CASE ANALYSIS

“Kingfisher Airline Limited and Another V.

Competition Commission of India 1”

Competition Law

SUBMITTED TO
SUBMITTED BY
Mr. Vinod Dixit
Harsh Sahu
1
2010 SCC OnLine Bom 2186 : (2011) 100 CLA 190
NLIU, Bhopal Roll No. - 2017 BA LLB 88
Enrolment no: A-1864
 Table of Contents
S. No. Topics Page No.

1. Acknowledgement 3
2. Relevant Laws 4
3. Facts of the Case 6
4. Before Competition Commission of India 8
5. Contentions raised by both the Parties 10

6. Size of the Bench and Counsels of Respective Parties 13

7. Judgment 14
8. Conclusion 18
9. Bibliography 20
 Relevant Laws
Monopolies and Restrictive Trade Practices Act, 19692

 Section 11 Investigation by Director-General before issue of process in certain

cases-
(1) The Commission may, before issuing any process requiring the attendance of the
person against whom an inquiry (other than an inquiry upon an application by the
Director-General) may be made under section 10, by an order, require the Director-
General to make, or cause to be made, a preliminary investigation in such manner as it
may direct and submit a report to the Commission to enable it to satisfy itself as to
whether or not the matter requires to be inquired into.]
(2) The Director-General may, upon his own knowledge or information or on a complaint
made to him, make, or cause to be made, a preliminary investigation in such manner
as he may think fit to enable him to satisfy himself as to whether or not an application
should be made by him to the Commission under section 10.
(3) For the purpose of conducting the preliminary investigation under sub-section (1), or
sub-section (2), as the case may be, the Director-General or any other person making
the investigation shall have the same powers as may be exercised by an Inspector
under sub-section (2) of section 44.
(4) Any order or requisition made by a person making an investigation under sub-section
(1), or sub-section (2), shall be enforced in the same manner as if it were an order or
requisition made by an Inspector appointed under section 240 or section 240-A of the
Companies Act, 1956 (1 of 1956), and any contravention of such order or requisition
shall be punishable in the same manner as if it were an order or requisition made by
an Inspector appointed under the said section 240 or section 240-A.]3

The Competition Act, 20024

 Section 3: Anti Competitive Agreements

(1) No enterprise or association of enterprises or person or association of persons shall
enter into any agreement in respect of production, supply, distribution, storage,
acquisition or control of goods or provision of services, which causes or is likely to
cause an appreciable adverse effect on competition within India.
(2) Any agreement entered into in contravention of the provisions contained in subsection
(1) shall be void.
(3) Any agreement entered into between enterprises or associations of enterprises or
persons or associations of persons or between any person and enterprise or practice
carried on, or decision taken by, any association of enterprises or association of
persons, including cartels, engaged in identical or similar trade of goods or provision
of services, which5—
2
http://www.bareactslive.com/ACA/ACT755.HTM
3
Law of Monopolies, Restrictive and Unfair Trade Practices book by Avtar Singh
4
https://www.cci.gov.in/sites/default/files/cci_pdf/competitionact2012.pdf
5
Competition Law in India: Policy, Issues, and Developments book by T. Ramappa
 a) directly or indirectly determines purchase or sale prices;
b) limits or controls production, supply, markets, technical development,
investment or provision of services;
c) shares the market or source of production or provision of services by way of
allocation of geographical area of market, or type of goods or services, or
number of customers in the market or any other similar way;
d) directly or indirectly results in bid rigging or collusive bidding, shall be
presumed to have an appreciable adverse effect on competition:6

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

(4) Any agreement amongst enterprises or persons at different stages or levels of the
production chain in different markets, in respect of production, supply, distribution,
storage, sale or price of, or trade in goods or provision of services, including—
a) tie-in arrangement;
b) exclusive supply agreement;
c) exclusive distribution agreement;
d) refusal to deal;
e) resale price maintenance,

shall be an agreement in contravention of sub-section (1) if such agreement causes or

is likely to cause an appreciable adverse effect on competition in India.

(5) Nothing contained in this section shall restrict—

1. the right of any person to restrain any infringement of, or to impose reasonable
conditions, as may be necessary for protecting any of his rights which have been
or may be conferred upon him under—
a) the Copyright Act, 1957 (14 of 1957);
b) the Patents Act, 1970 (39 of 1970);
c) the Trade and Merchandise Marks Act, 1958 (43 of 1958) or the Trade
Marks Act, 1999 (47 of 1999);
d) the Geographical Indications of Goods (Registration and Protection) Act,
1999 (48 of 1999);
e) the Designs Act, 2000 (16 of 2000);
f) the Semi-conductor Integrated Circuits Layout-Design Act, 2000 (37 of
2000);7
2. the right of any person to export goods from India to the extent to which the
agreement relates exclusively to the production, supply, distribution or control of
goods or provision of services for such export.

6
https://www.cci.gov.in/sites/default/files/cci_pdf/competitionact2012.pdf
7
Competition Law in India a book by Abir Roy
  Section 4: Prohibition of use of dominant position
(1) No enterprise or group shall abuse its dominant position.
(2) There shall be an abuse of dominant position 4 [under sub-section (1), if an enterprise or a
group].—-
a) directly or indirectly, imposes unfair or discriminatory—
1) condition in purchase or sale of goods or service; or
2) price in purchase or
3) sale (including predatory price) of goods or service.
b) limits or restricts—
1) production of goods or provision of services or market therefore; or
2) technical or scientific development relating to goods or services to the
prejudice of consumers; or
c) indulges in practice or practices resulting in denial of market access 5 [in any
manner]; or
d) makes conclusion of contracts subject to acceptance by other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts; or
e) uses its dominant position in one relevant market to enter into, or protect, other
relevant market.8

Section 42 Contravention of order of Commission9—

(1) The Commission may cause an inquiry to be made into compliance of its orders or
directions made in exercise of its powers under the Act.

(2) If any person, without reasonable cause, fails to comply with the orders or directions of
the Commission issued under sections 27, 28, 31, 32, 33, 42-A and 43-A of the Act, he shall
be punishable with fine which may extend to rupees one lakh for each day during which such
non-compliance occurs, subject to a maximum of rupees ten crore, as the Commission may
determine.

(3) If any person does not comply with the orders or directions issued, or fails to pay the fine
imposed under sub-section (2), he shall, without prejudice to any proceeding under section
39, be punishable with imprisonment for a term which may extend to three years, or with fine
which may extend to rupees twenty-five crore, or with both, as the Chief Metropolitan
Magistrate, Delhi may deem fit:

Provided that the Chief Metropolitan Magistrate, Delhi shall not take cognizance of any
offence under this section save on a complaint filed by the Commission or any of its officers
authorised by it.

Constitution of India10
Article 20 Protection in respect of conviction for offences -

8
Competition Law in India book by Abir Roy
9
https://www.cci.gov.in/sites/default/files/cci_pdf/competitionact2012.pdf
10
https://www.india.gov.in/sites/upload_files/npi/files/coi_part_full.pdf
(1) No person shall be convicted of any offence except for violation of a law in force at the
time of the commission of the act charged as an offence, nor be subjected to a penalty greater
than that which might have been inflicted under the law in force at the time of the
commission of the offence.

(2) No person shall be prosecuted and punished for the same offence more than once.

(3) No person accused of any offence shall be compelled to be a witness against himself.

Article 21 Protection of life and personal liberty - No person shall be deprived of his life
or personal liberty except according to procedure established by law.
 Facts of the Case
Petitioner no. 1 is a Company incorporated under the provisions of the Companies Act, 1956
and is engaged in business of running an airline. The airline carries on operation throughout
India and also on some international roots. Petitioner no. 2 is the Chairman of petitioner no.
1. Some time in October, 2008, petitioner no. 1 and Jet Airways issued a press announcement
informing that two airlines were pleased to form an alliance of wide ranging proportions
which will help the airlines to rationalize the rates and provide improved standards of service
of wider choice of air travel options to the consumers. After such an announcement, the
Commission established under the provisions of the Monopolies and Restrictive Trade
Practices Act (M.R.T.P. Act), issued certain notices to the petitioners. On 17th October, 2008,
an order was passed by the M.R.T.P. Commission ordering an investigation into the reported
agreement between the petitioners and the Jet Airways. 11 On 29th October, 2008, the Director
General of Investigation issued a notice to petitioner no. 1 calling certain information under
Section 11 of the M.R.T.P. Act. The petitioner filed a reply to the said notice before the
M.R.T.P. Commission. On 16/1/2009, a further notice was issued by the Director General
under the M.R.T.P. Act seeking further information. Reply was sent to the said letter. Several
other letters were written by the Assistant Director General to the petitioner and replies were
accordingly sent. Later, on 11th August, 2009, the Additional Director General
of Competition Commission wrote a letter to the petitioner. This letter was issued on the basis
of information sent by respondent no. 3 to the Competition Commission, which came to be
established under the provisions of the Competition Act, 2002. The informant places reliance
upon the newspaper report in respect of market shares and the strength of fleet, etc. On the
basis of the aforesaid information, Competition Commission passed an order on 4th August,
2009 in which it is recorded that on the basis of information submitted by respondent no. 3,
the Commission is of the opinion that there exists a prima facie case and the matter should be
referred to the Director General for investigation. The petitioners therefore filed an appeal
against this Order of the Commission.12

The petitioners and Jet Airways entered into an alliance with an objective to rationalise the
rates and provide improved standard of service of wider choice to the customers in the month
of October, 2008. The M.R.T.P. Commission had taken cognizance of the agreement. It,
however, did not take any action since it found that alliance had not come through. It,
however, left it open for the Director General to investigate, if necessary, on further
developments. This order was passed on 4th September, 2009.13

The Competition Act, 2002 repealing the M.R.T.P. Act came into effect on 20th May, 2009.

However, the operation of Section 66 was kept in abeyance for two years, as a result of

11
https://www.livemint.com/Home-Page/BraE2K3NODEWpnKaUzeVXJ/Kingfisher-in-deals-for-bio-jet-fuel-
RampD.html
12
https://www.dnaindia.com/business/report-jet-airways-kingfisher-plan-code-sharing-on-domestic-routes-
1259595
13
https://www.business-standard.com/article/companies/cci-finds-no-competition-issue-in-jet-kingfisher-
alliance-111081700205_1.html
which, M.R.T.P. Commission could continue to exercise the jurisdiction till the expiry of two
years from 20th May, 2009.

Legislature amended the Act with regard to Section 66 proviso and substituted the words
“after the expiry of two years referred to in the proviso to sub-section 1” by words “on the
commencement of the Competition Act, 2009”. This Gazette of India shows that the
amendment came into effect on 14th October, 2009. It is, therefore, apparent that M.R.T.P.
Commission ceases to have existence from 14th October, 2009.

This writ petition challenges the notices issued by the Competition Commission under

the Competition Act, 2002 in respect of an alliance between the petitioners and Jet Airways
(India) Ltd.14

14
https://www.business-standard.com/article/companies/cci-finds-no-competition-issue-in-jet-kingfisher-
alliance-111081700205_1.html
 Before the Competition Commission
The said order dated 4/8/2009 reads as follows—

Case No. 4/2009dated 4.8.2009

Filed by: Mr. M.P. Mehrotra, C-561, Defence Colony, New Delhi-110024.

Against: 1) Jet Airways (India) Ltd. S.M. Centre, Andheri-Kurla Road, Andheri (East),
Mumbai - 400059 and (ii) Kingfisher Airlines Ltd. 12 th Floor, UB Tower, UB City, NO, 24,
Vutal Mallya Road, Bangalore - 560001.

This information has been filed by Sh. M.P. Mehrotra in his individual capacity through his
Advocate Shri Rupin Pahwa U/s. 19(1) of the Competition Act, 2002. In the application, it is
stated that the opponents namely Jet Airways (India) Ltd. and Kingfisher Airlines Ltd. have
entered into anti competitive agreement by way of code sharing, joint fuel management,
common ground handling, joint network rationalization etc. It is also stated that these
Airlines are controlling major share of market collectively and by abusing their dominant
position, they are adversely affecting the competition in the market.15

The Informant has claimed to be a consumer of products and services provided by Jet
Airways and Kingfisher Airlines and has alleged that the interest of the consumer like him is
affected because of cartelized behaviour of these Airlines which are acting in monopolistic
manner to the disadvantage of consumers and are abusing their dominant position which is
also causing appreciable adverse effect on fair competition in India.

It is alleged by the informant that the two airlines mentioned above are acting in concert to
fix prices and limiting/controlling supply through route rationalization in violation of
Sections 3 and 4 of the Competition Act.

In the application the Informant has prayed for instituting an enquiry against opponents
Airlines in view of the provisions of Section 19(1)(a) of the Competition Act and also to
direct the opponent to discontinue and not to re enter in such cartel like agreements.

The Commission considered this information in its meeting dated 4.8.2009. After considering
the entire material on record and relevant facts and circumstances relating to this matter
which are brought to the notice of the Commission in the meeting, the Commission is of the
opinion that there exists a prima facie case and hence the matter should be referred to the
Director General for conducting enquiry into it. The Commission, therefore, directs that a
reference be made to the Director General to cause an investigation to be made into this
matter and to submit his report within 45 days of the receipt of the order of the Commission.

The Competition Commission has passed an order on 4/8/2009 directing the Director General

to investigate into the information given by respondent no. 3. The main challenge is to this
order dated 4/8/2009.
15
https://www.business-standard.com/article/companies/cci-finds-no-competition-issue-in-jet-kingfisher-
alliance-111081700205_1.html
 Contentions Raised by the Parties
Arguments advanced by the Petitioners:
1. According to the petitioners, the M.R.T.P. Commission is already seized of the matter
in enquiry No. 172 of 2008 and therefore, the cognizance taken by the Competitive
Commission was one without jurisdiction.
2. Sections 3 and 4 of the Competition Act, 2002 cannot have retrospective effect since
the Act contains penal provisions, which includes even imprisonment and fine.
3. It is the contention of the petitioners that since the Act came into force on 20th May,
2009, the alliance between the petitioners and Jet airways is saved, as, according to
them, the Act has no retrospective effect.
4. A plain reading of Sections 3 and 4 would indicate that the Act has neither retroactive
nor retrospective effect and therefore the alliance or agreement entered into by the
parties in October, 2008 is beyond the purview of the provisions of Sections 3 and 4.
5. The petitioners contend that no action as contemplated by Section 4 of the Act can be
taken unless and until it is first established that there was an abuse of the dominant
position by the group.
6. According to the petitioners, no action can be taken as the Commission has not
determined whether the Domestic Air Transport Service (Passenger) constitutes
relevant market for the purpose of the Act, which is prerequisite for the exercise of
jurisdiction under Section 4. Thus, according to the petitioners, establishment of
relevant market is an essential condition before any exercise can be undertaken by the
Commission for taking any action against the petitioners.
7. Further, the petitioners contend that the provisions of Sections 3, 4, 19, 27, 42 and 43
are violative of provisions of Article 20 of the Constitution of India.
8. The M.R.T.P. Commission had taken cognizance of the alliance and had decided not
to take any action and therefore, for the same act second action would violate the
provision of Article 21 of the Constitution of India.
9. The Competition Commission has no jurisdiction to go into constitutional validity of
the Act.
10. Shri Seervai, the learned Senior Counsel, submits that the very wording of Section 3
of the Act would make it clear that the Act is prospective in nature. He submits that
even a plain reading of the provisions would go to show that.
11. The petitioner contends that the legislature in its wisdom has not added any words in
the section to say that it would affect the agreement already entered into.
12. He submits that if it wanted to bring the agreement, prior to coming into force of
the Act, into its sweep, it would have and could have said so in very many words.
13. Seervai contended before us that the Benami Transactions (Prohibition Act) which
contains a similar provision has been held by the Supreme Court to be prospective in
nature.
14. The petitioner referred to the decision in R. Rajagopal Reddy (dead) by
Lrs. v. Padmini Chandrasekharan (dead) by L.Rs16 in which the Supreme Court held
16
(1995) 2 SCC 630 
 that the Benami Transaction Act is not retrospective. The Supreme court has held that
all transactions in respect of which the suits were pending on the date the Act came
into force were saved. This is because the transactions were valid since the Act had
not come into force and the Act did not specifically render them void. The
Benami Act prohibits the benami transaction as from the date of commencement of
the Act.
15. In Collins English Dictionary, 1979 Edition as reprinted subsequently, the word lie’
has been defined in connection with suits and proceedings. At page 848 of the
Dictionary while dealing with Topic No. 9 under the definition of term ‘lie’ it is stated
as under: 17 “For an action, claim appeal etc. to subsist; be maintainable or
admissible.”
16. It was submitted on behalf of the petitioner that Section 43 of the Act prescribes
punishment and therefore, it should be treated as a penal Act.
17. Shri Seervai, the learned senior counsel for the petitioners, has placed reliance on a
decision reported in 1923 King's Bench Division 193 (Henshall v. Porter18). The
court observed as follows: “In my opinion the Act of 1922 must be considered in the
light of the settled, recognized and beneficent rule of law that existing rights are not
to be deemed to be destroyed by a statute unless there be express words or the
plainest implication to that effect. I need not cite the overwhelming body of authority
as to this; many of the decisions and text-books are quoted in Bowling v. Camp19 and
Cohen v. Hall20. I see nothing in the Act of 1922 which compels me to give it a
retrospective operation.”

Arguments raised by the Respondents:

1. Respondent no. 1/the Competition Commission in its affidavit contends that the
petition itself is premature and without merits.
2. The Commission contends that an enquiry has merely been ordered and no action
whatsoever has been taken against the petitioners.
3. It is also contended that the prima facie view has been formed by respondent no. 1
and enquiry and investigation has been ordered. No final order has been passed by the
Commission and it is only after the conclusion of the investigation that the
Commission will pass an appropriate order giving opportunities to the petitioners to
present their case.
4. Respondent no. 1 contends that the respondent/Commission has received information
and it had to form an opinion with regard to the existence or non-existence of a prima
facie case against the petitioners. It is contended that the enquiry and investigation is
at a preliminary stage and the petitioners, therefore, has no right to challenge the
enquiry which the commission can hold under a statute itself.
5. Competitive Commission is investigating in relation to anti-competitive agreement
under Section 3 of the Act and for abuse of dominant position by the two airlines
17
https://www.collinsdictionary.com/dictionary/english
18
[1923] 2 K.B. 193
19
Ibid
20
622 F. 3d. 188
 under Section 2 of the Act. Such an investigation is different and has no relation with
investigation carried out by the erstwhile M.R.T.P. Commission.
6. Further, an affidavit has been filed that the said M.R.T.P. Commission now no more
exists.
7. The respondent denies that the respondent is required to determine the relevant market
before ordering the investigation under Section 4.
8. The respondent further contends that Sections 3 and 4 of the Act cannot be read so as
to have application only to agreements entered after 20 th of May, 2009 as is sought to
be done by the petitioners. It is contended that such an interpretation would be against
the language of the Section and intention of the legislature.
9. Further, the respondents contend that the Act is not ultra vires and the Competitive
Commission has a right to investigate and enquire into any agreement which may
have been entered prior to coming into force of the Competition Act.
10. It is also contended that any agreement which is sought to be enforced after coming
into force of the Act, could and would fall within the scope of the Act.
11. Shri Khambata, learned Additional Solicitor General, submits before us that the
contention of the petitioners that Article 20 should be applied to the facts of the
instant case is misconceived. He submits that this is not a penal statute falling in the
realm of criminal law.
12. The Respondent also referred to paragraph 57 of the judgment in Virtual Soft
Systems Ltd. Case21 wherein it was held that “The amended provision of law is not
available prior to 1/4/2003, as the same is not enacted with retrospective effect. That
this amendment is declaratory and applies to all pending cases, as held by the
Bombay High Court in CIT  v. Chemiequip Ltd22. is untenable”.

21
(2007) 9 SCC 665 
22
(2003) 182 CTR Bom 144, 2004 265 ITR 265 Bom
 Size of the Bench and Advocates of the Respective Parties
A division bench consisting of Justice J.N. Patel and Justice C.L. Pangarkar heard the case.

Counsels for the Petitioners:

 N.H. Seervai
 B.B. Saraf
 Mr. Buchubhai Munim

Counsels for the Respondents:

Mr. T. Andhyarujina with Mr. Sunail Nathani and Mr. Sushanth Murthy for Respondent No.
1 and 2

Mr. D.j. Khambata Addl. Solicitor General with Mr. R.A. Rodrigues, Mr. AM Sethna and
Ms. LB Patane Advocates for Respondent No. 4.
 Judgment
1. The Act nowhere declares the agreement already entered into as void. If the Section 3
is read, it says that after coming into force of the Act, no person shall enter into an
agreement in contravention of the provisions of the Act and if entered into, same shall
be void. This, to our mind, at the most, would mean that the Act does not render the
agreement entered into, prior to coming into force of the Act, void ab initio. Had
the Act been retrospective in operation, it would render the agreement void ab initio. 
2. The agreement prior to coming into force of the new Act was, therefore, certainly
valid, for it was not in breach of any law or affected any law then existing. All acts
done in pursuance of the agreement before the Act came into force would be valid and
cannot be questioned.
3. The question here is whether this agreement, which was valid until coming into force
of the Act, would continue to be so valid even after the operation of the law. The
parties as on today certainly propose to act upon that agreement.
4. But if the parties want to perform certain things in pursuance of the agreement, which
are now prohibited by law, would certainly be an illegality and such an agreement by
its nature, therefore, would, from that time, be opposed to the public policy. If the law
cannot be applied to the existing agreement, the very purpose of the implementation
of the public policy would be defeated. The moment the Act comes into force, it
brings into its sweep all existing agreements.
5. The decision in Rajgopal23 case applies on all fours to the instant case. We are,
therefore, of considered opinion that though the Competition Act is not retrospective,
it would cover all the agreements covered by the Act though entered into prior to the
commencement of the Act and sought to be acted upon.
6. As to the contention of the petitioner that Section 43 of the Agreement prescribed
punishment and therefore the Act is penal in nature the Court held that the Act is not a
penal Act. This is because the Act does not make punishable by itself an act of
entering into an agreement, contrary to the provisions of the Act. Therefore, even if
parties enter into an agreement covered by the Act, that by itself, does not amount to
an offence. What is made punishable is disobedience of the order passed by the
Commission and non-compliance.
7. What Article 20(1)24 says is that no person shall be convicted of any offence except
for violation of law in force. It was contended that on the date the parties entered into
an alliance, there was no prohibition and therefore, it was not void agreement nor was
it repugnant to the statutory provision. Shri Seervai submits that if it was then valid, it
continues to be so valid unless parties want to abandon it. He also submits that even if
the agreement could be said to be in violation now, the Commission cannot take
cognizance of the same as it was valid when the said agreement was entered into. The
Commission, according to him, has no jurisdiction to punish for any breach which
was not an offence when the agreement was entered into.

23
(1995) 2 SCC 630
24
https://www.india.gov.in/sites/upload_files/npi/files/coi_part_full.pdf
 8. State of Maharashtra. v. Kaliar Koil Subramaniam25 is the decision on the above
said proposition.
9. In the instant case, the Act does not make breach of Sections 3 and 4 by itself
punishable. Therefore, entering into an agreement, contrary to provisions of law, is
not an offence but such agreement is only void. That may not be enforceable in law.
10. Article 20(1)26 to us has no application to the instant case. If the article is read
carefully, what it prevents to do is the imposition of higher penalty at the time of
conviction, if the law provided lesser at the time of commission of the offence. The
person will have to be convicted in accordance with the punishment provided at the
time of commission of the offence and not in accordance with the law which may be
prevailing at the time of trial and conviction of the offender. The proceedings or the
action of the Commission is at the preliminary stage only. It only seeks to look into
and enquire into/investigate into the terms of the alliance. If Article 20 is to be
applied, there has to be trial or prosecution for the act done prior to the coming into
force of the Act. There is nothing like that.
11. The decision cited to us by Shri Seervai, reported in Soni Devrajbhai
Babubhai v. State of Gujarat27 has no application. Mere enquiry into certain alliance
can in no way be said to be unconstitutional. What is sought to be done by the
Commission is to examine terms of alliance. If it finds that certain terms of the
alliance are repugnant to the Act, it may ask the parties to stop acting upon them or
under Section 27(d) to modify the terms of the said agreement. Therefore, unless and
until the Commission examines all aspects, it cannot come to the conclusion if the
agreement is void and partly valid. The commission alone, upon such examination,
has a right to give such finding.
12. The petitioners cited Virtual Soft Systems Ltd. v. Commissioner of Income Tax,
Delhi I28 in which the Supreme Court held “Section 271 of the Act is a penal
provision and there are well-established principles for the interpretation of such a
penal provision. Such a provision has to be construed strictly and narrowly and not
widely or with the object of advancing the object and intention of the legislature.” In
the case of Tolaram Relumal v. State of Bombay29 it was held by the Court that “If
two possible and reasonable constructions can be put upon a penal provision, the
court must lean towards that construction which exempts the subject from penalty
rather than the one which imposes penalty. It is not competent to the court to stretch
the meaning of an expression used by the legislature in order to carry out the
intention of the legislature.” The same principle was echoed in the judgment of the
five-judge Bench in Sanjay Dutt v. State30, which approved an earlier expression of
the rule by us in Niranjan Singh Karam Singh Punjabi v. Jitendra Bhimraj

25
(1977) 3 SCC 525
26
Constitution of India a book by DK Basu
27
(1991) 4 SCC 298 
28
(2007) 9 SCC 665 
29
(AIR at pp. 498-99)
30
Decriminalising Criminal Politics: A Comment on Sanjay Dutt Versus State of Maharashtra- a book by Jitendra
Mishra
 Bijjaya31 wherein it was held that ‘Therefore, when a law visits a person with serious
penal consequences extra care must be taken to ensure that those whom the
legislature did not intend to be covered by the express language of the statute are not
roped in by stretching the language of the law.’ In the case of Prem Bahadur V. State
of Orissa32 it was held that “The Orissa Order does not make possession without a
licence an offence. Storage, however, has been made an offence. Between
“possession” and “storage”, some elements may be common and, therefore, it would
be appropriate to say that in all instances of storage there would be possession. Yet,
all possession may not amount to storage. “Storage” in the common parlance
meaning connotes the concept of continued possession. There is an element of
continuity of possession spread over some time and the concept is connected with the
idea of a regular place of storage. Transhipment is a moving vehicle would not
amount to storage within the meaning of the Orissa Order.”
13. There is no doubt that for coming at a conclusion as to whether a particular group has
abused the dominant position or not, three things, namely; relevant market, relevant
geographic market and relevant products are to be considered. However, for
considering the effect of Section 4, it would also be necessary to look into the various
other provisions of the Act. If Section 4 is read, it can be said that there are two
conditions which need to be fulfilled. First, the group must hold a dominant position
and secondly, such dominant position must be abused. Clearly, therefore, if a group
holds a dominant position but does not abuse it, the group would not be covered by
the section at all. The question is whether the Commission is prevented from taking
any action before it is so actually established. On careful reading of Section 4, it is
clear to us that Section 4 merely defines the dominant position. It does not go further
or beyond defining abuse.
14. It is clear is clear from Section 19 that the Commission can act upon receipt of
information and on a reference made to it by the Central or State Government or on its
own motion. It is, therefore, clear that there has to be some information before the
Commission about the alleged breaches of Sections 3 and 4. If the Commission
receives an information, it is supposed under Section 19 to enquire into the complaint
received. Under the Code of Criminal Procedure, a Police Officer is supposed to look
into the complaint and decide whether the information discloses a cognizable offence
or not. If, upon reading the complaint, he finds that it does disclose a cognizable
offence, he is bound to register the First Information Report and investigate into it.
The investigation is only for the purpose of collection of evidence.
15. If Section 26 is read with Section 19, it would be clear that the information received
under Section 19 is to be placed before the Commission; and if the Commission finds
a prima facie case, it can direct the investigation; and it has an option to drop the
matter if there is no prima facie case.
16. It is, therefore, clear to us that the question as to whether there is a breach of
provisions of Sections 3 and 4 is finally considered under Sections 19, 26 and 27(8).
Sections 19 and 26(1) speak of existence of prima facie case only. Therefore, at the
31
(SCC p.86, para 8.)
32
(Cril. L.J.p. 685, para 4).
 prima facie stage, it is never concluded whether there is breach or otherwise.
Therefore, at preliminary stage, it is only to be seen if there is a reason to believe that
there is a breach of Sections 3 and 4. The law is well settled that the court should not
stifle the investigation at all, except for compelling reason or when F.I.R. does not
disclose any offence at all. If the analogy is to be applied here it cannot be said that
the information given by respondent no.3 does not disclose any beach nor can it be
said that it is a case of lack of inherent jurisdiction to the Commission to investigate.
It has a power to enquire and investigate into every complaint received under the Act,
as is clear from the above provision. The Supreme Court in a decision reported in 
Sanaparededdy Maheedhar Seshagiri v. State of Andhra Pradesh33 made following
observations—“ The High Court should be extremely cautious and slow to interfere
with the investigation and/or prosecution except when it is convinced beyond any
manner of doubt that FIR does not disclose commission of any offence or that the
allegations contained in FIR do not constitute any cognizable offence or that the
prosecution is barred by law or the High Court is convinced that it is necessary to
interfere to prevent abuse of the process of the Court. In dealing with such cases, the
High Court has to bear in mind that the judicial intervention at the threshold of the
legal process initiated against a person accused of committing offence is highly
detrimental to the larger public and societal interest. The people and the society have
a legitimate expectation that those committing offences either against an individual
or the society are expeditiously brought to trial and, if found guilty, adequately
punished. Therefore, while deciding a petition filed for quashing FIR or complaint or
restraining the competent authority from investigating the allegations contained in
FIR or complaint or for stalling the trial of the case, the High Court should be
extremely careful and circumspect. If the allegations contained in FIR or complaint
disclose commission of some crime, then the High Court must keep its hands off and
allow the investigating agency to complete the investigation without any fetter and
also refrain from passing order which may impede the trial. The High Court should
not go into the merits and demerits of the allegations imply because the petitioner
alleges  malus animus against the author of FIR or the complainant. The High Court
must also refrain from making imaginary journey in the realm of possible harassment
which may be caused to the petitioner on account of investigation of FIR or
complaint. Such a course will result in miscarriage of justice and would encourage
those accused of committing crimes to repeat the same.”
17. If the said ratio is to be applied, the enquiry/investigation cannot be stifled at all. We
have not made reference to other decisions cited, since we find that the decisions
referred to in this judgment were enough to arrive at a conclusion. We find that it was
not necessary for the Commission to first find out the relevant geographic market,
relevant products market or relevant market. Such things can be found or concluded
upon investigation and not necessarily before that.
18. In the circumstances, the High Court found that no writ as sought can be issued and
petition was dismissed.

33
(2007) 13 SCC 165 
 Conclusion
According to me the decision of the High Court was correct in all instances. Firstly Section 3
of the Competition Act lists the anti competitive practices which will be punishable but no
where the Section means to say that the provisions will be applicable retrospectively. The
Supreme Court, in very clear language, says that the retrospectivity has to be enacted
specifically in the fiscal statue and it is more so in respect of penal provision else it would be
derogatory34 to Article 20(1)35. If this ratio is to be applied, it must be said that
the Competition Act is not retrospective since there is no provision to that effect at all in the
statute. For this reason, too, I find that the Competition Act is not retrospective in nature.
Hence the section prescribing anti competitive agreements as punishable will come into force
on the date from which the Amendment came into force. But it will engulf within its sweep
all those agreements from that date. It cannot be said that an agreement entered into between
the parties before the Act came into force will not be void. This can be explained further by
quoting the following example:—

“A and B enter into agreement of sale of land on 2/1/2008. It is agreed between them that
sale-deed would be executed on or before 2/1/2009. Meanwhile, i.e. on 10/8/2008, the
Government decides to impose a ban on transfer of the land and declares that any such
transfer, if effected, shall be void. The question is, could the parties say that since their
agreement being prior to Government putting a ban on transfer, their case is not covered by
the ban? The answer has to be in the negative, as on the day the contract is sought to be
completed, it is prohibited.” Similar would be the result in the instant case.

Another argument raised by the petitioner that Competition Commission does not have the
power to investigate into the nature of agreement entered into by the parties will stifle with
the powers granted to the Commission by the Statute. The observation made by the Supreme
Court in Sanaparededdy Maheedhar Seshagiri v. State of Andhra Pradesh36 should be
extremely cautious while interfering with the investigations of the respective agencies also
fits aptly to the present case, as there might be miscarriage of justice and stifling of the power
of the Commission if we interfere with the investigation of the said Commission.

34
Kailash Chand Sumerchand Jain vs State Of M.P.
35
Constitution of India a book by DK Basu
36
(2007) 13 SCC 165