COMPETITION COMMISSION OF INDIA versus STATE OF MIZORAM & ORS.

Citation: [2022] 13 S.C.R. 876 · Decided: 19-01-2022 · Supreme Court of India · Bench: SANJAY KISHAN KAUL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 13 S.C.R.
[2022] 13 S.C.R. 876
876
COMPETITION COMMISSION OF INDIA
v.
STATE OF MIZORAM & ORS.
(Civil Appeal Nos. 10820-10822 of 2014)
JANUARY 19, 2022
[SANJAY KISHAN KAUL AND M. M. SUNDRESH, JJ.]
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
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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

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