COMPETITION APPELLATE TRIBUNAL NEW DELHI. Appeal No. 44 OF 2013

Transcription

1 COMPETITION APPELLATE TRIBUNAL NEW DELHI Appeal No. 44 OF 2013 [Under Section 53-B of the Competition Act, 2002 against the Order dated passed by the Competition Commission of India in Combination Registration No. C-2013/05/2012] With CORAM I.A. No. 81/2013 Hon ble Mr. Justice V.S. Sirpurkar, Hon ble Shri Rahul Sarin Hon ble Ms. Pravin Tripathi In the matter of : Jitender Bhargava Versus Competition Commission of India & Ors. Appellant Respondents Appearances : Shri Parag P. Tripathi, Senior Advocate with Shri Srinivas Katni, Shri Mukul Chandra, Shri Pradeep and Shri Arunab, Advocates for the Appellant. Dr. Vijay K. Singh with Shri V. Sriraj, DD(Law) of Respondent No. 1/CCI. Ms. Mrinal, Advocatre for Respondent No. 2. Shri Rajashekhar Rao with Shri Abir Roy and Ms. Shruti Aji Murali,, Advocates for Respondent No. 3. O R D E R 9 th January, 2014 Learned counsel, Ms. Mrinal and Shri Rajashekhar Rao, accept Notice on behalf of respondents Nos. 2 and 3 respectively and pray for time to file their respective replies. Let the same be filed within two weeks from today and copies thereof shall be exchanged. Rejoinder, if any, shall be filed within a week thereafter. List the matter on 10 th February, 2014 for hearing on merits as well as on interim relief application. [Justice V.S. Sirpurkar) [Rahul Sarin] [Pravin Tripathi]

2 COMPETITION APPELLATE TRIBUNAL NEW DELHI Appeal No. 30 OF 2013 [Under Section 53-B of the Competition Act, 2002 against the Order dated passed by the Competition Commission of India in Case No.47/2012] With I.A. No. 53 of 2013 CORAM Hon ble Mr. Justice V.S. Sirpurkar, Hon ble Shri Rahul Sarin Hon ble Ms. Pravin Tripathi In the matter of : M/s. Mineral Enterprises Ltd. Versus Competition Commission of India & Ors. Appellant Respondents Appearances : Shri P.S. Narasimha, Senior Advocate with Shri K. Maruthi Rao, Advocate for the Appellant. Dr. Vijay K. Singh with Shri V. Sriraj, DD(Law) of Respondent No. 1/CCI. Shri V.S. R. Krishna, Advocate for the Respondents. O R D E R 9 th January, 2014 At the request of the learned counsel for the respondents, three weeks time is granted to file reply to the application for condonation of delay. List the matter on 3 rd February, [Justice V.S. Sirpurkar) [Rahul Sarin] [Pravin Tripathi]

3 COMPETITION APPELLATE TRIBUNAL NEW DELHI Appeal No. 31 OF 2013 [Under Section 53-B of the Competition Act, 2002 against the Order dated passed by the Competition Commission of India in Case No.49/2012] With I.A. No. 54 of 2013 CORAM Hon ble Mr. Justice V.S. Sirpurkar, Hon ble Shri Rahul Sarin Hon ble Ms. Pravin Tripathi In the matter of : N. Sanjeeva Rao & Anr. Appellants Versus Competition Commission of India & Ors. Respondents Appearances : Shri Rakesh Sanghi with Shri T.S.R. Prasad, Advocates for the Appellants. O R D E R 9 th January, 2014 Being aggrieved by the order dated passed by the Competition Commission of India (CCI) under Section 26(2) of the Competition Act, 2002 (hereinafter referred to as the Act ) closing the proceedings under that Section, the appellant have come before us by way of an appeal under Section 53-B of the Act. From the record, it appears that the appellants had taken auto finance services from the Opposite Parties Nos. 3, 4 and 5 before the CCI. The appellants have joined as many as 163 auto finance business firms as the respondents. According to the appellants, all these respondents are the s of a registered Association called the Andhra Pradesh Hire Purchase Association and it is in that capacity that they have

4 -2- been joined as parties to this appeal as also before the CCI. It is then made out that these opponents were controlling 60% of the entire auto-finance services market in the cities of Hyderabad and Secunderabad and that they were acting in violation of the provisions of the A.P. (Telangana Area) Money Lender s Act, 1349 Fasli. It is made out that under that Act, a person, individual or the partnership firm, conducting money lending business, had to obtain Money Lender s Licence. It is then contended that all these Opposite Parties were also acting in violation of the provisions contained in the Usurious Loans Act, 1918, which regulated the charging of interest by the Opposite Parties. It was then contended that the Opposite Parties had created a flimsy smoke screen by falsely describing their auto finance business as a Hire Purchase transaction. It was, however, made out that the Opposite Parties Nos. 31, 37, 39, 45, 47, 48, 60 and 90 before the CCI, being corporate entities, did not require the Money Lender s Licence to conduct the money-lending business but the interest which was being charged by them was bound to be regulated as per the provisions contained in the Usurious Loans Act, It was also complained that these entities unilaterally calculated the outstanding amount due and, on default, the financier s goons proceeded to seize the vehicle from the loanee without a court order. It was also complained that the s of the Association used to sell the hypothecated vehicles without a court decree by adopting a uniform business practice of obtaining various blank signed

5 -3- documents including signed blank cheques, transfer forms and number of other documents from the loanee at the time of execution of documents while disbursing the loan amount. 2. It was contended that the members claimed that they were conducting Hire-Purchase business and, according to the informants, this was a false declaration. A Model Hire-Purchase Agreement was also filed by the Association in the writ petition which is pending before the Andhra Pradesh High Court. According to the appellants, the transaction covered by that Model Hire- Purchase Agreement was nothing but a loan agreement. It was only a facade that a loan agreement was called the Hire-Purchase Agreement by the Opponents. 3. On this basis, it was urged that the s of the Association had entered into an agreement or understanding to carry on the illegalities in the course of auto finance business under the garb of Hire Purchase transaction which directly determined the price of services being rendered by the private financers in the automobile finance market and thus it was alleged that the Opposite Parties Nos. 2 to 163 had formed a cartel and constituted a single entity i.e. their association, which was Opposite Party No. 1. On that basis, the informants made the following prayers : a) To pass an Order to restrain the OP-2 to OP-163 (except 31, 37, 39, 45, 47, 48, 60, 90) from carrying on auto finance business and direct OP-31, 37, 39, 45, 47, 48, 60, 90 to carry on their business in compliance with the provisions contained in the A.P. (T.A.) Money Lenders Act, 1349;

6 -4- b) To pass an order directing the Opposite Parties to charge reasonable interest as per the provisions contained in the Usurious Loan Act, 1918; c) To pass an order restraining the Opposite Party from seizing or, snatching the Hypothecated vehicle from the consumers except through the procedure established by the law; and d) Any other order which the Commission may deem fit. 4. The Commission considered the material on record and also heard the advocates on behalf of the informants. According to the CCI, the market was the finance services rendered for automobile finance. The CCI came to the conclusion that there was no separate category or a market within a market called Auto-finance by nonbanking entities and there was no basis to differentiate between private auto financers and other banking/non-banking entities which were in the business of extending automobile finance. The Commission explained that the relevant product market in the present matter would be the services of automobile finance and the geographic market would be restricted to the twin cities of Hyderabad and Secunderabad in the State of Andhra Pradesh. 5. It was further observed by the CCI that the informants had not brought on record anything to show that there was an agreement among the Opposite Parties to charge exorbitant rates of interest for providing automobile finance services. The Commission, in its order, referred to the grievance of the appellants about the contravention of the provisions of the A.P. (Telangana Area) Money Lender s Act, 1349 Fasli and the Usurious Loans Act, According to the CCI, this

7 -5- did not raise any competition issue and the remedy, therefore, lied elsewhere. It was noted by the CCI that there was already a writ petition pending in the Andhra Pradesh High Court and filing of the writ petition by the Opposite Party No. 1 Association could not mean to be an agreement amongst all the members thereof. 6. From this, CCI came to the conclusion that there was no material on record to hold that there was any agreement amongst the Opposite Parties much less an agreement contravening the provisions of Section 3 of the Competition Act. 7. Before us, the learned counsel for the appellants very strenuously argued that forming of an association and creating a Model Hire Purchase Agreement by itself amounted to an agreement amongst all the Opposite Parties. According to the learned counsel for the appellants, this was nothing but cartelling. We do not think that the learned counsel for the appellants is right in this contention as for alleging cartelization, much more material would be required, which has not been placed by him either before the CCI or before us. Learned counsel for the appellants says that there is a Model Hire Purchase Agreement and that by itself would be sufficient to infer that there was an agreement amongst all the Opposite Parties. In our opinion, that by itself will not go to the extent of creating a cartel like agreement prosecuted under Section 3 of the Competition Act. In fact, it appears to us that in the name of raising a competition issue by the appellants, this is nothing but an attempt to get their

8 -6- grievance redressed in respect of the complaint against the Hire Purchasers like the Opposite Parties in this case. We are quite convinced that there was no competition issue involved and issue in reality only relates to the prosecutions of the Opposite Parties under the provisions of the A.P. (Telangana Area) Money Lender s Act, 1349 and the Usurious Loans Act, 1918, which they have challenged before the High Court of Andhra Pradesh. That issue has got nothing to do with the competition concern. It is also not suggested as to which particular provision of Section 3 of the Competition Act is breached by the Model Hire Purchase Agreement. We have absolutely no material to examine as to whether all the respondents follow that Model Hire Purchase Agreement. There is no evidence to that effect nor any material was placed on record before the CCI or before us. It is also not known as to whether the Association has any control over the concerned members. In view of this, we are unable to take any different view than the one taken by the CCI. In our opinion, the order of CCI is correctly passed and it was correctly held that there was no competition issue involved. The present appeal is, therefore, dismissed. [Justice V.S. Sirpurkar) [Rahul Sarin] [Pravin Tripathi]