section Singhvi, J. (Chairman) This appeal is directed against order dated 30.07.2012 passed by the Competition Commission of India (for short the Commission) in Case Number RTPE 52/2006, whereby the appellant was held guilty of acting in violation of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act, 2002 (for short, the Act) and penalty of Rs. 397.15 Crores was imposed on it.

The Commission further directed the appellant to cease and desist from indulging in any activity relating to agreement, understanding or arrangement of prices, production and supply of cement in the market.

A perusal of the impugned order shows that after going through the press reports published in Business Daily and Economic Times dated 09.05.2006 and 29.06.2006 regarding increase in cement prices and on receipt of letter dated 16.09.2006 of the Builders Association of India (BAI), which was forwarded to it by the Ministry of Company Affairs on 29.06.2006, the erstwhile Monopolies and Restrictive Trade Practices Commission (for short MRTP Commission) took suo moto cognisance and initiated investigation and entrusted the matter to the Director General (Investigation and Registration).

The latter asked all the cement manufacturing companies to furnish their comments as well as break-up of cost of cement per metric ton including state levies.

BAI was also asked to substantiate its allegation regarding increase in prices.

41 cement manufacturers submitted replies and denied the allegation that they had formed a cartel.

Before the Director General (Investigation and Registration) could complete the investigation, the Monopolies and Restrictive Trade Practices Act, 1969 was repealed by Section 66 of the Act and RTPE Number 52/2006 was transferred to the Commission.

The Commission considered the matter in its meeting held on 24.06.2010 and passed an order under Section 26(1) whereby the Director General was directed to conduct an investigation into the matter.

After conducting investigation, the Director General submitted report dated 31.05.2011 with the finding that the appellant had acted in contravention of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act.

In the meanwhile, an information was filed by BAI under Section 19(1)(a) alleging formation of cartel by 11 cement manufacturing companies and Cement Manufacturers Association.

The same was registered as Case Number 29/2010 and the Commission passed an order under Section 26(1) for an investigation by the Director General.

On the basis of the investigation report submitted in Case Number 29/2010, the Commission passed order dated 20.06.2012 and imposed penalty amounting to Rs. 6,316.59 Crores on the cement manufacturers and the Association.

The Commission largely relied upon the findings recorded in Case Number 29/2010 and reiterated the finding that the appellant had violated Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act and imposed the penalty to which reference has been made hereinabove.

The appellant has challenged the impugned order on several grounds, two of which are that the suo-moto investigation initiated by the MRTP Commission could not have been continued by invoking Section 66 of the Act and clubbed with the investigation conducted by the Director General in Case Number 29/2010 and in any case, the findings recorded in the latter case could not have been relied upon for holding the appellant guilty of violating Section 3 of the Act and further that the Chairperson of the Commission, who was not present in the meetings held on 21st, 22nd and 23rd February, 2012 and did not have the benefit of hearing the arguments of the advocates representing the parties could not have taken part in the decision-making process and passed the impugned order.

By a separate order passed today, we have allowed Appeal Number 105 of 2012 Lafarge India Limited v. Competition Commission of India and Another and connected matters and set-aside order dated 20.06.2012 passed by the Commission.

The operative portion of that order reads as under: In the result, the appeals are allowed.

The impugned order is set aside and the matter is remitted to the Commission for fresh adjudication of the issues relating to alleged violation of Sections 3(3) (a) and 3(3)(b) read with Section 3(1) of the Act by the appellants.

The appellant shall be entitled to withdraw the amount deposited by them in compliance of the interim order passed by the Tribunal.

The Commission shall hear the advocates representatives of the appellants and BAI and pass fresh order in accordance with law.

We hope and trust that the Commission shall pass fresh order as early as possible but within a period of three months from the date, which may be notified after receipt of this order.

The parties shall be free to advance all legally permissible arguments.

They may rely upon the documents, which formed part of the record of the Jt.

DG or which may have been filed by them before the commencement of hearing on 21.02.2012.

The parties shall also be free to press the applications already filed before the Commission.

However, no application, which may be filed hereinafter for cross-examination of the persons, whose statements were recorded by the Jt.

DG or for any other purpose shall be entertained by the Commission.

As a sequel to the above, I.A. Number 36/2013 filed by the appellant in Appeal Number 105/2012 for review of order dated 17th May, 2013 is disposed of as infructuous.

Before parting with this order, we consider it necessary to mention that we have referred to various provisions of the Act (un-amended and amended) and Regulations and analysed the same to emphasize the proceedings held under the Act and the Regulations should be just and fair and in consonance with the principles of natural justice as engrafted in the Act and the Regulations.

We also feel that the time has come for the Commission to evolve a comprehensive protocol and lay down guidelines for conducting investigation inquiry in consonance with the rules of natural justice.

It should be realized that much of the appellate litigation would be obviated if a just and fair procedure is adopted for conducting investigation and inquiry and passing of orders under Section 27, 28 and the provisions contained in Chapter VI of the Act.

Since the impugned order is mainly founded on the findings recorded in Case Number 29 of 2010 and the order passed in that case under Section 27 of the Act has been set-aside on the ground of violation of principle that only one who hears can decide, the order under challenge is also set aside in similar terms.

The detailed reasons recorded in the order passed today in Appeal Number 105 of 2012 and connected matters and the directions contained therein shall be read as part of this order.

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Lanusungkum Jamir, J. 1 .

W.P.(C) Number 24 of 2013, W.P.(C) Number 76 of 2013 and W.P.(C) Number 90 of 2013 involves the same question of facts with similar reliefs sought, these petitions are being disposed by this common judgment and order.

The Government of Mizoram invited Expression of Interest (EOI) through the Director, Institutional, Finance State Lottery on 20.12.2011 for appointment of Lottery Distributors and Selling Agents for the lotteries organized by the Government of Mizoram.

The Mizoram Lotteries (Regulation) Rules, 2011 was framed in terms of the Lotteries (Regulation) Act, 1998.

Pursuant to the EOI of 20.12.2011, four firms companies were selected as distributors to operate lotteries as per the provisions of the Lotteries (Regulation) Act, 1998 and the Mizoram Lotteries (Regulation) Rules, 2011.

M section Tamarai Technologies Private Limited (who is the respondent Number 3 in all the 3 writ petitions) filed an information complaint before the Competition Commission of India under Section 19(1)(a) of the Competition Act, 2002 alleging that the Government of Mizoram (petitioners in W.P.(C) Number 24 of 2014) had violated the provisions of Section 4 of the Competition Act, 2002 and that M section Teesta Distributors, M section N.V. International (petitioner in W.P.(C) Number 76 of 2013) and M section Summit Online Trades Solutions Private Limited (petitioners in W.P.(C) Number 90 of 2013) are directly or indirectly associated with each other and have been involved in collusive bidding by quoting identical rates for Online and Paper Lotteries against EOI dated December 20, 2011 and thereby forming a cartel with regard to selection of distributors in lottery business of the State of Mizoram.

On receipt of the information complaint, the Competition Commission of India passed an order dated 7.6.2012 under Section 26(1) of the Competition Act, 2002 where it had formed an opinion that there was a prima facie case about the existence of a cartel amongst the bidders and there was contravention of the provision of Section 3(1) read with Section 3(3) of the Act and the Director General was directed to cause an investigation into the matter and to submit a report within a period of 60 (sixty) days from the receipt of the order dated 7.6.2012.

In the order dated 7.6.2012, the Competition Commission of India was also of the opinion that no case was made out for violation of the provision of Section 4 of the Competition Act of 2002 (hereinafter the Act of 2002).

The Director General, after completion of the investigation submitted its report before the Competition Commission of India on 17.1.2013 wherein all the allegations leveled against the 4 (four) firms companies were found to be correct and came to a finding that they had indulged in bid rigging by forming a cartel and thereafter, came to the conclusion that there was violation of Section 3(1) read with Section 3(3) of the Competition Act of 2002.

Thereafter the Competition Commission on 12.2.2013 after considering the report of the Director General, issued an order dated 12.2.2013 in case Number 24/2012 directing the respondents therein to file their reply objection within 2 (two) weeks of receipt of the record.

It further decided to hear the parties on 20.3.2013 at 10:30 AM.

Being aggrieved, the aforesaid 3 (three) writ petitions have been filed.

Heard Mr. B. Deb, learned Advocate General, Mizoram in W.P.(C) Number 24 of 2014, Mr. I. Lahiri in W.P.(C) Number 76 of 2013 as well as Mr. section Dutta in W.P.(C) Number 90 of 2012 for the petitioners.

Also heard Mr. Vijay Kumar Singh, Deputy Director (Law) and Mr. A.H. Barbhuiya, learned CGC for the Competition Commission of India who are arrayed as respondent Numbers 1 2 in all the writ petitions and Mr. A.R. Malhotra, learned counsel for the respondent Number 3 Tamarai Technologies Private Limited (informant complainant) in all the 3 (three) writ petitions.

W.P.(C) Number 24 of 2013 Mr. B. Deb, the learned Advocate General, Mizoram submits that the respondent Number 3 had not participated in the EOI invited by the petitioners nor did they raise any objection with regard to the procedure of inviting offers before the appropriate authorities and remained a silent spectator on the entire issue.

The petitioners, therefore, on the basis of the offers received from the various bidders proceeded with the bidding process and decided to execute agreements with the selected bidders on the basis of the offers received in accordance with the terms and conditions as notified in the EOI dated 20.12.2011.

The respondent Number 3 was at liberty to participate in the bidding process but did not do so on its own volition but have instead proceeded before the respondent Number 1 i.e., the Competition Commission of India with its complaint information under Section 19(1) of the Act of 2002 which was registered as Complaint Case Number 24 of 2012.

On the basis of the complaint made by the respondent Number 3, the respondent Number 1 had ordered an enquiry on 7.6.2012 under Section 26(1) of the Act of 2002.

While passing the order dated 7.6.2012, the respondent Number 1 had made observation stating that there seems to be a prima facie case of contravention of the provision of Section 3(1) read with Section 3(3) of the Act.

The respondent Number 1 also observed that no case was made out against the petitioners as far as Section 4 of the Act is concerned.

The respondent Number 1 also observed that the role of present petitioners was to regulate and monitor the business of lottery in the State of Mizoram in discharge of its power and functions as envisaged under the Lotteries (Regulation) Act and Mizoram Lotteries (Regulation) Rules, 2010 and that the petitioners cannot be considered as an enterprise or group under the Act.

Therefore, there was no violation of the provisions of the Section 4 of the Act.

The respondent Number 1, however, was of the opinion that there existed a prima facie case against the opposite parties 1 to 4 and the respondent Number 2 was therefore directed to cause an investigation.

Basing on the order dated 7.6.2013, the respondent Number 2 caused an investigation and in its report had come to the finding that there was renegotiation of prizes of 4 (four) opposite parties before appointing all of them as its selling agents which confirms that there was tacit understanding between the Government of Mizoram Director IF SL and all 4 (four) parties.

The DG report also came to the finding that it was a case of not only bid rigging but also a case of collusive bidding and therefore, it came to the conclusion that all 4 (four) opposite parties have colluded together and has violated the provisions of Section 3(3)(a) and 3(3)(d) of the Act.

Learned Advocate General, Mizoram also submits that the respondent Number 3 i.e. M section Tamarai Technologies Private Limited being a defaulter to the tune of more than 2 crores, the petitioners had filed a money suit being Money Suit Number 64 of 2012 against respondent Number 3 which is still pending before the learned trial Court.

He also submits that clause 8 of the Expression of Interest provides that firms companies, etc.

or its subsidiary company having outstanding liabilities towards sale proceeds on lotteries, prizes money or any other dues shall be required to clear of such dues if selected for appointment as distributor selling agents of Mizoram State Lotteries before signing of agreement.

The respondent Number 3, therefore, having dues to the petitioners to the tune of more than 2 crores had not participated in the Expression of Interest and the complaint filed before the respondent Number 1 was just to stall the bid process with ulterior motives.

When the respondent Number 1 was of the opinion that there was no violation of Section 4 of the Act of 2002 by the petitioners there was no reasons for the respondent Number 2 to have indicated in its finding that there was bid rigging and collusion between the parties.

The direction of the respondent Number 1 to the respondent Number 2 was also to cause an investigation against the opposite parties 1 to 4 and not against the present petitioners.

Therefore, the respondent Number 2 had travelled beyond the reference made by the respondent Number 1, more particularly, when the respondent Number 1 had found nothing wrong on the action of the petitioners.

Learned Advocate General, while referring to C.M. Appl.

Number 101/2013 filed by the petitioners submits that the respondent Number 1 has also passed an order dated 11.6.2013 wherein the representative of the respondent Number 1 was authorized to make a statement before this Court that the respondent Number 1 does not intend to pass any order against the State.

As the respondent Number 1 has passed the order dated 11.6.2013, it should have therefore, immediately resorted to Section 26(2) of the Act and thereafter, close the matter forthwith.

This has not been done by the respondent No. 1 till date and therefore, the report of the respondent Number 2 deserves interference by this Court.

In the facts and circumstances of the case, he submits that the present writ petition be allowed by quashing and setting aside the DG report submitted on 17.1.2013.

W.P.(C) Number 90 of 2013 Mr. section Dutta, learned counsel appearing for the petitioners submits that in the Expression of Interest issued on 20.12.2012 by the Government of Mizoram, 4 (four) parties participated amongst which the present petitioners were also an interested party.

The respondent Number 3/informant complainant did not participate in the said Expression of Interest.

The learned counsel for the petitioners submits that the present writ petition is primarily a challenge on the applicability of the Competition Act of 2002 (hereinafter the Act of 2002).

He submits that the term lottery has been defined under Section 2(b) of the Lotteries (Regulation) Act, 1998 (hereinafter the Act of 1998).

Under Section 2(b) lottery has been defined as a scheme for distribution of prizes by lots or draw to other persons participating in the chance or prize by purchasing tickets.

Section 4(j) of the Act of 1998 provides that State may organize, conduct or promote a lottery subject to the condition that the number of bumper draws of a lottery shall not be more than 6 (six) in a calendar year.

He submits that under Rule 2(c) of the Lotteries (Regulation) Rules, 2010 (hereinafter the Rules of 2010) defines distributor or selling agent to be an individual or a firm or a body corporate or other legal entity under law so appointed by the organizing State through an agreement to market and sale lotteries on behalf of the organizing State.

He further submits that Rule 3 of the Rules of 2010 provides for organization of lottery by the State Government and Rule 10 provides that the organizing State shall charge a minimum amount of 5 lakhs per draw for bumper draw of lottery and for other forms of lottery a minimum amount of 10,000/- per draw.

He, therefore, submits that business of lottery is being statutorily regulated wherein it is the State Government who is the organizing State and the distributors agents are appointed by the organizing State by way of an agreement to market and sell lotteries on behalf of the organizing State.

He also submits that under the Act of 1998 and the Rules of 2010, all States are to frame rules and accordingly, the Mizoram Lottery Regulation Rules, 2011 has been framed.

Mr. section Dutta, learned counsel submits that the Act of 2002 was enacted by repealing the Monopolies and Restrictive Trade Practices Act, 1969 with the object for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition markets, to protect the interest of consumers to ensure freedom of trade carried on by other participants in markets.

He submits that lottery is not a trade or commerce and places reliance in the cases of R. Enterprises vs U.P. Ors.

reported in  : (1999) 9 SCC 700 and Khoday Distilleries Limited Ors.

vs State of Karnataka Ors.

reported in  : (1995) 1 SCC 574.

He submits that lottery does not fall under the expression Trade inasmuch as it does not involve sale of goods as the lottery tickets is a mere piece of paper nor does the sale of lottery ticket have an effect of transfer of right and relies in the case of Sunrise Associates vs Govt.

of NCT of Delhi Ors.

reported in  : (2006) 5 SCC 603.

He submits that holding of lottery falls within the doctrine of res extra commercium and therefore, rendering of service of distribution or acting as agent of the organizing state does not fall under the ambit of the scope of service as provided under the Act of 2002.

He therefore relies in the case of Union of India Ors.

vs Martin Lottery Agencies Limited reported in  : (2009) 12 SCC 209.

Mr. section Datta also submits that the complaint made by the respondent Number 3 under Section 19(1)(a) of the Act of 2002 also alleges cartel which is defined under Section 2(c) therein.

He submits that in the case in hand, the question of formation of a cartel does not arise inasmuch as all parties participating in the Expression of Interest had quoted rates as prescribed under the Rules of 2010.

Further, the conclusion of the respondent Number 2 as regards identical bidding is not correct inasmuch as the 4 (four) parties that had participated in the tender had bidded for different forms of lotteries and the present petitioner i.e. Summit Online Trade Solutions Private Limited had bidded for Online Lottery with 10,000/- per draw.

Though E-COOL Gaming Solutions and NV International Marketing have bidded for Online Lottery their bids were different than that of the petitioner and the other party i.e., Teesta Distributors had bidded for paper lottery which is totally a different product Under such circumstances, the respondent Number 2 could not have, under any circumstances, come to the finding that there was identical bidding and there was a cartel amongst the 4 (four) parties.

Therefore, the finding at paragraph XVI by the respondent Number 2 is totally absurd and without any basis.

In this connection, he also places reliance in the case of Union of India Ors.

vs Hindustan Development Corporation Ors.

reported in  : (1993) 3 SCC 499.

He further submits that the action of the respondent Number 1 alleging violation of the Act of 2002 is without jurisdiction inasmuch as lotteries is a subject which is governed by the statutory enactments such as the Act of 1998 and the Rules of 2002.

The subject matter of consideration under Case Number 24 of 2012 before the respondent No. 1 relating to marketing of lotteries is therefore beyond the purview of the Act of 2002.

Further submission is made that the Act of 2002 is a general enactment enacted for the purpose ensuring fair competition in the trade of free commodities.

Therefore, the provisions of the Act of 2002 cannot be invoked in respect of a regulated commodity as the said regulated commodities is controlled and there is no freedom in marketing or purchasing of lotteries.

The Act of 2002 cannot be made applicable to marketing of lotteries which operates under the stringent control of the Government.

The respondent Number 3 who had not participated in the bidding nor has demonstrated any reservation as regards the methodology adopted in publication of the Expression of Interest dated 20.12.2011, inasmuch as the respondent Number 3 does not stand anywhere in the scene of submission of bids pursuant to the EOI dated 20.12.2011.

Therefore, it has no locus standi to even make a complain as the respondent Number 3 is in no way an aggrieved party.

The indirect attempt on the part of the respondent Number 3 to thwart the whole process by taking recourse to respondent Number 1 is therefore, ill motivated and tainted with mala fide.

He also submits that the action of respondent Nos. 1 and 2 apart from being illegal and without jurisdiction also suffers from a total non-application of mind.

Further reliance has been placed in the cases of:- Somesh Tiwari vs Union of India Ors.

reported in  : (2009) 2 SCC 592 Secretary of the Governor of Assam vs Madan Chandra Mahanta reported in 1997 (3) GLT 461 Dhanani Shoes Limited Ors.

vs State of Assam Ors.

reported in  : 2008 (3) GLT 361 Commissioner of Taxes, Assam vs Dhanani Shoes Limited (M section) Anr.

reported in  : 2012 (2) GLT 726 and Tashi Delek Gaming Solutions Limited Anr.

vs State of Karnataka Ors.

reported in  : (2006) 1 SCC 422.

It is further submitted that the word any person used under Section 19 of the Act of 2002 has been defined under Section 2(1) of the said Act where it has been given a very wide scope.

However, he submits that despite such a wide scope given to the term any person, the same would have to be considered upon the context and the subject matter of the Act.

In the present case, as lotteries do not come under the definition of goods, trade or service, the word any person would not necessarily mean any person involved in normal trade or providing service.

Therefore, the complaint of the respondent Number 3 could not have been entertained by the respondent No. 1 and places reliance in the case of Raj Kumar Shivhare vs Assistant Director, Directorate of Enforcement Anr.

reported in  : (2010) 4 SCC He, therefore, submits that under the facts and circumstances of the case, the impugned order dated 7.6.2012, the report of the respondent Number 2 dated 14.1.2013 and the order dated 12.2.2013 be set aside and quashed.

W.P.(C) Number 76 of 2013 Mr. I. Lahiri, the learned counsel appearing for the petitioner while adopting the submissions made by Mr. section Datta, learned counsel appearing for the petitioner in P.(C) Number 90 of 2013 submits that the footing of the present petitioners are totally different inasmuch as the petitioners had a long association with the State of Mizoram in the business of lotteries.

However, things fell out between the petitioner and the State of Mizoram and an arbitration proceeding was drawn out between the parties in the year 2003 being Arbitration Proceeding Number 1 of 2003.

The proceedings carried on for a very long period and therefore, the parties to the said proceeding decided to amicably settle the matter and accordingly a meeting was held on 7.12.2009.

The matter was finally settled in a meeting held on 22.7.2010 between the parties where the State of Mizoram accepted its liabilities of 2.89 crores and the parties agreed under the Rules of 2010 that if and when the State Government decided to reopen lottery business, the petitioners would be one amongst the successful bidders at the highest accepted bid and further that 24 lotteries shall be distributed to successful bidders including the petitioners for implementation of the negotiated settlement.

It was also decided in the said meeting that the number of draws to be given to the petitioners would not be less than 25 of the total number of draws permitted by rules per day.

On the basis of such agreement, the arbitration proceedings were terminated on 12.2.2011.

This being the position, the petitioners were formally assured for a minimum of 25 of the draws to be held per day by the State of Mizoram.

The State of Mizoram initiated a fresh Expression of Interest on 9.3.2011.

However, the same did not materialize due to various litigations and finally the Expression of Interest was made on 20.12.2011.

The petitioners, being a natural choice, pursuant to the agreement made on 22.7.2010, participated in the said bid process and was automatically awarded 25 of the draws to be held per day.

Mr. I. Lahiri, the learned counsel for the petitioner, therefore, submits that in the background of the history between the petitioner and the State of Mizoram, the question of having a cartel or bid rigging does not arise under any circumstances more particularly, when the agreement dated 22.7.2010 existed.

He also submits that the respondent Number 3 had never participated in the Expression of Interest nor raised any objections for the working modalities of the same.

However, it had proceeded with the complaint before the respondent Number 1.

The same would show that the said complaint was actuated with malice.

As the respondent Number 3 had not participated in the Expression of Interest, it has no locus standi to even make the complaint before the respondent Number 1.

Therefore, the allegations against the petitioners is without any merit, as the petitioners are assured of a contract of 25 of the draws at the rate quoted by the highest bidder and therefore, any rates quoted by the petitioner would have no relevance.

The respondent Number 2 had also lost sight of the fact that the petitioners had ceased to have any business in lotteries and its participation in the tender was only to recover the dues from the State of Mizoram.

In the facts and circumstances, he also submits that the impugned report of the respondent Number 2 dated 17.1.2013 and the proceedings being Case Number 24 of 2013 before the respondent Number 1 be set aside and quashed.

Countering the aforesaid 3 (three) writ petitions, Mr. Vijay Kumar Singh, Deputy Director (Law), appearing for the Competition Commission of India respondent Number 1 as well as Mr. A.H. Barbhuiya, learned CGC for the respondent Number 1 appearing for respondent Number 1 in the later stage submits that the respondent Number 1 received information from M section Tamarai Technologies Private Limited under Section 19(1)(a) of the Act of 2002 on 16.5.2012, which was registered as Case Number 24 of 2012.

The information pertained to alleged anti-competitive behavior by certain opposite parties in the matter of Expression of Interest floated by the Government of Mizoram on 20.12.2011 for appointment of lottery distributors and selling agents for the lotteries organized by the Government of Mizoram.

On 7.6.2012, the respondent Number 1 came to a prima facie opinion that there was a cartel amongst the opposite parties 1 to 4 in quoting the same rates for the Expression of Interest floated by the opposite Party No. 5 (Government of Mizoram) which was in contravention of the Section 3 of the Act of 2002.

Accordingly, a direction was given to the respondent Number 2 to conduct investigation and submit its report.

The respondent Number 1 while issuing the direction for investigation to the respondent Number 2 also observed that no prima facie case for abuse of dominant possession under Section 4 of the Act of 2002 was made out against the State of Mizoram.

It is submitted that there are no adverse civil consequences against any party flowing from the said order and the subsequent report of the respondent Number 2 until the respondent Number 1 decides the matter finally and therefore, the 3(three) writ petitions are not maintainable and places his reliance in the case of Competition Commission of India vs Steel Authority of India Limited reported in  : (2010) 10 SCC 744.

He also submits that there is no judicial review against any tentative decisions or inter departmental communications which at best constitutes a step in the process of taking a final decision and relies in the case of State of Orissa vs MESCO Steels Limited Ors.

reported in  : (2013) 4 SCC 340.

It is further submitted that the present writ petitions should not be entertained by this Court as the same are not maintainable inasmuch as it is only in the stage of show cause notice without any final adjudication.

Reliance has been placed in the case of Executive Engineer, Bihar State Housing Board vs Romesh Kumar Singh Ors.

reported in  : (1996) 1 SCC 327 and in the case of Kingfisher Airline Limited vs Competition Commission of India passed by the Bombay High Court by judgment dated 31.3.2010 and also the judgment dated 4.2.2013 passed by the Allahabad High Court in the case of Narmata Marketing Private Limited vs CCI Ors.

It is submitted that the petitioners have alternative remedy under Section 53(B) of the Act of 2002.

Therefore, when there is alternative remedy available to the petitioners, the present writ petitions are not maintainable except on the ground of jurisdiction, which is very limited, and which have also not been taken as a ground by the petitioners.

Therefore, there is no merit in the present writ petitions and the same should not be entertained by this Court.

It is also submitted that the Commission initiates a case on the basis of information received under the Act of 2002.

If the respondent Number 1 is of the opinion that there is a prima facie case, it refers the case to the respondent Number 2 for investigating into the matter under Section 26(1) of the Act of 2002.

In the event, no prima facie case is found by the respondent Number 1, it closes the case under Section 26(2) of the Act of 2002.

However, when reference is made to respondent Number 2 for investigation, after receipt of the report from the respondent Number 2, the report is considered and thereafter parties are heard for passing final orders.

As the present writ petition has been filed at the stage when the respondent Number 2 has just submitted its report, the respondent Number 1 is yet to hear the parties and take a decision and therefore, the parties instead of approaching this Court should place their case before the respondent Number 1.

Reliance has been placed in the order dated 12.5.2011 passed by the Competition Commission of India in Case Number 15 of 2010 in the case of Jupiter Gaming Solutions Private Limited vs Government of Goa Another.

Further submission has been made that the Mizoram Lotteries (Regulation) Rules, 2011 and the Competition Act of 2002 are not in conflict inasmuch as the said Rules of 2011 are meant for regulating the lottery sector whereas the Act of 2002 has been enacted to prevent practices having adverse effect on competition.

In the present case, the respondent Number 1 is not examining the vires of the Expression of Interest under the Lottery Regulation but is investigating into the alleged bid rigging activity which amounts to violation of Section 3(3)(d) of the Act of 2002.

Reference has also been made to Sections 60, 61 and 62 of the Act of 2002 and reliance placed in the decision of the Bombay High Court in the case of Amir Khan Productions Private Limited vs Union of India.

The allegation made by the petitioners that the respondent has engaged in a roving enquiry and is harassing them is denied and such allegations are not maintainable as has been held in the case of Amir Khan (supra).

It is also submitted that the respondent Number 2 had completed its investigation within time after having being given extension of time on 28.8.2012, 23.10.2012 and 13.12.2012 by the respondent Number 1 which is permissible under the Act of 2002.

The observation of the respondent Number 1 under Section 26(1) was merely a prima facie view as regards Section 4 of the Act of 2002 as regards the State of Mizoram in its capacity of regulating the lottery trade.

Therefore, the respondent Number 1 has passed an order dated 11.6.2003 expressing its intention not to pass an order against the State of Mizoram.

As such, no further grievance survives in so far as the W.P.(C) Number 24 of 2013 i.e. writ petition filed by the State of Mizoram is concerned.

The main purpose of filing the writ petitions is to delay and defeat the enquiry initiated against the alleged anticompetitive practices in the present case.

Mr. A.R. Malhotra, learned counsel appearing for the respondent Number 3 submits that the petitioners have not come with clean hands before this Court as they have failed to disclose the complete and correct facts that are relevant for deciding the present case in hand.

He submits that the respondent Number 3 was appointed as a Selling Agent for the Mizoram State Lottery by an agreement dated 28.11.2008 between the Government of Mizoram and the respondent Number 3.

In September, 2009, the Government of Mizoram unilaterally decided to modify the terms of the agreement which was challenged by the respondent Number 3 in W.P.(C) Number 10 of 2010.

This Court, after being satisfied, had issued an interim order dated 20.6.2010 which was subsequently made absolute till disposal of the writ petition by order dated 2.3.2010.

The State of Mizoram with mala fide intention had therefore issued a Notification dated 18.3.2010 imposing a ban on organization, conduct, promote and sale of lottery tickets within the State of Mizoram.

Thereafter, without even withdrawing the said Notification dated 18.3.2010 by which there was a ban on lottery in the State of Mizoram, the Government of Mizoram had floated NTT for appointment of Selling Agent Distributors on 13.12.2010.

In response to the said NIT dated 9.3.2011, several parties submitted their tenders.

However, the State of Mizoram realize its mistake and therefore the Notification dated 3.1.2011 was issued withdrawing the earlier Notification dated 18.3.2010.

The NIT dated 13.12.2010 was accordingly abandoned and a fresh NIT was issued on 9.3.2011.

Subsequently, another NIT was floated on 20.12.2011 wherein only 4 (four) tenderers submitted their tenders wherein all the 4 (four) tenderers quoted unreasonably low rates and there was a clear unanimity in the pattern of the rates quoted by them.

The respondent Number 3 in their counter-affidavit has shown the rates quoted by the 4 (four) tenderers as under:- Mr. A.R. Malhotra, learned counsel appearing for the respondent Number 3 submits that on a bare perusal of the rates quoted by the 4 (four) tenderers what emerges is that the statutory mandate of anti-corruption law have been floated and as the respondent Number 3 being actively involved in the business of lottery had submitted a complaint before the respondent Number 1 under Section 19 of the Act of 2002 and a copy of the same was also forwarded to the Government of Mizoram.

It was on the basis of the complaint that the respondent Number 2 was directed to cause an enquiry who accordingly submitted its report on 17.1.2013.

The investigation report was sent to the parties for enabling them to file replies objections wherein the opposite parties were also directed to file their profit and loss account, balance sheets and turnover for the 3 (three) financial years.

Mr. A.R. Malhotra, learned counsel appearing for the respondent Number 3 also raised preliminary objections stating that W.P.(C) Number 24 of 2013 was filed through the Secretary to the Government of Mizoram, Finance Department and the Director, Institutional, Finance and State Lottery, Mizoram, Aizawl as petitioners 1 and 2.

However, no authorization has been given by the petitioner Number 2 in the affidavit by affirming the affidavits signed by the petitioner Number 1 and therefore the writ petition is not maintainable.

I have heard the learned counsel appearing for the parties.

The respondents Number 1 and 2 in all the writ petitions has confined the arguments to the stage of show cause notice and has not entered into the merit of the case.

The petitioners in W.P.(C) Number 76/2013 have also raised the issue of the applicability of the Act of 2002.

This Court therefore intends to first consider the issue of applicability of the Act and whether the respondent Number 1 could have entertained the complaint information given by the respondent Number 3.

The Act of 2002 aims to prevent practices having adverse effect on competition to promote and sustain competition in market.

It also aims to protect the interest of the consumer and to ensure freedom of trade carried on by the participants in the market.

The first issue is whether lotteries can be considered as a trade under the Act of 2002.

Under the Lotteries Regulation Act of 1998, lottery has been defined as a scheme for distribution of prizes by lots or chance to those persons participating in the chances of a prize by purchasing tickets.

Unlike any other trade and commerce, the business of lottery is being governed strictly in terms of the Act of 1998 and the Regulations and Rules framed thereunder.

In the case of B.R. Enterprises (Supra), the Honble Supreme Court has laid the ratio that the difference between gambling and trade is that gambling inherently contains a chance with no skill, while trade contains skill with no chance and even in the State Lotteries the same element of chance remains with no skill and therefore it remains within the realm of gambling and the same would not be a trade in any case, would not qualify to be trade and commerce as used in Article 301.

Further, the Honble Supreme Court was of the opinion that no gambling could be commercium and therefore the principle laid down in the case of State of Bombay vs M.D. Chamarbaugwala reported in  : AIR 1957 SC 699 would equally be applicable to the State organized lottery.

It was therefore held that Lotteries organized by the State is also gambling in nature and cannot be construed to be a trade and commerce within the meaning of Article 301 to 303 of the Constitution of India.

Further, in the case of Sunrise Associates (Supra), the Honble Supreme Court has held that a lottery ticket has no value in itself.

The sale of lottery ticket does not necessarily involve the sale of goods and on purchasing a lottery ticket, the purchaser would have a right to claim to a conditional interest in the prize money which is not in the purchasers possession.

The right would fall squarely within the definition of an actionable claim and would therefore be excluded from the definition of goods under the Sale of Goods Act and the sales tax statutes.

In the case of Martin Lottery Agencies Limited (supra), the Honble Supreme Court has held that the law, as it stands today recognizes lottery to be gambling.

Thus, holding of lottery being gambling, comes within the purview of the doctrine of res extra commercium.

Organizing lottery by the State is tolerated being an economic activity on its part so as to enable it to raise revenue and that raising of revenue by the State, by itself cannot amount to rendition of any service.

Under the Act of 2002, goods has been defined as goods defined in the sale of Goods Act, 1930 (8 of 1930) and includes-(A) products manufactured, processed or mined (B) debentures, stocks and shares after allotment (C) in relation to goods supplied, distributed or controlled in India, goods imported into India.

Service has been defined as service of any description which is made available to potential users and includes the provision of services in connection with business of any industrial or commercial matters such as banking, communication, education, financing, insurance, chits fund, real estate, transport, storage, material treatment, processing, supply of electrical and other energy, boarding, lodging, entertainment, amusement, construction, repair, conveying of news or information and advertising.

Trade has also been defined as any trade, business, industry, profession or occupation relating to the production, supply, distribution, storage or control of goods and includes the provision of any service.

Considering the Act of 2002, this Court is of the considered opinion that the same would be applicable to legitimate trade and goods to ensure competition in the market, to protect the interest of the consumers and freedom of trade in markets which are res commercium.

The lottery business being gambling and falling within the purview of the doctrine of res extra commercium and not qualifying in the normal parlance of trade and commerce would therefore not come within the purview of the Act of 2002.

This being the position, the respondent Number 1 having no jurisdiction could not have entertained the information complaint of the respondent Number 3.

Accordingly the Order dated 7.6.2012 passed by the respondent Number 1 directing the respondent Number 2 to cause an investigation is held to be illegal.

Coming to W.P.(C) Number 24/2013, this Court has already noticed that in the order dated 7.6.2012 passed by the respondent Number 1, it was found that there was no contravention of Section 4 of the Act of 2002 in so far as the State of Mizoram is concerned.

Further, in C.M. Application Number 101/2013, this Court has noticed the order dated 11.6.2013 passed by the respondent Number 1 wherein the representative was authorized to make a statement that the respondent Number 1 does not intend to pass any order against the State and to pray for lifting injunction order.

If that be the position, the respondent Number 1 ought to have closed the case against the petitioners in W.P.(C) Number 26/2013 under Section 26 of the Act.

This has not been done in the present case.

Accordingly, this Court is of the considered opinion that no further proceedings can be allowed against the petitioners in W.P.(C) Number 26/2013 by the respondent Number 1.

As regards the contention of the respondents Number 1 and 2 that the three writ petitions are not maintainable inasmuch the petitioners have approached this Court in the stage of show cause notice, this Court is of the considered opinion that having already held that the lottery business does not fall within the purview of the Competition Act of 2002 and therefore the respondent Number 1 has no jurisdiction, the contention of the respondent Numbers 1 and 2 is rejected.

In the fact and circumstances of the case, this Court does not intend to discuss any further the arguments forwarded by the petitioners in W.P.(C) Numbers 76/2013 and 90/2013 in so far as the merit of the case is concerned.

In view of what has been discussed herein above, the Orders dated 7.6.2012 and 12.2.2013 passed by the respondent Number 1 and the Investigation Report of the respondent Number 2 are set aside and quashed.

Accordingly, all the three writ petitions are allowed.

No costs.

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Order under Section 26(1) of the Competition Act, 2002 The information in the present case was filed by M section Western Coalfield Limited (hereinafter, the Informant) under section 19(1)(a) of the Competition Act, 2002 (hereinafter, the Act) against SSV Coal Carriers Pvt.

Limited (hereinafter, the Opposite Party Number 1/OP 1), M section Bimal Kumar Khandelwal (hereinafter, the Opposite Party Number 2/OP 2), M section Pravin Transport (hereinafter, the Opposite Party Number 3/OP 3), M section Khandelwal Transport (hereinafter, the Opposite Party Number 4/OP 4), M section Khandelwal Earth Movers (hereinafter, the Opposite Party Number 5/OP 5), M section Khanduja Coal Transport Company (hereinafter, the Opposite Party Number 6/OP 6), M section Punya Coal Road Lines (hereinafter, the Opposite Party Number 7/OP 7), M section B. Himmatlal Agrawal (hereinafter, the Opposite Party Number 8/OP 8), M section Punjab Transport Company (hereinafter, the Opposite Party Number 9/OP 9) and Avaneesh Logistics Pvt.

Limited (hereinafter, the Opposite Party Number 10/OP 10), collectively referred to as the Opposite Parties, alleging contravention of the provisions of sections 3 of the Act.

Briefly, the Informant is one of the eight subsidiary companies of Coal India Limited which is under the administrative control of Ministry of Coal.

It is stated to have been conferred Miniratna status on 15.03.2007 and has mining operations which are spread over the States of Maharashtra (Nagpur, Chandrapur and Yeotmal districts) and Madhya Pradesh (Betul and Chhindawara districts).

The Informant claims to be a major supplier of coal to industries located in the States of Maharashtra, Madhya Pradesh, Gujarat, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala.

A large number of power houses under Maharashtra, Madhya Pradesh, Gujarat, Karnataka, Punjab and Uttar Pradesh - Electricity Boards are major consumers of its coal along with cement, steel, chemical, fertilizers, paper and brick industries.

The Opposite Parties are stated to be engaged in the business of providing ancillary services in colliery areas including sand and coal transportation in the area of operation of the Informant.

It is stated that the Informant had issued a Tender Notice Number 34/2013-14 (Tender Notice I) for transportation of sand at Mahakali Colliery of Chandrapur area by hiring equipments whereby bids were invited from experienced and reputed contractors with experience of executing work of similar nature.

It was further stated that the bid for the tender was called in two parts.

Part I was for general eligibility criteria comprising of bid security earnest money deposit, qualification information, etc.

Part II was for price bids and were to be opened only for bidders who qualify and are found eligible after the scrutiny of their respective Part I bid documents.

The Informant has submitted that as per the conditions laid down in the tender notice and as a necessary part of Part I bid documents, all the bidders were required to sign pre-contract integrity pact wherein they agree not to indulge in any kind of unfair, illegal or corrupt practices at any stage of the bidding process (pre post contract stages) in order to secure the contract or in furtherance to secure it.

It has been submitted that the estimated rates of the works to be executed under various tenders were based on the prices of diesel stated therein in the respective Notice Inviting Tenders (NITs).

However, due to increase in the price of diesel post submissions of the bids and to retain the profitability and viability element for the bidders in the exercise, there was a provision of an upward revision in the estimated value of the works to be executed under the tender based on the deliberations of the Tender Committee.

It is further stated that in response to Tender Notice I for sand transportation at Mahakali Colliery of Chandrapur Area, OP 1, OP 2 and OP 4 were found to have qualified for Part II bids, OP 3 was disqualified.

It was noted by the Tender Committee that all the three qualified bidders quoted identical rates for all the three jobs mentioned in the said tender.

Further, the rates quoted by them were 20.3 above the estimated cost.

The Informant clarified that the trend of awarded rates for sand transportation tenders in the last two years had been 8.39 above to 9.26 below updated estimated cost.

Also, in response to Tender Notice Number 37/2013-14 (Tender Notice II) for sand transportation at Hindustan Lalpeth Colliery of Chandrapur Area, all the four bidders OP 1, OP 2, OP 3 and OP 4 met the eligibility criteria under Part I. It was, however, again noted by the Tender Committee that the three bidders OP 2, OP 3 and OP 4 quoted identical rates for all the three jobs mentioned in the said tender, while OP 1 quoted slightly higher than the others.

Further the Informant stated that the identical rate quoted by OP 2, OP 3 and OP 4 was 16.21 above the estimated cost.

Similarly, for Tender Notice Number 03/2014-15 (Tender Notice III) for coal transportation at Neeljay South OCM of Wan Area, all the five bidders namely, OP 5, OP 7, OP 8, OP 9 and OP 10 qualified the eligibility criteria under Part I. Yet again, four out of five bidders OP 5, OP 7, OP 9, and OP 10 were found to have quoted identical rates and became L-1.

It is submitted that L-1 rate was 38.47 above the estimated cost, 32.09 above the justified cost and 2.08 below ESM rates.

That the trend of awarded rates after revision of justified rates (after February 2013) is 27.72 below to 23.35 above the justified rates, 14.65 below to 41.98 above the updated estimated rates and 3.01 below to 41.76 below ESM rates.

For Tender Notice Number 06/2014-15 (Tender Notice IV) for coal transportation from loading point of Umrer CHP to wharf wall siding (Makardhokda Sub Area) of Umrer Area, OP 5, OP 6, OP 7 and OP 8 were found to have qualified the eligibility criteria.

It was noted that OP 5, OP 6 and OP 7 quoted identical rates and became L- It is submitted that the L-1 rates were 41.26/64.57 above the justified cost and 2.66 below overall ESM rates.

That the present trend of awarded rates is 27.72 below to 23.35 above justified rates, 14.65 below to 41.98 above the updated estimated rates and 3.01 below to 41.76 below ESM rates.

After having evaluated all the four above mentioned tenders, the Tender Committee is alleged to have noted that the rates were identical and significantly higher than the updated estimated value of the work under the tenders.

It was stated that the Tender Committee recommended cancellation of all four tenders and suggested issuance of fresh tenders sensing the alleged foul play by the bidders.

Based on the recommendation of the Tender Committee, the tenders were cancelled.

It is further alleged that OP 7 and OP 8 have been working in close proximity and jointly bidding for work under different tenders contracts as Joint Venture partners.

To substantiate this claim, the Informant has submitted that in one of the earlier tenders floated by the Informant, OP 7 and OP 8 along with another firm, M section Fuleco Coal (India) Limited placed their bid as a Joint Venture.

Although the Informant has submitted that all of them were debarred for not being able to commence the work on time, the fact of their joint bidding was used to buttress the possibility of collusion and anti-competitive behaviour on their part.

The Informant has submitted that the conduct of the Opposite Parties is allegedly pernicious, illegal and was aimed at vitiating the entire procurement process.

It is further alleged that the conduct of the Opposite Parties in submitting identical bids was a blatant act of bid-rigging which was in clear violation of the provisions of the Act.

Based on the above allegations, the Informant has alleged that the Opposite Parties have contravened the provisions of the Act and has prayed for initiating an investigation against the Opposite Parties under the Act.

The Commission after perusing the information decided to call the parties for a preliminary conference on 01.07.2015.

On the said date, the Informant, OP 1, OP 3, OP 4, OP 7 and OP 9 appeared before the Commission and presented their oral arguments.

OP 8 has filed its written submissions.

OP 8 has denied in its reply to have adopted any unfair or anticompetitive practice.

It is stated that for Tender Notice I and II, no bid was submitted by OP 8.

Thus, question of any anti-competitive practice being adopted by OP 8, does not arise.

With regard to Tender Notice III, which was for coal transportation at Neeljay, it has been submitted that all five bidders including OP 8 submitted their bids.

Out of the 5 bidders, OP 9, OP 10 and OP 7 quoted identical rates but OP 8 quoted higher rates and thus became L-II.

As regards Tender Notice IV, OP 8 has stated that four bidders submitted their bids and were qualified for part-II bids.

Out of the four bidders, three bidders quoted identical rates and OP 8 quoted higher rates.

It has been contended that the conduct of OP 8 and the rates quoted by it was a prudent business decision and could not be considered as unfair.

Thus, no analogy could be drawn as to any unfair nexus between the Informant and OP 8.

It has further been submitted by OP 8 that the Tender Committee had wrongly arrived at the conclusion that the rates were identical and significantly higher than the updated estimated value of the work under the tenders.

The Commission has considered the submissions made by the Informant and the Opposite Parties.

From the facts and circumstances of the case, it appears that the Informant is basically aggrieved by the alleged anti-competitive conduct of the Opposite Parties which has resulted in bid rigging of the above mentioned four tenders floated by the Informant.

Prima facie examination of the price bids submitted by various Opposite Parties in the 4 aforesaid tenders floated by the Informant indicates some arrangement amongst the Opposite Parties.

It is quite apparent that while in some tender notices, all the Opposite Parties, qualified for Part II bidding, have quoted identical rates and in others with marginal difference.

In Tender Notice I, for sand transportation at Mahakali Colliery, all the eligible bidders OP 1, OP 2 and OP 4 had quoted identical rates and similarly for Tender Notice II, for Hindustan Lalpeth Colliery, three out of four eligible bidders (OP 2, OP 3 and OP 4) had quoted identical rates while OP 1 quoted a rate which was marginally above the identical rate as quoted by the other three Opposite parties.

Similarly, in Tender Notice III for coal transportation at Neeljay South OCM of Wan Area, four out of five bidders (OP 5, OP 7, OP 9, and OP 10) had quoted identical rates and for Tender Notice IV, three out of four bidders OP 5, OP 6 and OP 7 quoted identical rates for the said tender while OP 8 had quoted a price slightly above the identical price as quoted by the other three Opposite Parties.

The Commission also observes that all the identical quotes were above the updated estimated and justified cost and mostly below ESM rates.

These similarities prima facie indicate that there was some kind of an arrangement amongst the Opposite Parties to collude by aligning the prices for the sand and coal transportation tenders.

Further, the fact that such identical rates in the four tenders were much above the average estimated costs portray that the same could not have been the result of independent decision making.

From the facts on record, it appears that the Opposite Parties were coordinating and fixing the prices of their services with the object of distorting the fair bidding process.

The identical price quotations submitted by the Opposite Parties appear to have actuated by mutual understanding arrangement or in other words agreement amongst them.

Although some of the Opposite Parties had quoted different rates, their rates were too close to the identical rates as quoted by others which could not be a mere coincidence.

In view of the foregoing, the Commission is of the view that the Opposite Parties have contravened the provisions of section 3(1) read with section 3(3)(d) of the Act.

Though the Commission has considered the submissions made by the Opposite Parties whereby they have denied collusion, the evidence on record suggest that prima facie they had colluded for aligning the prices for the sand and coal transport tenders.

Accordingly, the Commission, under section 26(1) of the Act, directs the Director General (DG) to cause an investigation into the matter and to complete the same within a period of 60 days from receipt of this order.

In case the DG finds that the Opposite Parties have acted in contravention of the provisions of Act, it shall also investigate the role of the officials persons who at the time of such contravention were in-charge of and responsible for the conduct of the business of the company.

Nothing stated in this order shall tantamount to a final expression of opinion on merit of the case and the DG shall conduct the investigation without being swayed in any manner whatsoever by the observations made herein.

The Secretary is directed to send a copy of this order alongwith the information and the documents filed therewith to the Office of the DG forthwith.

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