REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE JURISDICTION

CIVIL APPEAL NO(S).   11843        OF 2018 (ARISING OUT OF SLP (C) NO. 35574 OF 2017)

COMPETITION COMMISSION OF INDIA .....APPELLANT(S)

VERSUS

BHARTI AIRTEL LIMITED AND OTHERS .....RESPONDENT(S)

W I T H

CIVIL APPEAL NO(S).  11844-11845       OF 2018 (ARISING OUT OF SLP (C) NOS. 35532-35533 OF 2017)

CIVIL APPEAL NO(S).   11846        OF 2018 (ARISING OUT OF SLP (C) NO. 35497 OF 2017)

CIVIL APPEAL NO(S).   11852        OF 2018 (ARISING OUT OF SLP (C) NO. 115 OF 2018)

A N D

CIVIL APPEAL NO(S).   11847-11851      OF 2018 (ARISING OUT OF SLP (C) NOS. 37285-37289 OF 2017)

J U D G M E N T

A.K. SIKRI, J.

Leave granted.

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 1 of 122

2) Reliance Jio Infocomm Limited (hereinafter referred to as 'RJIL')

has filed information under Section 19(1) of the Competition Act,

2002 (hereinafter referred to as the 'Competition Act') before the

Competition Commission of India (for short, 'CCI') alleging anti-

competitive agreement/cartel having been formed by three major

telecom operators, namely, Bharti Airtel Limited, Vodafone India

Limited  and  Idea  Cellular  Limited  (Incumbent  Dominant

Operators)  (hereinafter  referred  to  as  the  ‘IDOs’).   Similar

Informations under Section 19 of the Competition Act were also

filed by one Mr. Ranjan Sardana, Chartered Accountant, and Mr.

Justice Kantilal Ambalal Puj (Retd.).  These were registered by

the CCI as Case Nos.  80-81, 83 and 95 respectively.   As per

Section  26  of  the  Competition  Act,  on  receipt  of  such  an

information, the CCI has to form an opinion as to whether there

exists a prima facie case or not.  If it is of the opinion that there

exists a prima facie case, the CCI directs the Director General to

cause an investigation to be made into the matter.  Apart from the

IDOs,  certain  allegations  were  also  made  against  the  Cellular

Operators Association of India (for short, 'COAI').  The CCI issued

notice to these parties and after hearing the RJIL, the aforesaid

cellular companies and COAI, it passed a common order dated

April  21,  2017  in  all  these  cases  (by  clubbing  them together)

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holding a view that prima facie case exists and an investigation is

warranted into the matter.  It,  accordingly, directed the Director

General to cause investigation in the case.

Introduction:

3) Four writ petitions came to be filed by the Bharti Airtel Limited,

Vodafone  India  Limited,  Idea  Cellular  Limited  and  COAI

respectively.  The prayed for quashing of the aforesaid order and

consequential action/proceedings on the ground that the CCI did

not have any jurisdiction to deal with such a matter.  Show-cause

notices were issued pursuant to which the CCI as well as RJIL

filed  their  counter  affidavits.   The  mater  was  heard  and  vide

judgment dated September 21, 2017 the High Court has allowed

these writ petitions and quashed/set aside the order dated April

21, 2017 passed by the CCI and consequently notices issued by

the Director General of the CCI have also been quashed.  We

may reproduce the conclusions and operative portion of the order

passed by the Bombay High Court here itself, which are as under:

"130.  Conclusions:

a)   All  the  Writ  Petitions  are  maintainable  and entertainable.  This Court has territorial jurisdiction to deal and  decide  the  challenges  so  raised  against  impugned order (majority decision) dated 21 April  2017, passed by the  Competition  Commission  of  India  (CCI)  under  the provisions of Section 26(1) of the Competition Act, 2002 in case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all

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the consequential actions/notices of the Director General under Section 41 of the Competition Act arising out of it.

b)   The  telecommunication  Sector/Industry/Market  is governed,  regulated,  controlled  and  developed  by  the Authorities  under  the  Telegraph  Act,  the  Telecom Regulatory Authority  of  India Act (TRAI Act)  and related Regulations,  Rules,  Circulars,  including  all  government policies.   All  the  “parties”,  “persons”,  “stakeholders”, “service  providers”,  “consumers”  and  “enterprise”  are bound by the statutory agreements/contracts,  apart  from related policy, usage, custom, practice so announced by the Government/Authority, from time to time.

c)   The  question  of  interpretation  of  clarification  of  any “contract  clauses”,  “unified  license”,  “interconnection agreements”,  “quality  of  service regulations”,  “rights  and obligations  of  TSP  between  and  related  to  the  above provisions”, are to be settled by the Authorities/TDSAT and not by the Authorities under the Competition Act.

d)  The concepts of “subscriber”, “test period”, “reasonable demand”,  “test  phase and commercial  phase rights  and obligations”, “reciprocal obligations of service providers” or “breaches of any contract and/or practice”, arising out of TRAI Act and the policy so declared, are the matters within the jurisdiction of the Authority/TDSAT under the TRAI Act only.

e)  The Competition Act and the TRAI Act are independent statutes.   The statutory  authorities  under  the  respective Acts are to discharge their  power and jurisdiction in the light of the object, for which they are established.  There is no conflict of the jurisdiction to be exercised by them.  But the Competition Act  itself  is  not  sufficient  to decide and deal  with the issues, arising out of the provisions of the TRAI  Act  and  the  contract  conditions,  under  the Regulations.

f)   The  Competition  Act  governs  the  anti-competitive agreements  and its  effect  –  the issues about  “abuse of dominant position and combinations”.  It cannot be used and utilized to interpret the contract conditions/policies of telecom  Sector/Industry/Market,  arising  out  of  the Telegraph Act and the TRAI Act.

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g)   The  Authority  under  the  Competition  Act  has  no jurisdiction to decide and deal  with the various statutory agreements,  contracts,  including  the  rival rights/obligations,  of  its  own.   Every  aspects  of development  of  telecommunication  market  are  to  be regulated  and  controlled  by  the  concerned  Department/ Government, based upon the policy so declared from time to  time,  keeping  in  mind  the  need  and  the  technology, under the TRAI Act.

h)   Impugned order  dated 21 April  2017 passed by the Competition  Commission  of  India  (CCI)  under  the provisions of Section 26(1) of the Competition Act, 2002 and all  the consequential  actions/notices of  the Director General  under  Section  41  of  the  Competition  Act proceeded on wrong presumption of law and usurpation of jurisdiction,  unless  the  contract  agreements,  terms  and clauses  and/or  the  related  issues  are  settled  by  the Authority  under  the  TRAI  Act,  there  is  no  question  to initiating  any  proceedings  under  the  Competition  Act  as contracts/agreements  go  to  the  root  of  the  alleged controversy, even under the Competition Act.

i)   The  Authority,  like  the  Commission  and/or  Director General,  has  no  power  to  deal  and  decide  the  stated breaches including of “delay, “denial”, and “congestion” of POIs unless settled finally by the Authorities/TDSAT under the TRAI Act.  Therefore, there is no question to initiate any inquiry and investigations under Section 26(1) of the Competition Act.  It is without jurisdiction.  Even at the time of passing of final order, the Commission and the Authority, will not be in a position to deal with the contractual terms and conditions and/or any breaches, if any.  The uncleared and vague information are not sufficient to initiate inquiry and/or investigation under the Competition Act, unless the governing law and the policy  of  the concerned “market” has clearly defined the respective rights and obligations of the concerned parties/persons.

j)   Impugned  order  dated  21  April  2017  and  all  the consequential  actions/notices  of  the  Director  General under the Competition Act, therefore, in the present facts and  circumstances,  are  not  mere  “administrative directions”.

k)   Impugned  order  dated  21  April  2017  and  all  the consequential  actions/notices  of  the  Director  General

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 5 of 122

under the Competition Act are, therefore, illegal, perverse and also in view of the fact that it takes into consideration irrelevant material  and ignores the relevant material  and the law.

l)   Every  majority  decision  cannot  be  termed  as “cartelisation”.   Even  ex-facie  service  providers  and  its Association  COAI  have  not  committed  any  breaches  of any provisions of the Competition Act.

131.  Hence the following

ORDER

a)  Impugned order dated 21 April  2017, passed by the Competition  Commission  of  India  (CCI)  under  the provisions of Section 26(1) of the Competition Act, 2002 in case Nos. 81 of 2016, 83 of 2016 and 95 of 2016 and all the consequential actions/notices of the Director General under Section 41 of the Competition Act, are liable to be quashed and set aside, in exercise of power under Article 226 of the Constitution of India.  Order accordingly.

b)  All the Writ Petitions are allowed.

c)  There shall be no order as to costs.

d)   In  view  of  the  above,  nothing  survives  in  Civil Application (Stamp) No. 17736 of 2017 in Writ Petition No. 7164 of 2017 and the same is also disposed of.  No costs.”

4) Gist of the aforesaid order, as per the High Court, is that insofar

as  the  telecom  sector/industry/market  is  concerned,  same  is

governed, regulated, controlled and developed by the authorities

under the India Telegraph Act, 1885 (hereinafter referred to as the

‘Telegraph Act’),  the Telecom Regulatory Authority of India Act,

1997  (for  short,  ‘TRAI  Act’),  and  as  well  as  the  related

Regulations,  Rules,  Circulars,  etc.   Therefore,  the  question  of

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interpretation  or  clarification  of  any  “contract  clauses”,  “unified

license”,  “interconnection  agreements”,  “quality  of  service

regulations”, “rights and obligations of TSP between and related

to  the  above  provisions”,  are  to  be  settled  by  the

Authorities/Telecom Disputes Settlement and Appellate Tribunal

(TDSAT) and not by the Authorities under the Act.   It  has also

held that the Competition Act and the TRAI Act are independent

statutes and the statutory authorities under the respective Acts

are to discharge their  power and jurisdiction in the light  of  the

objectives for which they are established.  The Competition Act is

itself not sufficient to decide and deal with the issues arising out

of  the provisions of  the TRAI  Act  etc.   Thus,  the CCI  has no

jurisdiction  to  decide  and  deal  with  the  various  statutory

agreements,  contracts,  including  rival  rights/obligations,  of  its

own.  The issues arising out of contract agreements, terms and

clauses  and/or  the  related  issues  are  to  be  settled  by  the

authority under the TRAI Act in the first instance and unless these

issues  are  decided,  there  is  no  question  of  initiating  any

proceedings under the Act.  In a nutshell, it is held that insofar as

contracts,  etc.  which  are  regulated  by  the  TRAI  Act  are

concerned, in the first instance, it is the authority under the TRAI

Act  which  has  to  decide  these  questions.   Once  there  is  a

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 7 of 122

determination of the respective rights and obligations under these

licenses by the authority under the TRAI Act, which provided an

information to the effect that the particular act appears to be anti-

competitive, only thereafter the CCI gets jurisdiction to go into the

question of such anti-competitive practice.  Primarily the message

behind the decision of the High Court is that jurisdictional facts

are to be decided by the authorities under the TRAI Act which has

the exclusive jurisdiction to determine those issues as the TRAI is

the  statutory  authority  established  for  this  very  purpose,  and

unless  there  is  a  determination  of  these  facts,  the  machinery

under the Competition Act cannot be invoked.  To put it otherwise,

the judgment proceeds to decide that it  was premature for the

CCI to entertain the Information for want of determination of such

issues that fall within the domain of the TRAI Act.

5) It  is  obvious  that  the  RJIL  is  not  happy  with  the  aforesaid

outcome. Even the CCI feels aggrieved.  CCI has impugned this

decision by filing four special leave petitions, while the other one

has been filed by the RJIL.   

6) The material facts which are absolutely essential to determine the

controversy,  eschewing  the  unnecessary  details,  may  now  be

recapitulated:

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 8 of 122

Factual Background:

With the decision of the Government of India, more than 25

years ago, ushering into era of globalisation and liberalisation, lot

of avenues opened up.  It led to the privatisation of business in

many sectors which were,  hitherto,  monopolistic domain of  the

Government.   These  included  aviation,  insurance,

telecommunication etc.   With the opening of  the industrial  and

other activities in all spheres by placing it in the hands of private

sector led to a significant economic development.  The absolute

control of the Government through public enterprise or otherwise,

which had seen licence and quota raj,  virtually withered away,

thereby reverting back to laissez faire economy to a great extent,

though not completely.  It led to two significant developments:

In the first instance, though the private sector was given full

freedom to do the business without any shackles in the form of

controls etc., it was also deemed necessary at the same time that

in public interest, some of the aspects of the business need to be

regulated,  of  course,  not  by  the  Government  but  by  an

independent  regulatory  authority.   This necessity  prompted the

Government  to  come  out  with  regulatory  regime  in  different

sectors.  For example, in insurance sector, we have regulatory

authority  constituted  under  Insurance  Regulatory  and

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Development  Authority  Act,  1999;  for  industries  generating

electricity,  there is an electricity regulatory authority constituted

under the Electricity Act, 2003; and for telecom sector, with which

we are concerned, the TRAI is constituted under the provisions of

TRAI Act.   

Secondly, this requirement to do business thereby allowing

free  entry  to  private  enterprise  led  to  competition  between

different players in the private sector.  Competition is perceived

as a phenomena which is in best public interest in so many ways.

Therefore, it  becomes necessary to encourage competition.  At

the same time,  tendency  of  the  business enterprises  to  adopt

practices which retard healthy competition needed to be curbed.

There was a governing law in the field known as Monopolistic and

Restrictive Trade Practice Act, 1969.  However,  it was felt that a

new robust statutory regime is required to take care of the needs

of the present day.  This necessity prompted the Parliament to

come out with a new Act on the subject and the Competition Act,

2002 was passed by the Parliament.  Under this Act, the CCI is

constituted  as  a  statutory  body  which  is  to  ensure  healthy

competition in markets thereby preventing the practice of having

adverse  effect  on  competition;  to  promote  and  sustain  the

competition in markets; to protect the interest of consumers and

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to  ensure freedom of  trade.   In  that  sense,  the CCI  is  also a

regulator.  But a unique feature of the CCI is that it is not sector

based  body  but  has  the  jurisdiction  across  which  transcends

sectoral  boundaries,  thereby  covering  all  the  industries,  with

focus  on  the  aforesaid  object  and  purpose  behind  the

Competition Act, 2002.   

7) In the instant appeals, width and scope of the powers of the CCI

under the Competition Act, 2002 pertaining to telecom sector i.e.

in respect of the companies in telecom industry providing telecom

services is  to  be defined vis-a-vis  the scope of  the powers of

TRAI under the TRAI Act, 1997.  It has arisen in these appeals, in

the following background:

As mentioned above, TRAI is the regulatory which regulates

the functioning of the telecom service provider i.e. the telecom

sector.  Section 11 of the TRAI Act enumerates various functions

which TRAI is supposed to perform under the Act.  Section 13,

likewise,  empowers  the  TRAI  to  issue  directions,  from time to

time, to the service provider.  In exercise of powers under Section

13  read  with  Section  11  of  the  TRAI  Act,  the  TRAI  issued

directions  dated  June  07,  2005  to  all  the  telecom  service

providers  to  provide  interconnection  within  ninety  days  of  the

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applicable payments made by the interconnection seeker.  The

purpose behind providing interconnection by one service provider

to the other service provider is to ensure smooth communication

by a subscriber of one service provider to the cell number which

is  provided  by  another  service  provider.   In  that  sense,  this

direction facilitates smooth functioning of the cell phone network

even when it  is managed by different companies as it  ensures

interconnectivity  i.e.  connectivity  from  one  service  provider  to

other service provider.   

8) On  October  21,  2013,  RJIL was  granted  Unified  License  and

Unified Access Service License under Section 4 of the Telegraph

Act  by  the  Department  of  Telecom  (DoT)  for  providing

telecommunication  services  in  all  22  circles/licensed  service

areas in India.  Soon thereafter,  RJIL executed interconnection

agreements  (ICA)  with  existing  telecom  operators  inter  alia

including,  Bharti  Airtel  Limited  and  Bharti  Hexagon  Limited

(hereinafter collectively referred to as the ‘Airtel’),  Idea Cellular

Limited  (hereinafter  referred  to  as  the  ‘Idea’);  Vodafone  India

Limited/Vodafone Mobile Services Limited (hereinafter collectively

referred to as the ‘Vodafone’).  RJIL commenced test trial of its

services after intimation and approval of the DoT and TRAI.   

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9) By its ‘firm demand’ letter of June 21, 2016, RJIL vide separate

letters  requested  IDOs  to  augment  Point  of  Interconnection

(POIs)  for  access,  National  Long  Distance  (NLD)  and

International Long Distance (ILD) services, as according to it, the

capacity already provided to it was causing huge POI congestion,

resulting in call failures on its network.  According to RJIL, these

companies  intentionally  ignored  the  aforesaid  request.

Accordingly, RJIL sent a letter dated July 14, 2016 to TRAI stating

that the POIs provided by IDOs are substantially inadequate and

leading  to  congestion/call  failures  on  its  network  in  all  circles.

Hence,  TRAI  was  requested  to  intervene  and  direct  these

telecom  operators  to  augment  the  POI  capacities  as  per  the

demands made by RJIL.  TRAI vide separate letters dated July

19,  2014  requested  inter  alia  the  aforementioned  telecom

operators to augment POIs as per the RJIL’s request.  Further,

responses of the respective companies were also sought on the

issues raised by RJIL,  within seven days.   Idea responded by

sending letter dated July 26, 2016 to RJIL denying that there had

been any delay in augmentation of POIs and further stated that it

is willing to fully support RJIL and that it had instructed its circle

teams to augment the POIs on the basis of traffic congestion as

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per the ICA.  Likewise, Airtel  also sent reply dated August 03,

2016 to TRAI, inter alia stating that augmentation of POIs shall be

undertaken as per the terms and conditions of the ICA and on the

basis of traffic trends post their commercial launch.  RJIL was not

satisfied with such responses.  It sent another letter dated August

04, 2016 to TRAI reiterating its earlier request for augmentation of

POIs by the subject telecom operators.  In the meantime, even

Cellular  Operators  Association  of  India  (COAI)  intervened  by

addressing  communication  dated  August  08,  2016  to  TRAI

wherein it took a stand by stating that the RJIL was providing free

service to millions of users under the guise of testing which led to

choking of POIs.  It was further suggested that due to the free

service provided by RJIL, a substantial imbalance in voice traffic

had  occurred  for  which  the  existing  operators  were  not

adequately  compensated  under  the  Interconnection  Usage

Charges regulations (IUC) in place.   

10) There  was  further  exchange  of  correspondence  between  the

parties and even by the parties to the TRAI which shows that the

parties  stuck  to  their  respective  positions  and  it  may  not  be

necessary to refer to those communications in detail.  Suffice it is

to  mention that  RJIL fixed September  05,  2016 as the launch

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date, which fact was informed to other service providers as well

who were also told  that  the subscriber  base was expected to

substantially  and  swiftly  increase  resulting  in  even  more  POI

congestion.   On that  basis,  request  was made for  urgent  POI

augmentation vide letter dated September 02, 2016.  The TRAI

even facilitated a meeting between the representatives of RJIL

and other service providers (respondents herein) to sort out and

resolve the differences in the interest of the consumers.  At the

same  time,  in  the  said  meeting,  the  three  telecom  operators

(respondents herein) also raised a grievance that free calls being

provided  by  RJIL  has  resulted  in  an  unprecedented  traffic

congestion  on  their  respective  networks  and  the  current  IUC

regime is inadequate to cover the cost of efficiently maintaining

such  high  traffic.   Thereafter,  vide  letter  dated  September  14,

2016, addressed by Airtel to RJIL, it stated that the POIs (also

known as E1s) would be converted into 50:50 ratio to outgoing

and incoming E1s.  In other words, the E1s provided would be

converted to ‘only outgoing’ or ‘only incoming’ i.e. one-way E1s.

RJIL replied by stating that it was acceptable to them.   

11) Soon thereafter, i.e. in September 2016 itself, Mr. Rajan Sardana,

a Chartered Accountant, filed information under Section 19 of the

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Competition Act (registered as Case No. 81 of 2016) and similar

application was filed by Justice K.A. Puj (retired) (registered as

Case No. 83 of 2016).  Then, it was followed by information under

Section 19 of  the Competition Act  by RJIL in November,  2016

(registered as Case No. 95 of 2016).   

Proceedings before TRAI:

12) As the matter was with the TRAI as well, it issued show cause

notices dated September 27, 2016 to IDOs and RJIL for violation

of  Standard  of  Quality  of  Service  of  Basic  Telephone  Service

(Wireline)  and  Cellular  Mobile  Telephone  Service  Regulations,

2009 (hereinafter referred to as the ‘QoS’) and for provision of the

License Agreements.  Similar show cause notices were also sent

to other telecom operators.  On October 21, 2016, TRAI issued

recommendations to DoT after  finding that  IDOs have violated

conditions  under  the  QoS,  interconnection  agreements  and

Unified License.  The TRAI inter alia stated in its recommendation

as under:

"21.  … (vii)  It is evident from the above clauses that the licensees are mandated to provide interconnection to all eligible telecom service provider.  However, as mentioned in para 6 above,  Airtel along with other service providers have  jointly  through  their  association  (COAI),  declined Point of Interconnection to RJIL which is willful violation of the above mentioned license conditions.

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...(x)  COAI’s letter dated 2nd September, 2016 which was confirmed by Airtel in the meeting held on 9 th September, 2016 clearly indicates attempt by three service providers namely,  Airtel,  Vodafone India  Limited and Idea Cellular Limited  to  stifle  competition  in  the  market  and  willfully violate the license conditions;…

23.  While the Authority has been taking necessary steps to  ensure  effective  interconnection  between  Airtel  and RJIL,  it  is  evident  from  Para  21  that  Airtel  is  in  non- compliance  of  the  terms  and  conditions  of  license  and denial of interconnection to RJIL appears to be with ulterior motive to stifle competition and is anti-consumer.”

13) TRAI  recommended  that  Rs.  50  crore  per  local  service  area

(LSA) be imposed on all the above three telecom operators for

failure  to  adhere  to  TRAI  norms  and  regulations.   Similar

recommendations were also issued to DoT against other telecom

operators.  Against the recommendations dated October 21, 2016

of TRAI, Vodafone filed a Writ Petition being Writ Petition (C) No.

11740 of 2016 before the High Court at Delhi.  Meanwhile, on

January 17, 2017, TRAI also recommended imposition of penalty

of  Rs.  1,90,000/-  on  Idea  for  its  rejection  of  mobile  number

portability  (MNP)  requests  to  RJIL’s  network.   Against  the

aforesaid  recommendation,  Idea  has  preferred  a  Writ  Petition

being Writ Petition (C) No. 685 of 2017 before the High Court at

Delhi.   The DoT after  examining the matter  referred it  back to

TRAI for fresh consideration vide DoT’s reference dated April 05,

2017 whereby its recommendations imposing penalty upon IDOs

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were sent back for reconsideration. The TRAI sent its response

dated May 24,  2017 to  the DoT,  wherein  it  took a  categorical

stand  that  telecom  operators  have  intentionally  denied  and

delayed the augmentation of POIs to RJIL.   

Proceedings before CCI:

14) The CCI took the cognizance of the three informations given to it

under Section 19 of the Competition Act which were registered as

Case  Nos.  81,  83  and  95  of  2016.   It  gave  hearing  to  the

respondents service providers as well as COAI and passed order

dated April 21, 2017 under Section 26(1) of the Competition Act

as per which it  came to a  prima facie  conclusion that case for

investigation was made out and directed the Director General to

cause  investigation  in  the  case.   This  order  was  passed  by

majority of 3:2 as two members of CCI dissented from the said

order.  Operative portion of the majority order holds as under:

"23.   The  Commission  notes  that  allegations  of  anti- competitive  agreement  as  well  as  abuse  of  dominant position have been made for the same conduct of refusal to facilitate call termination services and denial of mobile number portability.  As discussed earlier, the Commission is satisfied that there exist a  prima facie  contravention of Section 3(3)(b) of Act, as the ITOs appear to have entered into  an  agreement  amongst  themselves  through  the platform of  COAI,  to  deny  POIs  to  RJIL.   Having  been prima facie  convinced that  the  impugned conduct  is  an outcome of the anti-competitive agreement amongst ITOs, Commission does not find it  appropriate to consider the same impugned conduct as unilateral action by each of the ITOs.  The Commission therefore at this stage does not

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find  it  necessary  to  deal  with  the  allegations  and submissions  regarding  abuse  of  dominance  in contravention of the provisions of Section 4 of Act.

24. In view of the foregoing, the Commission directs the DG to  cause an  investigation into  the  matter  under  the provisions of  Section 26(1)  of  the Act.   Considering the substantial similarity of allegations in all the informations, the  Commission clubs them in terms of  the  proviso  to Section 26(1)  of  the Act  read with Regulation 27 of  the Competition Commission of  India (General)  Regulations, 2009.  The DO is directed to complete the investigation and submit investigation report within a period of 60 days from  the  date  of  receipt  of  this  Order,  if  the  DG  finds contravention,  he  shall  also  investigate  the  role  of  the persons who at  the time of  such contravention were in- charge of and responsible for the conduct of the business of the contravening entity/entities.   During the course of investigation,  if  involvement  of  any other  party  is  found, DG shall investigate the conduct of such other parties also who may have indulged in the said contravention.  In case the  DG  finds  the  conduct  of  the  Opposite  Parties  in violation of the Act, the DG shall also investigate the role of the persons who were responsible for the conduct of the Opposite  Parties  so  as  to  proceed  against  them  in accordance with Section 48 of the Act.

25. The Commission makes it clear that nothing stated in this order shall tantamount to final expression of opinion on  the  merits  of  the  case  and  DG  shall  conduct  the investigation  without  being  swayed  in  any  manner whatsoever by the observations made herein.”

15) Likewise, two members who dissented inter alia held as follows:

"...As  stated  above,  from  the  various  charts  placed  on record by the ITOs showing the number of POIs provided by them to RJIL, the respective learned senior counsel for Ops have tried to show that the number of POIs provided to  RJIL by  08.11.2016  i.e.  within  the  first  quarter  itself, were much more than what was demanded.  In fact, the charts filed by RJIL itself corroborate this fact.  The charts show that  even if  some of  the POIs  provided (one-way POIs for connecting outgoing calls from ITOs to RJIL) are not taken into consideration, the number of POIs provided

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by  OP-5  and  OP-7  were  much  more  than  what  was demanded by RJIL.  Even in case of OP-2, the same were approximately  64%  (NLD  POIs)  and  85.53%  (Access POIs) as on 08.11.2016.  However, as we have already observed  above,  we  are  not  expected  to  go  into  the question of providing adequate number of POIs.  Yet there is ample material on record to show that RJIL was more to be blamed for congestion in its traffic than the ITOs...”

“...we are of the considered opinion that on the basis of material available with the Commission, it is difficult to say that there is a prima facie case...” made out against the Petitioner and others and accordingly, “...the instant cases ought  to  be  closed  under  Section  26(2)  of  the  Act...” (hereafter “Dissent Note”).”

 16) On  June  08,  2017,  the  Director  General  issued  a  letter  of

investigation to the appellant seeking call data records in respect

of certain identified mobile numbers by June 19, 2017.  On June

19, 2017, respondent No. 2 issued a letter of investigation to the

appellant seeking detailed information/documents to be furnished

by June 30, 2017.  Immediately thereafter, writ petitions were filed

challenging the aforesaid order of the CCI as well as action of the

Director  General  seeking information for  holding inquiry.   After

preliminary hearing, the High Court passed interim orders dated

June 30, 2017 on the basis of statement of the counsel for CCI

that  they  shall  not  proceed with  the investigation,  which  order

continued till the disposal of the writ petitions.  The High Court

after  hearing  the  matter  finally  allowed  the  writ  petitions,  as

already mentioned.

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17) It is clear from the above that as per RJIL, the respondent service

providers,  along  with  COAI,  entered  into  an  anti-competitive

agreement/formed  a  cartel  and  acted  in  an  anti-competitive

manner which is prohibited by the Act.  On these allegations, it

approached the CCI for initiating inquiry into this anti-competitive

practices.   Insofar  as  the  nature  of  alleged  anti-competitive

agreement is concerned, the allegations of RJIL are the following:

(i) Delay in provisioning or denial in provisioning of POIs, also

known as ‘E1’ in telecom parlance, to RJIL by IDOs during the

testing  phase  and  after  commercial  launch  of  RJIL  services.

POIs  are  the  points  where  the  networks  of  telecom operators

connect.  Without sufficient POIs it is not possible for subscribers

of one service provider to make calls to subscribers of another

service provider.

(ii) It was also alleged, inter alia, that IDOs are denying Mobile

Number Portability (MNP) requests of customers who wanted to

switch to RJIL competing service.

(iii) It was also alleged that COAI was acting at the behest of

IDOs against the interest of a competing member, i.e. RJIL, and

not for the common interest of the industry and consumers as a

whole.

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Proceedings before the High Court:

18) Against the order passed by the CCI directing investigation into

the aforesaid allegations, in the writ  petitions filed by the IDOs

and  also  by  COAI,  challenge  laid  to  the  aforesaid  order  was

premised  on  the  ground  that  the  CCI  lacked  jurisdiction  to

entertain such complaints/information filed under  Section 19 of

the Competition Act as such a matter falls within the exclusive

jurisdiction of another regulatory authority, namely, TRAI.

19) In  nutshell,  it  was  pleaded  that  the  violation  alleged  by  RJIL,

namely, whether there was a delay or denial in provisioning POIs,

comes within the domain of TRAI as it is the TRAI which has the

exclusive jurisdiction to deal with such a matter under the TRAI

Act and, in fact, the complaint was also made by TRAI as well

which was seized of the matter.

20) The plea of the appellants, on the other hand, was that violation

of  telecom  regulations,  etc.  was  undoubtedly  a  matter  which

could be looked into by the TRAI for which RJIL has approached

the TRAI.  However, the subject matter of inquiry before the CCI

was entirely different, namely, formation of cartel and a concerted

effort on the part of the service providers, in collusion with COAI,

to  curb the competition  in  the market  and,  thus,  the CCI  was

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competent and had requisite jurisdiction to look into this aspect.

To  put  it  otherwise,  according  to  the  appellants,  the  CCI  had

decided to examine the facts purely from the stand point as to

whether the alleged Act constituted anti-competitive practice on

the  part  of  the  respondents  and,  therefore,  contravened  the

provisions contained in Section 3 or Section 4 of the Act.  This

aspect, they had argued, could not be gone into by the TRAI as

the CCI was the only statutory authority constituted under the Act

to examine such an issue.

21) The Bombay High Court  in  the impugned judgment  has,  thus,

inter alia, held as under:

"(i)   the Competition Commission of  India  (CCI)  had no jurisdiction in view of the Telecom Regulatory Authority of India Act, 1997 and the authorities and regulations made thereunder;

(ii)   the  CCI  could  exercise  jurisdiction  only  after proceedings under the TRAI Act  had concluded/attained finality;

(iii)   the  order  dated  21.04.2017  passed  under  section 26(1)  of  the  Competition  Act  was  not  an  administrative direction, but rather a quasi judicial one that finally decided the  rights  of  parties  and  caused  serious  adverse consequences,  because  a  detailed  hearing  had  been given and many materials had been tendered in the courts of the hearings;

(iv)  on the merits of the matter, there was no cartelisation as alleged and COAI was exonerated; and

(v)  the order of  the CCI was perverse and liable to be interfered with under writ jurisdiction.”

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Arguments: The appellants:

22) Mr.  P.S.  Narasimha,  learned  Additional  Solicitor  General,

appeared on behalf of the CCI and submitted that the impugned

judgment is contrary to the law.  His attack was premised on three

principal propositions, which are follows:

(i) Jurisdiction  of  the  CCI:   The  CCI  has  jurisdiction  in  the

present  case  and  it  need  not  wait  till  the  conclusion  of

proceedings under the TRAI Act to conclude.

(ii) Scope of Judicial Interference under Article 226:  The High

Court erred in holding that the order passed under section 26(1)

was an order resulting in serious adverse consequences merely

because the CCI had granted a hearing.

(iii) The order of CCI was not perverse and the High Court erred

in  giving  findings  on  merits.   The  High  Court  erroneously

exercised writ jurisdiction.

23) With respect to the first proposition, his argument was that the

High Court had failed to appreciate that issues before the CCI are

altogether  different  than  the  issues  before  the  TRAI  and  they

necessarily be treated differently.   He argued that the CCI and

TRAI operate in entirely different fields, which is discernible from

the Preambles of the respective legislations.  The TRAI Act was

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supposed to enable it to regulate the telecommunication services,

adjudicate dispute, dispose of appeals and protect the interests of

service  providers  and  consumers  of  the  telecom  sector,  to

promote and ensure orderly growth of the telecom sector.  The

CCI, on the other hand, is a body that has been established to

prevent  practices  having  an  adverse  effect  on  competition,  to

promote  and  sustain  competition  in  markets,  to  protect  the

interests of consumers and to ensure freedom of trade carried on

by other participants in markets, in India.

24) Mr.  Narasimha emphasised that  the issue before the CCI was

whether  the  opposite  parties/respondents,  i.e.  the  IDOs,  were

acting in concert and colluding (forming a cartel) so as to block or

hinder the entry of RJIL in the market in violation of section 3(3)

(b)  of  the  Act.   The  key  issue  is  whether  there  was  an  anti-

competitive agreement between the IDOs, using the platform of

COAI.  The issue before the TRAI, on the other hand, is whether

the  delay/denial  of  POIs  has  violated  terms  of  the  licence

agreement and QoS regulations.  The learned ASG pointed out

that all the opposite parties have argued that they were justified in

declining POIs to RJIL.  However, the question before the CCI is

whether  the conduct  of  the  parties  was  unilateral or  collective

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action  based  on  an  agreement?  It  is  precisely  this  issue  that

requires investigation by the Director General.  If the conduct of

the respondents in delaying/denying POIs was unilateral (i.e. an

independent decision made by each of them), then the conduct

cannot be faulted under Section 3 of the Act since Section 3 is

premised on existence of an ‘agreement’ as defined in Section

2(b).  However, if the conduct of the respondents was based on

an ‘agreement’, it would become illegal under Section 3(3)(b) of

the  Act  because  its  intent  and  effect  is  to  ‘limit  or  control

production,  supply,  markets,  technical  development,  investment

or provision of services”.  It was contended that the conduct may

well be legal under the TRAI Act and regulations or other laws.

However, it is the collusive/concerted nature of the action coupled

with the effect that makes it illegal under the Competition Act.

25) He adverted to the order dated April 21, 2017 of the CCI, while

taking  its  prima  facie  view  and  submitted  that  the  CCI  has

recognised the distinction between the issues before the TRAI

and the issues arising under the Act, as follows:

"9. It  is  observed that  telecom sector  is  regulated by TRAI  as  the  sectoral  regulator.   On  the  allegation  of insufficient POIs being provided to RJIL, the Commission notes  from the  information  available  on  TRAI’s  website that,  on  21st October  2016,  TRAI  had  recommended, through three separate communications to the Department of  Telecommunications,  imposition  of  penalty  of  Rs.50

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crore  per  License  Service  Area  (LSA)  against   Airtel, Vodafone  and  Idea,  for  violation  of  the  provisions  of License Agreements and the Standards of QoS of Basic Telephone  Service  (Wireline)  and  Cellular  Mobile Telephone Service Regulations, 2009.  Thus, TRAI as a sectoral  regulator,  has held the said conduct  of  ITOs in violation of relevant TRAI regulations and recommended penal  action  against  them.   However,  the recommendations of TRAI is in respect of violations of the provisions of  License Agreements  and the Standards of QoS of Basic Telephone Service (Wireline) and  Cellular Mobile  Telephone  Service  Regulations,  2009  by  these OPs.    Against  this,  mandate of  the Commission under Section 18 of  the Act  is  ‘...to  eliminate practices having adverse  effect  on  competition,  promote  and  sustain competition, protect the interests of consumers and ensure freedom  of  trade  carried  on  by  other  participants,  in markets in India.’  Accordingly,  it  becomes the duty and responsibility of the Commission to eliminate practices in the market that have an adverse effect on competition and promote  and  sustain  competition  so  as  to  protect  the interest  of  consumers  and  ensure  freedom  of  trade. Further, as per Section 62 of the Act, provisions of the Act are in addition to and not in derogation of the provisions of any other law for the time being in force.  Section 61 of the Act  grants  exclusive  power  to  the  Commission  and  the Competition Appellate Tribunal to exercise its jurisdiction in respect  of  any  matter  which  the  Act  empowers  the Commission  or  the  Competition  Appellate  Tribunal  to determine to the exclusion of civil courts.  A careful reading of  these  provisions  show  that  the  Commission  has  the jurisdiction to inquire into the issues alleged in the present information  insofar  as  the  same  may  result  in contravention of the provisions of the Act.

10. It may be noted that the primary grievance of the Informants  relates  to  cartelization  by  the  Opposite Parties,  amounting  to  violation  of  the  provisions  of Section 3 of the Act.  In this regard, it must be noted that none of the areas covered under Section 3 of the Act are covered by TRAI in its mandate as a sector regulator  for  TSPs.   No  doubt,  TRAI  has  the responsibility/obligation to determine whether Quality of  Service regulations and interconnection norms on the  levels  of  congestion  at  the  points  of interconnection are  complied with  it  not.   But  apart from that, none of the other issues as envisaged under

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Section  3  of  the  Act  are  looked  into  by  TRAI. Specifically, TRAI cannot arrive at a determination as to whether the ITOs have colluded and cartelized to deny  POIs  to  the  detriment  of  RJIL  in  violation  of Section 3(3)  read with  Section 3(1)  of  the  Act.   The scope of the Section 3 allegation is not whether the ITOs  have  breached  the  terms  of  their  respective License  agreement  or  ICA,  rather,  the  scope  of  the Section  3  allegations  pertains  to  whether  the  ITOs have  entered  into  an  anti-competitive  agreement  to provide  insufficient  POIs  or  delay  the  provisions  of POIs to RJIL.  It is within the mandate of the Commission which can adjudicate on the issue of cartelization amongst enterprises/associations  and  arrive  at  a  finding  on  the alleged cartelization.  The Commission accordingly holds that the issue of whether such conduct on the part of ITOs (including COAI) has resulted in any anti-competitive effect in the market in violation of the provisions of the Act can and needs to be examined by it.

11. The  Commission  recognizes  the  role  and importance  of  sectoral  regulators  and  exercises  its jurisdiction keeping in mind their role and responsibilities. The Commission  is  a  market  regulator  and has  the jurisdiction  to  look  at  those  issues  which  affect competition in markets in India,  including that of an alleged  cartelization  amongst  enterprises/ associations.   The nature of the proceedings before TRAI involving ITOs on the other hand different and related to whether interconnection norms and quality of  service  regulations are complied with  or  whether the contractual terms of ICAs have been breached or met.   Palpably,  these  issues  are  not  relevant  for determination in  the  current  proceedings before  the Commission.

12. The informants have alleged that the conduct of ITOs amounts to a “cartel” in relation to denial of POIs to RJIL.  The definition of cartel has been provided under Section  2(c)  of  the  Act  which  reads  as  follows:  ‘cartel includes an association of producers, sellers, distributors, traders or service providers who by agreement amongst themselves  limit,  control  or  attempt  to  control  the production, distribution, sale or price of or, trade in goods or provision of services.’  Further, any alleged agreement amongst  enterprises  and  an  association  of  enterprises, engaged  in  identical  or  similar  trade  or  provision  of

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services is covered under Section 3(3)  of  the act  which states that:

Any agreement entered into between enterprises or associations  of  enterprises  or  persons  or associations of persons or between any person and enterprise or practice carried on,  or decision taken by, any association of  enterprises or association of persons,  including  cartels,  engaged  in  identical  or similar trade of goods or provision of services, which-

(a) directly or indirectly determines purchase or sale prices;

(b)   limits  or  controls  production,  supply,  markets, technical  development,  investment  or  provision  of services;

(c) …..

(d) …..

shall  be presumed to have an appreciable adverse effect on competition.

13. On the basis of  the above, the Commission notes that in addition to ITOs, conduct of COAI also needs to be examined under the provisions of Section 3(3) of the Act.”

(emphasis added)   

26) He  submitted  that  it  was  the  statutory  duty  of  the  CCI,

enumerated in Section 18 of the Act, to eliminate anti-competitive

practices and the focus of the CCI was confined to this Court’s

judgment  in  the  case  of  Haridas  Exports  v.  All  India  Float

Glass Manufacturers’ Assn. & Ors.1 wherein it  was held that

where  statutes  operate  in  different  fields  and  have  different

purposes, it cannot be said that there is implied repeal by one, of

1 (2002) 6 SCC 600

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the other.  In the said case, this Court was considering alleged

conflict  between  the  Monopolies  &  Restrictive  Trade  Practices

Act,  1969  and  the  Anti-Dumping  Rules  under  the  Customs

Act/Customs Tariff Act.  It was held:

"48.  The  jurisdiction  of  the  MRTP  Commission,  in  our opinion, is not ousted by the anti-dumping provisions in the Customs Act.  The two Acts operate in different fields and have different purposes. The Import Control Act and the Customs Tariff Act are concerned with import of goods into India  and  the  duty  which  could  be  imposed  on  the imported items. Import may be allowed on the basis of an import licence or, depending upon the policy, import may be allowed under OGL — open general licence — where no specific licence for import is required. Whether to allow import  or  not  and  the  terms  on  which  an  item may be imported is a matter of policy and regulated by law.

xx xx xx

52.  The  levy  or  non-levy  of  anti-dumping  or  other  duty being a legislative act pursuant to the exercise of powers under the Customs Tariff  Act can also not be a subject- matter of judicial  review by the MRTP Commission. The two Acts substantially  operate in different  fields and the following table brings out some of the distinctions between the MRTP Act and the anti-dumping provisions: [table omitted] A perusal of the above chart indicates that the two statutes and regimes operate in different and distinct spheres and there  is  no  conflict  between  the  two  regimes/statutes. Hence, the question of implied repeal of the provisions of Section 33(1)(j) of the MRTP Act, 1969 on account of the provisions of Section 9-A of the Customs Tariff Act, 1975 does not arise.

53.  It  is  thus  seen  that  the  provisions  relating  to  anti- dumping contained in the Customs Tariff Act do not in any way  affect  the  power  or  jurisdiction  of  the  MRTP Commission.  The  Import  Control  Act  and  the  Customs Tariff Act on the one hand and the MRTP Act on the other operate  in  different  independent  fields  and the authority

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under  one  has  no  jurisdiction  over  the  other. In  other words,  their  paths  do  not  cross  each  other.  While  the provisions of the Anti-Dumping Act are concerned with the levy of  anti-dumping duty,  the MRTP Act  in  the present case would be concerned with the agreements between the parties which relate to the restrictive trade practices. Therefore,  it  would  be  incorrect  to  say  that  the incorporation  of  the  anti-dumping  provisions  ousts  the jurisdiction of the MRTP Commission to inquire and pass orders,   inter alia  , with regard to restrictive trade practice in India.”

The learned ASG pointed out that the allegation against the

respondents  i.e.  IDOs  is  that  they  have  through  an  anti-

competitive agreement/cartel, limited the provision of services by

delaying or denying POIs to RJIL, with a view to block its entry in

the  market.   As  per  him,  such  an  agreement  would  raise  a

presumption of ‘appreciable adverse effect’ on competition.  

27) Explaining the scheme of the Act, Mr. Narasimha referred to the

provisions  of  Section  3  which  prohibits  anti-competitive

agreements of the nature mentioned therein.  He also referred to

the definitions  of  ‘agreement’,  ‘cartel’,  ‘enterprise’ and ‘service’

contained in Section 2 of the Act and submitted that the definition

of ‘agreement’ is not restricted to written agreements, but even

extends to ‘action in concert’,  which, according to him, is wide

enough  to  allegations  of  RJIL,  if  proved  correct,  within  the

mischief of Section 3 of the Act.  He also referred to Section 19(3)

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of the Act which lists certain factors to be considered in analysing

adverse  effect  on  competition  and  submitted  that  creation  of

barriers  to  new  entrants  in  the  market  and  foreclosure  of

competition by hindering entry into the market are to be perceived

as having adverse effect on competition.  He, thus, submitted that

having  regard  to  the  aforesaid  provisions,  the  CCI  wanted  to

investigate  the matter  with  focus on the aspect  as  to  whether

there  was  an  agreement  between  the  respondent  service

providers  and  they  acted  in  concert  pursuant  to  the  said

agreement;  whether it  amounted to anti-competitive act  on the

part  of  these  respondents  and  had  adverse  effect  on  the

competition.   In  the  process,  the  CCI  was  also  supposed  to

examine as to whether the respondents colluded with COAI and

abused their dominant position.  His further argument was that

inquiry into these aspects was within the exclusive domain of the

CCI as it is the CCI which is supposed to ensure that no such

anti-competitive practices are adopted by anybody and if that has

happened, the CCI is empowered to issue directions in terms of

Section 27 of the Act and also impose penalties.  It has power to

impose even lesser penalties as provided in Section 46 of the Act.

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28) Mr.  Narasimha  also  referred  to  Section  60  of  the  Act  which

provides for overriding effect for the Act and reads as under:

"60.  Act to have overriding effect. - The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.”

 It was emphasised that the case of the CCI is not that the

TRAI does not have power to exercise jurisdiction at all  in the

present factual  matrix and there is no conflict  of  jurisdiction or

legal regimes.  Rather, both the TRAI and the CCI exercise their

jurisdiction in their respective fields.  Exercise of jurisdiction by

the CCI to investigate an alleged cartel does not impinge upon

TRAI’s  jurisdiction  to  regulate  the  industry  in  any  way.

Submission  in  this  behalf  was  that  the  TRAI  exercises  its

jurisdiction  by  ensuring  compliance  with  the  interconnect

agreements,  license  conditions,  interconnection  regulations,

quality  of  service  norms  and  regulations  etc.   Based  on  past

experience, the TRAI frames regulations for the improvement of

the telecom industry in the future.   For instance, the June 07,

2005 direction of  TRAI which provided for  a 90-day period for

interconnection has now been replaced by  the  interconnection

regulations  of  2018,  by  which  the  time period  for  provision  of

POIs has been reduced to 30 days, because it was found that

due to technical advancements, it was possible to give POIs in a

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much  shorter  time  frame,  and  parties  were  using  the  90-day

period to delay the provision of  POIs,  as in  the case of  RJIL.

However, the TRAI does not have the power to penalize for past

conduct  which  was  of  anti-competitive  nature.   It  was  further

submitted  that  while  the  competition  law  seeks  to  promote

efficient  allocation  and  utilization  of  resources  by  inter  alia

lowering the entry barriers in the market, the primary objective of

the  sectoral  regulators  like  the  TRAI  is  development  of  their

respective sector.  However, what is important to bear in mind is

that the promotion of competition and prevention of competitive

behaviour may not be high on the agenda of a sectoral regulator

which makes it  prone to ‘regulatory capture’.  The position has

been  very  succinctly  captured  by  the  Report  of  the  Working

Group  on  Competition  Policy,  Planning  Commission  of  India,

Government of India, February 2007 which states as follows:

"7.2.3   The objective of a sectoral regulator is to provide good quality service at affordable rates, but the promotion of  competition  and  prevention  of  anti-competitive behaviour  may  not  be  high  on  its  agenda  or  the  laws governing the regulator may be silent on this aspect.  It is not uncommon for sectoral regulators to be more closely aligned  with  the  interest  of  the  firms  being  regulated, which is also known as ‘regulatory capture’.   Besides, a sectoral  regulator  may  not  have  an  overall  view  of  the economy as a whole and may tend to  apply  yardsticks which  are  different  from  the  ones  used  by  the  other sectoral regulators.  In other words, there is a possibility of the lack of consistency across sectors.  On the other hand,

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CCI will  be able to  apply  uniform competition principles across all sectors of economy.”

(emphasis added)   

The National Competition Policy 2011 has also observed as

following:

"8.3  The objective of  a sectoral  regulator  is  to provide good quality service at affordable rates, but the promotion of  competition  and  prevention  of  anti-competitive behaviour  may  not  be  high  on  its  agenda  or  the  laws governing  the  regulator  may  be  silent  on  this  aspect. Besides, a sectoral regulator may not have an overall view of  the  economy  as  a  whole  and  may  tend  to  apply yardsticks which are different from the ones used by the other  sectoral  regulators.   In  other  words,  there  is  a possibility  of  the  lack  of  consistency  across  sectors  as regards competition issues.  On the other hand, the CCI, which  is  expected  to  have  developed  the  core competence, expertise and capacity in competition related issues, will be able to apply uniform competition principles across  all  sectors  of  economy.   Besides,  enforcement and  penalizing  violations  of  Competition  Act  is  the exclusive area of the CCI.  Even otherwise, the general principle for economic efficiency would be, whoever can do a thing in best and most professional manner should do it.”

(emphasis added)   

29) The learned ASG, on taking support from the above, submitted

that  the  sectoral  regulators,  by  contrast,  will  not  be  as

experienced  in  conducting  competition  analysis  as  the

competition authorities.  Being susceptible to regulatory capture,

the  day-to-day  interactions  between  industry  officials  and

regulatory agency may lead to a commonality of interests that can

interfere with the perspective necessary to evaluate competitive

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harms and to construct remedies that will protect competition for

the benefit of the economy as a whole.  While the sector specific

regulators  typically  impose  and  monitor  various  behavioral

conditions,  the competition agencies are more likely  to  opt  for

structural remedies which would lead the sector to evolve to a

point  where  sufficient  new entry  is  induced thereby  promoting

genuine  competition.   According  to  him,  keeping  in  view  the

aforesaid respective roles in mind, the Parliament in its wisdom

and foresight has built in a mechanism within the Act to address

apparent  conflicts  of  jurisdiction.   The  ‘comity’  between  the

sectoral  regulator  (TRAI)  and  the  market  regulator  (CCI)  is

entirely addressed by a reading of Section 21 and Section 21A of

the Act.  In any case, Section 60 of the Act had an overriding

effect.   To support  his argument,  the learned ASG relied upon

State (NCT of Delhi) v. Sanjay2 wherein this Court dealt with the

issue  of  whether  a  prescription  of  offence  under  the  Mines  &

Minerals Development & Regulation (MMDR) Act would exclude

the application of the Indian Penal Code.  The Court held that due

to the absence of a non-obstante clause, the application of the

Indian Penal Code was not excluded.  In the present case, the

TRAI Act does not apply notwithstanding any other laws, and it

2 (2014) 9 SCC 772

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does not contain an overriding effect provision containing a non-

obstante clause.  The relevant paragraphs of the judgment have

been extracted below:

"62. Sub-section (1-A) of Section 4 of the MMDR Act puts a  restriction  in  transporting  and  storing  any  mineral otherwise than in accordance with the provisions of the Act and the Rules made thereunder. In other words no person will  do  mining  activity  without  a  valid  lease  or  licence. Section  21  is  a  penal  provision according  to  which  if  a person contravenes the provisions of sub-section (1-A) of Section  4,  he  shall  be  prosecuted  and  punished  in  the manner and procedure provided in the Act. Sub-section (6) has been inserted in Section 4 by amendment making the offence cognizable notwithstanding anything contained in the Code of Criminal Procedure, 1973. Section 22 of the Act puts a restriction on the court to take cognizance of any offence punishable under the Act or any Rule made thereunder  except  upon a complaint  made by a person authorised in this behalf. It is very important to note that Section  21  does not  begin  with  a  non obstante clause. Instead of the words “notwithstanding anything contained in any law for the time being in force no court shall take cognizance….”,  the  section  begins  with  the  words  “no court shall take cognizance of any offence.

63.   It  is  well  known  that  a  non  obstante  clause  is  a legislative  device  which  is  usually  employed  to  give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or  some  other  enactment,  that  is  to  say,  to  avoid  the operation and effect of all contrary provisions.”

30) He also premised his  argument  on the basis that  the Act  is  a

special  statute  in  the  field  of  telecommunications  regulation,

including  technical  aspects  connected  thereto,  and  in  case  of

conflict  between  two  special  legislations,  the  later  enactment

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would prevail.  In  Solidaire India Ltd.  v.  Fairgrowth Financial

Services Ltd. & Ors.3, this Court held as under:

"7. Coming to the second question, there is no doubt that the 1985 Act is a special Act. Section 32(1) of the said Act reads as follows:

“32.  Effect  of  the  Act  on  other  laws.—(1)  The provisions of  this Act and of  any rules or schemes made  thereunder  shall  have  effect  notwithstanding anything  inconsistent  therewith  contained  in  any other  law  except  the  provisions  of  the  Foreign Exchange Regulation Act, 1973 (46 of 1973) and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976)  for  the  time  being  in  force  or  in  the Memorandum  or  Articles  of  Association  of  an industrial company or in any other instrument having effect by virtue of any law other than this Act.”

8. The effect of this provision is that the said Act will have effect  notwithstanding  anything  inconsistent  therewith contained in any other law except to the provisions of the Foreign  Exchange  Regulation  Act,  1973  and  the  Urban Land  (Ceiling  and  Regulation)  Act,  1976.  A similar  non obstante  provision  is  contained  in  Section  13  of  the Special Court Act which reads as follows:

“13. Act to have overriding effect.—The provisions of this  Act  shall  have  effect  notwithstanding  anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law, other than this Act, or in any decree or  order of  any court,  tribunal  or  other authority.”

9.  It  is  clear that both these Acts are special  Acts.  This Court has laid down in no uncertain terms that in such an event it is the later Act which must prevail. The decisions cited  in  the  above  context  are  as  follows:  Maharashtra Tubes  Ltd.  v.  State  Industrial  &  Investment  Corpn.  of Maharashtra  Ltd.  [(1993)  2  SCC 144];  Sarwan Singh  v. Kasturi  Lal  [(1977)  1  SCC  750  :  (1977)  2  SCR  421]; Allahabad Bank  v.  Canara Bank  [(2000) 4 SCC 406] and Ram Narain  v.  Simla Banking & Industrial  Co.  Ltd.  [AIR 1956 SC 614 : 1956 SCR 603]”

3 (2001) 3 SCC 71

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31) The  learned  ASG  endeavoured  to  support  his  proposition  by

referring to the contrasting provision contained in Section 14 of

the TRAI Act which provides for dispute resolution in respect of

various  categories  of  persons  before  the  TDSAT,  which

specifically  carves  out  an  exception  in  respect  of  monopolistic

trade practice, restrictive trade practice and unfair trade practice,

which  was  subject  to  the  jurisdiction  of  the  Monopolies  and

Restrictive  Trade  Practices  Commission  (MRTP  Commission).

He submitted that this was another indicator in the TRAI Act itself

from  which  it  can  be  inferred  that  when  it  comes  to  anti-

competitive practices, an embargo is put on the TRAI to deal with

such practices, inasmuch as the Competition Act is enacted to

repeal and replace the obsolete regime of the MRTP Act.  In this

behalf,  he  drew  sustenance  from  Section  8  of  the  General

Clauses Act to submit that the Competition Act could be read in

place of MRTP Act while construing the provisions of Section 14

of the TRAI Act.

32) His another submission, in this hue, was that a distinction needs

to  be  drawn  between  facilitating  competition  (as  provided  in

Section 11 of the TRAI Act) on the one hand and curbing and

deterring  anti-competitive  conduct  and  practices  on  the  other

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hand.  His submission in this behalf was that the function of the

TRAI  under  Section  11(1)(a)(iv)  was  to  facilitate  competition

which  was  purely  recommendatory  in  nature  and  not  part  of

regulatory function of the TRAI, as held in  Union of India and

Another v. Association of Unified Telecom Service Providers

of India and Others4.  He also argued that TRAI has no power to

enforce compliance, pass orders, or give directions of the nature

envisaged under the Act to curb anti-competitive conduct.

33) The learned ASG also relied upon the judgment of the European

Commission in  Deutsche Telekom  v.  European Commission5

wherein  it  was  held  that  it  is  only  if  the  legislative  framework

eliminates the possibility of competition (for example, a statutory

monopoly)  that  the  jurisdiction  of  the  Commission  would  be

excluded.   Following  passage  from  the  said  judgment  was

specifically referred to:

"80.  According to the case-law of the Court of Justice, it is only if anti-competitive conduct is required of undertakings by  national  legislation,  or  if  the  latter  creates  a  legal framework  which  itself  eliminates  any  possibility  of competitive activity on their part, that Articles 81 EC and 82 EC do not apply.  In such a situation, the restriction of competition  is  not  attributable,  as  those  provisions implicitly  require,  to  the  autonomous  conduct  of  the understandings.   Articles  81 EC and 82 EC may apply, however, if  it  is found that the national legislation leaves open  the  possibility  of  competition  which  may  be

4 (2011) 10 SCC 543 5 Case C-280/08 P, Judgment dated 14.10.2010

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prevented,  restricted  or  distorted  by  the  autonomous conduct of undertakings (Joined Cases C-359/95P and C- 379/95P  Commission  and  France  v.  Ladbroke  Racing (1997) ECR I-6265, paragraphs 33 and 34 and the case- law cited).”

34) Mr. Narasimha also referred to another judgment of the General

Court  of  the  European  Union  in  Telefonica  SA  v.  European

Commission  (T-336/07)  wherein it was held that the European

Commission could intervene in the telecommunications market,

even though the entry was regulated through a sectorial regulator.

He pointed out that this decision of the General Court was upheld

in  appeal  by  the  European Court  of  Justice  vide  its  judgment

dated July 10, 2014.

35) Mr. Narasimha also contrasted the investigative regime under the

two Acts, i.e. Section 12 of the TRAI Act vis-a-vis Section 41 read

with Section 36(2) of the Competition Act and submitted that the

Director General under the Competition Act is better equipped to

deal  with  detection  and  investigation  of  anti-competitive

agreements.

36) Labelling as erroneous, the approach of the High Court that CCI

should  await  the  outcome  of  the  proceedings  before  TRAI  to

attain  finality,  answer  given  by  Mr.  Narasimha  was  that  this

approach was erroneous for three reasons.   First, the High Court

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has failed to appreciate the different fields/domains in which the

CCI  and  the  TRAI  operate.   Secondly,  the  course  of  action

proposed by the High Court would result in considerable delay

defeating  the  CCI’s  investigation.   Thirdly,  the  High  Court  has

failed to notice the role played by Section 21A of the Act.   

37) He again emphasised that CCI is not inquiring into the adequacy

of POIs provided to RJIL by the respondents, or compliance with

the  QoS  standards  of  TRAI  and  licence  conditions,  but  was

examining whether the conduct of the respondents was unilateral

or  it  was  the result  of  anti-competitive  agreement.   Insofar  as

requirement of speedy investigation by the CCI is concerned, he

submitted  that  such  a  requirement  has  already  been

acknowledged  and  mandated  by  this  Court  in  Competition

Commission of India  v.  Steel Authority of India Limited and

Another6.   Further,  if  at  any  stage,  prior  to  or  after  taking  a

decision, the CCI is of the view that opinion of TRAI is required, it

could  always  make  reference  under  Section  21A  of  the

Competition Act.

38) On  the  second  proposition,  namely,  the  High  Court  could  not

have entertained writ jurisdiction in respect of an order passed

6 (2010) 10 SCC 744

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under  Section  26(1)  of  the  Competition  Act,  Mr.  Narasimha

clarified that he was not taking the position that the High Court ,in

no circumstance/situation,  exercise its  extraordinary  jurisdiction

under  the  said  provision,  in  spite  of  an  order  passed  under

Section 26 of the Competition Act.  His submission, however, was

that  as per  the judgment  in  Steel  Authority of  India Limited

case,  such  jurisdiction  would  be  very  narrow  and  is  to  be

exercised  in  exceptional  cases.   According  to  him,  no  such

exceptional circumstance arises in the instant case as order in

question was only a  prima facie  view of  the CCI and such an

order  was  administrative  in  nature.   Learned  ASG specifically

referred to the following discussion in the case of Steel Authority

of India Limited:

"38.  In contradistinction, the direction under Section 26(1) after  formation  of  a  prima  facie  opinion  is  a  direction simpliciter  to  cause  an  investigation  into  the  matter. Issuance  of  such  a  direction,  at  the  face  of  it,  is  an administrative  direction  to  one  of  its  own  wings departmentally  and  is  without  entering  upon  any adjudicatory process. It does not effectively determine any right or obligation of the parties to the lis. Closure of the case causes determination of rights and affects a party i.e. the  informant;  resultantly,  the  said  party  has  a  right  to appeal against such closure of case under Section 26(2) of the Act. On the other hand, mere direction for investigation to  one  of  the  wings  of  the  Commission  is  akin  to  a departmental  proceeding  which  does  not  entail  civil consequences for any person, particularly, in light of the strict confidentiality that is expected to be maintained by the  Commission  in  terms  of  Section  57  of  the  Act  and Regulation 35 of the Regulations.

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xx xx xx

97.  The above reasoning and the principles enunciated, which are consistent  with the settled canons of  law,  we would adopt even in this case. In the backdrop of these determinants,  we may refer to the provisions of  the Act. Section 26, under its different sub-sections, requires the Commission  to  issue  various  directions,  take  decisions and  pass  orders,  some  of  which  are  even  appealable before the Tribunal. Even if it is a direction under any of the  provisions  and  not  a  decision,  conclusion  or  order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage  of  forming  a  prima  facie  view,  as  required  under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such  opinion  should  be  formed  on  the  basis  of  the records, including the information furnished and reference made to the Commission under the various provisions of the  Act,  as  aforereferred.  However,  other  decisions  and orders, which are not directions simpliciter and determining the rights of the parties, should be well reasoned analysing and  deciding  the  rival  contentions  raised  before  the Commission  by  the  parties.  In  other  words,  the Commission is  expected to  express  prima facie  view in terms of Section 26(1) of the Act, without entering into any adjudicatory  or  determinative  process  and  by  recording minimum  reasons  substantiating  the  formation  of  such opinion, while all its other orders and decisions should be well reasoned.”

39)  He also drew the attention of the Court to paragraph 25 of the

CCI’s  order  dated  April  21,  2017  as  per  which  the  Director

General  was  asked  to  conduct  the  investigation  without  being

swayed in any manner whatsoever by the observations made by

the  CCI  in  the  said  order.   He  submitted  that  in  these

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 44 of 122

circumstances the said order was merely administrative in nature

and could not be labelled as quasi-judicial order.  In the same

vein his further submission was that the observations of the High

Court that the CCI has decided several issues and elements with

clear adverse consequences was clearly erroneous and contrary

to  the  well-established  principle  of  law.   In  support,  he  also

referred to the judgments of the Bombay and the Allahabad High

Courts.

40) Dilating on his third proposition, namely, the CCI order was not

perverse, he submitted that there was sufficient material before

the CCI for formation of a prima facie opinion that the conduct of

the  respondents  was  violative  of  Section  3(3)(b)  of  the

Competition Act.  He submitted that such material was taken into

consideration and discussed in the order itself and he referred to

certain paragraphs of the order dated April 21, 2017 in this behalf.

In  the  process,  he  again  emphasised  that  none  of  the

observations made in the said order are conclusive findings in

any way and not binding on the Director General and this was

only the starting point, as held in the case of  Excel Crop Care

Limited.

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41) M/s. Harish Salve, Dr. A.M. Singhvi, Ramji Srinivasan and Amit

Sibal, learned senior advocates, argued on behalf of RJIL.  Their

detailed  submissions  were  almost  on  the  lines  on  which  Mr.

Narasimha, learned ASG, had argued on behalf of the CCI.  

42) In the first place, it was emphasised that insofar as dragging of

COAI  into  this  investigation is  concerned,  it  was sought  to  be

justified  by  placing  reliance  on  Section  3  of  the  Act  which

specifically  recognises  possible  mischief  by  an  association  of

persons or an association of enterprises.  It  was stressed that

Section 3(3) recognises certain agreements as per se violations,

and shall  be presumed to  have appreciable  adverse effect  on

competition.   Submission was that  associations of  enterprises,

after the operation of the Act are now liable to be viewed with

great  suspicion  in  view  of  the  fact  that  by  its  very  nature  an

association  of  competing  enterprises  provides  a  convenient

platform for such competitors to assemble together.   

43) The involvement of COAI was sought to be proved by arguing

that the IDOs have not argued that COAI letters must be ignored

since  the  decision  to  provide  or  not  to  provide  POIs  to  its

competitor was taken by each of them independently either Airtel

by itself, or Vodafone by itself, or Idea by itself.  But the facts of

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the case disclose active involvement  by that  common platform

called  COAI.   As  per  the  Reliance  Jio,  the  COAI  admittedly

facilitated exchange of  information between the three IDOs.  It

draws  references  in  its  response  to  private  letters  exchanged

between  Reliance  Jio  and  each  of  the  IDOs  separately.  The

decisions of the COAI are not decisions of a majority comprising

of  a  large and diverse pool  of  members that  could  suggest  a

democratic decision making.  By its very constitution, the COAI’s

majority views were nothing but the common views of the three

IDOs that controlled it.  It was also argued that in the preliminary

conference and in the High Court defence raised was that COAI

was not a front for these three IDOs but was merely espousing

general industry issues.  It does not explain how it chanced upon

private  documents  and  correspondence  exchanged  bilaterally

between  RJIL with  each  of  the  IDOs  separately.   It  does  not

explain how it voiced the common decisions on behalf of those

three IDOs.   The COAI  was not  the fourth  voice but  was the

prohibited chorus of those three colluding competitors.  Thus, no

legitimacy can be attributed to actions of the COAI.  Attention of

the Court was drawn to the letter dated August 08, 2016 (before

the announcement of launch of services by Reliance Jio dated

September 01, 2016) and the letter dated September 02, 2016

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(after the launch of  Reliance Jio)  which,  according to Reliance

Jio, expose the common collusive conduct of these competitors to

first delay the launch and secondly to scuttle the launch.  It was

also contended that  the concerted,  collusive conspiracy by the

three existing IDOs (having a collective market share of 65%) to

meet with each other under auspices of their association called

Cellular  Operators  Association  of  India  (COAI)  and  evolve  a

common strategy to respond to challenge posed by a new entrant

RJIL, is by itself violative of Section 3 of the Act.  The learned

senior counsel pointed out that the defence of the COAI is that it

was merely lobbying the Government for enacting a change in

law or regulation to stop Reliance Jio from carrying out test on

such  a  large  scale  by  introducing  limits  on  number  of  Test-

subscribers.   However,  the letters  of  COAI  revealed  an active

participation of taking sides of certain operators whose interest

was to hinder, or at least slowdown the entry of the new operator.

COAI announced unilateral decisions like virtual boycott (which is

not the same as lobbying for change of regulation).  To support

this argument, reference was made to the decisions of Supreme

Court of United States in FTC v. Supreme Court Trial Lawyers

Association7 wherein it has observed that:

7 493 US 411 (1990)

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"no  violation  of  the  Act  can  be  predicated  upon  mere attempts to influence the passage or enforcement of laws,” even  if  the  defendants’  sole  purpose  is  to  impose  a restraint  upon the trade of  their competitors.  But in the Noerr case the alleged restraint of trade was the intended consequence of public action; in this case the boycott was the  mans  by  which  respondents  sought  to  obtain favourable  legislation.   The  restraint  of  trade  that  was implemented  while  the  boycott  lasted  would  have  had precisely the same anticompetitive consequences during that  period even if  no legislation had been enacted.  In Noerr,  the  desired  legislation  would  have  created  the restraint  on  the  truckers’  competition;  in  this  case  the emergency legislative response to the boycott put an end to the restraint.”

44) On the submission that the dangers of a trade association being

hijacked to further the cause of only a few competitors and yet

attempt to give the entire exercise a veneer of respectability has

been also commented upon in the recent decision of this Court in

Competition Commission of India v. Coordination Committee

of  Artistes  and  Technicians  of  West  Bengal  Film  and

Television & Ors.8 wherein it has been observed that:

"47.   In  the  instant  case,  admittedly  the  Coordination Committee, which may be a “person” as per the definition contained in Section 2(l) of the Act, is not undertaking any economic activity by itself.  Therefore, if  we were to look into the “agreement” of such a “person” i.e. Coordination Committee, it may not fall under Section 3(1) of the Act as it is not in respect of any production, supply, distribution, storage,  acquisition  or  control  of  goods  or  provision  of services. The Coordination Committee, which as a trade union  acting  by  itself,  and  without  conjunction  with  any other, would not be treated as an “enterprise” or the kind of “association of  persons” described in Section 3.  A trade union  acts  as  on  behalf  of  its  members  in  collective

8 (2017) 5 SCC 17

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bargaining  and  is  not  engaged  in  economic  activity.  In such  circumstances,  had  the  Coordination  Committee acted  only  as  trade  unionists,  things  would  have  been different. Then,  perhaps,  the view taken by the Tribunal could be sustained. However, what is lost in translation by the Tribunal i.e. in applying the aforesaid principle of the activity  of  the  trade  union,  is  a  very  pertinent  and significant fact, which was taken note of by the DG as well as CCI in its majority opinion.  It is this: the Coordination Committee  (or  for  that  matter  even    EIMPA  )  are,  in  fact, association  of  enterprises  (constituent  members)  and these  members  are  engaged  in  production,  distribution and  exhibition  of  films. EIMPA is  an  association  of  film producers, distributors and exhibitors, operating mainly in the  State  of  West  Bengal.  Likewise,  the  Coordination Committee  is  the  joint  platform  of  Federation  of  Senior Technician and Workers of Eastern India and West Bengal Motion Pictures Artistes' Forum. Both   EIMPA   as well as the Coordination  Committee  acted  in  a  concerted  and coordinated manner. They joined together in giving call of boycott of the competing members i.e. the informant in the instant case and, therefore, the matter cannot be viewed narrowly  by  treating Coordination Committee as a  trade union, ignoring the fact that it is backing the cause of those which are “enterprises”. The constituent members of these bodies take decision relating to production or distribution or exhibition on behalf of the members who are engaged in the similar or identical business of production, distribution or  exhibition  of  the  films.  Decision  of  these  two  bodies reflected collective intent of the members. When some of the members are found to be in the production, distribution or exhibition line, the matter could not have been brushed aside by merely giving it a cloak of trade unionism. For this reason,  the  argument  predicated  on  the  right  of  trade union under Article 19 of the Constitution, as professed by the Coordination Committee, is also not available.”

(emphasis supplied)   

Arguments: The respondents:

45) Mr. Darius J. Khambata, senior advocate, appeared on behalf of

Idea Cellular Ltd.  Mr. Gopal Jain and Mr. Navroz Seervai, senior

advocates,  appeared on behalf  of  Bharti  Airtel  Ltd.   Mr.  Ranjit

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Kumar,  Mr.  Arvind  Datar  and  Mr.  Sidharth  Luthra,  senior

advocates,  appeared on  behalf  of  Vodafone India  Ltd.   Mr.  P.

Chidambaram, senior advocate, appeared on behalf of the COAI.

TRAI had also intervened in the matter and supported the legal

submission  of  the  IDOs,  namely,  that  TRAI  had  the  exclusive

jurisdiction  to  deal  with  the  matter,  i.e.  there  was  a  complete

absence of  jurisdiction  in  CCI  to  deal  with  the  issue  at  hand.

Instead  of  taking  note  of  the  submissions  of  these  counsel

separately,  we  are  taking  note  of  the  submissions  in  a

consolidated manner as that would avoid repetition.

46) The  submissions  of  the  respondents  can  be  paraphrased  as

under:  

(i) The TRAI Act, being a special law, ousts the jurisdiction of

CCI  to  examine  the  telecom sector.   In  that  sense,  exclusive

jurisdiction vests in TRAI to regulate the telecom sector, including

competition related issues, thereby ousting the jurisdiction of the

CCI altogether.

(ii) Even if the CCI has the jurisdiction, TRAI’s jurisdiction will

prevail.

(iii) In the alternative, the jurisdictional facts, in any case, had to

be determined by the TRAI in the first place.  Since there was

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absence of jurisdictional facts, the CCI could not have proceeded

with the matter and ordered the investigation.  Thus, the CCI’s

order for carry out investigation is premature.

(iv) The impugned order passed by the CCI under Section 26(1)

of  the  Competition  Act  applies  the  ‘prima  facie  test’  and

consequences of such an order are grave.  Such an order was

quasi-judicial in nature and, therefore, amenable to judicial review

under  Article  226  of  the  Constitution  of  India.   Thus,  the  writ

petitions  filed  by  the  IDOs  challenging  this  order  were

maintainable.

(v) On merits,  the  prima facie  order passed by the CCI was

without considering the material submitted by the IDOs.  In this

behalf it was argued that the IDOs had provided sufficient POIs

and  given  ample  proof  thereof,  which  was  not  taken  into

consideration by the CCI while passing the impugned order under

Section 26(1) of the Competition Act.  This also becomes a valid

ground to challenge the order by filing writ petition under Article

226 of the Constitution of India.

47) Insofar as the argument of the respondents that the TRAI Act is a

complete code and the jurisdiction of CCI is totally ousted, the

argument proceeded on the following basis:

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The real issue which arises is comparison of two regimes –

one regulated  by  TRAI  under  the  Indian  Telegraph Act,  1885,

Wireless  Telegraphy  Act,  1933  and the  TRAI  Act,  1997  which

together  forms  a  comprehensive  and  complete  code;  and  the

other  being  CCI  under  the  Competition  Act.   The  various

provisions  under  these legislations seen with  the terms of  the

License  Agreement  show  that  the  issues  arising  out  of

interconnection between different operators shall be determined

within  the  overall  framework  of  the  interconnection

regulations/directions/orders issued by TRAI from time to time.

The Object and Reasons of the TRAI Act itself lays down that it is

mandated to make arrangements for protection and promotion of

consumer interest  and ensuring fair  competition and to ensure

orderly  and healthy growth of  telecommunication infrastructure.

Moreover, the competition in the telecom sector is of a different

kind  as  it  has  to  function  under  the  constant  monitoring  and

regulation of TRAI.  TRAI effectively plays the role of a watchdog

of the sector as otherwise the entire sector would collapse if there

is no interdependence between the telecom operators.  Moreover,

under  Section  11(1)(a)(iv)  of  the  TRAI  Act,  the  authority  is

required to take measures to facilitate competition in the market.

CCI can ensure competition only in an unregulated sector and not

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 53 of 122

in  the likes of  the telecom sector  wherein  even the tariffs  are

capped/determined by TRAI.

48) On the aforesaid basis, the submission was that:

(a) The TRAI Act is a complete code.

(b) Exclusive jurisdiction vests in TRAI to regulate the telecom

sector including competition related issues.

(c) The TDSAT has the exclusive jurisdiction to examine the

disputes  between  licensees  including  the  one  raised  by  RJIL

before CCI.

(d) CCI has no jurisdiction to decide disputes pertaining to the

telecom sector.

In  this hue it was submitted that the Statement of Objects

and  Reasons  of  the  TRAI  Act  made  it  abundantly  clear  by

satisfying that  TRAI was supposed to make "arrangements for

protection and promotion of consumer interest and ensuring fair

competition...".   It  was,  thus,  clear  that  even  the  competition

aspects of the telecom sector were within the domain of TRAI.

The respondents also drew comparison of the Preamble of the

Competition Act with that of the TRAI Act to point out that insofar

as dealing with the issue of fair competition in telecom sector is

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concerned, it was overlapping to a great extent in the following

manner:

Competition  Act TRAI Act An Act to provide, keeping in view the economic  development  of  the  country, for the establishment of a Commission to

“prevent practices having adverse effect on competition

to  promote  and  sustain  competition  in markets

to protect interests of consumers and  

to ensure freedom of trade carried on by other  participants  in  the  markets,  in India

for  matters  connected  therewith  or incidental thereto”

An  Act  to  provide  for  the establishment  of  the  Telecom Regulatory Authority of India and the  Telecom  Dispute  Settlement and Appellate Tribunal (“TDSAT”) to

[-]

[for  protection  and  promotion  of consumer  interest  and  ensuring fair  competition  (Statement  of Object and Reasons)]

to  protect  the  interest  of  the service providers and consumers of the telecom sector (Preamble)

to  promote  and  ensure  orderly growth of the telecom sectoral

For  matters  connected therewith and incidental thereto

49) It was submitted that pursuant to Section 11(1)(a)(iv) read with

Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act (including directions

and regulations issued by TRAI), the TRAI has been statutorily

mandated to perform functions on a variety of matters including

measures  aimed  at  facilitating  competition  and  regulated

interconnection between service providers.   Reliance was also

placed on Section 12 of the TRAI Act which empowers TRAI with

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vast  powers  to  discharge  its  functions,  including  to  call  for

information,  conduct  investigations  and  issue  such  necessary

directions  as  it  may  deem  necessary  for  the  discharge  of  its

functions.  Moreover, TRAI has also been empowered to issue

appropriate  directions  under  Section  12  and  make  regulations

under Section 36 of the TRAI Act.  Section 29 of the TRAI Act

provides for penalties for contravention of directions of the TRAI.

Further, under Section 14A of the TRAI Act, it has been provided

that  any  person  may  make  an  application  before  the  TDSAT.

With regard to the jurisdiction, Section 15 and 27 of the TRAI Act

provide  for  explicit  bar  on  jurisdiction  of  the  civil  courts  to

determine any matter with regard to which TDSAT or TRAI have

been empowered by or under the TRAI Act.

50) It was submitted that in the present case, at the time RJIL filed its

Information before the CCI on November 08, 2016 as also when

the  prima facie order was passed on April 21, 2017, TRAI was

seized of the matter pertaining to provisioning of POIs and even

made certain recommendations to the DoT on October 21, 2016.

Accordingly, TRAI had assumed jurisdiction and was exercising

the  same.   Thus,  the  dispute  was  being  dealt  with  and  was

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addressed by the TRAI and even on this ground, the jurisdiction

of the CCI stands ousted.

51) The TDSAT has the exclusive jurisdiction to examine the disputes

between licensees including the one raised by RJIL before CCI.

This very submission on the exclusion of CCI’s jurisdiction was

sought to be projected from another angle.  It was submitted that

in  the  Information  filed  by  RJIL before  the  CCI,  Reliance  Jio

stressed:

(a) The dispute raised by RJIL before the CCI pertains to the

specific  performance  of  the  Interconnect  Agreement  and  the

rights and liabilities arising therefrom;

(b) The Interconnect Agreement is completely regulated by the

TRAI inter alia under Section 11(1)(b)(ii), (iii), (iv) of the TRAI Act

read  with  the  Quality  of  Service  Regulations,  2009  issued

thereunder.

The argument was that the prayers sought by RJIL in the

Information  filed  before  the  CCI  clearly  demonstrate  that  RJIL

was seeking specific performance of the Interconnect Agreement.

Hence,  RJIL has  dressed up  what  is  essentially  a  contractual

complaint into anti-competition clothing.  In the present dispute,

upon a meaningful  reading of  the Information it  can clearly be

Civil Appeals arising out of SLP (C) No. 35574 of 2017 & Ors. Page 57 of 122

seen  that  through  clever  drafting,  RJIL  has  dressed  up  the

allegations of delay/denial of the POIs as alleged anti-competitive

behaviour.  In this behalf, reliance was placed on the decision of

this Court in Begum Sabiha Sultan v. Nawab Mohd. Mansur Ali

Khan & Ors.9, wherein it was held:

"10.  There is no doubt that at the stage of consideration of the return of the plaint under Order 7 Rule 10 of the Code, what is to be looked into is the plaint and the averments therein. At the same time, it is also necessary to read the plaint in a meaningful manner to find out the real intention behind the suit. In Moolji Jaitha and Co. v. Khandesh Spg. and  Wvg.  Mills  Co.  Ltd.  [AIR 1950 FC 83]  the  Federal Court observed that: (AIR p. 92, para 24)

“The nature of the suit and its purpose have to be determined by reading the plaint as a whole.”

It was further observed: (AIR p. 92, para 25)

“The inclusion or absence of a prayer is not decisive of the true nature of the suit, nor is the order in which the prayers are arrayed in the plaint. The substance or  object  of  the  suit  has  to  be  gathered  from the averments made in the plaint and on which the reliefs asked in the prayers are based.”

It was further observed: (AIR p. 98, para 59)

“It  must  be  borne  in  mind  that  the  function  of  a pleading is only to state material facts and it is for the court to determine the legal result of those facts and to mould the relief in accordance with that result.”

52) In  support  of  the  submission  that  a  special  legislation  i.e.  the

TRAI Act, will prevail over the provisions of the Competition Act,

which according to the respondents is general in nature, reliance

9 (2007) 4 SCC 343

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has  been  placed  on  the  decisions  of  this  Court  in  State  of

Punjab v. Labour Court, Jullundur & Ors.10.  In the said matter,

the  Court  was  inter  alia  seized  of  the  issue  whether  the

employee-respondents  were  at  liberty  to  seek  the  payment  of

gratuity by invoking the remedy available under Section 33-C(2)

of the Industrial Disputes Act, 1947 as opposed to the Payment of

Gratuity Act, 1972.  In deciding the said dispute, it was held that:

"7. It is apparent that the Payment of Gratuity Act enacts a complete code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right of payment of gratuity, indicates when the  right  will  accrue,  and  lays  down  the  principles  for quantification of the gratuity. It provides further for recovery of  the  amount,  and  contains  an  especial  provision  that compound  interest  at  nine  per  cent  per  annum  will  be payable on delayed payment. For the enforcement of its provisions,  the  Act  provides  for  the  appointment  of  a controlling  authority,  who  is  entrusted  with  the  task  of administering  the  Act.  The  fulfilment  of  the  rights  and obligations of the parties are made his responsibility, and he has been invested with an amplitude of power for the full discharge of that responsibility. Any error committed by him  can  be  corrected  in  appeal  by  the  appropriate Government  or  an  Appellate  Authority  particularly constituted under the Act.

8.  Upon  all  these  considerations,  the  conclusion  is inescapable that Parliament intended that proceedings for payment of gratuity due under the Payment of Gratuity Act must  be taken under  that  Act  and not  under  any other. That being so, it must be held that the applications filed by the employee respondents under Section 33-C(2) of  the Industrial  Disputes Act did not lie, and the Labour Court had no jurisdiction to entertain and dispose of them. On that ground, this appeal must succeed.”

(emphasis supplied)   

10 (1980) 1 SCC 4

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53) Applying the aforesaid tests to the present case, the submission

of the respondents is that:

(a) The subject  area of  competition  law is  dealt  with  by the

Competition Act, 2002.

(b) The  TRAI  Act,  1997  is  a  complete  code  in  itself  and

regulates the Telecom Sector.

(c) The Preamble, the Statement of Objects and Reasons and

Section 11(1) of the TRAI Act provide the TRAI with the power to

inter alia regulate competition in the telecom sector.

(d) Accordingly,  being  the  special  law regarding  the  telecom

sector,  as  regards  competition  issues  arising  in  the  telecom

sector, the TRAI Act would prevail over the Competition Act.

54) Replying to the argument of the appellants that the TRAI Act as

well as the Competition Act are both special statutes and hence,

the rule of statutory interpretation of special law prevailing over

the general  law will  be inapplicable in the present dispute,  the

respondents  referred  to  the  decision  of  this  Court  in  Ashoka

Marketing Ltd. & Anr. v. Punjab National Bank & Ors.11.  In the

said  case,  the  Court  was  seized  of  an  issue  on  whether  the

11 (1990) 4 SCC 406

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provisions  of  the  Public  Premises  (Eviction  of  Unauthorised

Occupants) Act, 1971 would override the provisions of the Delhi

Rent Control Act, 1958 in relation to the premises belonging to

Punjab National Bank Ltd., a body corporate under the Banking

Companies (Acquisition and Transfer of Undertakings) Act, 1970.

Each side argued that the enactment relied upon by it is a special

statute and the other enactment is general.  The Court held that

the  Rent  Control  Act  is  a  special  statute  regulating  the

relationship of landlord and tenant in the Union Territory of Delhi

and even the Public Premises Act is a special statute relating to

eviction of unauthorised occupants from public premises.  While

concluding  that  both  the  enactments  are  special  statutes,  the

Court held:

""61. ...in  the  case  of  inconsistency  between  the provisions  of  two  enactments,  both  of  which  can  be regarded  as  special  in  nature,  the  conflict  has  to  be resolved by reference to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the relevant provisions therein.

64. ...In  our  opinion,  therefore,  keeping  in  view  the object  and purpose underlying both the enactments viz. the  Rent  Control  Act  and  the  Public  Premises  Act,  the provisions of the Public Premises Act have to be construed as overriding the provisions contained in the Rent Control Act.”

(emphasis supplied)   

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55) Heavy reliance was placed on the judgment of the United States

Supreme Court in the case of  Credit Suisse  v.  Billing et al12.

Here the submission was that if the CCI is permitted to examine

the  information  of  RJIL  that  it  was  to  be  provided  POIs

immediately despite there being a period of 90 days in the ICA,

the following would be the consequences:

(i) The same may cause a threat and may alter the functioning

of telecom sector on account of threat of intervention of CCI even

where the acts are in accordance with TRAI’s Regulations.  The

same would threaten efficient functioning of the telecom sector.   

(ii) The additional benefits to competition would be very small

as the TRAI Regulations anyway have been framed keeping in

mind “facilitation of competition” in telecom sector.

(iii) The same would encourage future actions before CCI when

telecom related issues will be dressed up as competition issues.

It was the fervent plea that in order to avoid such conflict of

standards and norms, the TRAI Act being the sectoral law and the

TRAI  is  already  seized  of  the  matter,  the  CCI  should  not  be

allowed to proceed.   

56) According  to  the  respondents,  the  jurisdictional  facts  in  the

present matter would be:

12 551 US 264 (2007)

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(a) Failure to provide adequate POIs in the test phase; or

(b) Delay in providing POIs; or

(c) Providing inadequate POIs.

57) Mr.  Datar,  in  particular,  submitted  that  from  a  perusal  of  the

extensive pleadings and findings of the High Court, it is manifest

that  the  above  issues  are  pending  consideration  before  the

TRAI/DoT  as  well  as  in  connected  writ  petitions  pending

adjudication before the Delhi High Court.   The emphasis was that

there  must  first  be  clear  findings  on  the  above  issues  in  the

context of the TRAI Act,  Rules and Regulations.   According to

him, that alone is not enough.  It is necessary to establish that

violation  of  the  provisions  of  TRAI  Act  amounts  to  “abuse  of

dominance”  or  “anti-competitive  agreements”.   As  per  him,

Section 21 and 21A of  the Competition  Act  make it  clear  that

jurisdiction of the CCI is divided into parts, viz:

(a) Economic activity not regulated by any statutory authority.

(b) Economic activity regulated by a statutory authority.

In the latter case, Section 21A is mandatory and the CCI

can  act  only  in  accordance  with  Sections  21A(1)  and  (2).

Submission was that in economic activity that is regulated by a

statutory authority,  CCI can exercise powers under  Section 26

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only after complying with Section 21A.  It was predicated on the

principle  that  when the  law prescribes things to  be done in  a

particular  manner,  all  other  modes  of  action  are  prohibited.

(Bhavnagar University v. Palitana Sugar Mill (P) Ltd. & Ors.13)

58) In this hue, it was also argued that the decision of this Court in

Competition Commission of India  v.  Steel Authority of India

Ltd. & Anr.14 has no application to the present case because it

does  not  deal  with  a  sector  that  is  regulated  by  a  statutory

authority.   On  the  other  hand,  reliance  was  placed  on  the

judgment in the case of Carona Ltd. v. Parvathy Swaminathan

& Sons15.

59) It  was  submitted  that  the  facts  of  the  SAIL case  are  clearly

distinguishable from the present case as the main issue before

the Supreme Court in SAIL was whether an appeal can be filed

against an order passed under Section 26(1) of the Competition

Act.   Distinction  was sought  to  be  drawn on  the  basis  of  the

following facts:

(a) in the present case, CCI issued notice and called the TSPs

including Vodafone for  a preliminary conference to be held on

13 (2003) 2 SCC 111 14 (2010) 10 SCC 744 15 (2007) 8 SCC 559

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January  31,  2017 and the parties  were heard on January  31,

2017, February 07, 2017 and February 08, 2017;

(b) hearing  was  held  before  CCI  and  detailed  notes  on

arguments  were  submitted  with  supporting  documents  by  the

TSPs including Vodafone;

(c) the  prima facie  order  has been passed after  hearing the

submissions  of  the  TSPs  holding  that  a  prima  facie  case  of

violation of the Competition Act has been made out; and

(d) the prima facie order also provide for reasons in support of

the decision arrived at by the CCI.

60) Justifying the observations of the High Court that the order of the

CCI  cannot  be  treated  as  an  'administrative  order',  it  was

submitted that the order was passed by the CCI after collecting

the  detailed  information  from  the  parties  and  by  holding  the

conferences, calling material details, documents, affidavits and by

recording the opinion.  It was also submitted that the High Court

had  rightly  noted  that  majority  decision  of  the  CCI  has  given

reasons  by  overlooking  the  law  and  the  record.   It  was  a

reasoned  order/direction  and,  therefore,  judicial  review  is

permissible.   In this behalf  it  was submitted that  the aforesaid

view was taken on the basis of the following:   

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(a) whilst  an  order  under  Section  26(2)  has  been  made

appealable, an order under Section 26(1) is not appealable;

(b) an order under Section 26(1) of the Competition Act  is a

direction  simpliciter  to  the  Director  General  to  cause  an

investigation;

(c) at the stage of passing of the order under Section 26(1),

there is no adjudicatory process undertaken by the CCI as there

is no determination of any right or obligation of the parties to the

lis; and

(d) the order passed under Section 26(1) does not entail civil

consequences for any person as against a Section 26(2) order

wherein rights of the informant are affected.

61) In the alternative, it was argued that the observations of the Court

limited to the extent of the nature of powers vested in the CCI

under Section 26(1) needs reconsideration by this Court.

Our discussion:

62) We have noted of three propositions which were advanced by Mr.

Narasimha, learned Additional Solicitor General.  These are the

main issues which arise for consideration.  In fact, other counsel

for  the  parties  have  also  made  their  submissions  on  these

aspects.  We would, therefore, focus our discussion on the said

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propositions.  We would like to mention that while analysing the

arguments of all the parties, we have kept in mind their detailed

submissions  as  well  as  the  principles  laid  down  in  various

judgments  cited  by  them,  even  if  we  have  not  made  specific

mention to these judgments in our discussion.

A. Jurisdiction of the CCI

63) This is the principal issue which is the bone of contention.

64) In order to discuss and analyse this aspect, it  would be apt to

take note of the salient provisions of the Competition Act as well

as the TRAI Act inasmuch as that would facilitate appreciating the

arguments so advanced.

65) In the wake of globalisation and keeping in view the economic

development  of  the  country,  responding  to  opening  of  its

economy and resorting to liberalisation, need was felt to enact a

law  that  ensures  fair  competition  in  India  by  prohibiting  trade

practices  which  cause  an  appreciable  adverse  effect  on

competition within markets in India and for establishment of an

expert  body  in  the  form  of  Competition  Commission  of  India,

which would discharge the duty of curbing negative aspects of

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competition, the Competition Act, 2002 has been enacted by the

Parliament.

66) Having regard to this specific objective which the Act  seeks to

achieve,  provisions  contained  therein,  which  are  relevant  for

deciding the instant appeals, are reproduced below:

"2.  Definitions. –  

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(b)   “agreement”  includes  any  arrangement  or understanding or action in concert, –  

(i)  whether or not, such arrangement, understanding or action is formal or in writing; or

(ii)  whether or not such arrangement, understanding or  action  is  intended  to  be  enforceable  by  legal proceedings;

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(c) “cartel” includes an association of producers, sellers, distributors,  traders  or  service  providers  who,  by agreement amongst themselves, limit control or attempt to control  the  production,  distribution,  sale  or  price  of,  or, trade in goods or provision of services;

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(g)   “Director  General”  means  the  Director-General appointed under sub-section (1) of section 16 and includes any  Additional,  Joint,  Deputy  or  Assistant  Directors General appointed under that section;

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(m)  “practice” includes any practice relating to the carrying on of any trade by a person or an enterprise;

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(u)  “service” means service of any description which is made  available  to  potential  users  and  includes  the provision of  services in connection with business of  any industrial  or  commercial  matters  such  as  banking, communication,  education,  financing,  insurance,  chit funds, real estate, transport,  storage, material  treatment, processing, supply of electrical or other energy, boarding, lodging,  entertainment,  amusement,  construction,  repair, conveying of news or information and advertising;

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3.  Anti-competitive agreements. – (1)  No enterprise or association  of  enterprises  or  person  or  association  of persons  shall  enter  into  any  agreement  in  respect  of production,  supply,  distribution,  storage,  acquisition  or control of goods or provision of services, which causes or is  likely  to  case  an  appreciable  adverse  effect  on competition within India.

(2)   Any agreement  entered into in contravention of  the provisions contained in sub-section (1) shall be void.

(3)  Any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried  on,  or  decision  taken  by,  any  association  of enterprises  or  association  of  persons,  including  cartels, engaged in identical or similar trade of goods or provision of services, which –

(a)  directly or indirectly determines purchase or sale prices;

(b)   limits  or  controls  production,  supply,  markets, technical  development,  investment  or  provision  of services;

(c)   shares  the  market  or  source  of  production  or provision  of  services  by  way  of  allocation  of geographical  area  of  market,  or  type  of  goods  or services,  or  number of  customers in the market  or any other similar way;

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(d)   directly  or  indirectly  results  in  bid  rigging  or collusive  bidding,  shall  be  presumed  to  have  an appreciable adverse effect on competition:

Provided that nothing contained in this sub-section shall apply  to  any  agreement  entered  into  by  way  of  joint ventures  if  such  agreement  increases  efficiency  in production,  supply,  distribution,  storage,  acquisition  or control of goods or provisions of services.

Explanation.  –  For  the purpose of  this  sub-section,  “bid rigging”  means  by  agreement,  between  enterprises  or persons referred to in sub-section (3) engaged in identical or  similar  production or  trading of  goods or  provision of services, which has the effect  of  eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding.

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19.   Inquiry  into  certain  agreements  and  dominant position of enterprise. – (1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on its own motion or on -

“(a)  receipt of any information, in such manner and accompanied by such fee as may be determined by regulations,  from  any  person,  consumer  or  their association or trade association; or

(b)   a  reference  made  to  it  by  the  Central Government  or  a  State  Government  or  a  statutory authority.

(2)  Without prejudice to the provisions contained in sub- section (1), the powers and functions of the Commission shall  include the powers and functions specified in sub- sections (3) to (7).

(3)  The Commission shall, while determining whether an agreement  has  an  appreciable  adverse  effect  on competition under section 3, have due regard to all or any of the following factors, namely:

(a)  creation of barriers to new entrants in the market;

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(b)  driving existing competitors out of the market;

(c)  foreclosure of competition by hindering entry into the market;

(d)  accrual of benefits to consumers;

(e)   improvements  in  production  or  distribution  of goods or provision of services;

(f)   promotion of  technical,  scientific  and economic development by means of production or distribution of goods or provision of services.

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21A.   Reference  by  Commission.  –  (1)  Where  in  the course of a proceeding before the Commission an issue is raised  by  any  party  that  any  decision,  which  the Commission  has  taken  during  such  proceeding  or proposes to take, is or would be contrary to any provision of this Act whose implementation is entrusted to a statutory authority, then the Commission may make a reference in respect of such issue to the statutory authority:

Provided that the Commission, may, suo motu, make such a reference to the statutory authority.

(2)  On receipt of a reference under sub-section (1), the statutory authority shall give its opinion, within sixty days of receipt of such reference, to the Commission which shall consider  the  opinion  of  the  statutory  authority,  and thereafter give its findings recording reasons therefor on the issues referred to in the said opinion.

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26.  Procedure for inquiry under section 19. –  (1) On receipt of a reference from the Central Government or a State Government or a statutory authority or on its own knowledge or information received under section 19, if the Commission  is  of  the  opinion  that  there  exists  a  prima facie case, it shall direct the Director General to cause an investigation to be made into the matter:

Provided  that  if  the  subject  matter  of  an  information received is, in the opinion of the Commission, substantially

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the  same  as  or  has  been  covered  by  any  previous information  received,  then  the  new  information  may  be clubbed with the previous information.

(2)  Where  on  receipt  of  a  reference  from  the  Central Government  or  a  State  Government  or  a  statutory authority  or  information  received  under  section  19,the Commission is of  the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central  Government  or  the  State  Government  or  the statutory authority or the parties concerned, as the case may be.

(3)  The  Director-General  shall,  on  receipt  of  direction under  sub-section  (1),  submit  a  report  on  his  findings within  such  period  as  may  be  specified  by  the Commission.

(4)  The  Commission  may  forward  a  copy  of  the  report referred  to  in  sub-section  (3)  to  the  parties  concerned: Provided that  in  case the  investigation  is  caused to  be made  based  on  reference  received  from  the  Central Government  or  the  State  Government  or  the  statutory authority,  the  Commission  shall  forward  a  copy  of  the report  referred  to  in  sub-section  (3)  to  the  Central Government  or  the  State  Government  or  the  statutory authority, as the case may be.

(5) If the report of the Director General referred to in sub- section (3) recommends that there is no contravention of the  provisions  of  this  Act,  the  Commission  shall  invite objections or suggestions from the Central Government or the  State  Government  or  the  statutory  authority  or  the parties concerned, as the case may be, on such report of the Director-General.

(6) If, after consideration of the objections and suggestions referred  to  in  sub  section  (5),  if  any,  the  Commission agrees with the recommendation of the Director General, it shall close the matter forthwith and pass such orders as it deems  fit  and  communicate  its  order  to  the  Central Government  or  the  State  Government  or  the  statutory authority or the parties concerned, as the case may be.

(7) If, after consideration of the objections or suggestions referred to in sub section (5), if any, the Commission is of

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the opinion that further investigations is called for, it may direct  further  investigation  in  the  matter  by  the  Director General  or  cause  further  inquiry  to  be  made  by  in  the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act.

(8) If the report of the Director-General referred to in sub- section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in  accordance with  the provisions of this Act.

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36.   Power  of  Commission  to  regulate  its  own procedure. –

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(2)   The  Commission  shall  have,  for  the  purposes  of discharging its functions under this Act, the same powers as  are  vested  in  a  Civil  Court  under  the  Code  of  Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:–

(a)  summoning and enforcing the attendance of any person and examining him on oath;

(b)   requiring  the  discovery  and  production  of documents;

(c)  receiving evidence on affidavit;

(d)   issuing  commissions  for  the  examination  of witnesses or documents;

(e)   requisitioning,  subject  to  the  provisions  of sections  123  and  124  of  the  Indian  Evidence  Act, 1872 (1 of 1972), any public record or document or copy of such record or document from any office.

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41.  Director General to investigate contraventions. – (1)  The Director  General  shall,  when so directed by the Commission, assist  the Commission in investigating into

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any contravention of the provisions of this Act or any rules or regulations made thereunder.

(2)  The Director General shall have all the powers as are conferred upon the Commission under sub-section (2) of section 36.

(3)  Without prejudice to the provisions of sub-section (2), sections 240 and 240A of the Companies Act, 1956 (1 of 1956),  so far as may be, shall  apply to an investigation made  by  the  Director  General  or  any  other  person investigating  under  his  authority,  as  the  apply  to  an inspector appointed under that Act.

Explanation. – For the purposes of this section, –  

(a)   the  words  “the  Central  Government”  under section 240 of the Companies Act, 1956 (1 of 1956) shall be construed as “the Commission”;

(b)  the word “Magistrate” under Section 240A of the Companies Act, 1956 (1 of 1956) shall be construed as “the Chief Metropolitan Magistrate, Delhi”.

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45.   Penalty for  offences in relation to furnishing of information. –  (1) Without prejudice to the provisions of section  44,  if  a  person,  who furnishes or  is  required  to furnish under this act any particulars, documents or any information, –

(a) makes any statement or furnishes any document which he knows or has reason to believe to be false in any material particular; or

(b) omits to state any material fact knowing it to be material; or

(c)  wilfully  alters,  suppresses  or  destroys  any document  which  is  required  to  be  furnished  as aforesaid,

such  person  shall  be  punishable  with  fine  which  may extend to rupees one crore as may be determined by the Commission.

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(2)  Without prejudice to the provisions of sub-section (1), the  Commission  may  also  pass  such  other  order  as  it deems fit.

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60.  Act to have overriding effect. –  The provisions of this  Act  shall  have  effect  notwithstanding  anything inconsistent therewith contained in any other law for the time being in force.

61.  Exclusion of jurisdiction of civil courts. –  No civil court  shall  have  jurisdiction  to  entertain  any  suit  or proceeding in respect of any matter which the Commission or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

62.   Application  of  other  laws  not  barred.  –  The provisions of  this  Act  shall  be in addition to,  and not  in derogation of, the provisions of any other law for the time being in force.”

67) The aforesaid provisions would indicate that the Act deals with

three kinds of practices which are treated as anti-competitive and

are prohibited.  These are:

(a) where agreements are entered into by certain persons with

a view to cause an appreciable adverse effect on competition;

(b) where any enterprise or group of enterprises, which enjoys

dominant position, abuses the said dominant position; and

(c) regulating  the  combination  of  enterprises  by  means  of

mergers  or  amalgamations  to  ensure  that  such  mergers  or

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amalgamations  do  not  become  anti-competitive  or  abuse  the

dominant position which they can attain.

The objective behind the Act and rationale in curbing the

aforesaid anti-competitive practices was taken note of in  Excel

Crop Care Limited  v.  Competition Commission of India and

Another16 and we would like to reproduce the following passages

therefrom:

"21. In the instant case, we are concerned with the first type  of  practices,  namely,  anti-competitive  agreements. The Act, which prohibits anti-competitive agreements, has a laudable purpose behind it. It is to ensure that there is a healthy  competition  in  the  market,  as  it  brings  about various benefits for the public at large as well as economy of the nation. In fact, the ultimate goal of competition policy (or  for  that  matter,  even  the  consumer  policies)  is  to enhance consumer well-being. These policies are directed at ensuring that markets function effectively. Competition policy  towards  the  supply  side  of  the  market  aims  to ensure  that  consumers  have  adequate  and  affordable choices.  Another  purpose  in  curbing  anti-competitive agreements is to ensure “level playing field” for all market players that helps markets to be competitive. It sets “rules of  the game” that  protect  the competition process itself, rather  than  competitors  in  the  market.  In  this  way,  the pursuit of fair and effective competition can contribute to improvements  in  economic  efficiency,  economic  growth and development of consumer welfare. How these benefits accrue is explained in the ASEAN Regional Guidelines on Competition Policy, in the following manner:

“2.2.  Main  Objectives  and  Benefits  of  Competition Policy

2.2.1.1.  Economic  efficiency:  Economic  efficiency refers  to  the  effective  use  and  allocation  of  the economy's  resources.  Competition  tends  to  bring about  enhanced  efficiency,  in  both  a  static  and  a dynamic sense, by disciplining firms to produce at the

16 (2017) 8 SCC 47

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lowest possible cost and pass these cost savings on to  consumers,  and  motivating  firms  to  undertake research and development to meet customer needs.

2.2.1.2.  Economic  growth  and  development: Economic growth—the increase in the value of goods and  services  produced  by  an  economy—is  a  key indicator  of  economic  development.  Economic development  refers  to  a  broader  definition  of  an economy's well-being, including employment growth, literacy  and  mortality  rates  and other  measures  of quality of  life.  Competition may bring about greater economic  growth  and  development  through improvements  in  economic  efficiency  and  the reduction of wastage in the production of goods and services. The market is therefore able to more rapidly reallocate resources, improve productivity and attain a  higher  level  of  economic  growth.  Over  time, sustained  economic  growth  tends  to  lead  to  an enhanced  quality  of  life  and  greater  economic development.

2.2.1.3.  Consumer  Welfare:  Competition  policy contributes to economic growth to the ultimate benefit of  consumers,  in  terms  of  better  choice  (new products), better quality and lower prices. Consumer welfare  protection  may  be  required  in  order  to redress a perceived imbalance between the market power of consumers and producers. The imbalance between consumers and producers may stem from market failures such as information asymmetries, the lack  of  bargaining  position  towards  producers  and high transaction costs. Competition policy may serve as a complement to consumer protection policies to address such market failures.”

22.   The  aforesaid  Guidelines  also  spell  out  few  more benefits of such laws incorporating competition policies by highlighting the following advantages:

“2.2.2.  In  addition,  competition  policy  is  also beneficial to developing countries. Due to worldwide deregulation,  privatisation  and  liberalisation  of markets,  developing  countries  need  a  competition policy,  in  order  to  monitor  and control  the growing role of  the private sector  in  the economy so as to

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ensure  that  public  monopolies  are  not  simply replaced by private monopolies.

2.2.3.  Besides contributing to trade and investment policies, competition policy can accommodate other policy objectives (both economic and social) such as the integration of national markets and promotion of regional  integration,  the  promotion  or  protection  of small  businesses,  the  promotion  of  technological advancement, the promotion of product and process innovation, the promotion of industrial diversification, environment  protection,  fighting  inflation,  job creation,  equal  treatment  of  workers  according  to race  and  gender  or  the  promotion  of  welfare  of particular consumer groups.

In particular, competition policy may have a positive impact on employment policies, reducing redundant employment  (which often results  from inefficiencies generated by large incumbents and from the fact that more  dynamic  enterprises  are  prevented  from entering the market) and favouring jobs creation by new efficient competitors.

2.2.4. Competition policy complements trade policy, industrial  policy and regulatory  reform.  Competition policy  targets  business  conduct  that  limits  market access  and  which  reduces  actual  and  potential competition,  while  trade  and  industrial  policies encourage  adjustment  to  the  trade  and  industrial structures  in  order  to  promote  productivity-based growth  and  regulatory  reform  eliminates  domestic regulation that restricts entry and exit in the markets. Effective  competition  policy  can  also  increase investor confidence and prevent the benefits of trade from being lost through anti-competitive practices. In this  way,  competition  policy  can  be  an  important factor in enhancing the attractiveness of an economy to foreign direct  investment,  and in maximising the benefits of foreign investment.”

23. In fact,  there is broad empirical evidence supporting the  proposition  that  competition  is  beneficial  for  the economy. Economists agree that it has an important role to play in  improving productivity  and,  therefore,  the growth prospects of  an economy. It  is achieved in the following manner:

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“International  Competition  Network  —  Economic Growth and Productivity

Competition  contributes  to  increased  productivity through:

Pressure on firms to control costs—In a competitive environment,  firms  must  constantly  strive  to  lower their  production  costs  so  that  they  can  charge competitive prices, and they must also improve their goods  and  services  so  that  they  correspond  to consumer demands.

Easy market entry and exit—Entry and exit of firms reallocates  resources  from  less  to  more  efficient firms. Overall productivity increases when an entrant is  more  efficient  than  the  average  incumbent  and when  an  existing  firm  is  less  efficient  than  the average incumbent. Entry—and the threat of entry— incentivises  firms  to  continuously  improve  in  order not to lose market share to or be forced out of the market by new entrants.

Encouraging innovation—Innovation acts as a strong driver of economic growth through the introduction of new or substantially  improved products or  services and  the  development  of  new  and  improved processes  that  lower  the  cost  and  increase  the efficiency  of  production.  Incentives  to  innovate  are affected by the degree and type of competition in a market.

Pressure to improve infrastructure—Competition puts pressure  on  communities  to  keep  local  producers competitive  by  improving  roads,  bridges,  docks, airports  and communications,  as  well  as  improving educational opportunities.

Benchmarking—Competition  also  can  contribute  to increased productivity  by  creating  the  possibility  of benchmarking.  The  productivity  of  a  monopolist cannot  be  measured  against  rivals  in  the  same geographic market, but a dose of competition quickly will  expose inferior performance. A monopolist  may be  content  with  mediocre  productivity  but  a  firm battling in a competitive market cannot afford to fall

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behind,  especially  if  the  investment  community  is benchmarking it against its rivals.”

24.   Productivity  is  increased  through  competition  by putting pressure on firms to control costs as the producers strive  to  lower  their  production  costs  so  that  they  can charge competitive prices. It also improves the quality of their  goods  and  services  so  that  they  correspond  to consumers' demands.

25.   Competition  law  enforcement  deals  with  anti- competitive  practices  arising  from  the  acquisition  or exercise  of  undue  market  power  by  firms  that  result  in consumer harm in the forms of higher prices, lower quality, limited  choices  and  lack  of  innovation.  Enforcement provides  remedies  to  avoid  situations  that  will  lead  to decreased competition in markets. Effective enforcement is important not only to sanction anti-competitive conduct but also to deter future anti-competitive practices.

26.  When we recognise that competition has number of benefits,  it  clearly follows that  cartels  or  anti-competitive agreements  cause  harm to  consumers  by  fixing  prices, limiting  outputs  or  allocating  markets.  Effective enforcement  against  such  practices  has  direct  visible effects in terms of reduced prices in the market and this is also supported by various empirical studies.

27.  Keeping in view the aforesaid objectives that need to be achieved,  Indian Parliament  enacted the Competition Act, 2002. Need to have such a law became all the more important in the wake of liberalisation and privatisation as it was found that the law prevailing at that time, namely, Monopolies and Restrictive Trade Practices Act, 1969 was not equipped adequately enough to tackle the competition aspects  of  the  Indian  economy.  The  law  enforcement agencies, which include CCI and COMPAT, have to ensure that  these  objectives  are  fulfilled  by  curbing  anti- competitive agreements.

28.  Once the aforesaid purpose sought to be achieved is kept in mind, and the same is applied to the facts of this case after finding that the anti-competitive conduct of the appellants continued after coming into force of provisions of Section 3 of the Act as well, the argument predicated on retrospectivity pales into insignificance.

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29.  One has to keep in mind the aforesaid objective which the legislation in question attempts to subserve and the mischief which it seeks to remedy. As pointed out above, Section  18  of  the  Act  casts  an  obligation  on  CCI  to “eliminate”  anti-competitive  practices  and  promote competition, interests of the consumers and free trade. It was  rightly  pointed  out  by  Mr  Neeraj  Kishan  Kaul,  the learned Additional Solicitor General, that the Act is clearly aimed  at  addressing  the  evils  affecting  the  economic landscape of the country in which interest of the society and  consumers  at  large  is  directly  involved.  This  is  so eloquently  emphasised  by  this  Court  in  Competition Commission of India v. SAIL in the following manner: (SCC pp. 755-56 & 794, paras 6, 8-10 & 125)

“6. As far as the objectives of competition laws are concerned,  they  vary  from  country  to  country  and even  within  a  country  they  seem  to  change  and evolve  over  the  time.  However,  it  will  be  useful  to refer  to  some  of  the  common  objectives  of competition  law.  The main objective  of  competition law  is  to  promote  economic  efficiency  using competition  as  one  of  the  means  of  assisting  the creation  of  market  responsive  to  consumer preferences. The advantages of perfect competition are threefold: allocative efficiency, which ensures the effective  allocation  of  resources,  productive efficiency, which ensures that costs of production are kept  at  a  minimum  and  dynamic  efficiency,  which promotes innovative practices. These factors by and large have been accepted all over the world as the guiding  principles  for  effective  implementation  of competition law.

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8. The Bill sought to ensure fair competition in India by  prohibiting  trade  practices  which  cause appreciable  adverse  effect  on  the  competition  in market  within  India  and  for  this  purpose establishment  of  a  quasi-judicial  body  was considered essential.  The other object  was to curb the negative aspects of competition through such a body, namely, “the Competition Commission of India” (for short “the Commission”) which has the power to perform different kinds of functions, including passing of interim orders and even awarding compensation

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and  imposing  penalty.  The  Director  General appointed  under  Section  16(1)  of  the  Act  is  a specialised investigating wing of the Commission. In short,  the  establishment  of  the  Commission  and enactment  of  the  Act  was  aimed  at  preventing practices  having  adverse  effect  on  competition,  to protect  the interest  of  the consumer and to ensure fair  trade  carried  out  by  other  participants  in  the market in India and for matters connected therewith or incidental thereto.

9.  The various  provisions  of  the  Act  deal  with  the establishment,  powers  and  functions  as  well  as discharge  of  adjudicatory  functions  by  the Commission.  Under  the  scheme  of  the  Act,  this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the  Commission  to  deal  with  the  complaints  or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act. In exercise of the powers vested in it under Section 64, the  Commission  has  framed regulations  called  the Competition  Commission  of  India  (General) Regulations, 2009 (for short “the Regulations”).

10. The Act and the Regulations framed thereunder clearly indicate the legislative intent of dealing with the  matters  related  to  contravention  of  the  Act, expeditiously and even in a time-bound programme. Keeping  in  view  the  nature  of  the  controversies arising  under  the  provisions  of  the  Act  and  larger public interest, the matters should be dealt with and taken to  the logical  end of  pronouncement  of  final orders without any undue delay. In the event of delay, the very purpose and object of the Act is likely to be frustrated and the possibility of great damage to the open  market  and  resultantly,  country's  economy cannot be ruled out.”

68) It is for the aforesaid reason that the CCI is entrusted with duties,

powers and functions to deal with three kinds of anti-competitive

practices mentioned above.   The purpose is  to  eliminate such

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practices which are having adverse effect on the competition, to

promote and sustain competition and to protect the interest of the

consumers and ensure freedom of trade, carried on by the other

participants,  in  India.   For  the purpose of  conducting such an

inquiry, the CCI is empowered to call any person for rendering

assistance  and/or  produce  the  records/material  for  arriving  at

even the prima facie opinion.  The regulations also empower the

CCI  to  hold  conferences  with  the  concerned  persons/parties,

including their advocates/authorised persons.

69) It is also relevant to mention at this stage that while inquiring into

any  alleged  contravention  and  determining  whether  any

agreement  has  an  appreciable  adverse  effect  on  competition,

factors which are to be taken into consideration are mentioned in

sub-section (3) of Section 19.  These include creation of barriers

to new entrants in the market, driving existing competitors out of

the market and foreclosure of competition by hindering entry into

the market.  All these activities have connection with the ‘market’.

The word ‘market’ has reference to ‘relevant market’.  As per sub-

section (5) of Section 19, such relevant market can be relevant

geographic market  or  relevant  product  market.   In  the present

case,  we are concerned with the relevant  product  market,  viz.

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telecommunication  market.   Sub-section  (7)  of  Section  19

enumerates  the  factors  which  are  to  be  kept  in  mind  while

determining the relevant product market.

70) Market definition is a tool to identify and define the boundaries of

competition between firms. It serves to establish the framework

within which the competition policy is applied by the Commission.

The  main  purpose  of  market  definition  is  to  identify  in  a

systematic way the competitive constraints that the undertakings

involved  face.  The  objective  of  defining  a  market  in  both  its

product  and  geographic  dimension  is  to  identify  those  actual

competitors  of  the  undertakings  involved  that  are  capable  of

constraining  those  undertakings  behaviour  and  of  preventing

them  from  behaving  independently  of  effective  competitive

pressure.  Therefore, the purpose of defining the ‘relevant market’

is to assess with identifying in a systematic way the competitive

constraints that  undertakings face when operating in a market.

This is the case in particular for determining if undertakings are

competitors or potential competitors and when assessing the anti-

competitive  effects  of  conduct  in  a  market.  The  concept  of

relevant  market  implies  that  there  could  be  an  effective

competition between the products which form part of it and this

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presupposes that there is a sufficient degree of interchangeability

between all the products forming part of the same market insofar

as specific use of such product is concerned.  In essence, it is the

notion of  ‘power  over  the market’ which is  the key to  analyse

many competitive issues.

71) It is an admitted position that in the instant case we are dealing

with  the  telecom  market,  which  is  the  relevant  market.   An

interesting feature is that this telecom market is also regulated by

the statutory regime contained in the TRAI Act.  Under the said

Act,  TRAI  is  established  as  a  regulator  which  exercises

control/supervision  and  also  provides  guidance  to  the

telecom/mobile  market.   This  statutory  body  is  required  to

function as per  the provisions of  the TRAI  Act  as  well  as  the

Rules  and  Regulations  framed  thereunder.   Additionally,  the

telecom  companies  are  also  governed  by  licence  agreements

entered into between the Central Government and such service

providers, for providing telephone/telecommunication services to

the customers/subscribers.  At this stage, therefore, we take note

of the relevant provisions of the TRAI Act:

"11.   Functions  of  Authority.  –  (1)  Notwithstanding anything contained in the Indian Telegraph Act, 1885 (13 of 1885), the functions of the Authority shall be to –  

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(a)   make  recommendations,  either  suo  moto  or  on  a request  from  the  licensor,  on  the  following  matters, namely:

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(iv)  measures to facilitate competition and promote efficiency  in  the  operation  of  telecommunication services so as to facilitate growth in such services;

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(b)  discharge the following functions, namely:–  

(i)   ensure  compliance  of  terms  and  conditions  of licence;

(ii)  notwithstanding anything contained in the terms and  conditions  of  the  licence  granted  before  the commencement of the Telecom Regulatory Authority of  India (Amendment)  Act,  2000,  fix  the terms and conditions of  inter-connectivity  between the service providers;

(iii)  ensure technical compatibility and effective inter- connection between different service providers;

(iv)  regulate arrangement amongst service providers of  sharing  their  revenue  derived  from  providing telecommunication services;

(v)  lay-down the standards of quality of service to be provided  by  the  service  providers  and  ensure  the quality of service and conduct the periodical survey of such service provided by the service providers so as  to  protect  interest  of  the  consumers  of telecommunication service;

(vi)   lay-down  and  ensure  the  time  period  for providing  local  and  long  distance  circuits  of telecommunication  between  different  service providers;

(vii)   maintain  register  of  interconnect  agreements and of all such other matters as may be provided in the regulations;

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(viii)   keep  register  maintained  under  clause  (vii) open  for  inspection  to  any  member  of  public  on payment of such fee and compliance of such other requirement as may be provided in the regulations;

(ix)  ensure effective compliance of universal service obligations;

(c)   levy  fees  and  other  charges  at  such  rates  and  in respect  of  such  services  as  may  be  determined  by regulations;

(d)   perform  such  other  functions  including  such administrative and financial functions as may be entrusted to it by the Central Government or as may be necessary to carry out the provisions of this Act:

Provided  that  the  recommendations  of  the  Authority specified  in  clause  (a)  of  this  sub-section  shall  not  be binding upon the Central Government.

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14.  Establishment of Appellate Tribunal. – The Central Government  shall,  by notification,  establish an Appellate Tribunal to be known as the Telecom Disputes Settlement and Appellate Tribunal to –

(a)  adjudicate any dispute –  

(i)  between a licensor and a licensee;

(ii)  between two or more service providers;

(iii)   between  a  service  provider  and  a  group  of consumers:

Provided  that  nothing  in  this  clause  shall  apply  in respect of matters relating to –  

(A)  the monopolistic trade practice, restrictive trade practice and unfair trade practice which are subject to the  jurisdiction  of  the  Monopolies  and  Restrictive Trade Practices Commission established under sub- section  (1)  of  section  5  of  the  Monopolies  and Restrictive Trade Practices Act, 1969 (54 of 1969);

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(B)  the  complaint  of  an  individual  consumer maintainable before a Consumer Disputes Redressal Forum  or  a  Consumer  Disputes  Redressal Commission  or  the  National  Consumer  Redressal Commission  established  under  section  9  of  the Consumer Protection Act, 1986 (68 of 1986);

(C)  dispute  between  telegraph  authority  and  any other person referred to in sub-section (1) of section 7B of the Indian Telegraph Act, 1885 (13 of 1885);

(b)   hear  and  dispose  of  appeal  against  any  direction, decision or order of the Authority under this Act.

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16.  Procedure and powers of Appellate Tribunal. – (1) The  Appellate  Tribunal  shall  not  be  bound  by  the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Appellate Tribunal shall have powers to regulate its own procedure.

(2)  The Appellate Tribunal shall have, for the purposes of discharging the functions under this Act, the same powers as  are  vested  in  a  civil  court  under  the  Code  of  Civil Procedure, 1908 (5 of 1908), while trying a suit, in respect of the following matters, namely:–

(a)  summoning and enforcing the attendance of any person and examining him on oath;

(b)   requiring  the  discovery  and  production  of documents;

(c)  receiving evidence on affidavits;

(d)  subject to the provisions of section 123 and 124 of  the  Indian  Evidence  Act,  1872  (1  of  1872), requisitioning  any  public  record  or  document  or  a copy of such record or document, from any office;

(e)   issuing  commissions  for  the  examination  of witnesses or documents;

(f)  reviewing its decisions;

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(g)  dismissing an application for default or deciding it, ex parte;

(h)   setting  aside  any  order  of  dismissal  of  any application for default or any order passed by it,  ex parte; and

(i)  any other matter which may be prescribed.

(3)  Every proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purposes of section 196  of  the  Indian  Penal  Code  (45  of  1860)  and  the Appellate Tribunal shall be deemed to be a civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).”

72) Other provisions in the telecom sector which are relevant for the

purposes of these appeals are taken note of by the High Court as

under:

"Telecommunication laws binds all

19. The relevant licenses

Unified License (UL) –  The UL issued by Department of Telecommunications,  Government  of  India  (“DoT”)  for providing  telecommunication  services  on  a  pan  India basis.  Licence under Section 4 of Indian Telegraph Act, 1885  therefore  they  become  Telecom  Service  Provider (“TSP”).  Relevant clauses of the UL (UASL) are -  

(a)  Clause 16 of Part-I: Other conditions:  The licensee is bound by all TRAI Orders/Directions/Reglations;

(b)   Clause  27  of  Part-I:  Network  Interconnnection, particularly,  Clause  27.4,  which  requires  a  licensee  to interconnect  subject  to  compliance  with  prevailing regulations  and  determinations  issued  by  TRAI,  and contemplates  the  execution  of  ICAs  to  establish interconnection in sufficient capacity and number to enable

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transmission  and  reception  of  messages  between  the interconnected systems;

(c)  Clause 29 of Part-I, requiring a licensee to ensure QoS standards  as  may  be  prescribed  by  DoT/TRAI. Specifically, Clause 29.4, empowers DoT/TRAI to evaluate QoS  parameters  prior  to  grant  of  permission  for commencement of services; and

(d)   Clause  6.2  of  Part-II,  which  requires  a  licensee to provide interconnection to all TSPs to ensure that calls are completed to all destinations.

Inter-connection Agreements

20.  Similar separate Interconnection Agreements (ICAs) are executed between the parties.  The relevant clauses of ICAs are as under:

Clause  2.4:  “...RJIL  will  be  required  to  establish Interconnection at the Switches of IDEA as listed in Schedule I.  In addition to these specified locations, the Parties may further agree to interconnect at an additional  location(s) as mutually agreed to by and between  the  parties  during  the  term  of  this Agreement...”

Clause 5.7: “...At the end of two years, the Parties shall convert the total E1s existing at the POIs into one-way E1s for the Outgoing Traffic of each Party on the basis of the traffic ratio existing 3 months prior to the expiry of the initial period of two years.  These E1s shall thereafter be continued as one-way E1s for the remaining term of the Agreement at the cost of RJIL...”

Clause 9.1: “...A minimum notice of 4 weeks has to be  given  by  either  Party  for  augmentations  of Interconnect Links...”

Clause  9.2:  “...Augmentation  shall  be  completed within  90  days  of  receipt  of  requisite  charges specified in Schedule 2 from RJIL...”

Clause  9.3:   “...Any  request  for  augmentation  of capacity shall be in writing with Performance reports as prescribed in Schedule 4...”

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Clause 9.4:  “...Traffic measurements for 7 days shall be  taken  by  both  the  parties  during  agreed  busy route hours, every 6 months after commencement of traffic  at  the  POIs  to  determine  further  capacity requirements...”

Clause 9.5:  “...RJIL shall provide a forecast in writing in  advance for  its  requirement  of  port  capacity  for Telephony  Traffic  for  the  next  6  months  to  enable IDEA  to  dimension  the  required  capacity  in  its network...”

21.  The relevant clauses of the ICAs are:

(a)   Clause  2  makes  clear  that  the  ICA  will  be applicable and in effect from the date of execution;

(b)  Clause 2.10 makes clear that the interconnection facilities at each POI will  conform to the applicable QoS standards prescribed by TRAI;

(c)   Clause  3  –  Terms  and  Amendments  –  again makes  clear  that  the  ICA  becomes  applicable, effective and operational from the date of execution and is valid until both parties hold a valid license for providing access services;

(d)  Clause 4 – Applicability and Providing Services – reiterates that the ICA becomes applicable on signing and  is  subject  to  the  terms  and  conditions  of  the telecom licence;

(e)  Clause 5.2 specifically provides that for the initial two  years,  provision  and  augmentation  of transmission links shall be at the cost of RJIL;

(f)  Clause 5.7 contemplates conversion of two-way E1s into one-way E1s only after two years, which in other words mean that for two years all E1s must be two-way E1s;

(g)  Clause 9 provides modalities for enhancement of ports; and

(h)  Clause 10.7 again reiterates that Idea is bound to maintain QoS standards prescribed by TRAI.

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22.  Quality of Service Regulations, 2009

Quality  of  Service  Regulations (“QoS Regulations, 2009”) issued by TRAI under Section 36 read with Section 11  of  the  TRAI  Act.   Clause  5Iiv)  and  Clause  14,  as relevant, are reproduced as under:

(a)   Clause 5(iv)  prescribes that  the congestion at each  individual  POI  cannot  exceed  0.5%  over  a period of  one month (no more than 5 out of  every 100 calls can fail).

(b)  Clause 14 provides that in the event of any doubt regarding  interpretation  of  any  of  the  provisions  of the QoS regulations, the view of the TRAI shall be final and binding.

23.  The relevant clauses of the Standards of Quality of Service of Basic Telephone Service (wireline) and Cellular Mobile  Telephone  Service  Regulations,  2009  includes Cellular Mobile Telephone Services.  The terms “Point of Interconnection (POI)”, “Quality of Service (QoS)”, “Service Provider, Telecommunication services” have been defined in  the  Regulations.   The  term  POI  congestion  is  also described in 3.12 and 4.7 of POI.”

73) Some  of  the  features  which  govern  the  telecommunication

industry and noted by the High Court may also be captured at this

stage.  These are:

(a) To  protect  the  interest  of  the  service  providers  and

consumers  of  the  telecom  sector  and  to  permit  and  ensure

technical  compatibility  and  effective  inter-relationship  between

different service providers and for ensuring compliance of licence

conditions  by  all  the  service  providers,  TRAI  was  constituted

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under the Telecom Regulatory Authority of India Act, 1997.  TRAI

is  a recommendatory/advisory and regulatory body discharging

the functions envisaged under sub-section (1) of Section 11 of the

said  Act.   TRAI,  inter  alia,  is  charged  with  ensuring  fair

competition amongst service providers, including fixing the terms

and conditions of  entire  activity  between the service  providers

and laying down the standards of Quality of Service (QoS) to be

provided by each service provider.  In exercise of its functions,

TRAI  has  issued  detailed  Regulations  for  telecom  services,

including fixation and revision of tariffs (Tariff  Order), fixation of

Inter-connect  Usage  Charges  (IUC),  prescription  of  quality  of

service standards, etc.

(b) The  Telecom  Service  Providers,  which  include  the

respondents as well as RJIL, provide telecommunication access

service and are PAN India Telecom Service Providers.  They are

governed  by  the  Cellular  Mobile  Telephone  Service  (CMTS)/

Unified  Access  Service  Licence  (UASL)  issued  by  the

Telecommunications  Department,  Government  of  India  under

section 4 of the Telegraph Act.

(c) The  Central  Government  has  the  exclusive  privilege  of

establishing,  maintaining  and  working  telegraphs  under  the

Telegraph Act and the Central Government is authorised to grant

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licence on such terms and conditions and in consideration of such

payment as it  thinks fit  to any person to establish, maintain or

work as telegraph within any part  of  the country.   By virtue of

Section 4 of the Telegraph Act, a service provider is duty bound to

enter into a licence agreement with the former for unified licence,

with authorisation for provision of services, as per the terms and

conditions prescribed in the Schedule.  As a condition of the said

licence, the licensee agrees and unequivocally undertakes to fully

comply  with  the terms and conditions stipulated in  the licence

agreement without any deviation or reservation of any kind.  The

licence is governed by the provisions of the Telegraph Act,  the

Indian  Wireless  Telegraphy  Act,  1933,  the  TRAI  Act  and  the

Information Technology Act, 2000, as modified or regulated from

time to time.

74) In order to ensure that there is smooth interconnectivity and a

consumer who is the subscriber of mobile phone of one service

provider,  say  for  e.g.  Vodafone,  and  wants  to  make  call  to  a

mobile phone of his friend which is provided by another service

provider, say Idea Cellular, the unified licenses put an obligation

on all these licensees to interconnect with each other on the POI.

This is so mentioned in Clause 27.4 of Part I of the Schedule to

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the unified licence.  Such interconnectivity of POI is subject to

compliance  of  regulation/directions  issued  by  TRAI.   The

interconnection agreement,  inter alia,  provides for  the following

clauses:

(a) to  meet  all  reasonable  demand for  the  transmission  and

reception of messages between the interconnect systems;

(b) to establish and maintain such one or more POIs as are

reasonably required and are of sufficient capacity and in sufficient

numbers to enable transmission and reception of the messages

by means of applicable systems; and  

(c) to connect and keep connected to the applicable systems.

Some of the other clauses of the interconnection agreement

are as follows:

 A minimum four weeks’ written notice has to be given by either

party for augmentation of interconnect links.

 Augmentation shall be completed within 90 days of receipt of

requisite charges specified in the Schedule.

 Either party shall provide a forecast in writing, in advance for

its requirements of port capacity for “Telephony Traffic” for the

next six months to enable the other party to dimension the

required capacity in its network.

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 The interconnection tests for reach and every interface will be

carried out by mutual arrangement between signatories of the

agreement.

By virtue of the licence, the licensee is obligated to ensure

quality of service as prescribed by the licensor or TRAI and failure

on their part to adhere to the quality of service stipulated by TRAI

would make the licensor  liable to be treated for  breach of  the

terms and conditions of the licence.

In order to render effective services, it is mandatory for the

licensee  to  interconnect/provide  POIs  to  all  eligible  telecom

service  providers  to  ensure  that  calls  are  completed  to  all

destinations  and  interconnection  agreement  is  entered  into

between the different service providers which mandates each of

the party to the agreement to provide to the other interconnection

traffic  carriage  and  all  the  technical  and  operational  quality

service and time lines, i.e. the equivalent to that which the party

provides  to  itself.   The  interconnection  agreement  separately

entered into different  service providers is  based on the format

prescribed in the Telecommunication Interconnection (Reference

Interconnect Offer) Regulations, 2002.

75) POI is defined in the agreement, in the following words:

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"POI  are  those  points  between  two  network  operators which  allow  voice  call  originating  from the  work  of  one operator to terminate on the network by other operator.”

76) We may also note that on June 07, 2005 a direction was issued

under Section 13 read with sub-clause (i) to (v) of sub-clause (b)

of Section 11 of the TRAI Act, which provides as follows:

"In exercise of the powers vested in it  under section 13 read with section 11(1)(b)(i),  (ii),  (iii),  (iv)  and (v)  of  the Telecom Regulatory  Authority  of  India  Act,  1997  and  in order  to  ensure  compliance  of  terms  and  conditions  of license  and  effective  interconnection  between  service providers and to protect consumer interest,  the Authority hereby  directs  all  service  providers  to  provide interconnection  on  the  request  of  the  interconnection seeker within 90 days of the applicable payments made by the  interconnection seeker.   Further  there is  a  direction issued  by  the  Government  of  India,  Ministry  of Telecommunication  dated  28th August,  2005  by  which directions have been issued to provide data of subscribers in the prescribed format.”

77) From the aforesaid analysis of the scheme contained in the TRAI

Act,  it  becomes  clear  that  the  functioning  of  the  telecom

companies  which  are  granted  licence  under  Section  4  of  the

Telegraph  Act  is  regulated  by  the  provisions  contained  in  the

TRAI  Act.   TRAI  is  a  regulator  which  regulates  the  telecom

industry, which is a statutory body created under the TRAI Act.

The  necessity  of  such  regulators  has  been  emphasised  by  a

Constitution Bench of this Court in Modern Dental College and

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Research Centre and Others v. State of Madhya Pradesh and

Others17 in the following words:

"Need for regulatory mechanism

87.  Regulatory  mechanism,  or  what  is  called  regulatory economics, is the order of the day. In the last 60-70 years, economic policy of this country has travelled from laissez faire  to  mixed  economy  to  the  present  era  of  liberal economy with regulatory regime. With the advent of mixed economy, there was mushrooming of the public sector and some  of  the  key  industries  like  aviation,  insurance, railways,  electricity/power,  telecommunication,  etc.  were monopolised  by  the  State.  Licence/permit  raj  prevailed during  this  period  with  strict  control  of  the  Government even in respect of those industries where private sectors were  allowed  to  operate.  However,  Indian  economy experienced major  policy  changes  in  early  90s on LPG Model  i.e.  liberalisation,  privatisation  and  globalisation. With the onset of reforms to liberalise the Indian economy, in July 1991, a new chapter has dawned for India.  This period  of  economic  transition  has  had  a  tremendous impact on the overall economic development of almost all major sectors of the economy.

88. When we have a liberal economy which is regulated by the market forces (that is why it is also termed as market economy),  prices  of  goods  and  services  in  such  an economy are determined in a free price system set up by supply  and  demand.  This  is  often  contrasted  with  a planned  economy  in  which  a  Central  Government determines the price of goods and services using a fixed price system. Market economies are also contrasted with mixed economy where the price system is not entirely free, but under some government control or heavily regulated, which  is  sometimes  combined  with  State  led  economic planning  that  is  not  extensive  enough  to  constitute  a planned economy.

89.  With  the  advent  of  globalisation  and  liberalisation, though the market economy is restored, at the same time, it  is  also felt  that  market  economies should  not  exist  in pure  form.  Some regulation  of  the  various  industries  is required  rather  than  allowing  self-regulation  by  market

17 (2016) 7 SCC 353

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forces.  This  intervention  through  regulatory  bodies, particularly  in  pricing,  is  considered  necessary  for  the welfare of  the society and the economists point  out that such regulatory economy does not rob the character of a market  economy which still  remains a market  economy. Justification for regulatory bodies even in such industries managed by private sector lies in the welfare of people. Regulatory measures are felt necessary to promote basic well  being  for  individuals  in  need.  It  is  because  of  this reason that we find regulatory bodies in all vital industries like, insurance, electricity and power, telecommunications, etc.”

78) Thus, with the advent of globalisation/liberalisation leading to free

market  economy,  regulators  in  respect  of  each  sector  have

assumed great  significance  and importance.   It  becomes their

bounden duty to ensure that such a regulator fulfils the objectives

enshrined in the Act under which a particular regulator is created.

Insofar as the telecom sector is concerned, the TRAI Act itself

mentions  the  objective  which  it  seeks  to  achieve.   It  not  only

exercises control/supervision over the telecom service providers/

licensees,  TRAI  is  also  supposed  to  provide  guidance  to  the

telecom/mobile  market.   ‘Introduction’  to  the  TRAI  Act  itself

mentions that due to tremendous growth in the services it  was

considered essential to regulate the telecommunication services

by a regulatory body which should be fully empowered to control

the services,  in the best  interest  of  the country as well  as the

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service  providers.   Likewise,  the  Statement  of  Objects  and

Reasons of this Act, inter alia, stipulates as under:

"1.  In the context of the National Telecom Policy, 1994, which  amongst  other  things,  stresses  on  achieving  the universal service, bringing the quality of telecom services to world standards, provisions of wide range of services to meet  the  customers  demand  at  reasonable  price,  and participation of  the companies registered  in  India  in  the area of basic as well as value added telecom services as also making arrangements for protection and promotion of consumer interest and ensuring fair competition, there is a felt  need  to  separate  regulatory  functions  from  service providing  functions  which  will  be  in  keeping  with  the general trend in the world.  In the multi-operator situation arising  out  of  opening  of  basic  as  well  as  value  added services in which private operator will be competing with Government  operators,  there  is  a  pressing  need  for  an independent  telecom  regulatory  body  for  regulation  of telecom  services  for  orderly  and  healthy  growth  of telecommunication infrastructure apart  from protection of consumer interest.

xx xx xx

4.  The powers and functions of the Authority,  inter alia, are.–

(i)   ensuring  technical  compatibility  and  effective inter-relationship between different service providers;

(ii)   regulation  of  arrangement  amongst  service providers  of  sharing  their  revenue  derived  from providing telecommunication services;

(iii)  ensuring compliance of licence conditions by all service providers;

(iv)   protection of  the interest  of  the consumers of telecommunication service;

(v)  settlement of disputes between service providers;

(vi)  fixation of rates for providing telecommunication service within India and outside India;

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(vii)   ensuring  effective  compliance  of  universal service obligations.”

79) TRAI  is,  thus,  constituted  for  orderly  and  healthy  growth  of

telecommunication  infrastructure  apart  from  protection  of

consumer  interest.   It  is  assigned  the  duty  to  achieve  the

universal service which should be of world standard quality on the

one hand and also to ensure that it is provided to the customers

at a reasonable price, on the other hand.  In the process, purpose

is  to  make  arrangements  for  protection  and  promotion  of

consumer interest and ensure fair competition.  It is because of

this reason that the powers and functions which are assigned to

TRAI are highlighted in the Statement of Objects and Reasons.

Specific  functions which are assigned to TRAI,  amongst other,

including  ensuring  technical  compatibility  and  effective  inter-

relationship  between  different  service  providers;  ensuring

compliance  of  licence  conditions  by  all  service  providers;  and

settlement of disputes between service providers.   

80) In the instant case, dispute raised by RJIL specifically touches

upon these aspects as the grievance raised is that the IDOs have

not given POIs as per the licence conditions resulting into non-

compliance  and  have  failed  to  ensure  inter  se  technical

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compatibility thereby.  Not only RJIL has raised this dispute, it has

even specifically approached TRAI for settlement of this dispute

which has arisen between various service providers, namely, RJIL

on the one hand and the IDOs on the other, wherein COAI is also

roped in.  TRAI is seized of this particular dispute.

81) It is a matter of record that before the TRAI, IDOs have refuted

the aforesaid claim of  RJIL.   Their  submission is that  not  only

required POIs were provided to RJIL, it  is the RJIL which is in

breach as it was making unreasonable and excessive demand for

POIs.  It is specifically pleaded by the IDOs that:

(i) RJIL raised its demand for POIs for the first time on June

21, 2016.

(ii) In the letter dated June 21, 2016, it was admitted that RJIL

was in test phase.

(iii) There was no express mention of any commercial launch

date.

(iv) As per the letter, immediately on commercial launch RJIL

would have a 22mn subscriber base for which number series was

already allotted.

(v) As  per  the  DoT  Circular  dated   August  29,  2005  test

customers are not considered as subscribers and test customers

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can only be in the form of business partners.  It was highlighted

that problem, if any, of congestion has been suffered on account

of provisioning of full-fledged services during test phase.

(vi) RJIL in its complaint before the TRAI was not considering

the period of 90 days as was prescribed in the Interconnection

Agreement.   It  was  instead  proceeding  on  the  basis  that  the

demand for POIs should be met on an immediate basis.

(vii) There was several errors in the forecast made by RJIL.   

(viii) The tables given by the RJIL are wrong as they take into

account its total demand at the end of nine months against what

was actually provided.   

82) Learned counsel appearing for the IDOs had also argued that the

first firm demand for provisioning of POIs was made by RJIL on

June 21, 2016.  According to the IDOs, in that letter, RJIL had

expressly  admitted  that  it  was  under  test  phase  and  had  not

commenced ‘commercial services’.  RJIL had also stated that the

demand  for  POIs  was  being  made  to  ‘provide  seemless

connectivity to targeted subscribers’ as against ‘test consumers’.

Their submission was that it was not disclosed at all as to when

RJIL was going to launch commercial services.  On the basis of

the aforesaid stand taken by the IDOs, their argument is that in

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the first instance it is the TRAI which is not only competent but

more appropriate authority to consider these aspects as it is the

TRAI which is the specialised body going by the nature of dispute

between the parties, following aspects have to be determined by

the TRAI:

(a) Whether IDOs were under any obligation to provide POIs

during test period?

(b) As per the letter dated June 21, 2016 from RJIL, when IDOs

were to commence provisioning of POIs to RJIL?

(c) Whether  the  demand  for  POIs  made  by  RJIL  were

reasonable or not?

(d) Whether there was any delay/denial at the end of Vodafone

in provisioning of POIs?

(e)   Whether  the  POIs were to  be provided  ‘immediately’ and

during ‘test phase’?

(f)   Whether  IDOs have provided sufficient  number of  POIs to

RJIL in conformity with the licence conditions?

83) We are of the opinion that as the TRAI is constituted as an expert

regulatory body which specifically governs the telecom sector, the

aforesaid aspects of the disputes are to be decided by the TRAI

in the first instance.  These are jurisdictional aspects.  Unless the

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TRAI  finds  fault  with  the  IDOs  on  the  aforesaid  aspects,  the

matter  cannot  be  taken  further  even  if  we  proceed  on  the

assumption  that  the  CCI  has  the  jurisdiction  to  deal  with  the

complaints/information filed before it.   It  needs to be reiterated

that  RJIL  has  approached  the  DoT  in  relation  to  its  alleged

grievance of augmentation of POIs which in turn had informed

RJIL vide letter dated September 06, 2016 that the matter related

to  inter-connectivity  between  service  providers  is  within  the

purview  of  TRAI.   RJIL  thereafter  approached  TRAI;  TRAI

intervened and issued show-cause notice dated September 27,

2016;  and post  issuance of  show-cause notice  and directions,

TRAI issued recommendations dated October 21,  2016 on the

issue of inter-connection and provisioning of POIs to RJIL.  The

sectoral  authorities are,  therefore,  seized of  the matter.   TRAI,

being  a  specialised  sectoral  regulator  and  also  armed  with

sufficient power to ensure fair, non-discriminatory and competitive

market  in  the  telecom  sector,  is  better  suited  to  decide  the

aforesaid  issues.   After  all,  RJIL’s  grievance  is  that  inter-

connectivity is not provided by the IDOs in terms of the licenses

granted to them.  TRAI Act and Regulations framed thereunder

make detailed provisions dealing with intense obligations of the

service providers for providing POIS.  These provisions also deal

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as to when, how and in what manner POIs are to be provisioned.

They also stipulate the charges to be realised for POIs that are to

be provided to another service provider.  Even the consequences

for breach of such obligations are mentioned.

84) We, therefore, are of the opinion that the High Court is right in

concluding that till the jurisdictional issues are straightened and

answered by the TRAI which would bring on record findings on

the aforesaid aspects, the CCI is ill-equipped to proceed in the

matter.   Having  regard  to  the  aforesaid  nature  of  jurisdiction

conferred  upon  an  expert  regulator  pertaining  to  this  specific

sector, the High Court is right in concluding that the concepts of

“subscriber”, “test period”, “reasonable demand”, “test phase and

commercial phase rights and obligations”, “reciprocal obligations

of  service  providers”  or  “breaches  of  any  contract  and/or

practice”, arising out of TRAI Act and the policy so declared, are

the matters within the jurisdiction of the Authority/TDSAT under

the  TRAI  Act  only.   Only  when  the  jurisdictional  facts  in  the

present matter as mentioned in this judgment particularly in paras

56 and 82 above are determined by the TRAI against the IDOs,

the next question would arise as to whether it was a result of any

concerted agreement between the IDOs and COAI supported the

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IDOs in that endeavour.  It would be at that stage the CCI can go

into the question as to whether violation of the provisions of TRAI

Act  amounts  to  ‘abuse  of  dominance’  or  ‘anti-competitive

agreements’.  That also follows from the reading of Sections 21

and   21A of the Competition Act, as argued by the respondents.

85) The issue can be examined from another angle as well.  If the

CCI  is  allowed  to  intervene  at  this  juncture,  it  will  have  to

necessarily undertake an exercise of returning the findings on the

aforesaid issues/aspects which are mentioned in paragraph 82

above.  Not only TRAI is better equipped as a sectoral regulator

to deal with these jurisdictional aspects, there may be a possibility

that the two authorities, namely, TRAI on the one hand and the

CCI on the other, arrive at a conflicting views.  Such a situation

needs  to  be  avoided.   This  analysis  also  leads  to  the  same

conclusion,  namely,  in  the  first  instance  it  is  the  TRAI  which

should decide these jurisdictional issues, which come within the

domain of the TRAI Act as they not only arise out of the telecom

licenses granted to the service providers, the service providers

are governed by the TRAI Act and are supposed to follow various

regulations and directions issued by the TRAI itself.

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86) This takes us to the next level of the issue, viz. whether TRAI has

the  exclusive  jurisdiction  to  deal  with  matters  involving  anti-

competitive practices to the exclusion of CCI altogether because

of the reason that the matter pertains to telecom sector?

87) The IDOs have argued that not only TRAI is an expert body which

can deal with these issues and has been assigned this function

specifically under the TRAI Act, even the anti-competitive aspects

of  telecom sector  are  specifically  assigned to  the  TRAI  in  the

TRAI Act itself.  On that premise the submission is that the TRAI

Act is a special legislation which prevails over the provisions of

the Competition Act as the Competition Act is general in nature.  It

is also argued that even if  the Competition Act is treated as a

special  statute,  between the two special  statutes the TRAI Act

would prevail as it is a complete code in itself which regulates the

telecom sector in its entirety, including the aspects of competition.

88) Such  a  submission,  on  a  cursory  glance,  may  appear  to  be

attractive.  However, the matter cannot be examined by looking

into the provisions of  the TRAI Act  alone.   Comparison of  the

regimes and purpose behind the two Acts becomes essential to

find an answer to this issue.  We have discussed the scope and

ambit of the TRAI Act in the given context as well as the functions

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of the TRAI.   No doubt,  we have accepted that insofar as the

telecom sector is concerned, the issues which arise and are to be

examined in the context of the TRAI Act and related regime need

to  be  examined  by  the  TRAI.   At  the  same  time,  it  is  also

imperative  that  specific  purpose behind the Competition  Act  is

kept in mind.  This has been taken note of and discussed in the

earlier  part  of  the  judgment.   As  pointed  out  above,  the

Competition Act frowns the anti-competitive agreements.  It deals

with three kinds of practices which are treated as anti-competitive

and are prohibited.  To recapitulate, these are:

(a) where agreements are entered into by certain persons with

a view to cause an appreciable adverse effect on competition;

(b) where any enterprise or group of enterprises, which enjoys

dominant position, abuses the said dominant position; and

(c) regulating  the  combination  of  enterprises  by  means  of

mergers  or  amalgamations  to  ensure  that  such  mergers  or

amalgamations  do  not  become  anti-competitive  or  abuse  the

dominant position which they can attain.

89) The CCI is specifically entrusted with duties and functions, and in

the process empower as well,  to deal  with the aforesaid three

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kinds of anti-competitive practices.  The purpose is to eliminate

such  practices  which  are  having  adverse  effect  on  the

competition, to promote and sustain competition and to protect

the  interest  of  the  consumers  and  ensure  freedom  of  trade,

carried  on  by  other  participants,  in  India.   To  this  extent,  the

function that is assigned to the CCI is distinct from the function of

TRAI under the TRAI Act.  Learned counsel for the appellants are

right in their submission that the CCI is supposed to find out as to

whether the IDOs were acting in concert and colluding, thereby

forming a cartel, with the intention to block or hinder entry of RJIL

in the market in violation of Section 3(3)(b) of the Competition Act.

Also, whether there was an anti-competitive agreement between

the IDOs, using the platform of COAI.  The CCI, therefore, is to

determine whether the conduct of the parties was unilateral or it

was  a  collective  action  based  on  an  agreement.   Agreement

between the parties, if it was there, is pivotal to the issue.  Such

an exercise has to be necessarily  undertaken by the CCI.   In

Haridas Exports, this Court held that where statutes operate in

different fields and have different purposes, it cannot be said that

there is an implied repeal of one by the other.  The Competition

Act is also a special statute which deals with anti-competition.  It

is also to be borne in mind that if the activity undertaken by some

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persons  is  anti-competitive  and  offends  Section  3  of  the

Competition Act,  the consequences thereof are provided in the

Competition Act.  Section 27 empowers the CCI to pass certain

kinds of orders, stipulated in the said provision, after inquiry into

the agreements for  abuse of  dominant position.   The following

kinds of orders can be passed by the CCI under this provision:

"27.  Orders  by  Commission  after  inquiry  into agreements  or  abuse  of  dominant  position. -  Where after  inquiry  the  Commission  finds  that  any  agreement referred  to  in  section  3  or  action  of  an  enterprise  in  a dominant  position,  is  in  contravention  of  section  3  or section 4, as the case may be, it may pass all or any of the following orders, namely:—  

(a) direct  any enterprise or association of enterprises or person or  association  of  persons,  as  the case may be, involved  in  such  agreement,  or  abuse  of  dominant position,  to  discontinue  and  not  to  re-enter  such agreement  or  discontinue  such  abuse  of  dominant position, as the case may be;  

(b) impose such penalty, as it may deem fit which shall be not more than ten per cent of the average of the turnover for the last three preceding financial years, upon each of such  person  or  enterprises  which  are  parties  to  such agreements or abuse:  

Provided that in case any agreement referred to in section  3  has  been  entered  into  by  a  cartel,  the Commission  may  impose  upon  each  producer,  seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten percent. of its turnover  for  each  year  of  the  continuance  of  such agreement, whichever is higher.  

(c) repealed;

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(d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;

(e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any;  

(f) repealed;  

(g) pass such other [order or issue such directions] as it may deem fit.  

Provided  that  while  passing  orders  under  this section,  if  the  Commission  comes  to  a  finding,  that  an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group.

Moreover, it is within the exclusive domain of the CCI to find

out as to whether a particular agreement will  have appreciable

adverse effect on competition within the relevant market in India.

For this purpose, CCI is to take into consideration the provisions

contained in the Competition Act,  including Section 29 thereof.

Sections 45 and 46 also authorise the CCI to impose penalties in

certain situations.

90) Obviously,  all  the aforesaid functions not  only come within the

domain of the CCI, TRAI is not at all equipped to deal with the

same.  Even if TRAI also returns a finding that a particular activity

was anti-competitive,  its powers would be limited to the action

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that can be taken under the TRAI Act alone.  It is only the CCI

which is empowered to deal with the same anti-competitive act

from the lens of the Competition Act.  If such activities offend the

provisions  of  the  Competition  Act  as  well,  the  consequences

under  that  Act  would also follow.   Therefore,  contention of  the

IDOs that the jurisdiction of the CCI stands totally ousted cannot

be accepted.  Insofar as the nuanced exercise from the stand

point of Competition Act is concerned, the CCI is the experienced

body in conducting competition analysis.  Further, the CCI is more

likely to opt for structural remedies which would lead the sector to

evolve  a  point  where  sufficient  new  entry  is  induced  thereby

promoting genuine competition.  This specific and important role

assigned to the CCI cannot be completely wished away and the

‘comity’ between the sectoral regulator (i.e. TRAI) and the market

regulator (i.e. the CCI) is to be maintained.   

91) The conclusion of the aforesaid discussion is to give primacy to

the respective objections of the two regulators under the two Acts.

At the same time, since the matter pertains to the telecom sector

which  is  specifically  regulated  by  the  TRAI  Act,  balance  is

maintained by permitting TRAI in the first instance to deal with

and  decide  the  jurisdictional  aspects  which  can  be  more

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competently handled by it.  Once that exercise is done and there

are findings returned by the TRAI which lead to the  prima facie

conclusion  that  the  IDOs  have  indulged  in  anti-competitive

practices,  the  CCI  can  be  activated  to  investigate  the  matter

going by the criteria laid down in the relevant provisions of the

Competition  Act  and  take  it  to  its  logical  conclusion.   This

balanced approach in construing the two Acts would take care of

Section 60 of the Competition Act as well.  

92) We, thus, do not agree with the appellants that CCI could have

dealt  with  this  matter  at  this  stage  itself  without  availing  the

inquiry by TRAI.  We also do not agree with the respondents that

insofar as the telecom sector is concerned, jurisdiction of the CCI

under the Competition Act is totally ousted.  In nutshell, that leads

to  the  conclusion  that  the  view  taken  by  the  High  Court  is

perfectly justified.  Even the argument of the learned ASG is that

the exercise of jurisdiction by the CCI to investigate an alleged

cartel does not impinge upon TRAI’s jurisdiction to regulate the

industry  in  any  way.   It  was  submitted  that  the  promotion  of

competition and prevention of competitive behaviour may not be

high on the change of sectoral regulator which makes it prone to

‘regulatory  capture’  and,  therefore,  the  CCI  is  competent  to

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exercise its jurisdiction from the stand point of the Competition

Act.  However, having taken note of the skillful exercise which the

TRAI is supposed to carry out, such a comment vis-a-vis TRAI

may  not  be  appropriate.   No  doubt,  as  commented  by  the

Planning Commission in its report of February, 2007, a sectoral

regulator,  may not  have an overall  view of  the economy as a

whole, which the CCI is able to fathom.  Therefore, our analysis

does not bar the jurisdiction of CCI altogether but only pushes it

to  a  later  stage,  after  the  TRAI  has  undertaken  necessary

exercise in the first place, which it is more suitable to carry out.   

B. Whether the writ petitions filed before the High Court of Bombay were maintainable?

93) Here comes the scope of judicial interference under Article 226 of

the Constitution.  As per the RJIL as well as CCI, the High Court

could  not  have  entertained  the  writ  petition  against  an  order

passed under Section 26(1) of the Competition Act which was a

pure  administrative  order  and  was  only  a  prima  facie  view

expressed  therein,  and  did  not  result  in  serious  adverse

consequences.   It  was  submitted  that  the  finding  of  the  High

Court  that  such  an  order  was  quasi-judicial  order  is  not  only

erroneous but it is contrary to the law laid down in the case of

Steel Authority of India Limited.  The respondents, on the other

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hand, have submitted that the judgment in the above case had no

application in the instant case as it did not deal with the sector

that is regulated by a statutory authority.  Moreover, such an order

was  quasi-judicial  in  nature  and  cannot  be  treated  as  an

administrative  order  since  it  was  passed  by  the  CCI  after

collecting the detailed information from the parties and by holding

the  conferences,  calling  material  details,  documents,  affidavits

and by recording the opinion.  It was submitted that judicial review

against  such  an  order  is  permissible  and  it  was  open  to  the

respondents to point out that the complete material, as submitted

by  the  respondents,  was  not  taken  into  consideration  which

resulted  in  an  erroneous  order,  which  had  adverse  civil

consequences inasmuch as the respondents were subjected to

further investigation by the Director General.

94) We may mention at the outset that in the case of Steel Authority

of India Limited, nature of the order passed by the CCI under

Section 26(1) of the Competition Act (here also we are concerned

with  an  order  which  is  passed  under  Section  26(1)  of  the

Competition  Act)  was  gone  into.   The  Court,  in  no  uncertain

terms, held that such an order would be an administrative order

and  not  a  quasi-judicial  order.   It  can  be  discerned  from

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paragraphs 94, 97 and 98 of  the said judgment,  which are as

under:

"94.  The Tribunal, in the impugned judgment, has taken the  view  that  there  is  a  requirement  to  record  reasons which  can  be  express,  or,  in  any  case,  followed  by necessary  implication  and  therefore,  the  authority  is required to record reasons for coming to the conclusion. The proposition of law whether an administrative or quasi- judicial  body,  particularly  judicial  courts,  should  record reasons in support of their decisions or orders is no more res integra and has been settled by a recent judgment of this Court in  CCT v.  Shukla & Bros. [(2010) 4 SCC 785: (2010)  2  SCC  (Cri)  1201  :  (2010)  2  SCC  (L&S)  133], wherein this Court was primarily concerned with the High Court  dismissing  the  appeals  without  recording  any reasons.  The  Court  also  examined  the  practice  and requirement of providing reasons for conclusions, orders and  directions  given  by  the  quasi-judicial  and administrative bodies.

xx xx xx

97.  The above reasoning and the principles enunciated, which are consistent  with the settled canons of  law,  we would adopt even in this case. In the backdrop of these determinants,  we may refer to the provisions of  the Act. Section 26, under its different sub-sections, requires the Commission  to  issue  various  directions,  take  decisions and  pass  orders,  some  of  which  are  even  appealable before the Tribunal. Even if it is a direction under any of the  provisions  and  not  a  decision,  conclusion  or  order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage  of  forming  a  prima  facie  view,  as  required  under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such  opinion  should  be  formed  on  the  basis  of  the records, including the information furnished and reference made to the Commission under the various provisions of

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the  Act,  as  aforereferred.  However,  other  decisions  and orders, which are not directions simpliciter and determining the rights of the parties, should be well reasoned analysing and  deciding  the  rival  contentions  raised  before  the Commission  by  the  parties.  In  other  words,  the Commission is  expected to  express  prima facie  view in terms of Section 26(1) of the Act, without entering into any adjudicatory  or  determinative  process  and  by  recording minimum  reasons  substantiating  the  formation  of  such opinion, while all its other orders and decisions should be well reasoned.

98.  Such an approach can also be justified with reference to Regulation 20(4), which requires the Director General to record, in his report,  findings on each of  the allegations made by a party in the intimation or reference submitted to the Commission and sent for investigation to the Director General, as the case may be, together with all evidence and  documents  collected  during  investigation.  The inevitable consequence is that the Commission is similarly expected to write appropriate reasons on every issue while passing an order under Sections 26 to 28 of the Act.”

95) There is no reason to take a contrary view.  Therefore, we are not

inclined to refer the matter to a larger Bench for reconsideration.

96) It was, however, argued that since the case of Steel Authority of

India Limited was not dealing with the telecom sector, which is

regulated by the statutory regulator, namely, TRAI under the TRAI

Act, that judgment would not be applicable.  Merely because the

present case deals with the telecom sector would not change the

nature of the order that is passed by the CCI under Section 26(1)

of  the Competition Act.   However,  it  raises another dimension.

Even if the order is administrative in nature, the question raised

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before the High Court in the writ petitions filed by the respondents

touched upon the very jurisdiction of the CCI.  As is evident, the

case set up by the respondents was that the CCI did not have the

jurisdiction  to  entertain  any  such  request  or  Information  which

was  furnished  by  RJIL  and  two  others.   The  question,  thus,

pertained to the jurisdiction of the CCI to deal with such a matter

and in the process the High Court was called upon to decide as to

whether the jurisdiction of the CCI is entirely excluded or to what

extent the CCI can exercise its jurisdiction in these cases when

the matter could be dealt with by another regulator, namely, the

TRAI.   When  such  jurisdictional  issues  arise,  the  writ  petition

would clearly be maintainable as held in Barium Chemicals Ltd.

and Another v. Company Law Board and Others18 and Carona

Limited.  In Carona Limited, this Court held as under:

"26. The  learned  counsel  for  the  appellant  company submitted  that  the  fact  as  to  “paid-up  share  capital”  of rupees one crore or more of a company is a “jurisdictional fact”  and  in  absence  of  such  fact,  the  court  has  no jurisdiction to proceed on the basis that the Rent Act is not applicable.  The learned counsel  is  right.  The fact  as  to “paid-up share capital” of a company can be said to be a “preliminary”  or  “jurisdictional  fact”  and  said  fact  would confer  jurisdiction  on the court  to  consider  the question whether the provisions of  the Rent  Act  were applicable. The question, however, is whether in the present case, the learned  counsel  for  the  appellant  tenant  is  right  in submitting that the “jurisdictional fact” did not exist and the Rent Act was, therefore, applicable.

18 AIR 1967 SC 295

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27.  Stated  simply,  the  fact  or  facts  upon  which  the jurisdiction of a court, a tribunal or an authority depends can be said to be a “jurisdictional fact”. If the jurisdictional fact exists, a court, tribunal or authority has jurisdiction to decide other issues. If such fact does not exist, a court, tribunal or authority cannot act. It is also well settled that a court  or  a  tribunal  cannot  wrongly  assume existence of jurisdictional  fact  and  proceed  to  decide  a  matter.  The underlying  principle  is  that  by  erroneously  assuming existence of a jurisdictional fact, a subordinate court or an inferior tribunal cannot confer upon itself jurisdiction which it otherwise does not posses.

28. In Halsbury's Laws of England (4th Edn.), Vol. 1, Para 55, p. 61; Reissue, Vol. 1(1), Para 68, pp. 114-15, it has been stated:

“Where the jurisdiction of a tribunal is dependent on the existence of a particular state of affairs, that state of  affairs  may  be  described  as  preliminary  to,  or collateral  to  the  merits  of,  the  issue.  If,  at  the inception  of  an  inquiry  by  an  inferior  tribunal,  a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive.”

The existence of a jurisdictional fact is thus a sine qua non or condition precedent to the assumption of jurisdiction by a court or tribunal.

xx xx xx

36.  It is thus clear that for assumption of jurisdiction by a court  or  a  tribunal,  existence  of  jurisdictional  fact  is  a condition  precedent.  But  once  such  jurisdictional  fact  is found to exist, the court or tribunal has power to decide adjudicatory facts or facts in issue.”

97) Thus, even when we do not agree with the approach of the High

Court in labeling the impugned order as quasi-judicial order and

assuming jurisdiction to entertain the writ petitions on that basis,

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for our own and different reasons, we find that the High Court was

competent to deal with and decide the issues raised in exercise of

its power under Article 226 of the Constitution.  The writ petitions

were, therefore, maintainable.

C. Whether the High Court could give its findings on merits?

98) Once  we  hold  that  the  order  under  Section  26(1)  of  the

Competition Act is administrative in nature and further that it was

merely  a  prima facie  opinion  directing  the  Director  General  to

carry the investigation, the High Court would not be competent to

adjudge the validity of such an order on merits.  The observations

of the High Court giving findings on merits, therefore, may not be

appropriate.

99) At the same time, since we are upholding the order of the High

Court on the aspect that the CCI could exercise jurisdiction only

after  proceedings  under  the  TRAI  Act  had  concluded/attained

finality,  i.e.  only  after  the  TRAI  returns  its  findings  on  the

jurisdictional  aspects  which  are  mentioned  above  by  us,  the

ultimate  direction  given  by  the  High  Court  quashing  the  order

passed by the CCI is not liable to be interfered with as such an

exercise carried out by the CCI was premature.  The result of the

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discussion  would  be  to  dismiss  these  appeals,  subject  to  our

observations on certain aspects.  Ordered accordingly.

.............................................J. (A.K. SIKRI)

.............................................J. (ASHOK BHUSHAN)

NEW DELHI; DECEMBER 05, 2018

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