Vipul R. Shah Rupali Medical and Provision and 13 vs Director General Office of The director General Competiton and 1

Hon''ble Smt. Justice Abhilasha Kumari

By preferring these petitions under Article 226 of the Constitution of India, the petitioners have challenged the notices/ letters dated 26.04.2011, issued by respondent No.2, whereby, they have been directed to submit their profit and loss accounts and balance-sheets of the last three years, individually, within the stipulated period of time.

As identical issues of fact and law arise in both the petitions, they are being heard and decided together. For the sake of convenience, the facts, as stated in Special Civil Application No.6609 of 2011, shall be noticed.

The petitioner No.1 is a Member of the Chemists and Druggists Association, Baroda (petitioner No.2). The Competition Commission of India ("the Commission" for short) had issued notice to the petitioner No.2 - Association on 26.07.2010, under the provisions of Section 36(2) read with Section 41(2) of the Competition Act, 2002 ("the Act" for short). Petitioner No.2 replied to the said notice on 09.08.2010. During the proceedings, the Commission wrote letter dated 17.03.2011 to petitioner No.1, asking him to submit the balance-sheets and profit and loss accounts for the last three years. This request was reiterated by the Commission by letter dated 04.04.2011. Petitioner No.1 submitted the profit and loss accounts and balance-sheets of the Association, pertaining to the last three years vide letter dated 14.04.2011. Thereafter, petitioner No.1 received the impugned notice dated 26.04.2011, issued by the Commission, asking him to submit his individual profit and loss accounts and balance-sheet for the last three years. Aggrieved by this communication, the petitioners have challenged the same by filing the petitions, praying for issuance of a Writ of Mandamus, quashing and setting aside the impugned communications on grounds stated in the petition.

Mr.S.P.Majmudar, learned advocate for the petitioners, has submitted that the Members of the Association are not before the Commission in their individual capacity. They are only Members of the Association, and the proceedings pending before the respondent-Commission are against the Association, and not against any individual Member. The Commission, therefore, has no jurisdiction to demand the personal and individual details pertaining to profit and loss accounts and balance-sheets from petitioner No.1 or any individual Member. It is further submitted that the proceedings before the Commission pertain to an Anti Competitive Agreement and the personal balance-sheets and profit and loss accounts of the Members of the Association are not at all relevant to the same. Besides, there is no logic or reason behind calling for the personal details of the Members and the same amounts to a violation of their right of privacy, as enshrined in Article 21 of the Constitution of India.

Mr. P.S. Champaneri, Assistant Solicitor General of India, appearing for the respondents, has submitted that the petitioners may appear before respondent No.2 pursuant to the impugned communication and raise the question of jurisdiction of the Commission in asking for the individual profit and loss accounts and balance-sheets of the Members of the Association, as a preliminary issue. In view of the fact that proceedings before the Commission are pending, it would hardly be appropriate for this Court to examine the contentions raised by the learned advocate for the petitioners. Besides, the Commission can be directed to decide the issue of its jurisdiction to issue the impugned communications as a preliminary issue, after hearing the petitioners.

In support of the above submissions, reliance has been placed upon a judgment of the Karnataka High Court dated 11.11.2011, in Sri A.K.Jeevan and others v. Competition Commission of India Writ Petition No. 19760 of 2011, and connected matters, wherein such a course of action had been adopted.

Having heard thelearned counsel for the respective parties, and upon perusal of the material on record, it is evident that the issue involved in the petition lies in a narrow compass, namely, whether the Commission has jurisdiction to proceed individually against the Members of the Association and demand their individual profit and loss accounts and balance-sheets pertaining to the last three years, in proceedings against the Association.

In Sri A.K.Jeevan and others v. Competition Commission of India (supra), relied upon by the learned Assistant Solicitor General of India, the Karnataka High Court, in an almost similar fact situation, held as below:

At the first instance, it is urged by the learned Senior counsel that once the enquiry having been completed by the Director General, it was not open for him to embark upon another enquiry to submit a supplementary report nor such report could have been called for by the Commission as the Commission had no jurisdiction to proceed with the matter in view of Section 66 of the Act. According to him, the proceeding has to be conducted in accordance with the provisions contained under the MRTP Act before the new forum as provided u/s 66 of the Competition Act. Since this is a jurisdictional point any further proceedings to be continued by the Commission will necessarily depend upon the Commission, taking a view in this matter one way or the other. It is absolutely essential that the Competition Commission examines this question as a preliminary issue. It is not appropriate for this Court to examine these contentions in this writ petition. Therefore, this writ petition deserves to be disposed of with a direction to the petitioners to appear before the Commission and file their objections raising such preliminary objection regarding the jurisdiction of the Commission. If the 1st respondent-Commission comes to the conclusion that it has jurisdiction in the matter, it can proceed further in accordance with law with the proceedings initiated vide impugned notices-Annexures D and E in W.P. No.19759/2011 and Annexures-D, D1 to D5 in W.P. Nos.19760/2011 and 20485-489/2011. Petitioners are given two weeks time from the date of receipt of a copy of this order to file their objections, whereupon the 1st respondent-Commission will notify and hear the petitioners and decide the question regarding the jurisdiction as a preliminary issue and on pronouncing orders on the same, it may proceed in the matter in accordance with law if it finds that it has got jurisdiction..

All contentions are kept open. It is made clear that consideration of the question regarding imposition of penalty will arise only after the commission pronounces upon its jurisdiction.

It has been submitted by the learned Assistant Solicitor General of India that the issue of jurisdiction of the respondent - Commission to proceed individually against the Members of the Association by asking for their individual profit and loss accounts and balance-sheets for the last three years, can be raised as a preliminary issue before the Commission and the Commission can be directed to decide the said issue after hearing the petitioners, who may raise such objection before the Commission. The learned advocate for the petitioners has no objection to appearing before the respondent-Commission and raising the issue of jurisdiction, as a preliminary issue. Hence, in view of the respective stands taken by the learned counsel for the respective parties and as there is no objection to the above course of action, the following order is passed:

The petitioners may appear before the Commission and raise a preliminary objection regarding jurisdiction of the Commission to issue notices to the individual Members of the Association, demanding the production of their individual profit and loss accounts and balance-sheets. After hearing the petitioners, the Commission shall decide the said preliminary issue, in accordance with law, within a period of six weeks from the date of receipt of the preliminary objections. Only after the decision of the preliminary issue regarding jurisdiction shall the Commission proceed in the matter.

It is clarified that all rights and contentions available to the respective parties are kept open and the question regarding imposition of penalty, if any, shall arise only after the Commission pronounces upon its jurisdiction.

The petitions are disposed of, in the above terms, without entering into the merits of the cases. Notice is discharged.

In view of the above order, Civil Application No.11639 of 2011, does not survive, and is disposed of accordingly.

Direct Service is permitted.