Competition Act, 2002 – ss. 2(i), 2(u), 3, 4, 19(1)(a) & 26 – Lotteries (Regulation) Act, 1998 – Mizoram Lotteries (Regulation) Rules, 2011 – Jurisdiction of Competition Commission of India – State of Mizoram issued an Invitation for Expression of Interest (EOI), inviting bids for appointment of lotteries distributors and selling agents for State lotteries – In pursuance of EOI, bids were received and four companies were selected as distributors – Respondent No.4 made a complaint to the CCI, seeking investigation in respect of State lottery – Respondent alleged that the bidders had cartelised and entered into a collusive agreement that had an appreciable adverse effect on competition in the lottery business – CCI and Director General (DG) found prima facie evidence of cartelization and bid rigging by the bidders – However, CCI opined that no prima facie case was made out against the State and rejected the complaint – DG did make some observations against Director, IF&SL and the State of Mizoram to the effect that they ought to have been more vigilant in stopping unfair trade practices – High Court in writ petition filed by the State, held that lottery business being in the nature of res extra commercium could not be covered by the Competition Act – Consequently CCI did not have jurisdiction to entertain the complaint – On appeal, held: State, under a misconception, approached the High Court, possibly in an endeavour to defend one of its officers, respondent No. 2 whose conduct has not been very favourably commented on by the DG – Lotteries may be a regulated commodity and may even be res extra commercium – That would not takeaway the aspect of something which is anti-competition in the context of the business related to lotteries – The lottery business can continue to be regulated by the Regulation Act, however, if in the tendering process there is an element of anti-competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries – There was really no need for the High Court to proceed in the manner and in the direction it sought to proceed – The correct approach, more so once the statement was made on behalf of the CCI, would have been to close the proceedings filed by the State Government and let the private parties face the ultimate decision of the CCI.
Allowing the appeal, the Court
HELD: 1. The complaint of respondent No.4 may have been also under Section 4 of the Competition Act but it had not even referred that aspect to the DG and had decided not to proceed against the State. That should have been the end of the matter so far as the State is concerned. Yet the State, under a misconception, approached the High Court, possibly in an endeavour to defend one of its officers, respondent No. 2, whose conduct has not been very favourably commented on by the DG. Even if the State felt that these comments of the DG were not sustainable, such an aspect could have been pleaded with the CCI in pursuance of its notice and possibly the matter would have been closed atthat stage. In fact, the CCI had opined, both before and after the filing of the writ petition, that it was not proceeding against respondent No.1/State under Section 4 of the Competition Act. The aforesaid gave an opportunity to respondent Nos. 5 & 6 also to approach the Court and interdict the proceedings which ought to have been concluded a long time ago. It would, in our view, have been beneficial even to the State to have come to a conclusion one way or the other. The interdict post the investigation report by the DG and prohibiting the CCI from carrying out its mandate under the Competition Act is unsustainable. The concern was limited to the role assigned to the CCI under the Competition Act, and in the context of the EoI was limited to examining any perceived bid rigging in the tendering process for appointment of selling agents and distributors for the lottery business. There was no conflict in the interplay of the two Acts that even needed reconciliation or prohibition against either one, as the limited scrutiny was to examine the mandate of Section 3(1) read with Section 3(3) of the Competition Act. Lotteries may be a regulated commodity and may even be res extra commercium. That would not takeaway the aspect of something which is anti- competition in the context of the business related to lotteries. [Paras 37 & 38][894-F-G; 895-A-B, D-E]
2. This Court take note of the expansive definition of ‘Service’ under Section 2(u) of the Competition Act. It means “service of any description”, which is to be made available to potential users. The purchaser of a lottery ticket is a potential user and a service is being made available by the selling agents in the context of the Competition Act. Suffice for us to say the inclusive mentioning does not inhibit the larger expansive definition. The lottery business can continue to be regulated by the Regulation Act. However, if in the tendering process there is an element of anti- competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries. The intervention by the High Court was extremely premature. It ought to have waited for the CCI to come to a conclusion but on the other hand what has happened is that the CCI proceedings have been brought to a standstill while the High Court opined on the basis of some aspects which may or may not arise. [Paras 39 & 40][895-F-H; 896-A-B]
3. There was really no need for the High Court to proceed in the manner and in the direction it sought to proceed. The correct approach, more so once the statement was made on behalf of the CCI, would have been to close the proceedings filed by the State Government and let the private parties face the ultimate decision of the CCI. If they were aggrieved by any adverse decision of the CCI they were entitled to avail of the appellate remedy under Section 53B of the Competition Act. The complaint having been made by respondent No.4 under Section 19 of the Competition Act, which provides that the Commission “may” inquire into certain agreements and dominant position of enterprise as envisaged under sub-section (1) of Section 3 and sub- section (1) of Section 4 of the Competition Act. The CCI found out a prima facie case for investigation by the DG under Section 3(1) of the Competition Act, the DG opined adversely, and the CCI issued notice giving an opportunity to the affected parties to place their stand before it. This process ought to have been permitted to conclude with the right available to the affected parties to avail of the appellate remedy under Section 53B of the Competition Act. [Paras 41 & 42][896-B-E]
B.R. Enterprises v. State of UP (1999) 9 SCC 700 : [1999] 2 SCR 1111; Sunrise Associates v. Government of NCT of Delhi). (2006) 5 SCC 603 : [2006] 1 Suppl. SCR 421; Union of India v. Martin Lotter Agencies Ltd. (2009) 12 SCC 209 : [2009] 7 SCR 946; CCI v. Bharti Airtel (2019) 2 SCC 521 : [2018] 14 SCR 489; Black Diamond Beverages 19 v. Commercial Tax Officer (1998) 1 SCC 458 : [1997] 4 Suppl. SCR 133; State of Punjab v. Devans Modern Breweries. (2004) 11 SCC
26 : [2003] 5 Suppl. SCR 930; Competition Commission of India v. Steel Authority of India & Anr. (2010) 10 SCC 744 : [2010] 11 SCR 112; Sunrise Associates v. Government of NCT of Delhi (2006) 5 SCC 603 : [2006]
1 Suppl. SCR 421; R.D. Goyal & Anr. v. Reliance Industries Ltd.10) (2003) 1 SCC 81 : [2002] 4 Suppl. SCR 231 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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