Mr. Udayan Jain and Mr. Ranjan Mishra, Advs v. COMPETITION COMMISSION OF INDIA

Judgment

1. The present Appeal has been preferred under Clause 10 of the Letters Patent, assailing the Judgment dated 11.09.20191 passed by the learned Single Judge of this Court in W.P.(C) No. 1100/2019 titled United India Insurance Company Limited v. Competition Commission of India. 2. By the Impugned Judgment, the learned Single Judge dismissed the writ petition filed by the Appellant and upheld the Order dated 1 Impugned Judgment Signature Not Verified LPA 724/2019 Page 1 of 33 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:03.11.2025 12:18:11

06.12.2018 along with the Demand Notices dated 01.10.2015,

17.01.2017, and 14.12.2018, issued by the Competition Commission of India2, thereby affirming the CCI‘s demand for interest on the monetary penalty imposed under Regulation 5 of the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 20113. The said penalty had originally been imposed by the CCI vide Order dated 10.07.2015 passed under Section 27 of the Competition Act, 20024. BRIEF FACTS: 3. On 04.09.2013, the CCI received an anonymous information alleging that the Appellant, in concert with three other public sector general insurance companies, had engaged in cartelization in relation to tenders floated by the State of Kerala under the health insurance schemes, Rashtriya Swasthya Bima Yojna and Comprehensive Health Insurance Scheme, thereby violating Section 3(3) of the Competition Act. 4. Upon seeking a response from the Appellant, the CCI, vide Order dated 12.02.2014, directed the Director General5 under Section 26(1) of the Competition Act to conduct an investigation into the matter. 5. The DG submitted his report on 03.02.2015, concluding that the concerned companies, including the Appellant, were guilty of ―bid rigging‖ in contravention of Section 3(3) of the Competition Act. 2 CCI 3 2011 Regulations 4 Competition Act 5 DG Signature Not Verified LPA 724/2019 Page 2 of 33 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:03.11.2025 12:18:11

6. After the companies filed their objections on 14.05.2015, and upon hearing them, the CCI, by Order dated 10.07.2015, passed under Section 27 of the Competition Act, held them guilty of contravention and imposed a penalty equivalent to 2% of their average turnover for the financial years 2010-11 to 2012-13. The penalty quantified in the case of the Appellant amounted to Rs. 156.62 crores. 7. Aggrieved thereby, the Appellant preferred Appeal No. 96/2015 before then learned Competition Appellate Tribunal6, which, by an Interim Order dated 05.10.2015, stayed the operation of the penalty order, subject to the Appellant depositing 10% of the penalty amount with the Registry of the learned COMPAT within four weeks, to be kept in a fixed deposit for six months in a Scheduled Bank. 8. In the meantime, by a demand notice dated 01.10.2015 (received on 07.10.2015), the CCI directed the Appellant to pay the full penalty within thirty days, failing which interest at 1.5% per month would accrue. 9. The Appellant, vide reply dated 13.10.2015, informed the CCI that the learned COMPAT had stayed the penalty subject to the deposit of 10% within four weeks, and the same would be duly complied with within the prescribed period. 10. In compliance with the learned COMPAT‘s Order dated

05.10.2015, the Appellant deposited 10% of the penalty amount on

15.10.2015, which is within the time granted. 11. By final Order dated 09.12.2016, the learned COMPAT partly allowed the Appeal, upholding the finding of contravention but 6 COMPAT Signature Not Verified LPA 724/2019 Page 3 of 33 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:03.11.2025 12:18:11 substantially reducing the quantum of penalty to Rs. 1.56 crores, which the Appellant deposited on 04.01.2017. 12. Thereafter, the CCI issued a Demand Notice dated 17.01.2017, calling upon the Appellant to deposit Rs. 32.76 lakhs towards interest for an alleged delay of fourteen months in payment of the penalty, calculated under Regulation 5 of the 2011 Regulations. 13. The Appellant disputed the said Demand Notice and, by response dated 30.01.2017, contended that in view of the learned COMPAT‘s stay and subsequent modification of the penalty, no delay could be attributed to it, and therefore, it bore no liability to pay interest on the imposed penalty. 14. Meanwhile, on 06.03.2017, the CCI filed Civil Appeal No. 3342/2017 before the Hon‘ble Supreme Court challenging the learned COMPAT‘s Order, which has been admitted and remains pending adjudication. 15. Subsequently, on 06.12.2018, the CCI passed an Order directing the Appellant to deposit Rs. 32.76 lakhs as interest, followed by a Recovery Notice dated 14.12.2018 calling for payment within fifteen days. While doing so, the CCI placed reliance on the decision of the NCLAT in SCM Soilfert Ltd. v. Competition Commission of India7, holding liability to pay penalty and interest subsists

notwithstanding the pendency of an appeal. 16. The Appellant challenged the CCI‘s Order dated 06.12.2018 the Demand Notices dated 01.10.2015, 17.01.2017, and

14.12.2018 by way of a Writ Petition before this Court. 7 2018 SCC OnLine NCLAT 462 Signature Not Verified LPA 724/2019 Page 4 of 33 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:03.11.2025 12:18:11

17. After considering the pleadings and submissions, the learned Single Judge, by the Impugned Judgment, dismissed the Writ Petition and upheld the CCI‘s demand for interest under Regulation 5 of the 2011 Regulations. 18. Aggrieved by the Impugned Judgment, the Appellant has preferred the present Appeal. SUBMISSIONS OF THE APPELLANT: 19. Learned counsel for the Appellant would contend that the Impugned Judgment, rendered by the learned Single Judge is contrary to law, as it overlooks the true scope and intent of the 2011 Regulations and fails to appreciate their proper application. 20. It would be submitted by the learned counsel for the Appellant that the Appellant had fully complied with the Interim Order of the learned COMPAT by depositing 10% of the penalty amount, and upon disposal of the appeal on 09.12.2016, the penalty was substantially reduced from Rs. 156.62 crores to Rs. 1.56 crores. Learned counsel for the Appellant would further submit that the Appellant, acting promptly and in good faith, deposited the reduced amount on

04.01.2017, and therefore, there was neither any default nor delay in payment within the meaning of Regulations 3 and 5 of the 2011 Regulations, and consequently, the Demand Notices dated 17.01.2017 and 14.12.2018 claiming interest are wholly unsustainable. 21. Learned counsel for the Appellant would argue that liability to pay penalty arises only upon service of a valid Demand Notice under Regulation 3, and that interest under Regulation 5 can be levied only if the amount remains unpaid beyond the prescribed period; however, the Demand Notice dated 01.10.2015, though issued under Regulation Signature Not Verified LPA 724/2019 Page 5 of 33 Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:03.11.2025 12:18:11 3, was served on 07.10.2015, after the learned COMPAT had stayed the operation of the CCI‘s Order dated 10.07.2015, and thus became non est and inapplicable. It would further be submitted that since the original order was subsequently modified and superseded by COMPAT‘s final Order dated 09.12.2016, no interest could be levied retrospectively or for any period prior to that order. 22. It would further be contended by the learned counsel for the Appellant that the CCI‘s Order dated 10.07.2015 stood merged with the learned COMPAT‘s final Order dated 09.12.2016, and hence computation of interest from the date of the original order was legally untenable. It would also be submitted that the period during which the stay remained in force could not be treated as delay on the part of the Appellant, since the CCI‘s order itself was under suspension during that time. In this regard, reliance would be placed by the learned the Appellant on counsel Kunhayammed v. State of Kerala8 and Khoday Distilleries Ltd. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd.9, which affirm that the principles laid down once a superior forum modifies or supersedes an order, the original ceases to operate independently. 23. Learned counsel for the Appellant would also distinguish the precedents relied upon by the learned Single Judge, such as State of Rajasthan v. J.K. Synthetics Ltd.10 and Kanoria Chemicals and Industries Ltd. v. U.P. SEB11, on the ground that in those cases, the liability to pay interest had arisen either statutorily or contractually prior to the grant of any stay or appellate interference. In contrast, in