NCLAT sets aside CCI’s order imposing ₹38 crore penalty on sugar mills

On October 10, the National Company Law Appellate Tribunal (NCLAT) overturned a penalty of Rs 38.05 crore imposed by the Competition Commission of India (CCI) in 2018. The penalty was levied on 18 sugar mills and two trade associations in connection with a joint tender issued by oil marketing companies for the procurement of ethanol to be blended with petrol.

The appellate tribunal said the order passed by the fair trade regulator Competition Commission of India “suffers from illegality” and “does not comply with the requirement of adherence to the principle of natural justice”.

The NCLAT cited that the CCI quorum responsible for the final deliberations did not issue the requisite orders in a timely manner. Furthermore, when the final orders were eventually pronounced, one member had been absent from at least four subsequent hearings, and two members had left their positions. As a result, they neither participated in the decision-making process nor signed or authenticated the final order. The NCLAT also pointed out that the CCI issued its order on September 18, 2018, approximately 13 months after the conclusion of the case’s hearing, which had been reserved for an order since February 28, 2017.

“Such an inordinate delay in passing the order made it inform as the members would not be able to recall all the oral arguments from their memory, and further due to the passage of time some members retired, which meant that the order was passed by only three members as against five members who heard the case on all the dates, which made the order non est due to such basic infirmities,” said a bench comprising Justice Rakesh Kumar and Alok Srivastava.


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