NCLAT junks allegations of anti-competitive agreement between Centre and travel agencies

The National Company Law Appellate Tribunal (NCLAT) on Friday dismissed an appeal by Travel Agents Association of India (TAAI) challenging an order of the Competition Commission of India (CCI) dismissing its allegations of anti-competitive practices by the Department of Expenditure (DoE), which is part of the Union Finance Ministry.

A coram of judicial member Justice Rakesh Kumar Jain also imposed a penalty of ₹5 lakh on TAAI for repeatedly pursuing litigation against the DoE over the same office memorandum (OM).

TAAI had alleged that DoE’s OM that mandated government employees to use two travel agencies (Balmer Lawrie and Co and Ashok Travels) for all official trips, violated the Competition Act, 2002. 

TAAI had challenged two circulars issued in 2017 and 2018, in addition to the 2006 memorandum.

The first clarification had rejected a request by government employees to relax the conditions, which restricted their choice to these two agencies. The second clarification mandated that the government employees must seek the Centre’s permission should they need a relaxation of the conditions of the OM. 

TAAI alleged that the decision of DoE mandating the procurement of air tickets only through Balmer Lawrie and Ashok Travels has an adverse effect on the competition in the market for travel agent services for booking air tickets in India.

In May 2020, the CCI junked this plea, holding that DoE cannot be regarded as an ‘enterprise’ in terms of Section 2(h) of the Competition Act as its principal activity was not business but policy-making. Furthermore, DoE does not have any agreement with these travel agencies, but has only issued internal communications to government employees. Thus, it is not a business activity that falls within the ambit of the Competition Act, the Commission held. 

TAAI filed an appeal against this order before the NCLAT, which noted that TAAI had previously challenged the memorandum in 2010, and CCI had dismissed the same. However, TAAI had now filed a plea challenging the same memorandum, this time impugning the two subsequent circulars in addition to the memorandum.

The Commission in its 2020 order also noted that an appeal had been filed against this order in the now-defunct Competition Appellate Tribunal (COMPAT), which was also dismissed. As the COMPAT’s order was not challenged in the Supreme Court, it has attained finality. NCLAT agreed with the CCI’s view and upheld the finding that DoE was neither an enterprise nor did it have any agreement with these travel agencies.

Similarly, it was also observed that the memorandum’s constitutional validity was challenged in the Delhi High Court in 2012, and was dismissed in 2014.  Thus, the NCLAT opined that TAAI has approached the CCI by filing second information on the same facts and circumstances against the same opposite parties with the same prayer, which has already been declined in the first information .

According to NCLAT,

“...no man should be vexed twice for the same cause which has been adjudicated in the present case by the Appellant because even if it is presumed that the economic activities are dynamic, as stated by the Appellant, the fact remains that the two courts have already held that the Respondent No. 2 is not an enterprise and OM1 is not an agreement in violation of Section 3(4) of the Act, therefore, these issues cannot be reagitated and the court cannot be called upon to decide the same by passing a lengthy judgment and the wasting time which may be used for disposal of a genuine case.”

Thus, it imposed a penalty on TAAI and junked the appeal for want of merit. 

Advocates MM Sharma and Ankit Singh Rajput represented TAAI.

CCI and other respondents were represented by Advocates Shiva Lakshi, MK Ghosh, Tina Garg and Srashti Parashar.

[Read order]