Ad Here  
March
April
May
June
July
August
 
 
Merchants of deception When the judiciary is hyper-active The Djinns of Concrete A catalyst for economic development... Before our Faith is Lost Glorious, My Honour Lawyer's Side Convulsions in commerce chambers... High court work disrupted again A case for Uniform Civil Code Lawyers should look at their clients’ owes also... India’s Dr Jekyll and Mr Hyde Blunt parting shot
 
The Djinns of Concrete
The Competition Appellate Tribunal (CAT) has set aside Rs 6316 crore of penalty imposed on 11 cement firms by the Competition Commission of India (CCI) on cartelisation charges and asked the Regulator to hear the matter afresh. The Tribunal’s Order places ‘natural justice’ above ‘evidence.’ Will the case drag-on for ever?

Earlier this year, in a ground breaking verdict that had sent shock waves in the cement industry, the CCI had passed an order imposing cumulative penalty of Rs 6316 crore after an investigation into complaints of price cartelisation among cement firms.  In two well-argued orders, the Regulator had found evidence of price cartelisation among major cement firms in India to control the cement prices and limit the supply in the market.  The Commission had noted that “The act and conduct of the cement companies establish that they are a cartel.  The Commission holds that the cement companies acting as a cartel have limited, controlled and also attempted to control the production and price of cement in the market.”

On an appeal by the cement manufacturers, the CAT Tribunal has not only set aside the order levying penalty but has also allowed the cement manufacturers to withdraw the 10 per cent penalty amount already deposited with the CCI and to pass a fresh order within three months.  The companies include ACC, Ambuja Cements, Binani Cements, Century Textiles Ltd, India Cements, JK Cements, Lafarge India, Madras Cements, Ultratech, JP Associates and Shree Cements.


Violation of principles of natural justice

The CAT believes that CCI has not followed the principles of natural justice and has not given the company adequate opportunity of being heard.  The law of natural justice requires that if any incriminating material is to be used against an accused, it is necessary that the accused is provided with adequate opportunity to defend himself.  This, the CAT believes is a sufficient reason for setting aside the order of CCI.  

Commenting on the procedures followed by the CCI, the CAT noted: “we also feel the time has come for the Commission to evolve a comprehensive protocol and lay down guidelines for conducting investigation in consonance with the rules of natural justice.”  CAT also noted “It should be realised that much of the appellate litigation would be obviated if a just and fair procedure is adopted for conducting investigation and inquiry and passing of orders.”


CCI didn’t hear arguments of counsel

Another grouse of the appellant which was agreed by CAT was that the CCI did not hear arguments of the learned counsel representing the appellants and therefore it could not be said that opportunity of being heard was provided to them.  Given that no such opportunity was provided, the accused could not become a party to the final order passed by the CCI and no penalty can be imposed, it was submitted.

CAT further said that the case records showed that Builders Association of India had filed a complaint with CCI on 26 July 2010.  In the complaint, it was alleged that the CMA and 11 cement manufacturers formed a cartel and did not undertake production as per their installed capacity resulting in exorbitant rise in the price of cement.  It also alleged that the cement manufacturers had deliberately manipulated the price of cement affecting the public at large.  Consequently, CCI ordered a probe into the matter, which found major cement manufacturers were controlling the cement market in India and were in violation of various provisions of the Competition Act.  

On 20 June 2012, the CCI comprising the chairperson and six members, passed two orders and declared that the appellants had acted  as a cartel and imposed a cumulative penalty of Rs 6316.59 crore.  All the pages of both the orders have been initialed by the chairperson. On the last pages of both the orders the chairperson and six members appended their signatures without any date.  

It also was argued before the CAT by counsel for one of the appellants that the “impugned order is vitiated due to violation of the rule that ‘only the one who hears can decide.’ They pointed out that even though the CCI chairperson was not a party to the hearing held during 21-23 February, “and had no idea about the contentions raised by the counsel appearing for the parties, not only he became a party to the final order but also authored the same.” This, according to the senior counsel, “amounts to gross violation of the rule of fairness and impartiality and casts a shadow on the integrity of the process adopted by the Commission for adjudicating the issues raised in the information filed by BAI.”

1 2 3
Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com