Monsanto Company v. Competition Commission of India

4. It was the submission of the learned counsel for the appellants that the Scheme of Act of 2002 does not contemplate punishment of the Directors / Officers of a company under Section 27 ofthe 2002 Act and that they can only be proceeded against if the orders / directions of CCI are not obeyed and / or. are flouted by the company. However, CCI may, in agiven case, be entitled to invoke provisions ofChapter VI ofthe 2002 Act if the pre-condition of the various Sections contained therein are shown to have been fulfilled. The:categoiies oforders that can be passed under Section 27 of the 2002 Act can only be directed against an 'enterprise' as defined under Section 2(h) of the 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 they rely upon the judgment ofthe Supreme Court in the case of DawoodiBohra (supra).

5. It was the submission of the learned counsel for the appellants that Division Bench in Cadila (Supra) only considered a limited argument in relation to Section 48 of the 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 to be m..pari materia with each other when they deal with the same subject-matter and /or same person or things and /or same class or persons, or have the same purpose or objects. The rationale behind this rule is based on the inteipietative assumption that words employed in legislations are used in an identical sense. Acomparison ofthe preamble as also c IT person or things and / or same class orpersons, 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 distinct from the NI Act. In this regard, they would rely on S/m/i and Co., Bombay y. State ofMaharashtra anclAnr. AIR 1967 SC1877 8c Bangalore Turf Club Limited v. Regional Director Employees' State Insurance Corporation (and Connected appeals) (2014) 9 see 657

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 3and 4 ofthe 2002 Act, and made punishable under Section 27 thereof, would result in a 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 ofthe 2002 Act nugatory inasmuch as the orders which CCI Officers of a company. The same is also evident from the fact that Section 27 ofthe 2002 Act.employs terms such as ""turnover'" and "profif which terms can only be relevant to an enterprise and not to an individual. If ''turnover is interpreted to include income ofa director / olficer (as suggested by the learned counsel for the respondents herein), the same would amount to re-writing Section 27 ofthe Act. Further, the term ''profit' cannot be 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 Section 27 ofthe 2002 Act to mean only the relevant turnover pertaining to the infringing product (s). In the context of a director / officer of a company and.,in 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 with its purpose 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 onthejudgment passed bythe Supreme Court inM. Nizamudeen

V. ChemplastSanmar Limited and Ors. (2010) 4 SCC 240.

8. It was the submission of the learned counsel for the appellants that the Supreme Court while interpreting the2002 Act in Excel Crop Care (supra), also observed that in a situation where two inteipretations 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 refiame 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 isplaced on the judgment ofthe Supreme Court in appellants that during the course ofarguments on 19"' November, 2018, aquery was put to the appellants whether Section 27 (g) of the 2002 Act would empower CCI to punish erring Officers / Directors of a Company under Section 27 of the 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 camiot be presumed in favour ofthe CCI so far as directors /officers ofacompany are.concerned. Ifsuch an interpretation is ascribed to Section 27 (g) ofthe 2002 Act despite the statute itself being bereft of such an enabling provision and any concomitant statement of defined guidelines or parameters, then CCI would have unbridled and uncanalised powers to punish the Officers / Du-ectors of Company without any legislative guidelines / checks and as per its whims and fancies, which is anathema to rule of law. In this regard, reliance was placed on Kishan Prakash Sharma and Ors. VUnion ofIndia and Ors. (2001) 5see212 and B.R. Enterprises v. State ofU.P. and Ors. (1999) 9 see 700 State ofKarnataka (1981) 1 SCC 645, 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 of the offence. Plowever, perusal of the judgment would show that to the contrary, the said judgment supports the case ofthe appellants inasmuch as at Paragraph 7, it was clearly observed that the words ''punished accordingly" in'the' 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./ officers of acompany under Section 27 of the 2002 Act, such individual directors / officers of a company cannot be proceeded against and punished, except as contemplated under Chapter VI ofthe 2002 Act. n. They also submitted that the learned counsel for the respondents have contended that if the interpretation which is deserves to be rejected. In terms of the interpretation propounded by the appellants to Section 48 of the 2002 Act, it is their stand that the said section would only apply in a case where orders / directions of CCI are disobeyed / flouted by individual directors / officers of a 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 Cadila (supra) does not require reconsideration by a larger Bench, it would be seen that the said judgment is primarily premised on a judgment of a three Judge Bench of the Supreme Court in Aneeta Hacla v. M/s. Godfather Travels and Tours Private Limited (2008) 13 SCC 70. The issue in that case was whether a director / officer of a company could be prosecuted when the company has not been arrayed as an accused.

13. On the other hand, it is the submissions of Mr. 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 of the Division Bench of this Court in the case of Caclila (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 of persons 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 anyjudgment ofthe Supreme Court or of this Court or any other High Court to the loiowledge 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 s company did not properly defend itself and a finding of guilt 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 if they were asked / permitted to participate in the proceedings at the initial stage itself. They would be given a chance to contest the charge against the 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.F. (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 the judgment ofthe Kerala High Court in B. Unnikrishnan and Ors. vj-. CCI and Ors. W.P. (C) 22534/2016. contravention of orders of the CCI or DG under Section 42 to 44 ofthe Competition Act and not for 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 i applies only to contravention oforders ofthe CCI or DG and not to contravention ofSection 3and 4ofthe Competition Act by the 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, areading ofSection 48 ofthe Competition Act shows that it applies in case of any of the provisions of the Competition Act or rule or regulation or contravention of an order or direction passed by the CCI or DG. V Therefore, to hold that, Section '48 'applies only' for a contravention ofan order ofthe CCI or DG would render the first part of the 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 put on aprovision which renders apart of wherein it is held as under: "Itis nota soundprinciple ofconstruction to brush aside words in astQ.tute as being in opposite surplus age, ifthey can have appropriate application in circumstances conceivably within the contemplation ofthe statute. "

17. It was submitted that Section 48 of the Competition Act ciystal clear as it states that where acompany contravenes any provision of the Competition Act, a person in-charge of the company, when the contravention was committed, shall be - "deer}n.ed to be guilty ofthe contravention andshall be liable to be proceeded against and punished accordingly. " The words "punished accordingly" have been'interpreted by the Supreme Court in Rajasthan Pharmaceutical Laboratory (supra) wherein in paras 6and 7, it has been held that-''punished accordingly"does not mean that individuals have to be punished in exactly the same mannei as the company. The punishment prescribed for the offence in the Competition Act for contravention of Section 3 and 4 is in Section 27 i.e. apenalty which shall not be more than the average of the turnover of the last 3 preceding years. The provision was basically enacted in reference to an enterprise s the context of the Competition Act. Meaning of the term 'tmiiover', 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 that the individual escapes complete liability although Section 48 is very clear that the person incharge of managing the affairs of the company shall be deemed to be guilty when there is a contravention of Section 3 or 4 of the Competition Act by a company. In this connection, reliance was placed on Excel Crop Care Limited (Supra) wherein even though Section 27 of the 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 conteixt of,the offence and need not literally mean what: itprimafacie states. Thus, in the context of an individual who is in-charge of a company, turnover may mean his income from that company. It is submitted that the; section and can never be the correct interpretation.

18. It was the submission of Mi". Bhushan that the rationale for the vicarious liability ofthe persons in-charge is the same for the contravention of Section 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 anonthinlcing entity, cannot think for itself but it is the human beings, being directors or persons in-charge, who thinlc 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 4of the Competition Act as it is for acontravention by the Company ofan order or direction by the CCI or DG.

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 •1 > Chapter alone. It specifically says it applies to a contravention by a company of any 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 of enterprise in Section 2(h) and definition of person under Section 2(I)(iii) of the Competition Act), Section 48 becomes applicable and every person, n'amely, individual would be deemed to be guilty of the same offence as the company. This is the statutory framework of many similar deeming provisions of guilt for persons'in-charge of companies where offences were committed by companies in various other Acts.

21. On the issue of hearing the appellants by the Division Bench before pronouncing the judgment in Cadila (Supra), since the Bench pronounced on the correctness of Competition 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 that law, it has noticed that the judgment ofthe CCI inthe present case, laid down the correct law. There is absolutely nothing wrong with this and the submission that the appellants were therefore condemned unheard is totallymisplaced. '

22. In the end, it is his submission that the points raised by ~\ the appellants are either covered by the Cadila (Supra) or have y no merit. In any case, that the^ app,e%nts have held up the proceedings 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 report to the CCI, no final order ofthe CCI has been given yet on proceedings but also liave wasted valuable time of this Court.

23. Mr. Samar Bansal, learned counsel for the CCI; 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 correctness of the 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 4 of the Competition Act; rV apply only on contravention of orders of CCI or DG under Sections 42 to 44 of the Competition Act and not to contravention of Sections 3 and 4 of the Competition Act.

ISSUE NQ.l

25. Insofar as the issue No.l is concerned, no doubt the judgment passed by the CCI in Ministry 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, challenge before the learned Single Judge by the appellants is question No.4 which reads, ''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. 2 is concerned, the Division Bench in Cadila (supra), in paras 52 to 54, has held as under;-

52. Cadila's argument on this aspect'is that without first recording the complicity or otherwise of a company, its directors or employees/officials cannot be issued notice for contravention ofthe Act. In other words, according to Cadila, the CCI has to first 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 a charge of, and M>as responsible to the companyfor the conduct of the business of the company, as yvell 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 1 his Jmowledge 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 yvith 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 of that contravention and shall he liable to be proceeded against and punished accordingly.. • h Explanation.—For the purposes of this section, a.) "company" m.eans a body corporate and includes afirm or otherassociation 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 vs. 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 the schem.e ofthe Act, to my mind, does not contemplate such a procedure. The procedure suggested by Mr.Ramji Srmivasan is both inefficacious and inexpedient. As in every such matter, including the proceedings under Section 138ofthe Negotiable Instruments Act, 1881 (in short N.I Act), a procedure of the kind ^ suggested is not contemplated. The judgment ofthe Supreme Court in the case Aneeta Hada. dealt with proceedings under Section 138 of the N.I Act. The ' judgment does not deal with issue at hand, which is whether adjudication in two parts, as contended by Mr. Ramji Srinivasan, is permissible. Thejudgment, • in my opinion is distinguishable.

7. It is no doubt true that thepetitioners can only be held liable if the CCI, were to come to a conclusion that they were the key-persohs, who were in-charge and responsible for the conduct of the business ''of the company. In the course of-theproceedings qua. a company, it would be open to'the key-persons to contend that the contravention, if any, was not committed by them, and that, they had in any event y employed due diligence toprevent_the contravention. • These arguments can •easily-be'~advanced by keypersons without prejudice to the main issue, as to whether or not the com.pany had contravened, in the first place, the provisions ofthe Act, as alleged by the D.G.I, ina given case. • The CCI has, by its separate order, in Ministry of Agriculture vM/s Mahyco Monsanto Biotech Ltd (Ref Case No.02/2015, order dated 26/07/2016) followed the above decision and hadfurther cited Shailendra Swamp

V. The Director, Enforcement Directorate (2011) 162 rG VJ of the company was swrnnoned 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 Godfather Travels cS; Tours Private Limited (2008) 13 see 70.

54. Aneeta Hada set at rest the controversy whether in one proceeding, against the company, its director ("person in-charge") can also be prosecuted or proceeded against on the principle ofvicarious liability. Before Aneeta Hada, there existed a dichotomy of opinions - on the one hand, in Sta.te ofMadras v^- CV. Parekh and Another (1970) 3SCO 491 held that without prosecuting the company tdn.e director could not be prosecuted Sheoratan Agai^al and Another vs State of Madhya Pradesh (1984) 4SCO 352(on the other hand) explained the decision in C. V. Parekh (supra) by a tM>o ludge bench of the Court which held that the company alone or the person in-charge ofand responsiblefor the conduct of business of the company alone, m.ay be prosecutedfor the acts of the company as there is no statutory requirement that suck person cannot be \ prosecuted unless the, company is also arraigned as an accused with him. In Aneeta Hada (supra) it was held inter alia, asfoUoM>s:

58. Applying the doctrine ofstrict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability ofothers. Thus, the words —as well as the companyW appearing in the section make it absolutely unmistakably clear that when the company.can be prosecuted, then only the persons mentioned in the o 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 of which is hereby confirmed, as is the reasoning in Ministry of Agriculture v M/s Mahyco Monsanto Biotech Ltd, yvhich •4, proceeds on a correct appreciation of the law.• Accordingly Cadila's grievance with respect to issuance of notice to its directors by citing Section 48 is without substance; it is hereby rejected. The impugnedjudgment cannot befaulted. " 2'

19. The submission of Mr. Kapur and Mr. Rao on this issue was that the judgment of Cadila (supra), is primarily premised on ajudgment ofthree Judges in Aneeta Hada (supra), wherein the issue was whether aDirector / Official of a Company could be piosecuted when the Company has not been arrayed as an ^ accused. In otherwords, the saidjudgmentis not applicable. We are unable to accept the said contention. Para 58 of the of the judgment in Aneeta Hada (supra), as-noted by the Division Bench is very clear and we reproduced the same as under;- ''58. Applying the doctrine ofstrict construction, we are of the considered opinion that commission of offence bv the company/ is an express condition precedent to attract the vicarious liability of others. Thus, the words —"as >• -V thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. Ifa finding: is recorded against it. it would create a concavit]^ 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. CCl and another, Writ Petitions No. 6258/2014, 6259/2014 and 6669/ 2014 decided on February 26, 2015, a learned Single Judge of this Court, has on the precise issue dealing with the provisions ofthe Competition. Act, stated as under:- "6.... I am in asreement with the subm.issions ofMr. Chandhiok that there cannot be two separate proceedings in respect of the company (i.e. VeriFone) and the key-persons as the scheme of the Act, to my mind, does not contemvlate such a procedure. The procedure sup^ested bv Mr.Rcum'i Sriniyasan is both inefficacious- and inexpedient. As ^ in eyery such matter, including the proceedings / ' under Section I38ofthe'Negotiable Instrwnents Act, 1881 (in short N.I. Act), a procedure of the kind suggested is not contemplated. The judgment of the Supreme Court in the case Aneeta Tlqda dealt with proceedings imder Section 138 of the N.I. Act. The judgment does not deal with issue at hand, which is whether adjudication in two parts, as contended by Mr. Ramji Sriniyasan, is permissible. The judgment, in my opinion is distinguishable, (emphasis supplied by this Court) •V company, it would be oven to the key-persons to contend that the contravention, if any, was not committed by them, and that, they had in any event employed due diligence to prevent the contravention. These arguments can easily be advanced by keypersons without vreiudice to the main issue, as to whether or not the company had contravened, in the first place, the provisions of the Act, as alleged bv the D.G.I., in a s^iven 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 correct interpretation oflaw. So, we reject the 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'e«te77™eV

(ii) They can only be proceeded against if the orders / diiections of CCI are not obeyed and / or, are flouted by the Of •-v 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 of the 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 intei"pretation would render the words ^punished accordingly' appearing in Section 48 of the Competition Act nugatoiy, 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 evident from Section 27 of the Act, which employs terms such as 'turnover' and 'profit'which terms can only be relevant to an 'enterprise' and not to 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 constiuction, the construction that leads to absurdity or anomal)' should be eschewed. On the contrary, a construction that brings it into harmony with itspurpose must be followed. Competition Act lias,gone in to elaborate discussion on the interpretation of Section 138 of NI Act. A comparison of two statutes can only be said to be pari materia with each other, when they deal with the same subject matter and / or samx person or things and / or same class of persons 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 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 ofsection 3 or section 4, as the case may be, it m.ay pass-Ml-or any of thefollowing orders, namely:— (a) direct any enterprise or assbcidtion ofenterprises or person or association ofpersons, as the case m.ay 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 deemfit which shall be not more than tenpercent of the average of the turnover for the last three precedingfinancialyears, upon each of such person or enterprises which are parties to such J f? "X distributor, trader of service provider included in that cartel, apenalty ofup to three times ofits profitfor each year ofthe continuance ofsuch agreement or ten percent. of its turnover for each year of the continuance ofsuchagreement, whichever is higher.] r'==''-"7

(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 com.ply with the directions, including payment of costs, if any; [Omitted by Competition (Am.endm.ent) Act, 2007] (g) pass such 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 afimding, thatan. enterprise in contravention to section 3 or section 4 ofthe Act is a mem.ber ofa group as defined in clause (b) ofthe Explanation to section -5 of the Act, and other mem.bers of such a group are also responsible for, or have contributed to, such •a.contravention, then it m.ay pass orders, under this section, against such mem.bers of the group. '

42. Contravention of orders of Com.m.ission - (1) The Com.m.ission may cause an inquiry to be made into com.pliance ofits orders or directions m.ade in exercise of its powers under the Act. (2) If any person, without reasonable clause, fails to comply with the orders or directions of the Com.mission issued, under sections 27; 28, 31, 32, 33, 42A and 43A of the Act, he shall be punishable with fine which m.ay extend to rupees one lakhfor each day during which such directions issued, orfails to pay the fine imposed under sub-section (2), he shall, without prejudice to any proceeding under section 39, be punishable with imprisonmentfor a term, which m.ay extend to three years, or with fine which m.ay extend to rupees twentyfive crore, or M'ith both, as the ChiefMetropolitan Magistrate, Delhi m.ay deem,fit: Provided that the ChiefMetropolitan Magistrate, Delhi shall not take cognizance of any offence under this section save on a complaintfiled by the Comm.ission or any ofits officers authorizedby it.] 42A Compensation in case of contravention of orders of Comm.ission] - Withoutprejudice to the provisions ofthis Act, any person m.ay make an application to the Appelkite Tribunal for an orderfor the recovery of compensation from any enterprise for•any loss or damage shown, to have been siffered, by such person as a. result of the said, enterprise violating directions issued by the Commission or contravening, without any reasonable ground, any decision or order of the Comm.ission issued under sections 27, 28, 31, 32 and 33 or any condition or restriction.subject to which any. approval, sanction, direction or exem.ption in relation to any matter has been accorded, given, made or granted under this Act or delaying in carrying out such orders or directions ofthe Com.missionf • •

43. Penalty for failure to comply with directions of Comm.ission and Director General - Ifany personfails to com.pl.y, without reasonable cause, with a direction given by— • the Com.mission 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 nonfurnishing 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 a penalty M'hich m.ay extend to one percent, of the total turnover or the assets, whichever is higher, ofsuch a combination.]

44. Penaltyfor m.akingfalse statement or omission to ^ furnish m.aterial information - If any person, being a part)! to a combination,— (a) makes a statement which is false in any material particular, or Imowing it to befalse; or (b) omits to state any material particular Imowing it to be material, such person shall be liable to a penalty M'hich shall not be less than rupees fifty lakhs but which may extend to rupees one crore, as may be determined by the Commission.

48. Contravention by companies-(l) Where a person committing contravention ofany of.the provisions of this Act or of any rule, regulation, order made or direction issued thereunder is a company, evejyperson who, at the time the contravention was•committed, was in charge of and M>as responsible to the company for 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 punishnent 'if he proves that the contravention was committed, yvithout his Imowledge or that he had exercised all due diligence to prevent the comm.ission 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, m.anager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to he guilty of that contravention and. shall be liable to be proceeded. against and punished. accordingly. Explanation.—For thepurposes ofthis section,— k (a) "company" means a body corporate and includes a firm or other association ofindividuals; and (b) "director", in relation to a.firm, means a partner in the firm.

34. We may state at the outset that, in view of our conclusion to issue No.2 above, we proceed to answer this issue, on the premise that Officers / Directors can be proceeded against, along with Company. We also say that the Officers / Directors can only be liable if the CCI were to come to the conclusion that they were the key persons who were Iri-charge and responsible for the conduct ofthe business ofthe Company.

35. On a perusal of Section 27 of the 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, A 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' ofaperson. On this submission ofMr. Kapur, the argument of Mr. Bhushan and Mr. Bansal was primarily was that on areading of Sections 27(b) and 48' of the Competition Act, it is clear that apenalty can be imposed on a person for violation ofthe provisions ofthe Act, which includes Sections 3and 4also, in view ofthe presence ofthe words "upon each of such person" in Section 27(b) and "where aperson committing contravention ofany oftheprovisions ofthis Act" in Section 48(1).

37. We agree with the said submission of Mi*. Bhushan and Ml. Bansal. There cannot be any cjispirte that if the Company and the Officers / Directors m-e being proceeded against for violation ofSections 3and 4, there has to be aconsequence for violation. IVtr. Kapur and iVtr. Rao's plea was that the word 'turnover' would not be applicable to Officers / Directors. The plea appears to be appealing on afirst blush, but on adeeper A 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 bethe intent of Sections 27(b) and 48. Such a stipulation, surely requires a purposive interpretation.

38. The Supreme Court in State of Bihar & Ors. V. Anil Kumar and OrsAIR 2017SC2716 has by relying upon National Insurance Co. Ltd. v. Laxmi Narain Dliut (2007) 4SCALE 36 held as under; -

68. Astatute is an edict ofthe Legisla.t.ure and in construing a statute, it is necessary to seek the intention ofits niaker. A statute has to be construed accordins! to the intent of those who make it and the duty of the court is to act upon the trup intention ofthe Lesislaiure. Ifa statutory provision is open to more than one internretation the Court has to choose that interpretation which represents the true intention ofthe Leeislature. This task veiy often raises difficulties because ofvarious reasons, inasnmch as the words used may not be scientific symbols having any precise or definite meaning and the language m.ay be an imperfect medium, to convey one's thought or thai the assembly ofLegislatures consisting ofpersons ofvarious shades of opinion purport to convey a meaning which may be obscure. expound and not to legislate. Lesislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit The legislation is primarily directed to the problems before the Lesislature based on information derived, front past and present experience. It may also be designed by use of general words to cover similar problems arising 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 of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose, or object which comprehends the mischiefand its remedy to which the enactment is directed. (See District Mining. Officer and Ors. v. Tata Iron & SteelCo. &Anr. JT'WOl (6) SC 183). It is also well settled that to arrive at the intention of legislation depending on the objects for which the enactment is made, the Court can resort to historical, contextual and purposive interpretation leaving textual interpretation aside. (emphasis supplied)

69. It was also opined: More often than not, literal interpreta.tion of a. statute or a provision of a statute results in absurdity. Therefore, while interpreting statutory provisions, the Courts should keep in mind the objectives or purpose for which statute has been lesislation has an aim, it seeks to obviate some mischief, to supply an adequacy, to effect a change ofpolicy, to formulate a plan of Government. That aim, that policy is not drawn, like nitrogen, out of the air; it is evidenced in the languase 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 cQ; ors (1979) 2 see 468, that the construction which tends to malce any part of tlie statute meaningless or ineffective must always be avoided and construction which advances the remedy intended by the statute should be accepted. Mi\ Kapur and Mr. Rao, in their submissions had relied on the general meaning of the word 'turnover' the income of a 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 of Officers / Directors has to be interpreted as the income of the Officers / Directors from the Company, as there cannot be an income of an Officer / Director from an infringing product. <^0 •J. Directors of the Company. We agree with such an action.

40. So, tlie plea of Mr. Kapur and Mr. Rao that Section 27(b) shall be applicable to an 'enterpriseis not appealing.

41. Insofar as the plea of Nfr. Kapur and Mr. Rao that Section 48 as it falls under Chapter VI, only relates to the contravention of Sections 42 to 44 of the Act, is also not appealing, inasmuch as the Section contemplates, "on contravention of the provisions of the Act", one shall be hable to-be proceeded against and punished accordingly. The contravention of the provisions of the 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. If'the interpretation as sought to be advanced by Mr. Kapur and Mr., Rao, 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 of law that no order can be passed behind the back ofaperson adversely affecting him. support of their contention that the matter must be referred to a larger Bench in the facts of this 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 NI 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 of India 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 that the Officers / Dkectors cannot be punished without any legislative guideHnes / checks and as per whims and fancies this is anathema to rule of law.

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 of our discussion above, we are of the 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. i,

V. I<A.MESWAR RAO, J

CHISf JUSTICE DECEMBER 18, 2018 - • I -V,