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the appellants who are cement manufacturing companies had indulged in the offence of ‘cartelisation’ by creating artificial scarcity of cement in the market in spite of their gross production in the years spanning between 2009 to 2011, giving rise to artificial increase of price with a sole intention to gain undue profit which is known as ‘cartelisation’ in corporate jargon and is admittedly an offence, liable to imposition of monetary penalty which has been saddled on the appellants by the Competition Commission. while granting stay of payment of penalty imposed a condition that the appellants shall pay 10% of the penalty to be deposited in the Consolidated Fund of India & in the event of non-payment by any appellant, the appeal of such appellants shall stand dismissed.=

‘ published in http://courtnic.nic.in/supremecourt/qrydisp.asp
IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 4766-4767 OF 2013

ULTRA TECH CEMENT LTD. Appellant

VERSUS

COMPETITION COMMISSION OF
INDIA & ORS. Respondents

WITH

Civil Appeal No. 4768 of 2013
Civil Appeal No. 4770 of 2013
Civil Appeal Nos. 4771-4772 of 2013
Civil Appeal Nos. 4774-4775 of 2013
Civil Appeal Nos. 4776-4779 of 2013
Civil Appeal Nos. 4782-4784 of 2013
Civil Appeal Nos. 4789-4792 of 2013
Civil Appeal Nos. 4785-4788 of 2013

O R D E R

All these appeals preferred by the Appellants are statutory
in nature as they have been filed under Section 53T of the
Competition Act, 2002 and arise out of a consolidated order passed
by the Competition Appellate Tribunal (hereinafter referred to as
the ‘Tribunal’) dated 17.5.2013 holding therein that there is a
prima facie case for granting stay in respect of the penalty which
has been imposed on the appellants in view of the allegation that
the appellants who are cement manufacturing companies had indulged
in the offence of ‘cartelisation’ by creating artificial scarcity of
cement in the market in spite of their gross production in the years
spanning between 2009 to 2011, giving rise to artificial increase of
price with a sole intention to gain undue profit which is known as
‘cartelisation’ in corporate jargon and is admittedly an offence,
liable to imposition of monetary penalty which has been saddled on
the appellants by the Competition Commission.

The appellants
challenged the same by way of appeals before the Competition
Appellate Tribunal where the appeals are subjudice & the Tribunal
while granting stay of payment of penalty imposed a condition that
the appellants shall pay 10% of the penalty to be deposited in the
Consolidated Fund of India & in the event of non-payment by any
appellant, the appeal of such appellants shall stand dismissed.

Since the controversy in these appeals is confined to the
question as to whether the order of the Tribunal is justified while
issuing a direction to the appellants to deposit 10% of the amount
of the penalty imposed by the Competition Commission of India (CCI),
it is not quite essential to go into the merits of the appeal which
is subjudice before the Tribunal.

At this stage, the limited
question is whether the Tribunal was justified in directing the
appellants to deposit even 10% of the penalty imposed on the
appellants by the CCI against which they have preferred an appeal
before the Tribunal as already indicated hereinbefore.

The Tribunal although has admitted the appeal, it has
passed an order to the effect that the appellants should pay 10%
of the penalty imposed by the CCI in the nature of a pre-
deposit which is normally provided under several Acts, which are
statutory in nature under the relevant Acts but is not provided
in the Act applicable to these matters.

However, insofar as the
nature of the allegation that has been levelled against the
appellants, it is in regard to the charge/allegation that they have
indulged in cartelisation of the commodity which they were
manufacturing – which is cement and they increased their margin of
profit by increasing the prices artificially and unreasonably in the
year spanning between 2009 to 2011.

Since the Tribunal thought it
proper to direct the appellant companies to deposit the 10% of the
penalty, the Tribunal thought it appropriate to assign reasons in
this regard and, therefore, passed a detailed order which is under
challenge in these appeals, holding therein finally that 10% payment
of penalty imposed would be justified in the facts and circumstances
of the case.
As already stated earlier, all the appellants have assailed
that order stating that even 10% payment by way of penalty would
result into huge amount running into several crores of rupees
which will be an unnecessary and a grave financial burden on the
companies’ turnover as the Tribunal itself has recorded a finding
that they have a strong prima facie case in their favour against the
allegation of cartelisation.

In this view of the matter, all these
appeals have been filed where the prayer essentially is to the
effect that this Court should stay the order of imposition of even
10% of the penalty in view of the fact that the appeals are listed
for hearing on 21.08.2013 and in view of the said fact, there was no
necessity of directing the appellants to deposit this 10% by way of
the penalty, the justification of which is yet to be gone into by
the Tribunal.
Learned counsels representing the appellants have
sincerely made an endeavour to impress upon this Court that the
imposition of 10% penalty is neither in pursuance of any
provision under the Competition Act, 2002 as there is no
provision of pre-deposit under the Competition Act, 2002 in order to
entertain appeal nor the Tribunal was justified in imposing
this rider directing the parties to deposit 10% by way of penalty as
it is yet to examine the reasonableness and justification of the
order under appeal. In addition, it was submitted that in view of
the observation of the Tribunal to the effect that there is a strong
prima facie case in their favour against the allegation of
cartelisation, it was absolutely not essential to saddle the
appellants with this huge financial liability.
In response to the show cause notice, counsel for the CCI
and the Builders Association of India are also present before us,
who obviously supported the order passed by the Tribunal imposing
the penalty of 10% but the counsel for the appellants assailed the
order for the reasons referred to hereinabove.
Having heard them at some length, we are of the view that
it would not be appropriate for us to make any observation or
express any opinion insofar as the merit of the allegation levelled
against the appellants are concerned as the same is subjudice
before the Tribunal.

But we are surely concerned with the order
of penalty imposed on the appellants by the CCI which, for the
time being, has been limited for payment to the extent of 10%
of the amount which has been determined by the CCI. Having heard
them we are further of the view that if the penalty order made by
the CCI is not given effect to in a blanket way by exempting the
appellants from making the payment, it might practically amount to
allowing their appeals by the Tribunal.

Besides this, it is
common practice in the legal arena that a decree, penalty or any
order which is in the nature of payment in terms of money, the same
is rarely interfered with and obviously so as in case of setting
aside such order, the affected party can always be
adequately compensated.

At this stage, therefore, if the
Tribunal thought it proper to take an equitable view of the
matter by directing the appellants to pay only 10% of the amount
to be paid by them, the same in our view is not fit to be
interfered with by way of an interim measure. The concern
of this Court, however, is if the appeal is finally allowed by
the Tribunal then what exactly would be the way out to pass on the
amount of penalty to the benefit of the consumers, if the same is
transferred to the State exchequer through the Consolidated Fund of
India.

Therefore, we deem it appropriate to modify the order of
the Tribunal to the extent that 10% amount towards penalty be
deposited with the Tribunal by each company and the Tribunal will
ensure that a separate account is opened in a nationalised bank with
a provision that the said amount is kept in a short term fixed
deposit in the name of a company which will be initially for a
period of six months renewable after the end of its expiry, if
necessary.

It goes without saying that the principal amount and the
interest which is fetched by the account holders will be dealt with
in the manner which would be considered appropriate by the Tribunal
at the relevant stage of disposal of the appeals pending before it.
At one stage it did strike us that in the wake of
allegations levelled against the appellants alleging cartelisation
at their instance and in the event the allegation being proved, why
the profit should not be passed on to the consumers who in fact
would have benefited in case the cartelisation had not been done and
we also thought it appropriate to direct the appellant companies to
make arrangements for depositing the penalty or passing on the
benefit so that it can pass to the consumers;

but in view of the
practical fall out and implication of such a move which could give
rise to some confusion or even chaos while implementing it, we have
restrained ourselves from taking recourse to such remedy.

But
surely we leave it open to the affected parties including the
contesting respondent to raise this aspect of the matter before the
Tribunal which obviously would arise only in the event of the
Tribunal holding that the penalty was justified. In case the
penalties were not justified, this question would not arise at all.

However, before we close this order, we deem it
appropriate to address the plea raised by Mr. Ranjit Kumar,
learned senior counsel appearing on behalf of the Appellant, Jai
Prakash Associates in C.A. No. 4768 of 2013, who submitted that the
penalty calculated by the Tribunal/Commission is based on the profit
generated by several companies owned by the appellant company.

What
is sought to be impressed upon is that even if the 10% penalty is to
be paid by the appellant, the same should be based only on the
profit generated out of the cement manufacturing company as the
other companies owned by the Appellant would not be liable to pay
this penalty.

For this purpose, we leave it open to the appellant
in C.A. No. 4768 of 2013 to move an application before the Tribunal
for rectification/clarification on this issue and the amount of 10%
penalty shall be based on the said calculation.

However, it should
not be construed that the appellant at this stage will be exempted
from making the payment of 10% penalty.

The payment of 10% towards
penalty shall have to be made by the appellant in this appeal as
calculated in the impugned order of the Tribunal.

However, if the
appellant succeeds at any stage, that 10% penalty determined by the
Tribunal is based on the profit of all the companies and not
calculated on the basis of the profit of the cement manufacturing
company, the amount after its rectification shall be refunded to the
appellant.

Similarly, all the appellants who might have any issue in
regard to the wrong determination of 10% penalty calculated by the
Tribunal, will be at liberty to approach the Tribunal in this regard
and the issue will be taken care of by the Tribunal at the
appropriate stage.

Insofar as the present stage is concerned, 10%
penalty shall be deposited on the basis of the amount which has been
calculated by the Tribunal/Commission and rectification/refund, if
any, will be made at a later stage.

Learned counsels for the appellants have finally requested
that the time to deposit the penalty was fixed by the Tribunal up
till 16th June, 2013 but in view of the fact that this Court
entertained the appeals, the time fixed by the Tribunal be
extended by a further period of one week. In view of the
request which appears to be reasonable, all the appellants
shall deposit the 10% penalty by June 24, 2013. It goes
without saying that if the deposit is made by June 24, 2013 by
the appellants, the appeals before the Tribunal shall sruvive
and should not be dismissed.

In view of the aforesaid treatment of these appeals and
directions, these appeals stand disposed of.

……………………J.
(GYAN SUDHA MISRA)

………………………J.
(SUDHANSU JYOTI MUKHOPADHAYA)

NEW DELHI
JUNE 12, 2013

ITEM NO.301 COURT NO.2 SECTION XVII

S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CIVIL APPEAL NO(s). 4766-4767 OF 2013

ULTRA TECH CEMENT LTD. Appellant (s)

VERSUS

COMPETITION COMM. OF INDIA & ORS. Respondent(s)

(With appln(s) for stay)
WITH Civil Appeal NO. 4768 of 2013
(With appln(s) for stay , deletion of proforma respondents and office
report)
Civil Appeal NO. 4770 of 2013
(With appln(s) for stay , permission to place addl. documents on record and
office report)
Civil Appeal NO. 4771-4772 of 2013
(With appln(s) for stay and office report)
Civil Appeal NO. 4774-4775 of 2013
(With appln(s) for stay and office report)
Civil Appeal NO. 4776-4779 of 2013
(With appln(s) for stay and office report)
Civil Appeal NO. 4782-4784 of 2013
(With appln(s) for ex-parte stay and office report)
Civil Appeal NO. 4789-4792 of 2013
(With appln(s) for ex-parte stay and office report)
Civil Appeal NO. 4785-4788 of 2013
(With appln(s) for ex-parte stay and office report)

Date: 12/06/2013 These Appeals were called on for hearing today.

CORAM : HON’BLE MRS. JUSTICE GYAN SUDHA MISRA
HON’BLE MR. JUSTICE SUDHANSU JYOTI MUKHOPADHAYA
(VACATION BENCH)

For Appellant(s) Dr. Abhishek Manu Singhvi, Sr.Adv.
C.A. 4766-67/13 Mr. Pravin H. Parekh, Sr.Adv.
Mr. Amit Bhandari, Adv.
Mr. Vishal Prasad, Adv.
Mr. Utsav Trivedi, Adv.
Mr. Aditya Sharma, Adv.
M/S. Parekh & Co.

C.A. 4771-72/13 Mr. Rakesh Dwivedi, Sr.Adv.
Mr. T. Srinivasa Murthy, Adv.
Mr. Rahul Balaji, Adv.
Mr. Senthil Jagadeesan, Adv.

C.A. 4785-88/13 Mr. Ramji Srinivasan, Sr.Adv.
C.A. 4789-92/13 Ms. Shweta Shroff Chopra, Adv.
Mr. Anuj Berry, Adv.
Ms. Sangeetha Mugurthan, Adv.
Mr. Nikhil Parikshit, Adv.

C.A. 4768/13 Mr. Ranjit Kumar, Sr.Adv.
Mr. Subramonium Prasad, Adv.
Mr. G.R. Bhatia, Adv.
Ms. Kanika Chaudhary Nayar, Adv.
Ms. Nidhi Singh, Adv.
Mr. Vikram Sobti, Adv.

C.A. 4776-79/13 Mr. C.S. Vaidyanathan, Sr.Adv.
Mr. Vikas Singh Jangra, Adv.

C.A. 4770/13 Mr. Shyam Divan, Sr.Adv.
Mr. Pramod B. Agarwala

C.A. 4782-84/13 Mr. Rajiv Nayar, Sr.Adv.
Mr. N. Ganpathy, Adv.
Mr. Manpreet Lamba, Adv.
Mr. Kartik Yadav, Adv.
Ms. Hemangini Dadwal, Adv.
Mr. Karan Vir Khosla, Adv.

C.A. 4774-75/13 Mr. Sudhir Gupta, Sr.Adv.
Mr. Amarjit Singh Bedi, Adv.
Md. Asfar Heyat Warsi, Adv.
Mr. Abhinay, Adv.

For Respondent(s) Caveator-In-Person
Mr. Balbir Singh, Adv.
Mr. Rupender Sinhmar, Adv.
Mr. Abhishek Singh Baghel, Adv.

Mr. N. Ganpathy ,Adv

R.2 Mr. O.P. Dua, Sr.Adv.
Mr. Aditya Garg, Adv.
Mr. R. Chandrachud, Adv.

UPON hearing counsel the Court made the following
O R D E R

The appeals are disposed of in terms of the signed order.

(NAVEEN KUMAR) (S.S.R. KRISHNA)
COURT MASTER COURT MASTER
(Signed order is placed on the file)

 

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One thought on “the appellants who are cement manufacturing companies had indulged in the offence of ‘cartelisation’ by creating artificial scarcity of cement in the market in spite of their gross production in the years spanning between 2009 to 2011, giving rise to artificial increase of price with a sole intention to gain undue profit which is known as ‘cartelisation’ in corporate jargon and is admittedly an offence, liable to imposition of monetary penalty which has been saddled on the appellants by the Competition Commission. while granting stay of payment of penalty imposed a condition that the appellants shall pay 10% of the penalty to be deposited in the Consolidated Fund of India & in the event of non-payment by any appellant, the appeal of such appellants shall stand dismissed.=

  1. its all very helpful sir. can u please guide on order 39 rule 4 also in respect of its remedial perspective.

    Thanks&Regards

    Posted by tiruchi | July 3, 2013, 11:43 AM

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