Supreme Court Limits CCI’s Penalty Powers: “Relevant Turnover” Upheld

upheld the principle of “relevant turnover” for determination of penalties in competition law contraventions; and settled a critical issue in India’s antitrust jurisprudence, which was heavily debated amongst all stakeholders for over five years.

Background

The above ruling arises out of a proceeding involving an alleged contravention of Section 3(3) of the Competition Act, 2002 (Competition Act) in the public procurement of Aluminium Phosphide (ALP) Tablets by the Food Corporation of India (FCI). The Competition Commission of India (CCI) found a violation of Section 3(3) of the Competition Act and imposed a penalty at the rate of 9% of the total turnover of the concerned ALP manufacturers – namely, Excel Corp Care Limited (Excel), United Phosphorus Limited (UPL) and Sandhya Organic Chemicals Private Limited (Sandhya).

The Competition Appellate Tribunal (COMPAT) in its final order upheld the CCI’s order as to the existence of the contravention under the Competition Act. However, it significantly reduced the penalties imposed by the CCI. COMPAT’s modification of penalties was based on the principle that the reference to the term “turnover” in Section 27(b)[1] of the Competition Act would, in the facts and circumstances of the case, mean “relevant turnover”, i.e. turnover derived from the sales of goods or services, which are found to be the subject of contravention.

COMPAT’s order was challenged by the CCI before the Supreme Court. CCI contended that the term “turnover” as used in the Competition Act must always be interpreted as “total turnover” of the enterprise in contravention. The CCI contended that the COMPAT had added words to the Competition Act by inserting the word “relevant” before the term “turnover”. ALP tablets manufacturers, led by Excel, on the other hand, opposed the same by contending that it was the interpretation extended by the CCI, which led to adding the word “total” or “entire” before the term “turnover”.

Key Findings

Ultimately, the Supreme Court held that the imposition of penalty adopting the criteria of “relevant turnover” will be “more in tune with ethos of the Act and the legal principles which surround matters pertaining to imposition of penalties.”

Role of Equity in Penalty Imposition

The Supreme Court held that accepting the CCI’s interpretation of the term “turnover” as “total turnover” in all situations would “bring about very inequitable results”. Relying on various judgments stating that interpretation that brings out inequitable or absurd results has to be eschewed, the Supreme Court held that the interpretation extended by CCI does not commend acceptance.

In this regard, the Supreme Court took note of illustrations demonstrating that imposition of penalty on the basis of “total turnover” in all cases would inequitably discriminate against enterprises committing the same contravention depending on the manner in which their product/business lines are structured.

Strict Interpretation  

The Supreme Court also justified its conclusion and found that the principle postulating strict interpretation of “penal” statutes would also support and supplement the consideration of “relevant turnover” rather than “total turnover”.

In light of the principle of strict interpretation (relying on a recent Constitution Bench decision in Abhiram Singh and Ors v C.D. Commachen (Dead) by L.Rs and Ors[2] ) the Supreme Court held that, “even if two interpretations are possible, the one that leans in favour of infringer has to be adopted” and that there was “no justification for including other products of an enterprise for the purpose of imposing penalty” when the agreement leading to contravention involves one product.

Proportionality and Purposive Interpretation

As regards the arguments of the CCI on the objective to discourage and stop anti-competitive practices, the Supreme Court held, “the penalty cannot be disproportionate and it should not lead to shocking results”. It was held that the aim of deterrence cannot be justified to give an interpretation that may lead to “the death of the entity” itself. The Supreme Court emphasised that the doctrine of proportionality, which is based on equality and rationality, is a “constitutionally protected right which can be traced to Article 14 as well as Article 21 of the Constitution”.

The Supreme Court noticed that the doctrine of purposive interpretation and doctrine of proportionality have certain overlaps. It held that the purpose of the Competition Act cannot be to “finish” certain enterprises. Relying on the South African judgment in Southern Pipelines, the Supreme Court repeated that “there is a legislative link between the damage caused and the profits which accrue from the cartel activity”. Accordingly, the purposive interpretation of the term “turnover”, the Supreme Court found, also favours consideration of “relevant turnover”.

The concurring judgment by Hon’ble Mr. Justice N.V. Ramana held that “proportionality needs to be imbibed into any penalty imposed under Section 27” of the Competition Act. Accordingly, it laid down step-wise methodology to be followed by the CCI in imposing penalties.

Step-wise Methodology for Penalty Imposition

Step 1: Determination of Relevant Turnover

“Relevant turnover” refers to the “entity’s turnover pertaining to products and services that have been affected by such contravention”. The Supreme Court has clarified that the above definition is not exhaustive.

Step 2: Determination of Appropriate Percentage of Penalty Based on Aggravating and Mitigating Circumstances  

The Supreme Court provided an illustrative list of factors to be considered when determining such percentage.

Final Step: The penalty imposed “should not be more than overall cap of 10% of the entity’s relevant turnover”.

Key Takeaways

The Supreme Court’s approach in this judgment indicates a healthy respect for foreign jurisprudence, which is tempered by the motivation to evolve indigenous jurisprudence based on, and appropriate to, the Indian constitutional and legal framework.

• The judgment lays the foundation for penalty imposition under the competition law regime in India, leading to greater certainty and transparency in penalty imposition. The same will benefit all stakeholders functioning within the framework of the Competition Act.
• This judgment, from the highest court of the land, is likely to be followed in all cases where the issue of “relevant turnover” is pending or raised either before the DG/CCI or at the Appellate Stage or even before the Supreme Court itself. 

Supreme Court of India's on Aadhar PAN Link

1.    The Hon’ble Supreme Court of India in its Landmark Judgement has upheld Section139AA of the Income Tax Act,1961 as constitutionally valid which required quoting of the Aadhaar number in  applying for  PAN as well as for filing  of income tax returns.

2.    The Hon’ble Court also held that the “Parliament was fully competent to enact Section 139AA of the Act and its authority to make this law was not diluted by the orders of this Court.” Therefore, no violation of the earlier Supreme Court orders were found in enacting the provision.

3.    The Hon’ble Court has also held that Section 139AA of the Act is not discriminatory nor it offends equality clause enshrined in Article 14 of the Constitution.

4.    Section 139AA is also not violative of Article 19(1)(g) of the Constitution in so far as it mandates giving of Aadhaar number for applying PAN and in the income tax returns and linking PAN  with Aadhaar number. 

5.    Section 139AA(1) of the Income Tax Act,1961 as introduced  by the Finance Act, 2017 provides for mandatory quoting of Aadhaar/Enrolment ID of Aadhaar application form, for filing of return of income and for making an application for allotment of PAN with effect from 1st July, 2017.

6.    Section 139AA(2) of the Income Tax Act,1961 provides that every person who has been allotted PAN as on the 1st day of July, 2017, and who is eligible to obtain Aadhaar, shall intimate his Aadhaar on or before a date to be notified by the Central Government. The proviso to section 139AA (2) provides that in case of non-intimation of Aadhaar, the PAN allotted to the person shall be deemed to be invalid from a date to be notified by the Central Government.

7.    The Hon’ble Supreme Court has upheld Section 139AA(1) which mandatorily requires quoting of Aadhaar for new PAN applications as well as for filing of returns.

8.    The Hon’ble Supreme Court has also upheld Section 139AA(2) which requires that the Aadhaar number must be intimated to the prescribed authority for the purpose of linking with PAN.

         9.    It is only the proviso to Section 139AA(2) where the Supreme Court has granted a partial stay for the time being pending resolution of the other cases before the larger bench of the Supreme Court. The Hon’ble  Supreme Court has unequivocally stated as follows:

      “125. Having said so, it becomes clear from the aforesaid discussion that those who are not PAN holders, while applying for PAN, they are required to give Aadhaar number.  This is the stipulation of sub-section (1) of Section 139AA, which we have already upheld.  At the same time, as far as existing PAN holders are concerned, since the impugned provisions are yet to be considered on the touchstone of Article 21 of the Constitution, including on the debate around Right to Privacy and human dignity, etc. as limbs of Article 21, we are of the opinion that till the aforesaid aspect of Article 21 is decided by the Constitution Bench a partial stay of the aforesaid proviso is necessary.  Those who have already enrolled themselves under Aadhaar scheme would comply with the requirement of sub-section (2) of Section 139AA of the Act.  Those who still want to enrol are free to do so.  However, those assessees who are not Aadhaar card holders and do not comply with the provision of Section 139(2), their PAN cards be not treated as invalid for the time being.  It is only to facilitate other transactions which are mentioned in Rule 114B of the Rules.  We are adopting this course of action for more than one reason.  We are saying so because of very severe consequences that entail in not adhering to the requirement of sub-section (2) of Section 139AA of the Act.  A person who is holder of PAN and if his PAN is invalidated, he is bound to suffer immensely in his day to day dealings, which situation should be avoided till the Constitution Bench authoritatively determines the argument of Article 21 of the Constitution.  Since we are adopting this course of action, in the interregnum, it would be permissible for the Parliament to consider as to whether there is a need to tone down the effect of the said proviso by limiting the consequences.”

10.  Finally the effect of the judgement is as following 

   (i)     From July 1, 2017 onwards, every person eligible to obtain Aadhaar must quote their Aadhaar number or their Aadhaar Enrolment ID number for filing of Income Tax Returns as well as for applications for PAN;

 (ii)  Everyone who has been allotted permanent account number as on the 1^st day of July, 2017, and who has Aadhaar number or  is eligible to obtain Aadhaar number, shall intimate his Aadhaar number to  income tax authorities for the purpose of linking PAN with Aadhaar;

 (iii) However, for non-compliance of the above point No.(ii), only a partial relief  by the Court has been given to those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being, that their PAN will not be cancelled  so  that other consequences under the Income Tax Act for failing to quote PAN may not arise.

persistent effort of the wife to constrain her husband to be separated from the family constitutes an act of ‘cruelty’ to grant divorce.

The Supreme Court of India in Narendra vs. K.Meena has held that persistent effort of the wife to constrain her husband to be separated from the family constitutes an act of ‘cruelty’ to grant divorce.

The Bench comprising Justice Anil R. Dave and Justice L. Nageswara Rao also held that leveling of absolutely false allegations with regard to extra-marital life and repeated threats to commit suicide would also amount to ‘mental cruelty’. The Supreme Court set aside a High Court judgment which had reversed the Trial court order granting divorce to the husband on ground of cruelty.

Repeated threats to commit suicide

Observing that repeated threats to commit suicide amounts to cruelty, the Court observed: “No husband would ever be comfortable with or tolerate such an act by his wife and if the wife succeeds in committing suicide, then one can imagine how a poor husband would get entangled into the clutches of law, which would virtually ruin his sanity, peace of mind, career and probably his entire life. The mere idea with regard to facing legal consequences would put a husband under tremendous stress. The thought itself is distressing.”

Forcing separation from parents

With regard to allegations of cruelty in wife forcing husband to get separated from his parents, the Bench observed: “In normal circumstances, a wife is expected to be with the family of the husband after the marriage. She becomes integral to and forms part of the family of the husband and normally without any justifiable strong reason; she would never insist that her husband should get separated from the family and live only with her…. If a wife makes an attempt to deviate from the normal practice and normal custom of the society, she must have some justifiable reason for that and in this case, we do not find any justifiable reason, except monetary consideration of the Respondent wife. In our opinion, normally, no husband would tolerate this and no son would like to be separated from his old parents and other family members, who are also dependent upon his income.”

Wild allegation of extra marital affairs

The Court also observed that to suffer an allegation pertaining to one’s character of having an extra-marital affair is quite torturous for any person – be it a husband or a wife.

Restoring the judgment of Trial court and setting aside the High Court judgment, the Bench said: “The behaviour of the wife appears to be terrifying and horrible. One would find it difficult to live with such a person with tranquility and peace of mind. Such torture would adversely affect the life of the husband.”

Marriage under Hindu law is ‘sacrament’, not contract: Delhi High Court

Marriage under the Hindu law is “sacrament” and “not a contract” which can be entered into by executing a deed, Delhi High Court has observed while dismissing a plea by a woman who had challenged an order refusing to declare her as the legally-wedded wife. The woman had approached the court seeking her appointment for job on compassionate ground after the death of her alleged husband, a former sanitation staff in a city government hospital, and a direction to the medical superintendent to release consequential benefits and allow her to join duties.

The high court noted in its judgement that the petitioner had contended that she had married the man by way of execution of a marriage deed in June 1990 without disputing the fact that he was living with his earlier wife, who had died in May 1994. “Since inception, the contention of the appellant (woman) had been that her marriage with the man on June 2, 1990 was performed by way of execution of a marriage deed and an affidavit. It is not disputed by her that the man had a living spouse on June 2, 1990 and she expired on May 11, 1994.

“Under Hindu Law, marriage is a ‘sacrament’ (solemn pledge) and not a contract which can be entered into by execution of a marriage deed. On June 2, 1990 the man was having a living spouse,” Justice Pratibha Rani said. The high court said the lower court had rightly held that the woman cannot claim the status of a legally wedded wife of the man on the strength of the alleged marriage and its order cannot be termed illegal. The woman had claimed she was the man’s widow and after his death, she had applied for appointment on compassionate ground after which she was offered appointment as ‘safai karamchari’ on temporary basis in the hospital.

Later, a show cause notice was served on her asking her to explain the legality and validity of her marriage with the man. She had replied that on the date of death of her husband in February 1997, she was his only wife. The woman’s plea before the trial court was contested by the Delhi government and medial superintendent of the hospital who said that she had misrepresented about being the legally wedded wife of the man. The court, in its verdict, noted that the trial court in its judgement had referred to the earlier order passed by the high court in which it was held that issuance of succession certificate in favour of the petitioner without impleading the legal heirs of the man was of hardly any value.

“It is settled legal position that in second appeal, high court cannot set aside concurrent finding of fact given by the courts below. The second appeal can be entertained only if a substantial question of law is raised. The rationale behind is that appreciation and reappreciation of an evidence must come to an end with the first appeal,” the court noted. “It has been consistent view that high court has no jurisdiction to entertain second appeal merely on the plea that another view is possible on appreciation of relevant evidence available on record,” it said.

http://indianexpress.com/article/india/marriage-under-hindu-law-is-sacrament-not-contract-delhi-high-court-4496819/

Constitution bench to decide petitions on triple talaq: Supreme Court

A five-judge constitution bench would be set up by the Supreme Court to hear and decide on a batch of petitions relating to the practice of triple talaq, 'nikah halala' and polygamy among Muslims.

A bench headed by Chief Justice J S Khehar took on record three sets of issues framed by parties with regard to the cases and said the questions for consideration of the constitution bench would be decided on March 30.

The bench, also comprising Justices N V Ramana and D V Chandrachud, said "the issues are very important. These issues cannot be scuttled".

Referring to the legal issues framed by the Centre, it said all of them relate to the constitutional issues and needed to be dealt by a larger bench.

The bench asked the parties concerned to file their respective written submissions, running not beyond 15 pages, by the next date of hearing, besides the common paper book of case laws to be relied upon by them during the hearing to avoid duplicity.

When a woman lawyer referred to the fate of the apex court judgement in the famous Shah Bano case, the bench said "there are always two sides in a case. We have been deciding cases for last 40 years. We have to go by the law and we would not go beyond the law."

The bench also made it clear that it is willing to sit on Saturdays and Sundays to decide on the issue as it was very important.

During the last hearing, the apex court had said it would decide the issues pertaining to 'legal' aspects of the practices of triple talaq, 'nikah halala' and polygamy among Muslims but not deal with the question whether divorce under Muslim law needs to be supervised by courts as it fell under the legislative domain.

'Nikah halala' means a man cannot remarry a woman after triple talaq unless she has already consummated her marriage with another man and then her new husband dies or divorces her.

The bench headed by the CJI had said "You (lawyers for parties) sit together and finalise the issues to be deliberated upon by us."

The bench had made it clear to the parties concerned that it would not deal with the factual aspects of the particular case and would rather decide the legal issue.

The apex court had said that the question whether divorce under Muslim Personal Law needed to be supervised by either courts or by a court-supervised institutional arbitration fell under the legislative domain.

It, however, allowed lawyers to file small synopsis of cases pertaining to alleged victims of triple talaq.

The Centre had earlier opposed the practice of triple talaq, 'nikah halala' and polygamy among Muslims and favoured a relook on grounds like gender equality and secularism.

Ministry of Law and Justice had referred to constitutional principles like gender equality, secularism, international covenants, religious practices and marital law prevalent in various Islamic countries.

Responding to a batch of petitions including the one filed by Shayaro Bano challenging the validity of such practices among Muslims, the Centre had first dealt with the right of gender equality under the Constitution.

All India Muslim Personal Law Board, however, had rubbished the stand taken by the Narendra Modi government that the apex court should re-look these practices as they are violative of fundamental rights like gender equality and the ethos of secularism, a key part of the basic structure of the Constitution.

Another prominent Islamic organisation Jamiat Ulema-i- Hind had told the court there is no scope for interference with the Muslim Personal Law in which triple talaq, 'nikah halala' and polygamy are well rooted and stand on much higher pedestal as compared to other customs.

http://timesofindia.indiatimes.com/india/constitution-bench-to-decide-petitions-on-triple-talaq-supreme-court/articleshow/57185261.cms

Criminal Defamation law not unconstitutional

In the Year 2016, Supreme Court in Subramanian Swamy vs. Union of India upheld the Constitutional Validity of Sections 499 to 502[ [Chapter XXI]] of Indian Penal Code relating to Criminal Defamation. The Bench comprising of Justices Dipak Misra and PC. Pant held that the right to Life under Article 21 includes right to reputation. The Bench has dismissed the Petitions filed by Subramanian Swamy, Rahul Gandhi and Arvind Kejriwal challenging the law relating to Criminal Defamation in India.

Making it clear that criminal defamation law will remain the statute book, the bench said “reputations cannot be allowed to be sullied on the anvils of free speech as free speech is not absolute. Rght to life and freedom of speech have to be mutually respected.”

Dismissing the Petitions the Bench held as follows;

“In view of the aforesaid analysis, we uphold the constitutional validity of Sections 499 and 500 of the Indian Penal Code and Section 199 of the Code of Criminal Procedure. During the pendency of the Writ Petitions, this Court had directed stay of further proceedings before the trial court. As we declare the provisions to be constitutional, we observe that it will be open to the petitioners to challenge the issue of summons before the High Court either under Article 226 of the Constitution of India or Section 482 CrPC, as advised and seek appropriate relief and for the said purpose, we grant eight weeks time to the petitioners. The interim protection granted by this Court shall remain in force for a period of eight weeks. However, it is made clear that, if any of the petitioners has already approached the High Court and also become unsuccessful before this Court, he shall face trial and put forth his defence in accordance with law”.

The court also reminded the petitioners about the reasonable restriction in the Freedom of speech and expression.

Challenging constitutional validity of criminal defamation law the three leaders contended that rather than protecting individual reputation, these sections have a chilling effect on free speech. All of them argued that the penal provisions conceived in the British era are now “outmoded” and inconsistent with the right to freedom of speech and expression. The decision meant that the defamation cases against the three leaders will be revived and they must contest it in the lower courts. Earlier the SC had stayed them. The court gave the three political leaders 8 weeks time to challenge the pending criminal defamation case against them in respective HCs or face trial.

The SC has in fact upheld each of Centre’s arguments in support of the criminal defamation law Justifying the penal provisions, Centre had said there will be anarchy in the society and everyone will think he has a right to hurl abuses if the criminal defamation is repealed as a penal offence Arguing for retention of criminal defamation in the Indian Penal Code , Attorney General Mukul Rohatgi had said that punitive provisions are more relevant in modern times in view of the wide sweep of Internet and social media where every statement can reach millions of people.

Upload FIRs in Police Websites

Youth Bar Association of India vs. Union of India

The Supreme Court directed that the copies of the FIRs, unless the offence is sensitive in nature, like sexual offences, offences pertaining to insurgency, terrorism and of that category, offences under POCSO Act and such other offences, should be uploaded on the police website, and if there is no such website, on the official website of the State Government, within twenty-four hours of the registration of the First Information Report so that the accused or any person connected with the same can download the FIR and le appropriate application before the Court as per law for redressal of his grievances. The Bench clarified that in case there is connectivity problems due to geographical location or there is some other unavoidable difficulty, the time can be extended up to forty-eight hours. The said 48 hours can be extended maximum up to 72 hours and it is only relatable to connectivity problems due to geographical location.

If The Threat Of Infringement Exists, Then Courts Have Jurisdiction To Entertain The Suit

The Coca-Cola Company Vs.Bisleri International Pvt. Ltd Manu/DE/2698/2009

IPR Law- Infringement: Export: Threats: Jurisdiction – The Delhi High Court held that if the threat of infringement exists, then this court would certainly have jurisdiction to entertain the suit.

It was also held that the exporting of goods from a country is to be considered as sale within the country from where the goods are exported and the same amounts to infringement of trade mark.

In the present matter, the defendant, by a master agreement, had sold and assigned the trade mark MAAZA including formulation rights, know-how, intellectual property rights, goodwill etc for India only. with respect to a mango fruit drink known as MAAZA.

In 2008, the defendant filed an application for registration of the trade mark MAAZA in Turkey started exporting fruit drink under the trade mark MAAZA. The defendant sent a legal notice repudiating the agreement between the plaintiff and the defendant, leading to the present case. The plaintiff, the Coca Cola Company also claimed permanent injunction and damages for infringement of trade mark and passing off.

It was held by the court that the intention to use the trade mark besides direct or indirect use of the trade mark was sufficient to give jurisdiction to the court to decide on the issue. The court finally granted an interim injunction against the defendant (Bisleri) from using the trade mark MAAZA in India as well as for export market, which was held to be infringement of trade mark

Suit For Infringement Of Registered Trade Mark Is Maintainable Against Another Registered Proprietor Of Identical Or Similar Trade Mark

Clinique Laboratories LLCand Anr. Vs. Gufic Limited and Anr. MANU/DE/0797/2009

IPR Law- Suit for infringement by a registered trade mark owner against a registered trade mark holder: Conditions-The present dispute was between the registered trade mark of the plaintiff as well as defendant. It is interesting to note that before filing the suit the plaintiff i.e. Clinique had filed a cancellation petition before the Registrar of Trade Marks, India, against the defendant for cancellation of the defendant’s trade mark CLINIQ. As per the Section 124(1) (ii), of the Indian Trade Marks Act, 1999 a suit is liable to be stayed till the cancellation petition is finally decided by the competent authority.

However, under Section 124(5) of the Act, the court has the power to pass interlocutory order including orders granting interim injunction, keeping of account, appointment of receiver or attachment of any property.

In this case, the court held that a suit for infringement of registered trade mark is maintainable against another registered proprietor of identical or similar trade mark.

It was further held that in such suit, while staying the suit proceedings pending decision on rectification/cancellation petition, the court can pass interim injunction restraining the use of the registered trade mark by the defendant, subject to the condition that the court is prima facie convinced of invalidity of registration of the defendant’s trade mark. In this case the court granted an interim injunction in favour of the plaintiff till the disposal of the cancellation petition by the competent authority.

Patent Infringement Cannot Be Presumed

Bayer Corporation Vs. Union of India 162(2009) DLT 371

Bayer Corporation, instead of filing a suit for infringement, filed an inventive writ petition in the Delhi High Court desiring that since the applications of Cipla “SORANIB” allegedly infringed its patent, its (Cipla’s) marketing approval application under the Drugs Act should not even be processed or entertained. It is for the first time that an attempt is made to link drug approval to patent infringement in India. However, the Delhi High Court, denying the injunction, imposed a substantial cost of Rs. 6.75 Lakh to deter any such future attempts.

Bayer relied on the argument that a combined reading of Section 2 of the Drugs and Cosmetic Act along with Section 48 of the (Indian) Patent Act, 1970 establishes a Patent Linkage Mechanism under which no market approval for a drug can be granted if there a patent subsisting over that drug. It also claimed that CIPLA’s “SORANIB” is a “Spurious Drug” as defined under the Drugs Act, for which market approval cannot be granted.

The Hon’ble High Court of Delhi held that there is no Drug- Patent Linkage mechanism in India as both the Acts have different objectives and the authority to determine patent standards, is within the exclusive domain of the Controller of Patents. Moreover, the patent linkage will have undesirable effect on the India’s Policy of Public Health. It further held that the market approval of a drug does not amount to infringement of patent. Therefore, the patent infringement cannot be presumed, it has to be established in a court of law. Such adjudication is beyond the jurisdiction of Drug Authorities.

On the issue of “SORANIB” being a spurious drug, the court held that CIPLA’s “SORANIB” cannot come under the category of spurious goods as there is no element of passing off like deception or imitation present in CIPLA’s drug”.