasons, but must express its mind in no
uncertain terms that it is of the view that prima facie case
exists, requiring issuance of direction for investigation to
the Director General. Such view should be recorded with
reference to the information furnished to the Commission.
Such opinion should be formed on the basis of the
records, including the information furnished and reference
made to the Commission under the various provisions of
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the Act, as aforereferred. However, other decisions and
orders, which are not directions simpliciter and determining
the rights of the parties, should be well reasoned analysing
and deciding the rival contentions raised before the
Commission by the parties. In other words, the
Commission is expected to express prima facie view in
terms of Section 26(1) of the Act, without entering into any
adjudicatory or determinative process and by recording
minimum reasons substantiating the formation of such
opinion, while all its other orders and decisions should be
well reasoned.
98. Such an approach can also be justified with reference
to Regulation 20(4), which requires the Director General to
record, in his report, findings on each of the allegations
made by a party in the intimation or reference submitted to
the Commission and sent for investigation to the Director
General, as the case may be, together with all evidence
and documents collected during investigation. The
inevitable consequence is that the Commission is similarly
expected to write appropriate reasons on every issue while
passing an order under Sections 26 to 28 of the Act.”
95) There is no reason to take a contrary view. Therefore, we are not
inclined to refer the matter to a larger Bench for reconsideration.
96) It was, however, argued that since the case of Steel Authority of
India Limited was not dealing with the telecom sector, which is
regulated by the statutory regulator, namely, TRAI under the TRAI
Act, that judgment would not be applicable. Merely because the
present case deals with the telecom sector would not change the
nature of the order that is passed by the CCI under Section 26(1)
of the Competition Act. However, it raises another dimension.
Even if the order is administrative in nature, the question raised
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before the High Court in the writ petitions filed by the respondents
touched upon the very jurisdiction of the CCI. As is evident, the
case set up by the respondents was that the CCI did not have the
jurisdiction to entertain any such request or Information which
was furnished by RJIL and two others. The question, thus,
pertained to the jurisdiction of the CCI to deal with such a matter
and in the process the High Court was called upon to decide as to
whether the jurisdiction of the CCI is entirely excluded or to what
extent the CCI can exercise its jurisdiction in these cases when
the matter could be dealt with by another regulator, namely, the
TRAI. When such jurisdictional issues arise, the writ petition
would clearly be maintainable as held in Barium Chemicals Ltd.
and Another v. Company Law Board and Others18 and Carona
Limited. In Carona Limited, this Court held as under:
"26. The learned counsel for the appellant company
submitted that the fact as to “paid-up share capital” of
rupees one crore or more of a company is a “jurisdictional
fact” and in absence of such fact, the court has no
jurisdiction to proceed on the basis that the Rent Act is not
applicable. The learned counsel is right. The fact as to
“paid-up share capital” of a company can be said to be a
“preliminary” or “jurisdictional fact” and said fact would
confer jurisdiction on the court to consider the question
whether the provisions of the Rent Act were applicable.
The question, however, is whether in the present case, the
learned counsel for the appellant tenant is right in
submitting that the “jurisdictional fact” did not exist and the
Rent Act was, therefore, applicable.
18 AIR 1967 SC 295
Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 119 of 122
27. Stated simply, the fact or facts upon which the
jurisdiction of a court, a tribunal or an authority depends
can be said to be a “jurisdictional fact”. If the jurisdictional
fact exists, a court, tribunal or authority has jurisdiction to
decide other issues. If such fact does not exist, a court,
tribunal or authority cannot act. It is also well settled that a
court or a tribunal cannot wrongly assume existence of
jurisdictional fact and proceed to decide a matter. The
underlying principle is that by erroneously assuming
existence of a jurisdictional fact, a subordinate court or an
inferior tribunal cannot confer upon itself jurisdiction which
it otherwise does not posses.
28. In Halsbury's Laws of England (4th Edn.), Vol. 1, Para
55, p. 61; Reissue, Vol. 1(1), Para 68, pp. 114-15, it has
been stated:
“Where the jurisdiction of a tribunal is dependent on
the existence of a particular state of affairs, that state
of affairs may be described as preliminary to, or
collateral to the merits of, the issue. If, at the
inception of an inquiry by an inferior tribunal, a
challenge is made to its jurisdiction, the tribunal has
to make up its mind whether to act or not and can
give a ruling on the preliminary or collateral issue; but
that ruling is not conclusive.”
The existence of a jurisdictional fact is thus a sine qua non
or condition precedent to the assumption of jurisdiction by
a court or tribunal.
xx xx xx
36. It is thus clear that for assumption of jurisdiction by a
court or a tribunal, existence of jurisdictional fact is a
condition precedent. But once such jurisdictional fact is
found to exist, the court or tribunal has power to decide
adjudicatory facts or facts in issue.”
97) Thus, even when we do not agree with the approach of the High
Court in labeling the impugned order as quasi-judicial order and
assuming jurisdiction to entertain the writ petitions on that basis,
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for our own and different reasons, we find that the High Court was
competent to deal with and decide the issues raised in exercise of
its power under Article 226 of the Constitution. The writ petitions
were, therefore, maintainable.
C. Whether the High Court could give its findings on merits?
98) Once we hold that the order under Section 26(1) of the
Competition Act is administrative in nature and further that it was
merely a prima facie opinion directing the Director General to
carry the investigation, the High Court would not be competent to
adjudge the validity of such an order on merits. The observations
of the High Court giving findings on merits, therefore, may not be
appropriate.
99) At the same time, since we are upholding the order of the High
Court on the aspect that the CCI could exercise jurisdiction only
after proceedings under the TRAI Act had concluded/attained
finality, i.e. only after the TRAI returns its findings on the
jurisdictional aspects which are mentioned above by us, the
ultimate direction given by the High Court quashing the order
passed by the CCI is not liable to be interfered with as such an
exercise carried out by the CCI was premature. The result of the
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discussion would be to dismiss these appeals, subject to our
observations on certain aspects. Ordered accordingly.
.............................................J.
(A.K. SIKRI)
.............................................J.
(ASHOK BHUSHAN)
NEW DELHI;
DECEMBER 05, 2018
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