NCLAT sets aside CCI order passed by 3 out of 5 members who heard case, says all who hear case must sign order

The National Company Law Appellate Tribunal (NCLAT) recently set aside an order passed by the Competition Commission of India (CCI) on finding that it was signed by only three of the five members who had heard final arguments in the case, which involved allegations of cartelisation in the sugar industry. [Balrampur Chini Mills Ltd. v. CCI and ors].The NCLAT also criticised the CCI for taking almost 13 months to pass the order after the hearing concluded, by which time two of the five-member coram had retired. This was also the reason why the two members could not officially pronounce the final order..NCLAT judicial member Justice (retired) Rakesh Kumar and Technical Member Dr. Alok Srivastava opined that the episode indicated a faulty and irrational procedure on the part of the CCI and a violation of natural justice principles.“There is not only a strong desirability, but also a legal requirement that all the members who hear the case must deliver/pronounce the Impugned Order and sign and authenticate it,” stated the NCLAT judgment dated October 10..The NCLAT explained that the CCI could have arrived at a different opinion if all the members who heard the case had jointly applied their minds and come to a conclusion.The NCLAT acknowledged that it was quite possible that the two members who retired before the order was passed may have participated in preparing the order. However, since they had not signed off on the order, it was not clear as to what opinion they may have held, the NCLAT noted.“Such a doubt about the members having participated in the decision making but not being party to delivery of the impugned order creates legitimate perception about some ‘infirmity’ in the said order, which itself would go against the principle of natural justice because ‘justice must not only be done, but also appear to have been done,’” the NCLAT held..It further said that the almost 13-month delay in pronouncing the order went against the spirit of the regulations under the Competition Act, 2002..In the face of such delay, the NCLAT also observed that it is also possible that the members who finally signed the order may have suffered from some loss of memory regarding the facts of the case, which could have a bearing on its final outcome..In view of these concerns, the NCLAT set aside the CCI’s 2018 order which had held ethanol producers guilty of bid rigging and cartelisation.“We note that in the present case the non-compliance to the principle of natural justice is not due to some legal, compelling reason or public interest, but solely due to a faulty, and irrational procedure followed by the Competition Commission which has certainly meant prejudice to the appellants as they were imposed penalty on the basis of such a procedure being followed by CCI,” the NCLAT ruled..Background The NCLAT order was passed on a large batch of appeals by several sugar companies against the 2018 CCI order.Among other grounds, the appellants had challenged the CCI order on the ground that final arguments in the case were heard by five members, namely, the then Chairperson, DK Sikri and members UC Nahta, SL Bunker, Augustine Peter, and Sudhir Mital.Whereas a sixth member, Justice (retired) GP Mittal had participated in three of the hearings, he eventually did not join the coram to hear the final arguments. The order was eventually pronounced on September 18, 2018, by which time DK Sikiri, SL Bunker and Justice Mittal had retired.This meant that only Sudhir Mital (who became the Chairman), UC Nahta and Augustine Peter could sign the final order, although they were not the only members who heard the final arguments in the case..The NCLAT allowed the sugar companies’ appeals against this order, while observing:“The delay of about 13 months in the pronouncement of the Impugned Order so that only three members could sign and authenticate it instead of five members who heard the case on all the dates leads to two infirmities in the Impugned Order. The first infirmity that the same 'coram' of members, who heard the matter, did not sign the order was a major infirmity. It was compounded by the fact that there was inordinate delay in the pronouncement of the final order.”However, the case was not decided on merits by the NCLAT but sent back to the CCI for it to take a fresh decision..Among the counsel who appeared for various appellants are advocates Adhish Srivastava, Avdhesh Bairwa, Aryan Srivastava (of ASL Chambers), Gautam Shahi, Narinder Kr. Verma, Sanjeev Kr. Singh, Devansh Shekhar, PK Bhalla, Gaga, MM Sharma, Sudhanshu Prakash Singh, Sanjeev Kumar Singh, Devansh Shekhar, Rishi Agarwal, Pranjit Bhattacharya, Tarini Khurana, Pankaj Bhagat, Sadre Alam, Sandip Munian, Ritwik Singh, Sridhar Potaraju, Ankita Sharma, Aayush, Rajat Srivastava, Zeba Zoariah, Sushil Shukla, Aman Kumar Thakur, Kunal Masiwal, Ranjit B Raut, and Bhushan V Mahadik.Advocates Udayan Jain, Raj Surana, Sanyat Lodha, and Hima Bhardwaj appeared for the CCI along with Shama Nargis, Deputy Director (Law), CCI..[Read Judgment]