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NCLAT redefines limitation in filing competition appeals
By way of judgement dated 29 May 2020, the Hon’ble National Company Law Appellate Tribunal (“NCLAT”) has dismissed an appeal against order dated 28 November 2017 passed by the Competition Commission of India (“CCI/Commission”) in favour of NIIT Limited (“NIIT”) primarily on the ground that the time of 693 days spent by the Appellant in prosecuting litigation against the impugned CCI order before High Court and Supreme Court without first availing the statutory remedy of appeal to NCLAT did not constitute “sufficient cause” for condonation of such delay. The judgement redefines the application of the Limitation Act, 1963, particularly, Section 5 thereof , for filing competition appeals and sets a precedent which will deter litigants against “forum shopping” in competition litigation.
Background
The informant/Appellant , Maj (Retd.) Pankaj Rai , who was held as “natural person” under the Competition Act,2002,( the Act) appeared in person before the Commission as well as the NCLAT.
The Appellant held a franchise from NIIT in the city of Hyderabad in respect of computer education and training services, had approached the Commission alleging contravention of Section 3 & 4 by NIIT for: (i) revoking the informant/appellant’s franchise rights for an online banking operations course; (ii) operating in the territory which was allotted to the informant/appellant; (iii) offering the same services at discounted prices which jeopardised the informant/ appellant’s business; (iv) adopting differential pricing for consumers in metropolitan cities; (v) poaching the consumers of the informant/appellant.
The allegations against NIIT pertained to NIIT making forays into the territories allotted by NIIT itself of Informants depriving the Informants of their legitimate share of revenue from that territory. It was also alleged that NIIT was abusing its dominant position by offering courses at highly discounted prices by entering into an agreement with ‘Accenture’ and followed a differential pricing pattern for its consumers in metros jeopardising the rights of students and franchisees and thereby rendering the courses offered by the franchisees uncompetitive; besides alleged to be indulging in predatory pricing as the prospective customers in a franchisee’s territory could register online thereby ruining the business of franchisees.
However, the Commission during its prima facie analysis did not find NIIT to be dominant in the relevant market of computer education in India considering the presence of large players in the relevant market which posed sufficient competitive constraints on NIIT. Accordingly, the CCI closed the case under Section 26(2) of the Act.
The informant, instead of approaching the NCLAT in appeal under Section 53B of the Act, approached the Hon’ble High Court of Telangana against the order passed by the Commission under Section 26(2) of the Act alleging that the order passed by the Commission was in violation of principles of natural justice being influenced by Mr. Vinod Dhall (former chairperson of the Commission) who appeared for NIIT before the Commission. The Ld. Single Judge dismissed the Writ Petition holding that appeals against the orders passed by the Competition Commission of India are to be dealt by the NCLAT under Section 53B provided in the Act. The informant then filed another Writ Petition before the Division Bench of the High Court which dismissed it observing that the discretion exercised by the Ld. Single Judge in relegating the informant/appellant to the NCLAT was not unfounded on fundamental principles of law. Thereafter, the informant/appellant approached the Hon’ble Supreme Court of India in review, however, withdrew it during hearing and then finally approached the NCLAT in appeal after a delay of 708 days.
Observations of the NCLAT
The NCLT acknowledged that although the limitation period of filing an appeal against the order of the Commission is 60 days, however, such period can be extendable if the informant demonstrates “sufficient cause.” However, NCLAT held that pursuing litigation for 693 days before the High Court cannot be said to be a sufficient cause for explaining the delay. The NCLAT held that the informant cannot circumvent the statutory remedy of appeal provided under the Act and in turn approach the High Court against the orders passed by the Commission. The NCLAT observed that the conduct of the appellant was akin to “forum shopping” and in detriment to the ‘expeditious disposal duty’ of the NCLAT enshrined under the Competition Act, 2002 which directs the NCLAT to dispose of appeals within 6 months of filing. The NCLAT also held that since the Act calls for expeditious disposal of appeals, therefore, Section 5 of the Limitation Act, 1963 which provides for extension of prescribed period in certain cases where sufficient cause id shown , is not applicable .
As regards the conduct of the informant/appellant, the NCLAT noted that it was disrespectful towards the judicial bodies. The NCLAT also was ‘flabbergasted’ by the conduct of the informant calling into question the CCI’s decision making process and for adopting ‘offensive and intemperate’ language in the written submissions.
Comment: This NCLAT order is path breaking and streamlines jurisdiction on the issue of application of limitation law in antitrust proceedings under the Act in India. The order send a strong message against “forum shopping”, generally , on the advice of certain lawyers with vested interests to prolong litigation at the cost of the litigants .
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