Apr 28, 2023

SC Stays NCLAT’s Order Limiting Powers of CCI to Order Further Investigation by DG

The Supreme Court of India (‘SC’) on March 17, 2023, stayed the operation of the National Company Law Appellate Tribunal’s (‘NCLAT’) Order dated December 21, 2022 (‘Impugned Order’),[1] until the next date of hearing.

The Impugned Order had set aside the CCI’s Order dated August 31, 2018 (‘CCI Final Order’) dismissing an information (‘Information’) filed against DLF Ltd., and DLF New Gurgaon Home Developers Pvt. Ltd., (together, ‘DLF’), under Section 26(6) of the Competition Act, 2002 (‘Act’).

As background, Amit Mittal (‘Informant’) had filed the Information (alleging contravention of Section 4 of the Act by DLF) before the CCI. Subsequently, the CCI on February 4, 2015, ordered the Director General (‘DG’) to investigate the matter, being prima facie satisfied with the case. Accordingly, the DG submitted its investigation report dated March 18, 2016, finding that DLF had violated Section 4 of the Act (‘Original Report’).

However, the CCI on November 9, 2016, directed the DG to further investigate the matter, as the DG had not considered the correct relevant product market (‘RM Order’). The RM Order was passed under Regulation 20(6) of Competition Commission of India (General) Regulations, 2009 (‘General Regulations’).

Accordingly, the DG submitted its supplementary investigation report on September 8, 2017 (‘Supplementary Report’) finding that DLF had not violated Section 4 of the Act (since it was not dominant in the new relevant market, in the first place). Thereafter, the CCI passed the CCI Final Order, against which the Informant filed an appeal before the NCLAT under Section 53(B) of the Act (‘Appeal’).

Significantly, the NCLAT in the Impugned Order allowed the appeal and set aside the CCI Final Order holding that: (i) any proceedings post submission of the Original Report were void because the CCI cannot direct further investigation under the General Regulations, when the DG has found a contravention of the Act; and (ii) the CCI can only direct further investigation when the DG does not find any contravention of the Act.

The Impugned Order was assailed by the CCI before the SC, where the CCI argued that: (i) the NCLAT should not interfere with the CCI’s discretion in ordering case closure; and (ii) it has the discretion to either agree with the DG and close the matter or order further investigation under Sections 26(7) and (8) of the Act (relying on the SC’s judgment in Competition Commission of India v. Steel Authority of India Limited & Anr.[2]).

The SC stayed the Impugned Order until the next date of hearing. The SC’s judgment in this case will be of considerable significance as it will determine the scope of CCI’s discretion, in directing further investigation.

[1] Civil Appeal No. 1486 of 2023.

[2] (2010) 10 SCC 744)




These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.