Full Text
Judgmentreserved on:November19,2018 Judsifieni'delivsi'ed on:Decsritbev 18,2018
Appellant MONSANTO COMPANY
Through; Mr.Ajit Wanier with . , Mr.AngekKochhar&Mr.AdityaNayyar, Advs. ■ ■ .
Through: Mr-,Sarnar Bans.al with
I^IOeyahiailPat^ ■/ >
Shish^ 1vlr.:;$rhitahl^^
■Mr.,;kaii3h^ A;
/Ms. AkahsKkMehta, Advs; for R.-3 to 5
■HON^ITAIR. JUlSTiCE
■ JLi)'Gv-MTN-T.3
•VvlCiWESWAR RAO,L '
■ ■
For orders, see LPA 637/2018.
(a-I V.KAMESWAR RAO, J CHIEE.JUSTICE.DECEMBER .2018yg
2018:DHC:9235-DB HIGH COURT OF DELHI Judsmentreserved on:November 19,2018
Judsnient delivered on:December 18,2018
MAHYCO MONSANTO BIOTECH(INDIA)PRIVATE LTD & ANR.
Appellants
Through: Mr.P.V.Kapur,Sr. Adv.with Mr.Ajit Warrier, Mr.Rajshekhar Rao, Mr.Aditya Nayyar,Mr.Angad
Kochhar,Mr.Aman Singh Sethi,Mr.Vaibhav Aggarwal, Ms.Yashika Maheshhwari and
Mr.Siddhant Kapur,Advs.
Through: . Mr.Samar Bansal,Adv.and . Mr.Manan Shishodia,Adv.for
R-I/GCI ' Ms. Gauri Puri with Mr. Vinayak Mehrotra,Advs. for R-2.
Mr.Sunil J. Mathews,Adv.for R-3 Ml". Jayant K.Bhushan,Sr. Adv. with Mr.Amitabh Kumar, Mr. Vaibhav Choukse,Ms. Akansha Mehta & Mr.Aditya
Gupta,Advs.for R-4 to R6.
&
MONSANTO COMPANY Appellant
Through: Mr.Ajit Warrier with Mr.Angad Kochhar& Mr. Aditya Nayyar,Advs.
Through: Mr.Samar Bansal with Ms.Devahuti Pathak &
Mr.Manan Shishodia,Advs.for CCI Mr. Amitabh Kumar with
Mr. Vaibhav Choukse & Ms.Akansha Mehta,Advs.for
R-3 to'5
HON'BLE MR.JUSTICE V.KAMESWAR RAO
JUDGMENT
1. These appeals have been filed by the appellants challenging the order dated 12"' October, 2018 passed by the learned Single Judge in W.P. (C) 7583/2016 and 7578/2016 whereby the learned Single has dismissed the writ petitions by relying upon the.judgment ofthe Coordinate Bench ofthis Court
2. It was the submission of Mr. P.V. Kapur and Mr.Rajshekhar Rao,learned Sr. Counsel/counsel appearing for the appellants that in Cadila (Supra)^ the Coordinate Bench of this Court has noticed the order passed by the Competition Commission of India(CCI)in Ministry ofAgriculture v. M/s. Maliyco Monsanto Biotech Limited and has confirmed the reasoning therein. According to them,the Coordinate Bench has confirmed the judgment which was under challenge in the writ petitions before the learned Single Judge. This was done without notice to the appellants herein. As such the judgment of the Coordinate Bench in Cadila (Supra)io the extent it affirms the order ofthe CCI impugned by the appellants before the learned Single Judge in the writ petitions has;adversely affected their legal rights and remedies as evidenced by the summary dismissal of the writ petitions. In this regard, they had relied upon the judgment of the Supreme Court in Poonam v. State of Uttar Pradesh and Ors.20162SCC 779.
3. It was their submission that the judgment in Cadila (Supra) strongly indicates that the Division Bench was not been squarely mounted to the said order ofCCI in Ministry of Agriculture case (supra)(and connected matter). The private respondents had filed an application being CM.No.41877/2018 before the learned Single Judge seeking dismissal of the writ petition by relying on Cadila(supra). The appellants had also filed an application being CM.no.42823/2018 seeking refeience of the writ petition to a larger Bench in light of the binding precedent ofthe Supreme Court m Central Board ofDawoodi Bohra Community and Anr. V. State ofMaharashtra and Anr. (2005)2see 673,'wherein it was inter alia, contended that the grounds raised by the appellants before the learned Single Judge with respecttothescope,ambitand applicability ofSection48 of the Companies Act,2002 were never raised before and / or dealt by the Division Bench in Cadila (Supra). It is stated that the learned Single Judge without calling upon CCI to clarify the actual facts and / or considering the applications filed by the appellants,summarily dismissedthe writpetition,although it was a matter ofrecord that certain substantial grounds raised by the appellants in the writpetition with regard to the construction and Cadila(Supra). In essencethe substantial groundsraised bythe appellants in relation to the construction and interpretation of Section 48 ofthe 2002 Act were neither raised nor considered in Cadila(Supra).
4. It was the submission of the learned counsel for the appellants that the Scheme ofActof2002 does not contemplate punishment of the Directors / Officers of a company under Section 27 ofthe 2002 Actand thatthey can only be proceeded against ifthe orders/ directions ofCCI are not obeyed and/or are flouted by the company.However,CCImay,in agiven case, be entitled to invoke provisions ofChapter VIofthe2002Actif the pre-condition ofthe various Sections contained therein are showntohave beenfuifiiied. Thecategpfies-ofordersthatcan be passed under Section 27 ofthe 2002 Act can only be directed against an'enterprise'as defined under Seption 2(h)ofthe Act, 2002,and not against individual Directors/officers. It is their submission that since the grounds and points raised by the appellants at the time of hearing before this Court have admittedly not been considered by the Division Bench in Cadila they rely upon thejudgment ofthe Supreme Court in the case of DawoodiBohra(supra).
5. It was the submission of the learned counsel for the appellantsthatDivision Bench in Cadila(Supra)only considered a limited argument in relation to Section 48 ofthe 2002 Act and • admittedly did not consider the arguments raised by the appellants before the Id. Single Judge. A reading of Cadila (Supra) would show that the Division Bench has, without considering the special scheme and construction ofthe 2002 Act, gone into an elaborate discussion on the interpretation ofSection 138 ofNegotiable Instruments Act,1881 and while doing so,the Division Bench, with utmost respect, did not consider that two statutes can only be said fo be with each other whenthey deal withthesamesubject-matterand/orsame person orthingsand/orsame classorpersons,orhavethesamepurpose or objects. The rationale behind this rule is based on the interpretative assumption that words employed in legislations are used m an identical sense. A comparison ofthe preamble as also the StatementofObjects and Reasons ofthe 2002Actand the NI \0 person or things and / or same class or persons,or have the same purpose or objects. Therefore, there was no justification or warrant to refer to the NI Act, when the 2002 Act, as a special Act,deals with a subject matter which is entirely distinctfrom the NI Act. In this regard, they would rely on Shah and Co., Bombay v. State ofMaharashtra andAm.AIR 1967SC18778l Bangalore TurfClub Limited v. RegionalDirector Employees' StateInsurance Corporation(and Connected appeals)(2014)9 see657.
6. It was submitted that in light of special construct and scheme ofthe 2002 Act, an interpretation that Section 48 can be invoked by the CCI against individual Officers /Directors ofthe Company to investigate their role,and conduct of offences, as contemplated under Sections 3 and 4 ofthe 2002 Act,and made punishable tinder Section 27 thereof, would result in a legal absurdity and would render the statutory provisions unworkable and nonsensical for the reason that such an inteipretation would lender the words "punished accordingly", appearing in Section 48 ofthe 2002 Act nugatory inasmmch as the orders which CCI w Officers of a company. The same is also evident from the fact that Section 27ofthe 2002 Actemploys terms such as''turnover" and profit which terms can only be relevantto an enterprise and not to an individual. If "turnover'''' is interpreted to include income ofa director/officer(assuggested by the learned counsel forthe respondents herein),the same would amountto re-writing Section27ofthe Act.Further,theterm"profit"cannotbe applied in the context of a Director / Officer. The Supreme Court in Excel Crop Care Ltd v. Competition Commission ofIndia and Ors. AIR 2017 SC 2734 has interpreted the word "turnover'" appearing in Section27ofthe 2002Actto mean onlythe relevant turnover pertaining to the infringing product(s). In the contextof a director / officer of a company arid.Jri the absence of any enabling provision or prescribed parameters being prescribed under the 2002 Act, it would be impossible to ascertain the relevant turnover.
7. According to the counsels, it is a settled rule of interpretation that ifthe language used in a statute is capable of bearing more than one construction,a construction that results in with its puipose as it may always be presumed that while employing a particular language in the provision, absurdity or anomaly was never intended. In this regard,reliance was placed on thejudgment passed by the Supreme Court in M.Nizamudeen
V. ChemplastSaiimar Limited and Ors.(2010)4SCC240.
8. It was the submission of the learned counsel for the appellants thatthe Supreme Court while interpreting the 2002 Act in Excel Crop Care (supra), also observed that in a situation where two interpretations are possible,one that leans in favour of the infringer has to be adopted on the principle of strict interpretation. It is equally settled that the court cannot rewrite, recast or reffame the legislation for the-reasons that it has no power to legislate. Further, the..court cannot add words to a statute or read words into it which are not there. Even assuming there is a defect or omission in the words used by the legislature, the Court cannot correct or make up the deficiency and it shall only decide what the law is and not what it should be. In this regard reliance is placed on thejudgment ofthe Supreme Court in the case of Union ofIndia v. Deoki Nandan Aggarwal(1992) appellantsthatduringthe course ofarguments on 19""November, 2018,aquery wasputtothe appellants whether Section27(g)of the 2002 Act would empower CCI to punish erring Officers / Diiectors ofa Company under Section 27 ofthe 2002 Act. To which It was their submission that the power to prescribe punishment under a statute is an important legislative function and the said function cannotbe presumed infavour ofthe CCIso far as directors/officers ofacompany are.concerned. Ifsuch an interpretationisascribedto Section27(g)ofthe2002Actdespite the statute itself being bereft ofsuch an enabling provision and any concomitant statement ofdefined guidelines or parameters, then CCIwould haveunbridled andliiicanalised powerstopunish the Officers / Directors of Cpnipahy'without any legislative guidelines / checks and as per its whims and fancies, which is anathema to rule oflaw. In this regard,reliance was placed on Kishan Pmkash Sharma and Ors. V. Union ofIndia and Ors. (2001)5see212andB.R.Enterprisesv.StateofUP.andOrs. (1999)9see 700
10. Further they distinguished the judgment relied upon by V State ofKarnataka(1981)1 SCC645, which was in the context of the Drugs and Cosmetics Act, 1940. The respondents, by relying upon a similarly worded section therein as Section 48 of the 2002 Act,sought to argue that once an offence is committed, both the company and its officers are deemed to be guilty ofthe offence. However, perusal of the judgment would show that to the contrary,the saidjudgment supports the case ofthe appellants inasmuch as at Paragraph 7, it was clearly observed that the words ''punished accordingly inrthe'context would mean that a person deemed guilty of an offence committed by a company shall receive the punishment and'that is prescribed by the Act for that offence. In the present case, since.no punishment can be imposed upon individual directors[7] officers of a company under Section 27 ofthe 2002 Act,such individual directors / officers of a company cannot be proceeded against and punished, except as contemplated under Chapter VI ofthe 2002 Act.
11. They also submitted that the learned counsel for the respondents have contended that if the interpretation which is sought to be given by the appellants to Section 48 ofthe 2002 Act \\ deserves to be rejected. In terms ofthe interpretation propounded by the appellants to Section 48 ofthe 2002 Act, it is their stand that the said section would only apply in a case where orders / directions ofCCI are disobeyed /flouted by individual directors/ officers ofa company.
12. The learned counsels for the appellants in the alternative contended that if this court were to come to a conclusion that judgment passed in Ccidila (supra) does not require reconsideration by a larger Bench,it would be seen that the said judgment is primarily premised on ajudgment of a three Judge Bench ofthe Supreme Court in Aneeta Hada v. M/s. Godfather Travels and ToursPrivate Limited(2008)13SCC 70. The issue in that case was whether a director / officer ofa company could be prosecuted when the company has not been arrayed as an accused.
13. On the other hand,it is the submissions ofMr.Jayant K. Bhushan, learned Senior Counsel appearing for the respondent nos. 4 to 6 in LPA 371/2018 and respondent Nos.[3] to 5 in LPA 351/2018 that the plea of the appellants that no notice can be Company that it has indulged in anti-competitive activities, is squarely covered by the judgment ofthe Division Bench ofthis Court in the case of Cadila (Supra) which is binding on this Court and there is no occasion arises for disagreeing with it or referring the matter to a larger Bench.
14. It is his submission that the vicarious liability ofpersons in-charge of companies for offences committed by companies exists in several statutes, such as the Negotiable Instruments Act, 1881 (Section 141), Prevention of Food Adulteration Act, 1954 (Section 17) and the Drugs and Cosmetics Act, 1940 (Section 34). In none of these statutes is there any, provision which envisages a two stage inquiry, as has been canvassed by the Appellants,nor is there anyjudgmentof(he Supreme Court or of this Court or any other High Court to the knowledge of the respondents that states that such a two stage process is envisaged or that before notice is issued to the persons in-charge of the company, a finding of guilt must be recorded against the company. According to Mr.Bhushan,it would not even be in the public interest as it would prolong the proceedings and may even company did not properly defend itselfand a finding ofguilt was recorded against the company,the directors or person-in charge would surely come and challenge the finding before they could be held vicariously liable and would insist on that finding being revisited.
15. It was his submission that no prejudice would be caused to persons in-charge ifthey were asked / permitted to participate in the proceedings at the initial stage itself. They would be given a chance to contestthe charge againstthe company as well as the charge that they were in-charge ofthe company at the time when the offence was committed. He refers to paras 52 to 55 of the judgment ofthe Division Bench-ofthis Court in Cadila(Supra). Further, it was submitted that the reasoning ofthe learned Single Judge in Pran Mehra vs. CCI, W.P.(C)6258/2014 as well as the Division Bench in Cadila (Supra) is correct and needs no revisitation. In this regard he would rely upon thejudgment ofthe Kerala High Court in B. Unnikrishnan and Ors. vs. CCI and Ors. W.P.(C)22534/2016.
16. It was his submission that Section 48 which provides for contravention oforders ofthe CCI or DG under Section 42to 44 ofthe Competition Act and notfor contravention ofSection[3] and 4 of the Competition Act by the Company is misconceived. The only basis on which the appellants submit that Section 48 applies only to contravention oforders ofthe CCI or DG and not to contravention ofSection 3 and4ofthe Competition Actbythe company is on the ground that under Section 27,the penalty for contravening Sections 3 or 4 is a maximum of 10% of the turnover ofthe company. According to him,a reading ofSection 48 ofthe Competition Actshowsthat it applies in case ofany of the provisions of the Competition Act or rule or regulation or contravention ofan order or direction passed by the CCI or DG. Therefore, to hold that, Section 48/.applies only for a contravention ofan order ofthe CCIorDG would renderthe first part ofthe Section namely,'contravention of^provisions of the Competition Act' completely redundant and otiose. It is a fundamental principal of interpretation of statutes that no construction should be puton a provision which renders a partof it otiose. Reliance was placed on thejudgment ofconstitutional wherein it is held as under: "It is notasoundprinciple ofconstruction to brush aside words in astatute as beingin oppositesurplus age,ifthey can have appropriate application in circumstances conceivably within the contemplation ofthe statute."
17. It was submitted that Section 48 ofthe Competition Act is crystal clear as itstates that where a company contravenes any provision of the Competition Act, a person in-charge of the company, when the contravention was committed, shall be "deemed to be guilty ofthe contravention and shall be liable to be proceeded against and punished accordingly." The words "punished accordingly" have been interpreted by the Supreme Courtin Rajasthan PharmaceuticalLaboratory(supra)wherein in paras[6] and 7,it has punishedaccordingly"does notmean thatindividuals haveto be punished in exactlythe same manner as the company. The punishment prescribed for the offence in the Competition Act for contravention of Section 3 and 4is m Section 27i.e. a penalty which shall not be more than the average ofthe turnover ofthe last 3 preceding years. The piovision was basically enacted in reference to an enterprise the context of the Competition Act. Meaning of the tenn 'turnover', in the context of an individual, can easily be interpreted to mean the income of the individual from the company in question. Merely because the term needs an interpretation does not mean thatthe individual escapes complete liability although Section 48 is very clear that the person incharge of managing the affairs ofthe company shall be deemed to be guilty when there is a contravention ofSection 3 or 4 ofthe Competition Act by a company. In this connection,reliance was placed on Excel Crop Care Limited (Supra) wherein even though Section 27 ofthe Competition Act only said turnover of the company, the Supreme Court interpreted turnover in the context to mean turnover for the relevant product.It is submitted that this judgment therefore shows that the word 'turnover"has to be interpreted in the context of. the offence and need not literally mean what;itprimafacie states. Thus,in the context of an individual who is in-charge ofa company,turnover may mean his income from that company. It is submitted that the section and can never be the correctinterpretation.
18. It was the submission of Mr. Bhushan that the rationale for the vicarious liability ofthe persons in-charge is the same for the contravention ofSection 3 and 4 as it is for the contravention of any direction of the CCI or DG. The whole idea behind these provisions ofvicarious liability is that the company being a nonthmldng entity,cannotthink for itselfbut it is the human beings, being directors or persons in-charge,.who think for it. Thus,to provide a disincentive for repetition of such activity, not only must the company be penalized but the persons who have been thinldng for the wrong doings must also be penalized. Thus,the liability of directors or the persons in-charge is just, valid and necessary for the contravention by the company of Sections 3 and 4 ofthe Competition Act as it is for a contravention by the Company ofan order or direction bythe CCI orDG.
19. Further,Mr.Bhushan on the second submission made by the appellants that Section 48 occurs in Chapter VI of the Competition Act, therefore, the same will apply only to Chapter alone. It specifically says it applies to a contravention by a company ofany provision ofthe Competition Act.
20. On the third submission made by the appellants that Section 48 only applies to an enterprise and only punishes enterprises for contravention of the Competition Act is concerned, it is submitted that Section 27 may apply only to an enterprise, but when the enterprises is a company (which it obviously can,as per definition ofenterprise in Section 2(h)and definition of person under Section 2(I)(iii) of the Competition Act), Section 48 becomes applicable and every person, namely, individual would be deemed to be guilty ofthe same offence as the company. This is the statutory framework of many similar deeming provisions ofguilt for personsin-charge ofcompanies where offences were committed by companies in various other Acts.
21. On the issue of hearing the appellants by the Division Bench before pronouncing thejudgmentin Cadila(Supra),since the Bench pronounced on the correctness of Competition Commission s order in the appellants' case is concerned, it the while deciding a lis between some parties lay down the law which will have an effect on the lis between separate parties which are still pending. Yet,there is no requirement in law for hearing all parties who may be affected. In deciding the lis between the parties involved in Cadila (Supra), this Court has laid down law and while laying down thatlaw,it has noticed that thejudgment ofthe CGIin the presentcase,laid down the correct law. There is absolutely nothing wrong with this and the submission that the appellants were therefore condemned unheard is totally misplaced.
22. In the end, it is his submission that the points raised by the appellants are either covered by the Cadila(Supra)or have no merit. In any case, that the.,appellants have held up the pioceedings before the Competition Commission by filing one petition after another,none ofwhich,have any merit,for the last nearly three years. The CCI proceedings began from February 2016 and despite the DG having submitted the investigation leportto the CCI,no final order ofthe CCIhas been given yeton account offrivolous litigations pending in this Courtinitiated by proceedings but also have wasted valuable time ofthis Court.
23. Ml". Samar Bansal, learned counsel for the CGI had argued on similar lines as was argued by Mr.Bhushan. In effect he has adopted the arguments ofMr.Bhushan.
24. Having heard the learned counsel for the parties and perused the record including the written submissions filed in this appeals,the following issues arise for consideration:-
(i) Whether before deciding the appeal in the case of Cadila
(supra), the Division Bench was required to hear the appellants as the Division Bench has pronounced on the con-ectness ofthe CCI orders in two cases in Ministry of Agriculture v. M/s. Mahyco Monsanto Biotech Limited and connected matter, which were under challenge in two writ.petitions filed by the appellants herein;
(ii) Whether no notice can be issued to the Directors /
Persons In-charge of,the Company till the CCI returns a finding against the Company that it has indulged in anti-competitive activities under Sections 3 and 4ofthe Competition Act;
(iii) Whether Section 48 of the Competition Act, which apply only on contravention of orders of CCI or DG under Sections 42 to 44 of the Competition Act and not to contravention ofSections 3 and 4 ofthe Competition Act.
ISSUE NO.l
25. Insofar as the issue No.l is concerned, no doubt the judgment passed by the CCI in Ministiy ofAgriculture (supra) and connected matter was under challenge before the learned Single Judge of this Court; the said judgment having been approved by the Division Bench in the case of Cadila (supra), the appellants were required to be heard. In any case we have also heard the learned counsel for the appellants on the issues, which they had raised in their writ-petitions or at least in their applications for amendment for additional grounds and which have been incorporated in these appeals and accordingly,proceed to decide the same. So, to that extent, the grievance of the appellants has been addressed.
26. Before we come to the other two issues raised by the appellants in these appeals, it is necessary to note the only issue, which the Division Bench in Cadila (supra) has framed for its challenge before the learned Single Judge by the appellants is question No.4 which icQO-ds, "Whether DG could have issued notice to Cadila Officials under Section 48
27. That apart,the issue whether the penalty could have been imposed on the Officers / Directors only for contravention of Sections 42 to 44 of the Competition Act or also for contravention of Sections 3 and 4 of the said Act, is an issue, which was neither raised nor considered by the Division Bench in Cadila (supra). Having said that, we now proceed to answer the two issues, which have arisen for'our consideration.
ISSUE NO.2
28. Insofar as issue No,.2is concerned,the Division Bench in Cadila(supra),in paras 52to 54,has held as under:-
52. Cadila's argument on this aspect is that withoutfirst recording the complicity or otherwise ofa company, its directors or employees/officials cannot be issued notice for contravention ofthe Act. In other words, according to Cadila, the CCI has tofirst record that the company is guilty of an abusive act, after which it can proceed against its director, etc. The relevant provision is as follows: —Contravention by Companies 48.(1) Where a person committing contravention of charge of, and was responsible to the companyfor the conduct ofthe business ofthe company, as well as the company, shall be deemed to be guilty ofthe contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves thatthe contravention was committed without his Imowledge or that he had exercised all due diligence to prevent the commission of such contravention. (2) Notwithstanding anything contained in sub section (1), where a contravention of any of the provisions of this Act or of any rule, regulation, order made or direction issued thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty ofthat contravention and shall be liable to be proceeded against and punished accordingly. Explanation.—For thepurposes ofthis section, a) "company" means a body corporate and includes afirm or other association ofindividuals;and b) "director", in relation to afirm, means a partner in thefirm.
53. The question sought to be agitated was urged before another single judge in Pran Mehra V[5]. Competition Commission of India and Another (Writ Petitions NO. 6258/2014, 6259/2014 and 6669/2014) when the court proceedings in respect of the company (i.e. VeriFone)and the key-persons as thescheme ofthe Act, to my mind, does not contemplate such a procedure. The procedure suggested by Mr.Ramji Srinivasan is both inefficacious and inexpedient. As in every such matter, including the proceedings underSection 138ofthe NegotiableInstruments Act, 1881 (in short NI. Act), a procedure ofthe kind suggested is not contemplated. Thejudgment ofthe Supreme Court in the case Aneeta Hada dealt with proceedings under Section 138 ofthe N.L Act. The judgmentdoes not deal with issue at hand, which is whether adjudication in twoparts, as contended by Mr.RamjiSrinivasan, ispermissible. Thejudgment, in my opinion is distinguishable.
7. Itis no doubttrue thatthepetitioners can only be heldliable if, the CCI, were to come to a conclusion that they were the key-persohs, who were in-charge and responsiblefor the conduct ofthe business of the company.In the course oftheproceedings quaa company, it would be open to'the key-persons to contend that the. contravention,:if any, was not committed by them, and that,fliey had in any event employeddue diligence topresentthe contravention These arguments can eafilf- bd'advcmced by keypersons without prejudice to the main issue as to whether or notthe company hadcontravened, in the firstplace, theprovisions ofthe Act, as alleged by theD.G.I, in agiven case. The CCI has, by its separate order, in Ministry of griculture v M/s Mahyco Monsanto Biotech Ltd (Ref. Case No.02/2015, order dated 26/07/2016)followed the above decision and hadfurther citedShailendra Swarup v^ The Director, Enforcement Directorate (2011) 162 omp. Cas. 346 (Del.) which held that FERA of the company was summoned as an accused for violation of Sections 24 (1) of the Securities and Exchange Board of India Act, 1992 along with the company. The CCI also noticed that the law on this aspect was finally settled in Aneeta Hada vs. M/s ^( father Travels & Tours Private Limited (2008) 13 oLC- 70.
54. Aneeta Hada set at rest the controversy whether in one proceeding, against the company, its director (person in-eharge") can also be prosecuted or proceeded againston theprinciple ofvicarious liability. Before Aneeta Hada, there existed a dichotomy of opinions-on the one hand, in State ofMadras vs C V. Parekh andAnother(1970)3SCC491 heldthat without prosecuting the company the director could not he prosecuted. Sheoratan Agarwaland Another vs State of Madhya Prctdesh(1984)4SCC352(on the other hand) explained the decision in C.V. Parekh (supra) by a two judge bench ofthe Court which held that the company alone or theperson in-charge ofandresponsiblefor the conduct of business of the company alone, may be prosecutedfor the acts ofthe'company as there is no statutory requirement thatisuch, person cannot be prosecuted unless the coriipany is also arraigned as an yp'ted with him. In AneetaHadd(supra) it was held, inter aha, asfollows:
58. Applying the doctrine ofstrict construction we are ofthe considered opinion that commission of offence y the company is an express condition precedent to attractthe vicarious liability ofothers Thus, the words -as well as the companyW appearing m the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the. other categories could be vicariously liablefor the it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted. This court is ofopinion that the correct interpretation of law was given in Pran Mehra the reasoning ofwhich is hereby confirmed, as is the reasoning in Ministry of Agriculture v M/s Mahyco Monsanto Biotech Ltd, which proceeds on a correct appreciation of the law. Accordingly Cadila's grievance with respect to issuance ofnotice to its directors by citing.Section 48 is without substance; it is hereby rejected. The impugnedjudgment cannot befaulted."
29. The submission ofMr. Kapur and Mr. Rao on this issue was that the judgment of Cadila (supra), is primarily premised on ajudgment ofthree Judges vn Aueeta Hada(supra), wherein the issue was whether a Director / Official ofa Company could be prosecuted when the Company has not been aiTayed as an accused. In other words,the saidjudgmentis notapplicable. We are unable to accept the said contention. Para 58 ofthe ofthe judgment in Aneeta Hada as noted by the Division Bench is very clear and we reproduced the same as under:- "58. Applying the dor.triyiP ofstrict construction, we are ofthe considered oyinion that commission ofoffence bv the company is an express condition precedent to attract the vicarious liability ofothers. Thus, the words —"as well as the company appearins in the section make it thereof. One cannot be oblivious.of the fact that the comyany is a juristic person and it has its own respectability. Ifa findins is recorded aeainst it. it would create a concayity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted."
30. That apart in Pran Mehra v. CCI and another, Writ Petitions No.6258/2014,6259/2014 and 6669/ 2014 decided on February 26,2015, a learned Single Judge ofthis Court, has on the precise issue dealing with the provisions ofthe Competition Act,stated as under "6.... Iam in asreement with the submissions ofMr. Chandhiok that there cannot be two separate proceedings in respect of the company (i.e. VeriFone) and the key-persons as the scheme ofthe Act, to my mind, does not contemplate such a procedure. The procedure suy2ested by Mr.Ramii Sriniyasan is both inefficdcious.and inexpedient. As in eyery such inatter, including dhe proceedings under Section 138ofthe Negotiable Instruments Act, 1881 (in short N.I. Act), a procedure of the kind suggested is not contemplated. Thejudgment ofthe Supreme Court in the case.Aneeta Hada dealt with proceedings under Section 138 ofthe N.I. Act. The judgment does not deal with issue at hand, which is whether adjudication in two parts, as contended by Mr. RamjiSriniyasan, ispermissible. Thejudgment, in my opinion is distinguishable,(emphasis supplied by this Court)
7. It is no doubt true that the petitioners can only be company, it would be open to the key-persons to contend that the contrayention, if any, was not committed by them, and that, they had in any event employed due dilisence to preyent the contrayention. These arguments can easily be advanced by keypersons without yrehidice to the main issue, as to whether or not the company had contravened, in the first place, the uroyisions ofthe Act, as allesed by the D.G.L, in a siyen case, (emphasis supplied by this Court)
31. We agree with the aforesaid conclusion of the learned Single Judge, which is independent of what was held in Aneeta Hada(supra), which is the coiTect interpretation oflaw. So,we rejectthe submission ofMr.Kapur and Mi-.Rao.
ISSUE NO.3
32. On this issue,the submissions ofMr.Kapur and Mr.Rao can be summed up as under:-:
(i) The Scheme of Competition-Act, does not contemplate punishment of the Officers / Directors of a Company under Section 27 ofthe Act as the order contemplated therein can only be against an'enterprise';
(ii) They can only be proceeded against if the orders / directions of CCI are not obeyed and / or.are flouted by the can be invoked by CCI against individual Officers / Directors of the Company to investigate their role and conduct, for offences as contemplated under Sections 3 and 4 ofthe Competition Act and made punishable under Section 27 thereof would result in legal absurdity and would render the statutory provisions unworkable and nonsensical for the reason that such an interpretation would render the words ''punished accordingly' appearing in Section 48 of the Competition Act nugatory, inasmuch as the orders which CCI can pass under Section 27 of Competition Act can only relate to and be directed against an enterprise and not to individual Officers / Directors of a Company. The same is eviddnf from Section 27 of the Act, which employs terms such as'ferwpverfand 'profit'which teims can only be relevantto an 'enterprise'and notto an individual.
(iv) It is a settled rule of.interpretation,that if the language used in a Statute is capable of bearing more than one construction,the construction that leads to absurdity or anomaly should be eschewed. On the contrary,a construction that brings it into harmony with its purpose must be followed. Competition Act has gone in to elaborate discussion on the interpretation of Section 138 of NI Act. A comparison of two statutes can only be said to bepari materia with each other,when they deal with the same subject matter and / or samx person or things and / or same class ofpersons or have the same purpose or objects. 33.. Having noted the submissions made by Mr. Kapur and Mr. Rao, to answer this issue, it is necessary to reproduce Sections 27,42 to 44 and 48 ofthe Competition Act:-
27. Orders by Commission after inquiry into agreements or abuse ofdominant 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 ofsection 3 or section 4, as the case may be, it may pass:dil.-or any ofthefollowing orders, namely:—,, (a) direct any enterprise dt'association ofenterprises or person or association ofpersons, 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)imposesuch penalty, as it may deemfit which shall be not more than ten percent ofthe average ofthe turnover for the last three precedingfinancialyears, upon each of such person or enterprises which are parties to such agreements or abuse: distributor, trader or service provider included in that cartel, apenalty ofup to three times ofitsprofitfor each year ofthe continuance ofsuch agreementor tenpercent, ofits turnover for each year ofthe continuance ofsuch agreement, whichever is higher.]
(d) direct that the agreements shall stand modified to the extent and in the manner as may he 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, [Omitted by Competition(Amendment)Act,2007] (g)passsuch other 45[order or issue such directions]as it may deem fit. 46[Provided that;while passing orders under this section, ifthe Commission comes to afinding, thatan enterprise in contravention to section 2 orsection 4 ofthe Act is a member ofa group as defined in clause (b) ofthe Explanation to sectionEofthe Act, and other members ofsuch a group are also responsible for, oi have contributed to, such a contravention, then it may pass orders, under this section, against:such members of the group..■[': '■ '^ ■'■■
42. Contravention of orders of Commission - (1) The Commission may cause an inquiry to be made into compliance ofits orders or directions made in exercise of itspowers under the Act. (2) If any person, without reasonable clause, fails to comply with the orders or directions of the Commission issued under sections 27, 28, 31, 32, 33, 42A and 43A of the Act, he shall be punishable with fine which may extend to rupees one lakhfor each day duringwhich such directions issued, orfails to pay thefine imposed under sub-section (2), he shall, without prejudice to any proceeding under section 39, be punishable with imprisonmentfor a term which may extend to three years, or withfine which may extend to rupees twenty-five crore, or with both, as the ChiefMetropolitan Magistrate, Delhi may deemfit: Provided that the ChiefMetropolitan Magistrate, Delhi shall not take cognizance of any offence under this section save on a complaintjiled by the Commission or any ofits officers authorized by it.] 42A Compensation in case ofcontravention oforders of Commission]- Withoutprejudice to the provisions ofthis Act, anyperson may make an application to the Appellate Tribunalfor an orderfor the recovery ofcompensation from any enterprise for any loss, or damage shown to have been suffered, by such person as a result ofthe said enterprise violating directions issued by the Commission or contravening, without any reasonable ground, any decision or order of the Commission issued under sections 27, 28, 31, 32 and 33 or any condition or restriction subject to which anf., approval, sanction, direction or exemption in relation to any matter has been accorded, given, made or granted under this Act or delaying in carrying outsuch orders or directions ofthe Commission.]
43. Penalty for failure to comply with directions of Com.mission and Director General -Ifanypersonfails to comply, without reasonable cause, with a direction given by-- (a) the Commission under sub-sections (2) and (4) of section 36; or (b) the Director General while exercising powers referred to in sub-section(2)ofsection 41, 43A Power to impose penalty for non-furnishing of information on combinations] - If any person or enterprise who fails to give notice to the Commission under sub- section(2) ofsection 6, the Commission shall impose on suchperson or enterprise apenalty which may extend to one percent, ofthe total turnover or the assets, whichever is higher, ofsuch a combination.]
44. Penaltyfor makingfalse statement or omission to furnish material information - If any person, being a party to a combination,— (a). makes a statement which is false in any material particular, or knowing it to befalse;or (b)omits to state any materialparticular knowing it to be material, such person shall be liable to a penalty which shall not be less than rupeesfi fty^ lakhs but which may extend to rupees one crore, as inay be determined by the Commission.
48. Contravention by companies-(l) Where a person committing contravention ofany ofthe provisions ofthis Act or ofany rule, regulation, order made or direction issued thereunder is a.company, everyperson who, at the time the contravention was committed, was in charge of, and was responsible to the companyfor the conduct of the business of the company, as well as the company, shall be deemed tO' be guilty of the contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention was committed without his Icnowledge or that he had exercised all due diligence to preventthe commission ofsuch contravention. issued thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer ofthe company, such director, manager, secretary or other officer shall also be deemed to be guilty of that contravention and shall be liable to be proceeded against and punished accordingly. Explanation.—For thepurposes ofthis section,— (a) "company" means a body corporate and includes a firm or other association ofindividuals;and (b) "director", in relation to afirm, means a partner in thefirm.
34. We may state atthe outset that,in view ofour conclusion to issue No.2 above, we proceed to answer this issue, on the premise that Officers/ Directors can beproceeded against, along with Company.We also say thatthe Officers/Directors can only be liable ifthe CGI were to come to the conclusion thatthey were the key persons who were In-charge and responsible for the conduct ofthe business ofthe Company.
35. On a perusal of Section.27 ofthe Act, it is clear that it stipulates, the CCI on a finding that there is a contravention of Section 3 or Section 4, can pass orders against an 'enterprise' and a 'person' i.e individual, who has been proceeded against, turnover'for the last three preceding financial years cannot be on the person/individual/Director/Official. This they say so, as there is no 'turnover'ofa person. On this submission ofMr. Kapur, the argument of Mr. Bhushan and Mr. Bansal was primarily was that on a reading ofSections 27(b)and 48 ofthe Competition Act,it is clear that a penalty can be imposed on a person for violation ofthe provisions ofthe Act, which includes Sections3and4also,in view ofthepresence ofthe words "upon each ofsuch person" in Section'27(b) and "where a person committing contravention ofany oftheprovisions ofthis Act"in Section 48(1).
37. We agree with the.said.submission ofMi*. Bhushan and Mr. Bansal. There cannot be any disputje'that ifthe Company and the Officers / Directors are being proceeded against for violation ofSections 3 and 4,there has to be a consequence for violation. Mr. Kapur and Mr. Rao's plea was that the word 'turnover'would not be applicable to Officers / Directors. The plea appears to be appealing on a first blush, but on a deeper consideration, if we agree with the submission made by Mr. \« Section 27(b) would be rendered otiose / nugatory. In other words, there would not be any stipulation of penalty to be imposed on Officers / Directors even if they are found to be violating Sections 3 and 4. That cannot be the intent ofSections 27(b) and 48. Such a stipulation, surely requires a purposive interpretation.
38. The Supreme Court in State ofBihar Ors. V. Anil Kumarand OrsAIR2017SC2716 byrelying u^onNational Insurance Co. Ltd. v. LaxmiNarain Dhut(2007)4SCALE36 held as under:-
68. A statute is an edict ofthe Legislature and in construing a statute, it is neCessary to seek the intention ofits maker. A statute has to be construed according to the intent ofthose who make it and the duty of the court is to act upon the true intention ofthe Legislature.Ifa statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention ofthe Legislature. This task very often raises dijficulties because ofvarious reasons, inasmuch as the words used may not be scientific symbols having anyprecise or definite meaning and thelanguage may be an imperfectmedium to convey one's thought or that the assembly ofLegislatures consisting ofpersons ofvarious shades ofopinion purportto convey a meaning which may be obscure. It is impossible even for the most imaginative expound and not to lesislate. Lesislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The lesislation is primarily directed to the problems before the Lesislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arisins in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite referents are bound to be in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction. The process of construction combines both literal and purposive approaches.In other words the legislative intention i.e., the true or legal meaning ofan enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or obiect which comprehends the mischiefand its remedy to which the enactment is directed.(See District Mining.Officer and Ors. v. Tata Iron (fe SteelCo. dc Anr/IirffiOOT(6)SC 183). It is also well settled that to arfive at the intention of the legislation depending on the objects for which the enactment is made, the Court can resort to historical, contextual and purposive interpretation leaving textualinterpretation aside. (emphasissupplied) 69: Itwas also opined: More often than not, literal interpretation of a statute or. a provision of a statute results in absurdity. Therefore, while interpreting statutory provisions, the Courts should keep in mind the "lesislation has an aim, it seeks to obviate some mischief, to supply an adequacy, to effect a chanse ofpolicy, to formulate a plan ofGovernment. That aim, that policy is not drawn, like nitrosen, out of the air; it is evidenced in the lansuase of the statutes, as read in the lisht of other external manifestations ofpurpose".
39. Further, it has been held by the Supreme Court in Board ofMuslim Wakfs Rajasthan v. Radha Krishna & ors(1979)2 see 468,that the construction which tends to make any part of the statute meaningless or ineffective must always be avoided and construction which advances the remedy intended by the statute should be accepted. Mr. Kapur and Mr. Rao, in their submissions had relied on the genera:l meaning of the word 'turnover'i.e the income ofa Company in a particular period,but the synonyms of the word 'turnover'(as per English Oxford Living Dictionary) are revenue, gross revenue, income, yield, volume of business, business sales. - So, the turnover, in the context ofOfficers /Directors has to be interpreted as the income ofthe Officers / Directors from the Company,as there cannot be an income of an Officer / Director from an infringing product. Directors ofthe Company. We agree with such an action.
40. So,the plea ofMr.Kapur and Mr.Rao that Section 27(b) shall be applicable to an 'enterprise is not appealing.
41. Insofar as the plea ofMr.Kapur and Mr.Rao that Section 48 as it falls under Chapter VI, only relates to the contravention of Sections 42 to 44 ofthe Act, is also not appealing, inasmuch as the Section contemplates,"on contravention ofthe provisions of the Act", one shall be liable to be proceeded against and punished accordingly. The contravention ofthe provisions ofthe Act includes Sections 3 and 4,as is clear from Section 46,which is also in Chapter VI, stipulates lesser penalty for violating Section 3 in certain eventualities. Ifthe..interpretation as sought to be advaneed by Mr. Ka.pur hnd Mr.,Rab, is to be accepted /. agreed to,then Section 48 shall become nugatory,and there shall be no penalty for violating the Act.,
42. Insofar as the judgments, as relied upon by the learned counsels for the appellants are concerned, in Poonam (supra), the reliance was placed on a proposition oflaw that no order can be passed behind the back ofa person adversely affeeting him. support of their contention that the matter must be referred to a larger Bench in the facts ofthis case.
44. Insofar as the judgments in the case of Shah and Co., Bombay (supra) & Bangalore Turf Club Limited relied upon by the appellants in support of their submission that there is no justification to refer to the M Act when the 2002.Act as a Special Act deals with the subject matter, which is entirely distinct from the NI Act.
45. Insofar as the M. Nizamudeen (supra) is concerned, the same was relied upon by the learned counsel for the appellants to contend that it is a settled rule of interpretation that if the language used in a statute is capable,of bearing more than one construction, a construction that results in^absurdity or anomaly should be eschewed.
46. Similarly, Union ofIndia v. Deoki Nandan Aggarwal (supra), was relied upon by the learned counsel for the appellants to contend that defect or omission in the words used by the legislator,the Court cannot correct or make up the deficiency. It shall only decide whatthe law is, and not whatit should be. that the Officers / Directors cannot be punished without any legislative guidelines / checks and as per whims and fancies this is anathema to rule oflaw.
48. Suffice it to state, in view of our conclusion above, the judgments so relied upon have no applicability.
49. We see no reason, to refer the writ petition for consideration by a larger Bench.
50. In view ofour discussion above, we are ofthe view,that the impugned order needs no interference. The appeals are dismissed. No costs. CM.Nos.47926/2018 and 47927/2018 in LPA 637/2018 CM.Nos.48742/2018 and 48743/2018 in LPA 651/2018 Dismissed as infructuous.
V.KAMESWAR RAO,J CHIEF JUSTICE DECEMBER 18,l^mjg/ak