COMPETITION COMMISSION OF INDIA versus THOMAS COOK (INDIA) LTD. & ANR.

Citation: [2018] 3 S.C.R. 391 · Decided: 17-04-2018 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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COMPETITION COMMISSION OF INDIA
v.
THOMAS COOK (INDIA) LTD. & ANR.
(Civil Appeal No. 13578 of 2015)
APRIL 17, 2018
[ARUN MISHRA AND NAVIN SINHA, JJ.]
Competition Act, 2002:
ss.6(2) and 43A – Imposition of penalty u/s.43A for non-
compliance of provision u/s.6(2) – Propriety of – The three
respondent companies decided about de-merger/amalgamation –
Share Subscription Agreement (SSA), Share Purchase Agreement
(SPA), Open Offer and Market Purchases were also part of the
transaction – Respondents sent Notice u/s. 6(2) to appellant-
Commission notifying only ‘Demerger’ and ‘Amalgamation’ and not
other transactions – Other transactions were, however, disclosed
while claiming exemption u/s. 5 – Appellant-Commission imposed
penalty u/s.43A of Rs. one crore for not notifying other transactions
in terms of s.6(2) – Competition Appellate Tribunal allowed the
appeal against the order of Commission – On appeal, held: All the
transactions were part of the same transaction – All the transactions
are intrinsically connected with and interdependent on each other
and form one viable part of business transaction – Regulation 94
of 2011 Regulations acknowledges the possibility of business
transaction being interconnected or interdependent steps of such
transactions – Technical interpretation of isolate two different steps
of transactions of a composite combination would be against the
sprit and provision of the Act – Regulation 9(4) cannot be interpreted
to enable consummation by a composite combination before giving
notice to the Commission – By applying the ultimate objective test
also, it is apparent that market purchases were within view of the
scheme that was framed – There was no requirement of mens rea or
intentional breach as an essential element for levy of penalty u/s.
43A – Mens rea assumes importance in case of criminal and quasi
criminal liability – Penalty u/s. 43A is on account of breach of a
civil obligation and proceedings are neither criminal nor quasi-
criminal – Imposition of penalty u/s.43A by the Commission was
[2018] 3  S.C.R. 391
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SUPREME COURT REPORTS
[2018]  3 S.C.R.
just and proper – Competition Commission of India (Procedure in
Regard to the Transaction of Business Relating to Combinations)
Regulations, 2011 – Regulation 9(4).
Allowing the appeal, the Court
HELD: 1. Once a particular transaction or a series of
transactions falls within the purview of combination u/s. 5, it is
obligatory to report the same to the Competition Commission
under section 6 of the Act.  Section 6(1) prohibits combinations
which cause or likely to cause an adverse effect on the competition
and such a combination shall be void.  Section 6(2) of the Act
requires that advance notice has to be given of the proposal to
enter into a combination and that has to be given within 30 days
of approval of the proposal relating to merger or amalgamation,
execution of any agreement or other document or acquisition
referred to in section 5(a).  Section 6 (2) makes it clear that no
combination shall come into effect until 210 days have elapsed
from the date on which notice has been given to the Commission
under section 6(2) and the Commission has passed orders under
section 30(1), whichever is earlier.  And once mandatory notice
is given under section 6(2), the Commission has to deal with the
same in accordance with the provisions contained in sections 29,
30 and 31.  Certain exceptions are carved out as to Public Financial
Institutions, Foreign Investment Institutions, Banks or Public
Venture Funds etc. funds under section 6(4) of the Act.  [Para 19]
[403-A-C]
2. The Competition Act and Competition Commission of
India (Procedure in Regard to the Transaction of Business
Relating to Combinations) Regulations, 2011 clearly envisage
that a combination can consist of one or more transactions. Under
Regulation 9(4) of the Regulations, 2011, the parties have an
option of giving either a single notice or multiple notices in
respect of all the transactions. [Para 22] [404-B]
3. It is apparent in the present case that in the notification
made under section 6(2) on 14.2.2014 notifiable transactions were
shown regarding merger and amalgamation.  It was also mentioned
that parties have also contemplated certain other transactions in
view of the notifiable transactions, they were the subscription of
equity shares, SPA, open offer and market purchase.  It is crystal
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clear from the aforesaid application

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