CCI can probe Officers/Directors of a Company, Delhi High Court [Read Judgment]

The Delhi High Court has held that Officers or Directors of a company can be probed by the Competition Commission of India (CCI), and can also be held liable if they were the “key persons who were In-charge and responsible” for the anti-competitive conduct of the Company..“There cannot be any dispute that if the Company and the Officers / Directors are being proceeded against for violation of Sections 3 and 4, there has to be a consequence for violation.”, it has observed..Accordingly, a penalty on the income of such Officers or Directors of the Company can be imposed by the CCI in terms of Section 27(b) of the Competition Act, 2002 (Act), the Court has held..The Judgement was passed by a Division Bench comprising Chief Justice Rajendra Menon and Justice V Kameswar Rao in a Letters Patent Appeal preferred by Mahyco Monsanto Biotech (India) Private Ltd. (Monsanto)..A single Judge Bench had dismissed Monsanto’s appeal against the initiation of a probe by the CCI against its Directors for violation of the Act..Affirming the order passed by the Single Judge Bench, the Division Bench held that Officers or Directors can be proceeded against, along with the Company, in case of an alleged violation of the Act. If the Company is found to be indulging in an anti-competitive act, a penalty can also be imposed upon the Officers/Directors in Charge pursuant to Section 27 and Section 48 of the Act, it stated..On the intent of Sections 27(b) and 48, the Court held that penalty can be imposed on Officers/ Directors even if they are found to be violating Sections 3 and 4..“On a perusal of Section 27 of the Act, it is clear that if there is a contravention of Section 3 or Section 4, the Commission can pass orders against an ‘enterprise’ and a ‘person’ i.e individual, who has been proceeded against, imposing penalty.”.Giving a purposive interpretation to Section 27, the Court further held that the term “turnover” in Section 27(b), would thus refer to the “income” of the Director/Officer..It thus rejected Monsanto’s argument that the scheme of Act does not contemplate punishment of the Directors / Officers of a company under Section 27, and that they be proceeded against only if the orders or directions of CCI are not obeyed and/or are flouted by the company..The Court observed that Section 48 contemplates liability on persons-in-charge of the Company at the time of contravention of “the provisions of this Act” and therefore, one shall be liable for contravention of Sections 3 and 4 as well. It thus rejected Monsanto’s argument that Section 48 applies only when there is a contravention of Sections 42 to 44 of the Act..The Court thus decreed,.“In view of our discussion above, we are of the view, that the impugned order needs no interference. The appeals are dismissed. No costs.”.In 2016, the Commission had initiated probe against Monsanto and its Directors for allegedly abusing its dominant position in the Bt Cotton business by charging exorbitant prices..Monsanto was represented by Senior Advocate PV Kapur along with advocates Rajshekhar Rao, Ajit Warrier, Aditya Nayyar, Angad Kochhar, Aman Singh Sethi, Vaibhav Aggarwal, Yashika Maheshwari and Siddhant Kapur..CCI was represented by Advocates Samar Bansal, Devahuti Pathak and Manan Shishodia.