COMPAT & NCLAT: History, Establishment, Powers – Functions And Aftereffects

History of COMPAT

In the Competition (Amendment) Act, 2007, the Competition Appellate Tribunal, COMPAT, was established for better resolution of some problems. Before this, if a party was not pleased with the order of the CCI, it had to file an appeal in the Supreme Court. The COMPAT was established to reduce overcrowding by competition related cases in the Supreme Court, and to ensure that the parties had a proper channel for appeal. If a party was still dissatisfied with the order of COMPAT, the case could be further appealed to the Supreme Court. In this way, the number of cases that would reach the Supreme Court could be streamlined

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The establishment of the COMPAT can be directly attributed to the Supreme Court judgment in the case of Brahm Dutt v. Union of India. In this case, the issue was brought upon whether the CCI was acting in contravention of the rule of separation of powers. Truly, the CCI has multiple roles – advisory, regulatory, and adjudicatory. Thus, it was considered that while CCI is an expert body which should continue fulfilling all of these roles, there was a need for a separate appellate body which will perform primarily judicial functions. It will keep a check on the judicial functions of CCI, and can ensure that a fair and justified ruling is provided by the CCI in all cases

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As a result of this judgment, the Competition Act, 2002, was amended to create COMPAT. It was established on 15th May, 2009, authorized to hear appeals from the orders of CCI and pass relevant judgments.

However, COMPAT was found not to be as effective as it was hoped would be. There were a number of conflicts between CCI and COMPAT related to their sharing of power. The first and one of the most important instances of the same was the case of Competition Commission of India vs. Steel Authority of India Ltd. In this case, a complain was filed to the CCI by Jindal against SAIL and Indian Railways, accusing them of abuse of dominance and anti competitive agreements. CCI referred the matter to the Director General, waiting for his enquiry. However, before the Director General could even start his investigation, SAIL filed an appeal in COMPAT, accusing CCI of violating the rules of natural justice. An interim order was passed by the COMPAT, staying the investigation, which was appealed by the CCI to the Supreme Court.

The Supreme Court contended that not all of the orders that were passed by the CCI were subject to appeal to the COMPAT. As the case was still in the stage of an investigation by the CCI, it did not violate any rule of natural justice by not granting hearing to the parties, which was the gist of the accusation of SAIL. Thus, it was held that the appeal to COMPAT, in this case, was unauthorized

However, even though it can clearly be seen that in this judgment, the Supreme Court has made an effort to outline the different powers and functions of CCI and COMPAT, and the extent of the same, the conflicts between two were just beginning. The COMPAT was in place for only eight years, and in that time, it has seen 360 appeals from CCI orders. Among those orders, 216 of the orders were upheld, while striking down a staggering 40% or 114 of the total number of orders. For this reason, there was a prevalent confusion regarding the orders passed by CCI – as almost every aggrieved party started to appeal from the same in the hope of a reversal

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Establishment of NCLAT

It can not be said that the COMPAT did not have any positive impacts at all. In a number of cases, the involvement of COMPAT was instrumental in producing a fair and ground breaking judgment. For example, in the case of M/s Excel Corp Care Limited vs. Competition Commission of India, in a landmark movement, the COMPAT took the relevant turnover approach as opposed to the total turnover – bringing India in line with the current global practices. The principle of natural justice was upheld by the COMPAT in the case of Lafarge India Limited & ORs. Vs. Competition Commission of India as well. In this case, the chairperson of the CCI had passed an order as a signatory, even though he had not heard the manner. In this, the COMPAT found that giving the parties a reasonable opportunity to be heard was an inviolable principle of natural justice, which can not be done away by the CCI6

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In any case, the efficiency of the COMPAT was still not at the expected levels, and it was considered that the COMPAT only increased confusion in the whole process, and often got into a power struggle with the CCI. Thus, in 2017, the central government abolished the COMPAT via an amendment brought under the provisions of the Finance Act, 2017. The appellate functions of the Act were vested to the National Company Law Appellate Tribunal, or NCLAT. To ensure that the NCLAT was vested with the proper powers necessary to execute its functions, relevant provisions of the Competition Act, 2002, and Companies Act, 2013, were amended suitably.

These changes were brought under primarily the Finance Bill, 2017, which allows the central government to take the necessary steps in order to minimize the number of tribunals. Under the Bill, a number of tribunals were merged with each other by amending the relevant legislations, so that there is not an abundance of tribunals with relatively less workload.

Powers & Functions

It has to be remembered here that the NCLAT is not a body only dealing with competition related issues. It already deals with appeals from the National Company Law Tribunal, under the Companies Act, 2013, and the Insolvency and Bankruptcy Board of India, under the Insolvency and Bankruptcy Code, 2016. Now, the appellate functions of the Competition Act, 2002, rests on this body as well.

The NCLAT consists of a chairperson who is a retired Supreme Court judge, and up to eleven other members, all appointed by the central government. Under Section 422 of the Companies Act, 2013, the NCLAT is ideally supposed to dispose of the appeals within a span of three months, and can take an extension of at most 90 days, if there are justifiable reasons for the same. The NCLAT is free to regulate its own procedures, but is bound to follow the procedure as per the Code of Civil Procedure, 1908, and the principles of natural justice. The tribunal has the same power as a civil court while trying a suit, as in:

  • “Summoning and enforcing the attendance of any person and examining him on oath;
  • Requiring the discovery and production of documents;
  • Receiving evidence on affidavits;
  • Subject to the provisions of section 123 and 124 of the indian evidence act, 1872 requisitioning any public record or document or a copy of such record or document from any office;
  • Issuing commissions for the examination of witnesses or documents;
  • Dismissing a representation for default or deciding it ex-parte;
  • Setting aside any order of dismissal of any representation for default or any order passed by it ex-parte; and
  • Any other matter which may be prescribed”

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The NCLAT is also empowered to enforce the execution of its order by sending thesame to other courts which have jurisdiction. It can also punish for contempt, in the similar capacity as a High Court.

Aftereffects

You may now be wondering whether this change from COMPAT to NCLAT was beneficial or not. This has no easy answer. On one hand, there has been an effective resolution regarding the battle of powers between the CCI and the COMPAT, and the abundance of tribunals in the nation has been resolved to a great extent by consolidating a number of existing tribunals.

However, on the other hand, the workload on the NCLAT has increased considerably. During the period of the transition, the NCLAT only comprised of two members including the chairperson, though more members have been appointed afterwards. The success rate of the NCLAT in resolving the appeals that were pending in it beforehand.

Aishwarya Says:

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