Res Judicata in CCI: Grounds for Non-Applicability
[Swetank and Anand are students at Symbiosis Law School, Noida.]
Under the Roman law, a defendant could successfully contest a suit filed by a plaintiff on the plea of 'ex captio res judicata’, which means that ‘one suit and one decision is enough for any single dispute’. This doctrine of res judicata (the doctrine) has been accepted in all legal systems – common as well as civil law. It has been embodied under Section 11 of the Code of Civil Procedure 1908 (CPC) under the Indian legal system. The doctrine was explained by the Supreme Court in the case of Satyadhyan Ghosal v Deorjin Debi, wherein it held that the doctrine is based on the need of giving a finality to judicial decisions such that once a res is judicata, it shall not be adjudged again. Hence, it applies in relation to future litigations dealing with a matter which has already been decided in past litigation.
However, the applicability of the doctrine on the decisions of the Competition Commission of India (CCI) lacks certainty as evinced by the presence of only one existing judgment which points towards the its non-applicability. Moreover, the question of applicability of the doctrine becomes even more pertinent as the Ministry of Corporate Affairs (MCA) has planned to introduce the doctrine in the Competition Act (Act) by way of the Competition (Amendment) Bill 2020 (Bill). Hence, the authors will make an attempt to analyse the proposed amendment by highlighting the approach of the court while deciding in favour of the non-applicability of the doctrine as well as taking recourse to a new approach for its non-applicability before concluding on the desirability of the said amendment in the Act.
Background to the proposed amendment
The Bill aims to introduce sub-section 2A under Section 26 of the Act. Through this section, the CCI would be barred from inquiring into agreements under Section 3 or conduct of an enterprise or group under Section 4 of the Act, if information or reference from the Central Government or a State Government or a statutory authority raises the same or substantially the same facts and issues which have already been decided by the commission in its previous orders. The proposed amendment is based on the recommendation of the Competition Law Review Committee 2018 (CLRC) which had highlighted in its report that the doctrine is needed to be introduced for attaining expediency and also avoiding the repetition of efforts in conducting inquiry and investigation by the Director-General and the CCI.
Existing approach of the court: res judicata not applicable
A question of the applicability of the doctrine on CCI has been raised only once, before the division bench of Delhi High Court in the case of Cadila Healthcare Limited v. CCI. It was contended on behalf of Cadila Healthcare that same individuals were using different entities in frivolous, vexatious litigation against the same set of parties. Hence, CCI was dealing with successive information (by essentially the same informant) filed for the same conduct against the same enterprise through a separate order, which is barred by the doctrine.
The court held on the issue of res judicata that if a decision is rendered by CCI in a given case, the same may not be conclusive of the matter in its entirety as conclusions with respect to some specific complaints cannot be termed as determinative of the behaviour of an entity in the market place which tends to cover a larger canvas, influencing many other aspects of the competition which are not pointed out in the complaint and whose deleterious effects are felt by the general public.
Moreover, it held that the settlement or disposal of an individual case might not be determinative of the matter which pertains to anti-competitive conduct of an entity also because it affects the wider public, just as a crime does. To substantiate its reasoning, the court drew an analogy of the proceedings which are initiated on the registration of an FIR and proceedings which are initiated on the filing of information before the CCI. It observed that stopping CCI from taking cognizance of the same information successively about an enterprise is like saying that a builder or other service provider who indulges in widespread malpractice that amounts to cheating investors or flat buyers and which is exposed by one complaint will allow such builder or service provider to quash any other FIRs and any consequent investigations so filed and initiated on a complaint by several other consumers. Since, in such an event, the High Court would never exercise its discretion to quash a successive proceeding against an offender emanating from the different FIR. Therefore, the CCI or an expert body should ordinarily not be crippled or hamstrung in their efforts by application of technical rules of procedure.
A new approach to non-applicability of res judicata
It is notable from various judicial decisions that the doctrine applies to the decisions of a court or a body that has the trappings of a court. Therefore, when the doctrine is applied to a body which is not a court stricto sensu, the nature of such a body is to be looked into. In the case of Kamlapat Motilal v. Commissioner of Income-Tax, the Allahabad High Court held that the income-tax authorities are not courts and hence their decisions cannot operate as res judicata. Furthermore, when the Supreme Court (SC) observed that the doctrine can apply to decisions of administrative tribunals in the case of Smt Ujjam Bai v. State of UP, it had based its observation on the fact that such bodies are acting in a judicial capacity. With this background, it is necessary to look into the nature of CCI before deciding upon the applicability of the doctrine on its decisions. However, in the landmark judgement of Delhi High Court in Mahindra Electric Mobility v. CCI, the court settled the issue about the nature of CCI and held that CCI is not primarily a tribunal or a quasi-judicial body. The court observed that the CCI performs multiple functions and its role is, in part, of administrative, quasi-judicial nature when it proceeds to issue final orders, directions, and (or) penalties, and of an expert when it performs advisory and advocacy functions.
Additionally, it was held in Cooper v. Wilson (reiterated by SC in Bharat Bank Limited v. Employees of Bharat Bank Ltd), that for a judicial decision, one needs to presuppose an existing dispute between two or more parties. However, CCI does not act as a dispute settlement machinery aiming to settle a dispute between two parties but as a regulatory authority which is further substantiated by the fact that the power of the CCI to make quasi-judicial decisions is limited to a finding of any contravention of Chapter II of the Act by enterprise(s) and issuing of orders or directions under Section 27 of the Act rather than settling any dispute or claim between two opposite parties. Moreover, the power to make an adjudication on any possible dispute as to the claim of compensation by an enterprise from another enterprise that may arise from the findings of CCI has been specifically given to the Appellate Tribunal i.e. National Company Law Appellate Tribunal as provided under Section 53N of the Act. Besides, the test specified in the Cooper v. Wilson also entails that both the parties to the dispute must be allowed to present their case, but the Supreme Court in the judgement of CCI v. Steel Authority of India had held that the informant is not entitled to be heard if the Commission chooses not to go ahead with the enquiry.
In light of the above discussion, it can be observed that if the doctrine is made applicable to the decisions of the CCI, the same will result in its application on a non-judicial institution as against the established legal position. Furthermore, objectives of the desired amendment can be achieved only at the cost of freedom of CCI to look into the conduct of various entities so operating in different markets, every now and then. The impact on the freedom of CCI can be illustrated by the fact that as a result of the proposed amendment, the conduct of an entity which was once held by CCI to be in consonance with the Act will be presumed to be valid conduct even after becoming anti-competitive in subsequent years due to change in market dynamics as the CCI will be barred from inquiring into an already inquired conduct of an entity.