Feb 12, 2024

NCLAT Sets Aside CCI Order Imposing a Penalty of INR 38.05 Crore (Approx. US$ 4.6 Million) on 18 Sugar Mills and Two Trade Associations


On October 10, 2023, the NCLAT set aside the CCI’s Order dated September 18, 2018, which imposed penalties on some ethanol producers after finding them guilty of allegations of bid-rigging and cartelization (‘Impugned Order’). [1] The Impugned Order was challenged in appeal before the NCLAT on grounds of violation of principles of natural justice by the CCI:

i.    The matter was heard by six CCI members, but the final judgment was signed and pronounced by only three members;

ii.   No opportunity of hearing was provided to the parties after supplying them copies of the Supplementary Investigation Report; and

iii.  No opportunity of hearing was provided to the parties while deciding the question of the quantum of penalty to be imposed.

NCLAT’s Decision

i.    The NCLAT observed that CCI’s delay of 13 months in the pronouncement of the Impugned Order making it possible for only three out of five members (who heard the matter) to authenticate and sign the Impugned Order led to two infirmities: (i) the same ‘coram’ of members hearing the matter did not sign the Impugned Order; and (ii) there was inordinate delay in the pronouncement of the final Order;

ii.   The NCLAT also observed that Regulation 29 of the CCI (General) Regulations, mandates CCI to provide an opportunity to make oral submissions on written arguments. Further Section 36 of the Competition Act requires CCI to invite suggestions and objections from the opposite parties on the DG report, which was not followed, resulting in violation of the principles of natural justice; and

iii.  On the aforesaid grounds the NCLAT set aside the Impugned Order and observed that it was not necessary to hear the appeal on its merits. The NCLAT remanded the matter to the CCI for the constitution of an appropriate ‘coram’ of members to undertake fresh hearing of the case keeping all the contentions of rival parties open. The NCLAT directed that the oral hearing before the CCI should also cover the contentions of the parties on the Supplementary Investigation Report and the issue of penalty and its quantum, in case it is found necessary to impose penalty on erring parties.

[1] Balrampur Chini Mills Ltd. Vs. Competition Commission of India & Ors., Competition Appeal (AT) No. 86 of 2018.




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