The Delhi High Court has declared Section 22(3) of the Competition Act, 2002 as unconstitutional and void. It also held that casting vote anathema to rule of law.

Genesis and arguments before the Court:

The genesis of the dispute arose from a CCI order holding all the car manufacturers including the petitioners guilty of anti-competitive practices through agreements for spares and after-sales services. The Petitioners argued that although CCI and the Appellate Authority are tribunals, the procedure under the Competition Act was anathema to judicial decision making and ultra vires Article 14 of the Constitution of India. It was contended that the composition, manner of appointment, executive control over the CCI etc must, therefore, be in consonance with the doctrine of separation of powers and principles of preserving the independence of the judiciary. Challenging the validity of Section 22(3) of the Competition Act, the Petitioners submitted that the section was “ex facie unconstitutional“. Section 22(3) invests the CCI’s President with the power of a ‘casting vote’ when an even member tribunal is equally differing. It was submitted that no judicial tribunal with a multiplicity of members, which decides a lis, permits greater weight to the decision of one or some of its members. Defending the Section, CCI argued that the practice of ‘casting vote’ was an effective and logical working tool as it enabled a majority decision in case of a deadlock.

Conclusion by Court:

After hearing the parties, the Court concluded that a casting vote was anathema (a curse) to and destroys the Rule of Law in the context of the Indian Constitution. It opined that the principle of equal weight for the decisions of each participant of a quasi-judicial tribunal is undoubtedly destroyed by Section 22(3). The Court has nevertheless directed that when a case is set down for final hearing, the membership of the CCI should be constant. There would thus be no addition, deletion or substitution in the composition of the bench during the course of the final hearing. If at all, it becomes impossible to continue the hearing before the same bench, the matter would be heard afresh by the new bench even if the composition is partly common with the previous bench. The same has been directed to be assimilated in the form of regulations and followed by the CCI and all its members in all the final hearings. It has directed that no member of the CCI should take a recess individually, during the course of the hearing or take a break to rejoin the proceedings later. To enable the Chairman to ensure that substantial numbers (of at least five) are present at every substantial hearing and final hearing, the Court has directed the Central Government to fill all existing vacancies in CCI within six months. With respect to the contention that CCI was unconstitutional for being in violation of the separation of powers principle, the Court concluded in negative. After perusing the entire scheme of the Act, the Court observed that Section 11 of the Act “sufficiently entrenches the office of the Chairman and the members of the CCI” and insulates them from arbitrary inroads by the executive. It also concluded that the argument with respect to the illegality of the CCI’s procedure, in expanding the scope of inquiry under Section 26(1) was insubstantial as the proceeding at that stage is quasi-inquisitorial. Section 27(b) of the Competition Act and the provision for imposing penalties were also held to be Constitutional. The Court observed that the nature of the proceeding before the CCI and the procedure it adopts to impose any penalty gave sufficient safeguard to parties who were likely to be affected adversely, both as regards findings and the sanctions The Court also granted 6 weeks’ time to the Petitioners to appeal against the CCI order before the Appellate Tribunal, if they wished to do so.