CCI must respect mediation process: Delhi High Court sets aside probe against JCB

The Delhi High Court recently set aside an inquiry initiated by the Competition Commission of India (CCI) against UK-based JCB and its Indian subsidiary over the alleged misuse of its dominant position [JCB India Limited and Anr v The Competition Commission of India and Anr]..A Division Bench of Justices Prathiba M Singh and Amit Sharma quashed the CCI proceedings and an order passed by the trial court issuing search warrants against JCB.The Court noted that the informant Bull Machine, an Indian company manufacturing tractors and tractor attachments, had withdrawn its complaint from the CCI after settling the matter with JCB. The Division Bench pulled up the CCI for continuing with the investigation against JCB despite the settlement and said that statutory authorities must respect the mediation process.“Mediation processes and settlements have to be recognised and acknowledged by all Courts/fora where disputes are pending. Regulatory authorities such as the CCI are no exception to the same. It is imperative that the CCI and similar bodies honour the outcomes of mediation and respect the settlements reached between parties. By doing so, they not only uphold the legitimacy and reliability of the mediation process but also foster a legal environment where parties are encouraged to resolve disputes amicably without fear of subsequent regulatory interference,” the Court said.It stressed that the potential for the CCI to continue an inquiry after a settlement has been reached could even jeopardize the settlement and dissuade parties from opting for mediation in the first place.“It could lead to a lack of trust in the mediation process, as parties may fear that their efforts to settle disputes amicably would be disregarded. Moreover, settlements in general being agreements voluntarily agreed to between parties, unless there is an extraordinary situation, they cannot be permitted to be reopened – so as to ensure ‘FINALITY’ and ‘CLOSURE’. Furthermore, the threat of continued investigations by the CCI could compel parties to engage in prolonged and costly legal battles, defeating the purpose of settlements,” the Court said. The Bench further upheld the rights of Intellectual Property Rights (IPR) holders to protect their intellectual property and cautioned the CCI on hijacking IP disputes in the jurisdiction of a High Court or commercial court..The Court rendered these findings while dealing with two petitions filed by JCB.JCB had sued Bull Machine before Delhi High Court for design infringement, copyright violation and passing off.In 2014, the CCI initiated an inquiry into abuse of dominance by JCB India and its UK-based parent entity, on grounds of JCB filing an allegedly frivolous infringement claim against Bull Machine. This was done on Bull Machine's complaint.JCB approached the Delhi High Court challenging the jurisdiction of the CCI to examine the frivolity of an infringement claim which was pending before the Delhi High Court.Subsequently, in 2015, JCB also challenged a raid conducted on its premises in India in relation to these proceedings. Bull Machine and JCB eventually settled their disputes by way of a Supreme Court-directed mediation process which culminated in 2021..JCB was represented by Chandhiok & Mahajan and DSK Legal. Senior Advocates Sandeep Sethi along with advocates Karan Singh Chandhiok, Deeksha Manchanda, Uday Bali, Jai Hindocha, Kanika Chaudhary Nayar and Nidhi Singh appeared for the company. Advocate Anurag Ahluwalia, Abir Roy, Vivek Pandey, Aman Shankar, Sasthibrata Panda and Biyanka Bhatia appeared for Bull Machine. Advocates Samar Bansal and Vedant Kapur represented the CCI. .[Read Judgment]