COMPETITION APPELLATE TRIBUNAL Appeal No.17 of 2013 With I.A. No.26 of 2013

CORAM

Hon’ble Justice G.S. Singhvi Chairman

IN THE MATTER OF: The Board of Control for Cricket in India, Cricket Centre, Wankhede Stadium, ‘D’ Road, Churchgate, Mumbai – 400 020, India. ….Appellant

Versus

1. The Competition Commission of India, Through its Secretary, Hindustan Times House, 18-20, Kasturba Gandhi Marg, New Delhi – 110 001. ….Respondent No.1

2. Mr. Surinder Singh Barmi, 2190/63, Naiwala, Karol Bagh, New Delhi – 110005. ….Respondent No.2

Appearances: Shri A. Aryama Sundaram, Senior advocate with Ms. Rohini Musa, Ms. Akhila Kaushik, Ms. Nisha Kaur Uberoi, Shri Bharat Budholia and Ms. Aishwarya G., advocates , advocate for the appellant Shri Prashanto Chandrasen, Advocate for Respondent No. 1

ORDER

This appeal is directed against order dated 08.02.2013 by which the Competition

Commission of India (for short, ‘the Commission’) held that the appellant is guilty of contravention of Section 4(2)(c) of the Competition Act, 2002 (for short, ‘the Act’), issued three directions to which a reference will be made hereinafter were given and imposed penalty of Rs.52.24 Crore.

2. Respondent No. 2, Shri Surinder Singh Barmi, who claims to be a cricket fan, filed an information under Section 19(1) of the Act alleging violation of Section 4 of the

Act by the appellant and Indian Premier League (IPL) in more than one ways. The 2

Commission considered the averments contained in the information and passed an order dated 09.12.2010 under Section 26(1) of the Act, paragraphs 4 to 16 of which read as under :

“4. Informant alleged that the IPL was involved in the process of granting franchisee rights to the previous 8 teams and later for two teams of Pune and Kocchi. As per the media reports there as an agreement between the IPL and the bidders and they advised bidders regarding amount of bid for a particular team. This is bid rigging prohibited under section 3(3) of the Act.

5. As per the media the Chief of the IPL was also instrumental in favouring his near and dear for the bid and his favoured ones worked as his proxy for cornering the proceeds. Support provided by the official of the IPL significantly distorts competition in the relevant market.

6. It is also alleged that the IPL conducted bids for the television rights, website, sponsorship, catering services, transportation, event management etc. without adhering to the norms of fair tendering and restricting the market for the new entrants and foreclosing the market for the existing competitors.

7. As per the definition under section 4 of the Act, it is the power to operate independently of competitive forces prevailing in the relevant market, and there is no competitor of the IPL in twenty-20 format of cricket. Informant alleges that in the relevant market of economic activities of the biddings and tenders for organizing twenty 20 cricket matches, IPL is the dominant player.

8. Further, Informant stated that the IPL has abused its dominant position as it was the only agency for organizing twenty-20 cricket matches in the relevant market of franchisee of teams, transportation, sponsorship, sporting equipments, uniforms, catering, event management etc. The IPL has abused it dominant position by favouring few and foreclosing the market for other competitors. It has violated section 4 of the Act.

9. It was also stated that UK brand consultancy has valued IPL at Rs.18,500 crores in 2010 as the IPL is one of the most successful events from the point of view of the viewership. 3

10. The Commission considered this matter in the ordinary meeting on 15th November, 2010 and then on 9th December, 2010 and called the Informant to explain the case and also for any further submission in this regard and the Informant explained the issue related with this information.

11. The Commission is concerned about the business generated through the sports and not the rule of the sports applied for organization of the sports or its competition. Commission’s focus is on the underlying economic activities which are ancillary for the organizing the sports events.

12. The Competition Act prohibits collusion in business activities, price fixing and distortion of the bidding process which may or has distorted the competition in any relevant market appreciably thereby foreclosing competition for any new competitor or from fairly competing in the market through restrictions in the output or dividing the market.

13. As the IPL is the single governing authority for regulating Twenty 20 cricket, but its considerable presence in the economic sphere cannot be undermined and cannot be out of the purview of the Competition Act which broadly relates to the franchisee rights, media rights, television rights, sponsorship rights, mobile applications rights etc.

14. As alleged by the Informant on the basis of media reports, there has been violation of free and fair bidding process for the franchisee of the teams, providing television rights, mobile rights, internet rights, catering services, event management, sponsorship, sporting goods and equipments, transportation, ticketing etc.

15. Through the present information it appears that IPL has commercial conflict of interest concerning organization and regulation of twenty 20 cricket events. Such situation led to undermining competition in the relevant market.

16. After giving thoughtful to the facts and circumstances of the matter and examining the entire material on record, the Commission considers that there is fair possibility that competition in the relevant market of various/ ancillary products have been restricted. As the Competition Act mandates the Commission to prevent practices having adverse effect on competition and to promote and sustain competition in the market, commission is of the opinion that there exists a prima facie case of violation of the 4

Competition Act, and directs Director General (DG) to investigate and submit its report within 60 days of the receipt of the order.”

3. The Director General issued notices dated 12.01.2011, 28.01.2011, 14.02.2011,

07.03.2011, 24.03.2011, 27.04.2011 and 24.08.2011 and called upon the appellant and

the Chairman and Commissioner, IPL to submit information and documents specified

therein. These notices were duly complied with by the appellant. Shri Hemang Amin

(Manager- Finance, BCCI) appeared before the Director General and gave reply to the

latter’s queries. After conducting investigation for over one year, the Director General

submitted report dated 14.02.2012, the relevant portions of which are extracted below :

12.3 Looking to the economic activities being carried out for organizing the IPL cricket tournament, the conduct and behavior of the BCCI falls within the purview of Competition Act as an enterprise as defined in the provisions of section 2(h) of the Act. This has been discussed in detail in Chapter-6 of this report and also supported by the various legal pronouncements. 12.4 The investigation and analysis is carried out taking the underlying economic activities, which are ancillary for the organization of cricket in Twenty-20 format with respect to the IPL tournament, as relevant market. It is not substitutable to any format of cricket such as test cricket, one day cricket or other domestic cricket. The viewers of the game also cannot have a substitute to the Twenty-20 format of the cricket vis-à-vis any other game or any format of the cricket. 12.5 On investigation and analysis of the facts and materials of this case it is found that the BCCI-IPL is in the dominant position within the meaning of the provisions of section 4, read with section 19(4) of the Act. BCCI-IPL enjoys monopoly status for the Twenty-20 format of cricket and thereby having monopoly for the economic activities related to organizing such events also in the relevant market. This has been discussed in detail in Chapter-B of this report. 12.6 While analyzing the conduct of the various IPL franchisees with respect to the awarding of franchise rights, it was found that some of the franchisees who bid and awarded tender have either changed their status or shareholding pattern. The BCCI itself has, later on, discovered the irregularities for the award of franchise and also issued show cause notice to the then IPL Commissioner Mr. Lalit Kumar Modi. Therefore, the BCCI itself has conceded that the bid rigging or collusive bidding has taken place. The BCCI cannot distance or shirk its responsibility on the basis that for any fraudulent action of Mr. Modi the BCCI cannot be held responsible. On the contrary, the responsibility lied with the BCCI 5

only as all the tenders and agreements have been floated or entered into under the name and authority of the BCCI and deemed to have been in the knowledge of everybody. Any other party will only recognize the BCCI and none else. Therefore for any competition issue having appreciable adverse affect, in the arena of cricket game in India, the responsible party will be BCCI only. 12.7 On perusal of the documents submitted by BCCI and other relevant parties, the contentions of which are more elaborately discussed in Chapter-9 of this report, it clearly transpires that the franchise for tea, has been given till the IPL tournament continues, which is perpetual in nature. Therefore the agreement so made will havae the effect infinitum, until and unless a breach of contract takes place which is to take care of any eventuality and is generally a part of any agreement. It clearly indicates that no other team or franchisee can bid for the same location. Further, no more franchisee (at present 10) is contemplated in future. Therefore, no further teams can be selected or the number of playing teams can be enhanced. It has also been found that for the entry into the IPL Twenty-20 cricket high cost of capital is involved as the ITT stipulates the lowest bid to be 50 million US dollar and thus created a financial barrier to entry. Further, the contract for franchise has been framed by the BCCI and specimen proforma for the contract has been circulated with the ITT which was required to be signed by the bidders and submitted along with bid documents. Therefore, even before the process of bidding and at the stage of submission of tender documents, the bidders were supposed to submit the complete agreement duly signed by the authorized person leaving no room for the franchisee to have any say in the terms of contract. The franchisees are obliged to follow the same due to the dominant position of the BCCI in the relevant market. The franchisees have no occasion or opportunity to bid for any other Twenty-20 cricket tournament as no such recognized tournament existed. Other terms and conditions of the agreement were also found of violative of the Act inasmuch as they have an appreciable adverse effect on competition. For the aforesaid reasons the whole set up of the IPL tournament has left no room for anybody to enter further and accordingly the market has been restricted by putting barrier on entry and foreclosure of competition for any new franchisee for the said IPL tournament due to the abuse of dominance by the BCCI. Further, abusing its dominant position, the BCCI entered into the agreements with the franchisee on its unilateral terms and conditions which is unfair and discriminatory and hence restricted the market for others having adverse appreciable effect on competition within the meaning of provisions of section 4 (2) of the Act. 12.8 In-depth investigation has been carried out to understand and analyse the whole process of the grant of media rights by the BCCI, as discussed in detail in 6

Chapter-10 of this report. From the analysis, it transpires that during the course of initial media rights, extra time was allowed to the MSM and WSG to form consortium and allowed for the bid. It is also seen that though the tender was supposed to be submitted by 8.1.2008 however in order to allow to form the consortium, the bid of consortium was accepted on 14.1.08, which was the date of opening the tender. This way, by abusing its dominant position the BCCI has not only provided benefits to them but also foreclosed the market for others. Subsequently, being in its dominant position, the contracts were terminated and again entered with the same parties or other related parties. Consequently, after termination of the initial agreements, no further process of tendering was resorted. It has denied any other eligible party of their right to bid and obtain the tender and hence having adverse effect on competition as market was not made open for bidding. The period of contract was for a period of 10 years which clearly reflects that no other party could bid for further 10 years and the access to market is restricted. Further, the terms of the agreement are such that the parties were made to sign on the dotted lines, as the BCCI is in the position of monopoly to provide such rights, having the position of strength. The media rights were terminated abruptly by the BCCI without any plausible cause after one year and re-entered again. This act of BCCI-IPL is clearly abusive of its dominant position. Therefore, looking to the above features and considering their dominant position in the market, actions of the BCCI-IPL clearly makes them liable under the provisions of section 4(2) of the Act, having appreciable adverse effect on competition. 12.9 In the case of other rights such as associate sponsorship rights, web portal rights, transport, event management, umpiring etc. and other rights, no fair tendering process has taken place as discussed in Chapter-11 of this report. Further, in case of various other rights the BCCI has suggested names of the vendors or entered into a tripartite agreements, without adhering to the tendering process. Such rights have been granted by or under the aegis of the BCCI, which has directed or indicated the name of a particular vendor, to whom the contract has to be awarded further by the franchisee. The process of granting theatrical rights and FCT rights are also not transparent and fair. Accordingly, the BCCI has abused its dominant position by imposing unfair or discriminatory conditions and not having allowed to open the market for other eligible vendors. Such actions of the BCCI have appreciable adverse effect on competition within the meaning of provisions of section 4(2) of the Act. 12.10.3 In the present case also the agreement between BCCI and franchisees contains exclusionary clauses such as an infinitum agreement, high financial 7

cost, foreclosure of entry for the new franchise4 etc. which is restricting and limiting the market. 12.10.5 Therefore, impliedly, it is inferred that where the exclusive rights are given for a longer term or without any time limit, it will create an entry barrier, thus anti- competitive. 12.10.6 In the present case as discussed in detail, the franchisee agreements are infinitum and the media rights are given for 10 years. Therefore entry barrier is created, foreclosing the market for any new entrants and also resulting in the denial of market access. 12.11 As per the analysis made in the foregoing chapters and as per the major findings discussed hereinabove with respect to the allegations against the Opposite Party for their conduct in the relevant market, it can be concluded that – (a) For the purpose of grant of franchisee agreements, unfair and discriminatory tendering process was adopted and looking to the infinitum tenure of the franchisee agreements and other features thereof, the BCCI has abused its dominant position in the relevant market having appreciable adverse effect on competition. Such action of BCCI establishes the foreclosure of market and creation of entry barriers. Further, abusing its dominant position the BCCI entered into the agreements with the franchisee on its own terms and conditions which has restricted the market for others and hence having adverse appreciable effect on competition within the meaning of provisions of section 4(2) of the Act. (b) As far as the media rights are concerned, looking to the conduct of BCCI-IPL with respect to the various awards of media rights where neither fair nor transparent tendering process has been adopted and the media rights were given for fairly long period of 10 years. This has created adverse appreciable effect on competition where unfair or discriminatory conditions were imposed and the market has been limited and restricted for other eligible contenders by abusing its dominant position within the meaning of provisions of section 4(2) of the Act. (c) Regarding other rights neither any due tender process has been followed nor the system for grant for rights made transparent thus the BCCI has abused its dominant position by limiting or restricting the market within the meaning of provisions of section 4(2) of the Act. (d) In a case where the BCCI has directed or indicated the name of a particular vendor, to whom the contract has to be awarded further by the franchisee, there also the BCCI has abused its dominant position by imposing unfair or discriminatory conditions and not having allowed to open the market for other eligible vendors for the various services offered. 8

(e) In the light of the findings in this report, the conduct of BCCI in the matter of

awarding various franchisee rights, media rights and other rights are clearly

discriminatory and unfair which has caused appreciable adverse effect on

competition in violation of section 4(2)(a)(i), 4(2)(b)(i) and 4(2)(c) of the Act.”

(Emphasis supplied)

4. The Commission initially supplied non-confidential version of the Director

General’s report to the appellant and then gave the confidential version. The appellant filed detailed reply dated 07.06.2012 to contest the findings recorded by the Director

General on the issues of relevant market, its dominant position in the relevant market, abuse of dominant position and violation of Section 4 of the Act. The arguments were heard on 01.07.2012, 01.08.2012 and 02.08.2012. Thereafter, the Chairperson and four members of the Commission passed the impugned order, which has been termed as the majority order. They considered the information allegedly available in public domain about advertisement revenue, TAM ratings, applied SNNIP test and held that the relevant market is the Organization of Private Professional Cricket Leagues/Events in India. The majority then examined the issue relating to dominance of the appellant in the market for Organization of Private Professional League Cricket events and held that owing to regulatory role, monopoly status, control over infrastructure, control over players, ability to control entry of other leagues, historical evidences, the appellant is in a dominant position in the relevant. They finally referred to clause 9.1 (c)(i) of the

Media Rights and held that the appellant had abused its dominant position in contravention of Section 4(2)(c) of the Act. The operative portion of the majority order reads as under :

“The Commission finds BCCI guilty of contravention of Section 4(2)(c) of the Act. In view of the above and in exercise of powers under Section 27 of the Act, the Commission directs BCCI:-

i) to cease and desist from any practice in future denying market access to potential competitors, including inclusion of similar clauses in any agreement in future.

9 ii) to cease and desist from using its regulatory powers in any way in the process of considering and deciding on any matters relating to its commercial activities. To ensure this, BCCI will set up an effective internal control system to its own satisfaction, in good faith and after due diligence. iii) To delete the violative clause 9.1(c)(i) in the Media Rights Agreement. iv) The Commission considers that the abuse by BCCI was of a grave nature and the quantum of penalty that needs to be levied should be commensurate with the gravity of the violation. The Commission has to keep in mind the nature of barriers created and whether such barriers can be surmounted by the competitors and the type of hindrances by the dominant enterprise against entry of competitors into the market. The Commission has also to keep in mind the economic power of enterprise, which is normally leveraged to create such barriers and the impact of these barriers on the consumers and on the other persons affected by such barriers.

BCCI’s economic power is enormous as a regulator that enables it to pick winners. BCCI has gained tremendously from IPL format of the cricket in financial terms. Virtually, there is no other competitor in the market nor was anyone allowed to emerge due to BCCI’s strategy of monopolizing the entire market. The policy of BCCI to keep out other competitors and to use their position as a defacto regulatory body has prevented many players who could have opted for the competitive league. The dependence of competitors on BCCI for sanctioning of the events and dependence of players and consumers for the same reason has been total. BCCI knowing this had foreclosed the competition by openly declaring that it was not going to sanction any other event. BCCI undermined the moral responsibility of a custodian and defacto regulator. The Commission however, notes that BCCI in their submissions have claimed that the funds of

IPL have been re-ploughed in developing the game and considers it appropriate that the penalty of 6% of the average annual revenue of BCCI for past three years be imposed under Section 27(b) of the Act as under :

Name Gross Gross Gross Average Penalty @ Turnover Turnover Turnover Turnover 6% of for 2007- for 2008- for 2009- for 3 Years* Average 2008 2009 2010 ( Rs. Crore) Turnover (Rs. Crore) (Rs. Crore) (Rs. Crore) (Rs. Crore)

BCCI 1000.41 725.83 886.11 870.78 52.24

*Data as available from DG’s Report. 10

The Commission decides accordingly. The directions of the Commission must be

complied within 90 days of receipt of this Order. The amount of penalty

determined of Rs.52.24 Crore must also be deposited within a period of 90 days

from the date of receipt of this Order.”

5. One of the member of the Commission recorded a separate order but expressed

his agreement with the majority. Another member recorded a dissenting order and held

that no contravention of Sections 3 and 4 of the Act is established against the appellant

and the IPL.

6. While issuing the notice of the appeal on 09.05.2013, the Tribunal stayed the

directions issued under Section 27. The penalty imposed by the Commission was also

stayed subject to the condition that the appellant shall deposit 25% thereof within one

month. After service of the notice, the case was adjourned from time to time. On

11.08.2014, the Tribunal passed the following order :

“Inspite of the repeated opportunities given, there is no written denial to the

allegations made at page – 62 of the appeal which are very vital. The learned

counsel seeks seven days’ time for providing that denial in writing. List this

matter on 19th August, 2014.”

7. On the next effective date of hearing i.e. 27th October, 2014, the counsel

representing the Commission again sought adjournment to enable the Secretary of the

Commission to file written response. His request was accepted. Thereafter, Smt. Smita

Jhingran, Secretary of the Commission filed affidavit dated 29.10.2014, paragraphs 4 to

19 of which read as under :

4. Clause 9.1(c)(i) of the Media Rights Agreement is part of an agreement which was filed by the appellant itself. The appellant was fully conscious of the scope of the proceedings which was the abuse of dominance by BCCI in organization of IPL matches. 5. The Deponent places hereinbelow the relevant extracts of various material on record which indicates the scope of enquiry and submissions before the Commission and which also reflects the fact that the appellant had ample opportunity to present its case : 11

6. In the instant case, the informant (Respondent No.2) submitted his information on 01.11.2010 before the Competition Commission of India (hereinafter referred to as the Commission) wherein allegation of violation of Competition Act were made against BCCI, the relevant extract of which is reproduced hereinabove for ready reference: “IPL was considerably new format of twenty-20 over cricket match and has been designed to generate much compact format of three hours for entertainment. It is considered that this format of matches made the IPL as one of the most successful sports events from the point of viewership. The UK based brand consultancy, brand finance, has valued the IPL at 18500 crores (US$ 4.01 billion) in 2010. It appears that organization of this IPL has been based on fairly anticompetitive manner and the procurements and tenders were given following the process and procedures of fair tendering. (emphasis supplied)

7. The Commission after examining the issue in its ordinary meetings on 15/11/2010 and on 09/12/2010 when the informant was also called to explain the case and for any further submissions if any, passed on order dated 09.12.2010 under Section 26(1) of the Competition Act, 2002 (hereinafter referred to as the Act). The relevant extract of the order of the Commission is reproduced hereinbelow for ready reference : “6. It is also alleged that the IPL conducted bids for the television rights, website, sponsorship, catering services, transportation, event management etc. without adhering to the norms of fair tendering and restricting the market for the new entrants and foreclosing the market for the existing competitors…. xxx xxx xxx 11. The Commission is concerned about the business generated through the sports and not the rule of the sports applied for organization of the sports or its competition. Commission focus is on underlying economic activities which are ancillary for organizing the sports events.”

12. The Competition Act prohibits collusion in business activities, price fixing and distortion of the bidding process which may or has distorted the competition in any relevant market 12

appreciably foreclosing competition for any new competitor or from fairly competing in the market through restrictions in the output or dividing the market. xxx xxx xxx

15. Through the present information it appears that IPL has commercial conflict of interest concerning organization and regulation of twenty 20 cricket events. Such situation led to undermining competition in the relevant market. (emphasis supplied)

8. The DG having recognized the broader market of IPL considered the economic activities ancillary for organizing the IPL twenty 20. The relevant extracts of the DG report are given below :- 7.6 Therefore to the information available on record, it may be seen that the concern is for the underlying economic activities which are ancillary for organizing IPL Twnety-20 cricket tournament. The rights for such activities has been held by the BCCI because of its paramount position as sole controlling agency for any form of recognized cricket in India, which also includes the cricket in IPL Twenty-20 format. In other words, for organizing IPL tournaments [which is the area of investigation in terms of information and further orders of the Commission], the BCCI- IPL holds such powers in the field of ancillary economic activities, which has been granted as rights through the process of tendering or otherwise in lieu of the agreed amount. There is no substitute to the cricket vis a vis other games and in the game of cricket itself there is no substitutability of Twenty-20 format vis-à-vis other formats such as test cricket, other five day matches, one day matches of fifty-50 overs etc. Therefore, this format of game is unique, having specific consumer preference having no substitutability. Accordingly the underlying economic activities are also unique to the extent that franchise as well as other vendors have no other option but to go for the services and rights being offered by the BCCI for organizing the IPL twenty-20 cricket tournament. The market of such underlying economic activities cannot be substitute with the market of any other game or the format of cricket with the format of IPL twenty-20 cricket tournament. Thus, considering the facts of this case, it is concluded that all the economic activities including the granting of media rights, awarding of franchise, granting of other rights incidental to the game of Twenty-20 cricket is the relevant market..... 13

(emphasis supplied)

7.8 Thus, to sum up the relevant market in the present case is the underlying economic activities which are ancillary for organizing the IPL twenty-20 cricket tournament being carried out under the aegis of BCCI as per the provisions of Section2 (r) of the Act. (Pg.548/V.2)”

9. It is submitted that the absence of the exact words and form in the DG Report as may be suited to or desired by the appellant to present their argument in the case cannot be a ground for saying that they were not heard on the aspect of relevant market. 10. A large number of material was submitted by the appellants herein. In fact, their response indicates that they were well aware and understood the issue and also made submissions thereto. In its various materials, BCCI sought to justify why BCCI could not give its approval to ICL. Relevant extracts of some of the material are reproduced hereinbelow for ready reference : (i) Response of BCCI to the DG's Report : · Detailed submissions were given on how actions relating to ICL were not in contravention of the Competition Act. In particular, it was stated, “The DG in its report has stated that the BCCI precluded its players from participating in ICL. In this regard, it is submitted that several organizations and institutions (like the BCCI) impose restrictions on their members from engaging in outside activities which may adversely affect their performance in relation to their country and their primary organization. Any commitment by the cricket players to the ICL matches could lead to potential conflict with their prior commitments to the BCCI to play the international matches for the Indian cricket team scheduled to take place during the ICL season, given that is the BCCI is under an obligation to the ICC to honor its commitment, on behalf of the cricket player. Any default by the Indian cricket player(s) in meeting the international commitments which typically get decided at least two years in advance could severally jeopardize the Indian cricketing community's interest and comity. It may be noted that the Indian cricket team does not have any international cricket commitments during the IPL season. Accordingly the restrictions, if any, allegedly placed by the BCCI on cricket players in relation to ICL are reasonable and justifiable on objective criteria and cannot be construed as being discriminatory ….” (Pg.715/V.3) (ii) Analysis by Dr. R. Shyam Khemani on behalf of BCCI : 14

· Dr. Shyam Khemani highlighted that the IPL is itself a product while discussing the economics of professional sports league.

· “The Professional sports leagues such as BCCI/IPL and the T-20 tournament match series operate in markets which have distinct features compared to 'ordinary' industries or markets, such as steel, consumer durable or food products where firms individually compete against each other in terms of price, product quality etc. The 'product' that a professional sports league 'produces' is the series of tournament matches between its member teams which culminates in one team being declared 'champion' and awarded a coveted trophy. To organize and produce the series of matches requires both competition and cooperation between the teams within the framework of rules and regulations governing the league. Individual teams are not able to organize and sustain such a series of matches. Experience across the world indicates that there is rule for only one league to operate on a cost effective and successful basis. Since in most cases the leagues are non-profit organizations, as is the case with BCCI, revenues to fund the league, the member teams and tournament matches are earned by the sale of various rights such as media and broadcast rights, sponsorship rights, merchandise etc.” (para 9) (Pg.724/V.3) (emphasis supplied)

· “The success of IPL T-20 has been mainly due to its franchise model structure, the alignment of BCCI-IPL and individual franchise interests through its revenue sharing arrangements, league governance framework and attracting and recruiting ‘star cricket players’ to maintain competitive balance among teams among other factors. The IPL T-20 success is due to ‘superior competitive performance’ and not due to alleged competitive practices by a failed and disgruntled competitor.” (Para 11) (Pg.725/V.3)

· Although it can be acknowledged that BCCI is the sole body in India recognized for the control, organization and promotion of cricket in India, and that the IPL is a sub-group within BCCI, and therefore may be in a position of strength with respect to organize and holding a series of IPL T-20 cricket matches, this does not constitute the relevant market from a competition law and policy viewpoint. Moreover, even if the DG-I's market's definition is accepted in and of itself BCCI/IPL's 15

position does not constitute 'abuse' of dominant position (Para 22, Para 729-730/V.3) (iii) Quarterly Journal of Economics – Walter C. Neale:

· A detailed article was submitted in the Quarterly Journal of Economics wherein it was sought to be highlighted that sporting business is by nature a monopoly (Pg.804/V.3).

· League sports were identified as an indivisible product. (Pg.804- 805/V.3). Sporting firms sell an indivisible product. Once divided it is no product at all.

· League sports were identified as an indivisible product. (Pg.804- 805/V3). Sporting firms sell an indivisible product. Once divided it is no product at all. (Pg.807/V3).

· Example was given of a professional Baseball team which produces a complex product or in common parlance several inter-related streams of utility. (Pg.805/V3).

· It was sought to be argued in the Article that each sporting league is a natural monopoly. (Pg.806/ r/w 808/V3).

· Four possible options were visualized in Inter-League Business competition. (Pg.808-809/V3).

· It was admitted in the article that existence of economically but not sportingly competing leagues raises the money costs to both leagues and so endangers profits. (Pg.812/V3). (iv) Efficiency of Sports League – Arun Vig, The University of Nottingham: · The said article was based on an in-depth study of organization of IPL. · It highlighted that IPL was the most highly watched event in the world. (Pg.924/V3 r/w Pg.950-951/V3). · It emphasized the fact that BCCI controls players (Pg.947-948/V3) · A detailed discussion is there in the article of inter-relationship between ICL and IPL (Pg.948-950/V3). · Reference was made to the revenues of IPL outstripping the Government Sports Budget. (Pg.951/V3)

11. A perusal of the above documents indicated that the appellants were fully informed and well prepared to deal with one of the issues which had come up in the course investigation, namely, whether BCCI was abusing its dominance to exclude any other entity from organizing professional league matches. Admittedly, the economic activities which are involved for organizing IPL matches consist of grant of media rights [it is clause 9.1(c)(i) of the Media Rights Agreement which the Commission held 16

to constitute abuse of dominance], awarding of franchise, web portal rights; advertising and marketing within the stadium, granting of other rights incidental to the game of Twenty-20 cricket. 12. The above activities are controlled by BCCI. Thus, the organization of the IPL involves not just deciding on the dates when the matches would be played and by which teams, it also involves controlling and regulating the various activities mentioned above whose rights are controlled by BCCI. The material submitted by the appellants itself highlighted the fact that organization of IPL matches is a product and various activities consisting of media rights, wave portal rights are involved in creation of such a product.

13. The relevant product market was therefore identified by the DG “as the underlying economic activities which are ancillary for organizing the IPL Twenty-20 cricket tournament is being carried under the aegis of BCCI”. There is as such no difference between the relevant market as identified by DG or the relevant market identified by the Commission. The Commission while identifying the relevant product market has noted the following :

“8.37 The price of cricket event be it the price of tickets for the live audience or the prices for advertisement slots for broadcasts also points to a truly distinct market. The uniqueness of cricket events from the view point of the stakeholders as well as the ultimate viewers is reflected in revenues associated with sport vis-a-vis other sports/ entertainment forms and viewership data analysis. These are discussed at length in the section related to media rights market.

8.38 After concluding that cricket is not substitutable with other sports or other entertainment events, the Commission considers it necessary to examine whether there are inherent difference between the two broad categories of events also viz. First Class/ International events and Private Professional League Cricket event as noted in review of sports sector above which merit examination for determination of relevant market. The important fundamental differences noted are as under :

a. In case of First Class/ International Cricket, the teams represent states/ nation and comprises of players who are 31 Indian nationals which in case of Private Professional Leagues the teams represents private 17

clubs and can also have foreign players.

b. Revenue generation becomes incidental to the main objective of development and promotion of sport in case of First Class/ International events while revenue is the primary consideration in Private Professional Leagues. This distinction as we noted earlier arose from the fact that entry of private professional leagues saw the merger of media and entertainment to raise the level of cricket to a different height altogether, contributing to the commercialization of the game. A new genre of cricket is emerged with a market distinct from existing cricket events. The Commission, therefore, opines that the relevant market is the Organization of Private Professional Cricket Leagues/Events in India”

The organization of IPL involves regulating and controlling various activities mentioned hereinabove. This distinction made by the appellant is wholly misconceived and amounts to quibbling over semantics.

14. The appellant as the custodian and de facto regulator of cricket is admittedly in a dominant position in this area. On account of its position as a regulator, it can recognize and de-recognize players, thus exercising control over where cricket players can play.

15. The issue of such dominance by BCCI and abuse of such position by excluding Indian Cricket League (ICL) which sought to compete with the BCCI organized IPL was raised right at the inception in the information itself. This issue resonated through the order issued under Section 26(1) of the Competition Act, 2002 by the Commission; the investigation by the DG and his report; extensive material submitted by the appellant and ultimately the findings of the Commission. 16. The document relied on by the Commission in its main order (at Para 8.35) were in the public domain and were only relied on for the purpose of highlighting the popularity of cricket/IPL. This is a fact which was not disputed by the appellants either.

17. A perusal of the majority order of the Commission along with the supplementary order as also the dissenting order would indicate that the appellants did not address arguments on the issue of organization of IPL being comprehensively considered as a relevant market. 18

18. In a recent judgment dated 05.09.2014 in The National Stock Exchange of India Ltd. v. Competition Commission of India, this Hon'ble Tribunal did not find fault with the Commission determining a different relevant market from that of the Director General. However, the Tribunal agreed with the identification of relevant market as determined by DG on the basis of facts of the case. The relevant observations are quoted below :

“The D.G. while considering the relevant market came to the conclusion that the stock exchange business as a whole constituted the relevant market...... We must at this juncture point out that before holding the CD market to be the relevant market, the CCI separately considered the various aspects of equity market, F&O market and WDM market.

...... We do not have to wait for the actual foreclosure to happen, even if there is any possibility of the competition being affected that is sufficient for the purpose of Section 4(2).” 19. It is further stated that the dispute relating to clause 9.1(c)(i) of the Media Rights Agreement is a question of interpretation which can be decided even at the appellate stage based on the existing material on record. The argument made by the appellant before this Hon'ble Tribunal for remand of the matter is without any basis.

8. In reply to the affidavit of the Commission’s Secretary, Shri Sanjay Patel,

Honorary Secretary of the appellant filed affidavit dated 01.11.2014, paragraphs 3 to 17 and 19 to 22 of which read as under :

3. At the outset, it is stated that Clause 9.1(c)(i) of the Media Rights Agreement (“Impugned Clause”) was not found to be in violation of Section 4 of the Competition Act, 2002 (“Act”) by the Director General (“DG”). The DG Report, makes no reference to the impugned Clause in general or in Chapter 10 in particular (i.e., the chapter pertaining to the investigation and analysis on grant of media rights). It is stated that nowhere in the DG Report was the Impugned Clause relied upon to establish abuse of dominance by the Appellant. As is evident from the DG Report, the only adverse findings recorded in the DG Report with respect to media rights/the Media Rights Agreement (“Agreement”) were in relation to lack of transparency in the tendering process and the long term nature of the Agreement, i.e. for a duration 10 years. 19

4. Further, the Appellant has been informed by its legal counsel who appeared before the Competition Commission of India (“Commission”) that the Commission did not raise any issues or allegations with regard to the Impugned Clause at the time of the oral hearing. As such, on account of these reasons, no arguments/justification in relation to the Impugned Clause were advanced by the Appellant at that stage. 5. The Commission found the Appellant to be guilty of abusing its dominant position solely on the basis of the impugned Clause in the Majority Order. That reliance solely on the Impugned Clause to find the Appellant guilty of violation of the Section 4(2)(c) of the Act, without providing an opportunity to the Appellant to present arguments to defend the Impugned Clause, is a blatant violation the settled principles of natural justice. 6. It is incorrect for the Commission to state that the scope of inquiry and submissions before the Commission related to organization and regulation of twenty-20 cricket events. It is stated that the Commission, in its affidavit, has deliberately reproduced only such paragraphs (from the order of the Commission under Section 26 of the Act (“Prima Facie Order”) that are in its favour, in order to establish that the scope of inquiry related to the organization and regulation of twenty-20 cricekt events, as a whole. 7. As is evident from the Prima Facie order, the scope of the inquiry and investigation was limited to grant of various rights associated with Indian Premiere League (“IPL”), i.e., including grant of franchise rights, media rights, web portal rights, sponsorship rights and Relevant extracts of the Prima Facie Order are reproduced hereinbelow for ready reference : “14. As alleged by the Informant on the basis of media reports, there has been violation of free and free bidding process for the franchisee of the teams, providing television rights, Mobile rights, Internet rights, catering services. Event management, sponsorships, sporting goods and equipments, transportation, ticketing, etc. 16. After giving thoughtful consideration to the facts and circumstances of the matter and examining the entire material on record, the Commission considers that there is fair possibility that competition in the relevant market of various ancillary products have been restricted. As the Competition Act mandates the Commission to prevent practices having adverse effect on competition and to promote and sustain competition in the market, Commission of the opinion that there exists a prima facie case of violation of the Competition Act and directs Director General (DG) to investigate and submit its report within 60 days of the receipt of the order.” 20

8. In relation to the definition of the relevant market, the Commission has wrongly stated that there is no difference in the relevant market as defined by the DG and the Commission. It is submitted that the DG defined the relevant market for the purposes of the investigation to be the market for “underlying economic activities which are ancillary for organizing the IPL twenty-20 cricket tournament being carried out under the aegis of BCCI as per provisions of Section 2(r) of the Act.” (emphasis supplied) 9. On the other hand, the Commission differed from the DG and defined the relevant market to be the market for “organization of private professional cricket leagues/events in India”. (emphasis supplied) 10. As is evident from the above, the two definitions are distinct in terms of the scope of investigation and accordingly the conclusions arrived at would be different in case of each of these definitions. 11. As such, given that the two definitions of the relevant market are distinct and different, consequently, the material relied upon by the Commission in arriving at its definition of the relevant market was different from the DG and was not put to the Appellant. Moreover, as highlighted in paragraph 56.1(ii) and ()iii) of Memorandum of Appeal, Volume I, it is submitted that the Commission relied upon information/random newspaper articles to arrive at this definition of the relevant market – which were neither part of the DG Report nor were provided by the informant. 12. It is further stated that one of the newspaper articles relied upon by the Commission was published on 4 August, 2012, i.e. two days after the completion of the oral hearing before the Commission on 1-2 August, 2012. Based on the touchstone of the foregoing analysis, it is evident that BCCI was not put to notice of the information/evidence relied upon by the Commission and was therefore not provided an opportunity to effectively defend itself, in this regard. 13. Further, the issues identified by the DG in his Report (reproduced hereinbelow for ready reference) are as follows : “3.3 Hence, the issues for investigation, broadly, would be to find out :- (a) Whether the Opposite Party is in dominant position to decide about the underlying economic activity which are ancillary for organizing the IPL twenty-20 cricket tournament such as media rights, television rights, mobile, internet rights, catering services, event management, sponsorship, sporting goods, transportation and ticketing etc.. If it is 21

so, whether there was abuse of dominant position by the Opposite Party as per the provisions of Section 4 of the Act. (b) Whether the provisions of the Act were violated in the process of tendering/awarding contract for granting the franchisee rights for various IPL teams; (c) In case the process was not transparent or fair in respect of tendering/awarding contract as mentioned hereinabove, whether such processes causes an appreciable adverse effect on competition, by creating barriers to the new entrants in the market. 3.4 Investigation would thus focus on examination of above mentioned conduct and the violations of the provisions of the Act by the Opposite Party having appreciable adverse effect on competition.” 14. It is evident from the above that the DG himself stated that the investigation would focus on the specific issues identified him which was limited to grant of various rights associated with IPL, i.e. including grant of franchise rights, media rights, web portal rights, sponsorship rights. 15. The issues identified by the CCI in the Majority Order (reproduced hereinbelow for ready reference) are captured below : “7.1 a) Whether BCCI is an enterprise for the purposes of the Competition Act? b) Whether the actions of the BCCI associated with the organization of IPL contravene any of the provisions of the Act? 16. In addition to the above, the CCI identified the following additional issues in the Majority Order (reproduced hereinbelow for ready reference :- “7.3 a). What is the defacto status of BCCI? b). Whether BCCI has abused its dominant position in the relevant market in contravention of Section 4 of the Act? This involves the following steps:- i. Defining the relevant market ii. Assessment of dominance of BCCI in the relevant market as defined iii. Analysis of conduct of BCCI for contravention of Section 4 of the Act.”

17. This clearly evidences the fact that the Commission identified additional issues in

the Majority Order, which neither formed part of the DG Report nor were put to

the Appellant.

19. As regards the Impugned Clause, the mere fact that the Impugned Clause

formed part of the Media Rights Agreements and was submitted to the DG in the 22

course of investigation, does not impose an obligation on the Appellant to have

defended itself in relation to the same, in the absence of a specific allegation in

the DG Report.

20. As is evident from Section 26 of the Act, the Commission is required to proceed

to serve the relevant parties with copies of the DG Report and invite any

“objections and suggestions”, including written and/or oral arguments before it.

As such, the objections/suggestions by the relevant parties will only pertain to the

allegations raised in the DG Report and cannot go beyond the scope of what has

been identified by the DG (as detailed in paragraph 13 above).

21. Further, it is submitted that the Commission wrongly concluded that the dispute

relating to the Impugned Clause is a “question of interpretation” and can be

decided even at the appellate stage. It is submitted that the Commission has

found the Appellant to be guilty solely on the basis of the Impugned Clause.

22. That the documents relied on by the Commission in paragraph 8.35 of the

Majority Order was not disputed by the Appellant is incorrect and bereft of any

substance. As stated above, these documents neither formed part of the DG

Report nor were put to the Appellant. These documents were cited for the first

time in the Majority Order and therefore the Appellant did not have any

opportunity to dispute the same at any stage prior to the appellate stage.”

9. Although the appellant has challenged the impugned order on several grounds,

Shri A. Sundaram, learned senior counsel appearing on his behalf argued that the same is liable to be set aside only on the ground of violation of the principles of natural justice.

He submitted that while the Director General had treated the ‘relevant market’ as

“underlying economic activities which are ancillary for organizing the IPL Twenty 20

Cricket Tournament”, the Commission apparently differed with him and held that the relevant market is the ‘Organization of Private Professional Cricket League /Events in

India’ and this was done without giving any notice or opportunity of hearing to the appellant. Shri Sundaram further argued that the finding recorded on the issue of contravention of Section 4 of the Act is liable to be set aside because the Commission 23 relied upon information allegedly available in public domain and applied SNNIP test without disclosing the same to the appellant and giving it an opportunity to controvert the same. Learned Senior counsel also referred to the observations made by the

Commission on the validity of clause 9.1(c)(i) of Media Rights Agreement and argued that direction given for deleting the same is liable to be set aside because the Director

General had not recorded any finding qua that clause and the Commission did not give notice and opportunity of hearing in that regard.

10. Shri Prashanto Chandra Sen, learned counsel for the Commission argued that the impugned order does not suffer from any legal infirmity because the appellant was given full opportunity of hearing and it was very much aware of the material used by the

Commission for recording findings on the issues of ‘relevant market’ and contravention of Section 4. In support of this argument, Shri Sen relied upon the affidavit dated

29.10.2014 filed by the Secretary of the Commission and paragraphs 8, 9 and 13 of the supplementary order passed by one of the members. Shri Sen also referred to pages

802, 806, 808, 914, 948 and 949 of article published in quarterly journal of Economics and the research paper prepared by Arun Vig on “Efficiency of Sports Leagues – The

Economic Implications of Having Two Leagues in the Indian Cricket Market” and argued that monopoly as well as abuse of dominance of appellant is amply proved from the contents of this article.

11. I have considered the respective arguments and carefully perused the record.

Sections 19(1), 26(1), 26(2) to 26(8), 27 and 36(1) of the Act and Regulations 18, 20 and 21 the Competition Commission of India (General) Regulations, 2009 (for short, ‘the

Regulations) which have bearing on the determination of the point argued by learned counsel for parties read as under :

19. Inquiry into certain agreements and dominant position of enterprise.—(1) The Commission may inquire into any alleged contravention of the provisions contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on its own motion or on— (a) [receipt of any information, in such manner and] accompanied by such fee as may be determined by regulations, from any person, consumer or their association or trade association; or 24

(b) a reference made to it by the Central Government or a State Government or a statutory authority.

(2) to (7) xxx xxx xxx

26. Procedure for inquiry under section 19. – (1) On receipt of a reference from the Central Government or a State Government or a statutory authority or its own knowledge or information received under section 19, if the Commission is of the opinion that there exists a prima facie case, it shall direct the Director-General to cause an investigation to be made in to the matter: Provided that if the subject-matter of an information received is, in the opinion of the Commission, substantially the same as or has been covered by any previous information received, then the new information may be clubbed with the previous information. (2) Where on receipt of a reference from the Central Government or a State Government or a statutory authority or information received under section 19, the Commission is of the opinion that there exists no prima facie case, it shall close the matter forthwith and pass such orders as it deems fit and send a copy of its order to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (3) The Director-General shall, on receipt of direction under sub-section (1), submit a report on his findings within such period as may be specified by the Commission. (4) The Commission may forward a copy of the report referred to in sub- section (3) to the parties concerned: Provided that in case the investigation is caused to be made based on a reference received from the Central Government or the State government or the statutory authority, the Commission shall forward a copy of the report referred to in sub-section (3) to t he Central Government or the State Government or the statutory authority, as the case may be. (5) If the report of the Director-General referred to in sub-section (3) recommends that there is no contravention of the provisions of this Act, the Commission shall invite objections or suggestions from the Central Government or the State government or the statutory authority or the parties concerned, as the case may be, on such report of the Director-General. (6) If, after consideration of the objections or suggestions referred to in sub- section (5), if any, the Commission agrees with the recommendation of the Director-General, it shall close the matter forthwith and pass such orders as it deems fit and communicate its order to the Central Government or the State 25

Government or the statutory authority or the parties concerned, as the case may be. (7) If, after consideration of the objections or suggestions referred to in sub- section (5), if any, the Commission is of the opinion that further investigation is called for, it may direct further investigation in the matter by the Director-General or cause further inquiry to be made in the matter or itself proceed with further inquiry in the matter in accordance with the provisions of this Act. (8) If the report of the Director-General referred to in sub-section (3) recommends that there is contravention of any of the provisions of this Act, and the Commission is of the opinion that further inquiry is called for, it shall inquire into such contravention in accordance with the provisions of the Act.

27. Orders by Commission after inquiry into agreements or abuse of dominant position.-- Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely:—

(a) direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be; (b) impose such penalty, as it may deem fit which shall be not more than ten percent. of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: [Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent. of its turnover for each year of the continuance of such agreement, whichever is higher.] (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any; (g) pass such other 45[order or issue such directions] as it may deem fit.

26

[Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause(b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group.]

36. Power of Commission to regulate its own procedure.--(1) In the discharge of its functions, the Commission shall be guided by the principles of natural justice and, subject to the other provisions of this Act and of any rules made by the Central Government, the Commission shall have the powers to regulate its own procedure.

Regulation 18. Issue of direction to cause investigation on prima facie case – (1) Where the Commission is of the opinion that a prima facie case exists, the Secretary shall convey the directions of the Commission 1[within seven days,] to the Director-General to investigate the matter. (2) A direction of investigation to the Director-General shall be deemed to be the commencement of an inquiry under section 26 of the Act. 20. Investigation by Director-General – (1) The Secretary shall, while conveying the directions of the Commission under regulation 18, send a copy of the information or reference, as the case may be, with all other documents or materials or affidavits or statements which have been filed either along with the said information or reference or at the time of preliminary conference, to the Director-General. (2) The Commission shall direct the Director-General to submit a report within such time [as may be specified by the Commission which ordinarily shall not exceed sixty days from the date of receipt of the directions of the Commission]. (3) The Commission may, on an application made by the Director-General [giving sufficient reasons,] extend the time for submission of the respondent [by such period as it may consider reasonable]. (4) The report of the Director-General shall contain his findings on each of the allegations made in the information or reference, as the case may be, together with all evidences or documents or statements or analyses collected during the investigation : 27

[Provided that when considered necessary, the Director General may, for maintaining confidentiality, submit his report in two parts. One of the parts shall contain the documents to which access to the parties may be accorded and another part shall contain confidential and commercially sensitive information and documents to which access may be partially or totally restricted]. (5) [Ten copies] of the report of the Director-General, along with a soft copy in document format, shall be forwarded to the Secretary within the time specified required. (6) If the Commission, on consideration of the report, is of the opinion that further investigation is called for, it may direct the Director-General to make further investigation and submit a supplementary report on specific issues within [such time as may be specified by the Commission but ordinarily not later than forty-five days]. 21. Procedure for inquiry under section 26 of the Act. – (1) On receipt of the report of the Director –General, the Secretary shall place the said report before the Commission [within seven days,] for further orders and, in accordance with the direction of the Commission, forward [either a hard or a soft copy (in electronic form)] [of non confidential version] thereof to the Central Government or the State Government or the statutory authority, or the parties concerned, as the case may be. (2) If the report of the Director-General finds no contravention of the provisions of the Act, the Secretary shall [within seven days,] convey the directions of the Commission for inviting objections or suggestions [to be filed within fifteen days] from the Central Government or the State Government or the statutory authority, or from the parties concerned, as the case may be on such report of the Director-General. (3) If the Commission orders closure of the matter on consideration of the objections or suggestions, if any, referred to in sub-regulation (2), an agrees with the findings of the Director-General, the Secretary shall [within seven days,] convey the orders of the Commission to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (4) If the Commission, on consideration of the objections or suggestions, referred to in sub-regulation (2), directs further investigations in the matter by the Director-General or further inquiries in the matter to be made by an officer of the Commission so authorized by it, the Secretary shall [within seven days,] convey the directions of the Commission to the Central Government or the officer so authorized, as the case may be. 28

(5) On an application made by the officer authorized by the Commission justifying the production of specified books or other documents, as may be required to make further inquiries under sub-regulation (4), the Commission may direct any person to produce such specified books or other documents relating to any trade carried out by such person or enterprise, as per the provisions of sub – section (4) of section 36 of the Act. Explanation. - For the purpose of this sub-regulation, the word “officer” shall include the experts and professionals mentioned under sub-section (3) of section 17 or sub-section (3) of section 17 or sub-section (3) of section 36 of the Act. (6) On receipt of the report of the Director-General on further investigation or report of the authorized officer on further inquiries, as the case may be, the Secretary shall [with the approval of the Chairperson, fix the meeting of the Commission within seven days for consideration thereof]. (7) If the report of the Director-General mentioned under sub-regulation (1) finds contravention of any of the provisions of the Act, the Secretary shall obtain the orders of the Commission for inviting objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (8) On consideration of the objections or suggestions from the Central Government or the State Government or the statutory authority or the parties concerned, or the report of further investigation or further inquiries, as the case may be, if the Commission is of the opinion that further inquiry is called for, the Secretary shall fix the meeting of the Commission for consideration thereof, after issue of notice as per regulation 22, to the Central Government or the State Government or the statutory authority or the parties concerned, as the case may be. (9) The Secretary shall keep the Director-General informed of the dates of the meetings of the Commission for inquiry under sub-section (7) or sub-section (8) of section 26 of the Act for appearing in person or through any of his officers in accordance with the provisions of section 35 of the Act.

12. Some of the above reproduced provisions were considered by a three judge

Bench of the Supreme Court in Competition Commission of India vs. Steel Authority of

India Limited [(2010) 10 SCC 744]. In that case, the Commission had challenged the maintainability of an appeal filed by the respondent against an order passed under 29

Section 26(1) of the Act. The Supreme Court analyzed the relevant provisions of the Act and the Regulations and laid down several propositions including the following :

“78. Cumulative reading of these provisions, in conjunction with the scheme of the Act and the object sought to be achieved, suggests that it will not be in consonance with the settled rules of interpretation that a statutory notice or an absolute right to claim notice and hearing can be read into the provisions of Section 26(1) of the Act. Discretion to invite, has been vested in the Commission, by virtue of the Regulations, which must be construed in their plain language and without giving it undue expansion. 97. The above reasoning and the principles enunciated, which are consistent with the settled canons of law, we would adopt even in this case. In the backdrop of these determinants, we may refer to the provisions of the Act. Section 26, under its different sub-sections, requires the Commission to issue various directions, take decisions and pass orders, some of which are even appealable before the Tribunal. Even if it is a direction under any of the provisions and not a decision, conclusion or order passed on merits by the Commission, it is expected that the same would be supported by some reasoning. At the stage of forming a prima facie view, as required under Section 26(1) of the Act, the Commission may not really record detailed reasons, but must express its mind in no uncertain terms that it is of the view that prima facie case exists, requiring issuance of direction for investigation to the Director General. Such view should be recorded with reference to the information furnished to the Commission. Such opinion should be formed on the basis of the records, including the information furnished and reference made to the Commission under the various provisions of the Act, as afore-referred. However, other decisions and orders, which are not directions simpliciter and determining the rights of the parties, should be well reasoned analyzing and deciding the rival contentions raised before the Commission by the parties. In other words, the Commission is expected to express prima facie view in terms of Section 26(1) of the Act, without entering into any adjudicatory or determinative process and by recording minimum reasons substantiating the formation of such opinion, while all its other orders and decisions should be well reasoned.”

13. Since the question agitated in the above noted case was confined to the maintainability of an appeal filed against an order passed by the Commission under 30

Section 26(1) of the Act, the observations contained in the judgment that the rule of audi alteram partem, which is one of the facets of the principles of natural justice is not applicable at the stage of formation of prima facie opinion by the Commission do not have any bearing on the interpretation of other provisions of the Act, more so because

Section 36(1) of the Act explicitly provides that in discharge of its function the

Commission shall be guided by the principles of natural justice.

14. A careful reading of Section 26(1) shows that once the Commission forms an opinion that there exists a prima facie case, it shall direct the Director General to cause an investigation to be made into the matter. In terms of Regulation 18 read with

Regulation 20, the direction of the Commission is required to be communicated by its

Secretary to the Director General along with a copy of the information or reference with all other documents or materials or affidavits or statements which have been filed with the information or reference or at the time of preliminary conference. Section 26(3) requires the Director General to submit a report on its findings within the time specified by the Commission. Such findings must cover each of the allegations contained in the information or reference together with evidence or documents or statements or analysis collected during the investigation. Section 26(4) enjoins the Commission to forward the report of the Director General to the parties concerned. If the investigation is caused to be made based on a reference received from the Central Government or the State

Government or the statutory authority, then the report is required to be sent to the appropriate Government or the statutory authority. The object of sending report to the appropriate Government or the statutory authority or the parties concerned is to enable them to submit objections or suggestions qua the findings recorded by the Director

General. This exercise has to be undertaken by the Commission even if the Director

General finds that there is no contravention of Sections 3 or 4 of the Act. The

Commission can close the case if, after considering the objections or suggestions, it agrees with the recommendations of the Director General. If the Commission is not satisfied with the report of the Director General and forms an opinion that further investigation is called for then it can direct the Director General to make such 31 investigation or cause further inquiry into the matter through an authorized officer or itself hold enquiry [Section 26(7) read with Regulation 21 (4)]. If the report of the

Director General discloses contravention of provisions of the Act and the Commission opines that further inquiry is called for then it shall hold inquiry into such contravention.

In such an eventuality, the Commission is required to give notice to the Central

Government or the State Government or the statutory authority or the parties concerned

[Section 26(8) read with Regulation 21 (8)] and invite their objections or suggestions.

Not only this, the Secretary of the Commission is obliged to inform the Director General about the dates fixed for the meetings of the Commission, so as to enable him to appear in person or through an officer. If as a result of the inquiry held under Section

26(7) or 26(8) read with the relevant regulations, the Commission comes to the conclusion that contravention of Section 3 or Section 4 of the Act is established then it can pass appropriate order under Section 27 including an order for imposing penalty.

15. The exercise required to be undertaken by the Commission under Sections 26(7) or 26(8) read with the relevant regulations and an order passed under Section 27 which visits the concerned person with civil consequences makes the functions of the

Commission adjudicatory/quasi judicial. Therefore, before recording an adverse finding against a person and holding him guilty of violating Section 3 or 4 of the Act, the

Commission is obliged to comply with various facets of the principles of natural justice.

This necessarily implies that while holding an inquiry under Section 26(7) or Section

26(8) the Commission is required to comply with the rule of audi alteram partem and give an effective opportunity of hearing to the person against whom a finding is likely to be recorded on the issue of contravention of Section 3 or Section 4 of the Act not only to controvert the allegation made against him as also the evidence/material proposed to be used in support of such allegation but also produced evidence to show that he/she/it has not violated any provision of the Act. If the Commission wants to rely upon some information/ material, which does not form part of the report of the Director General then such information/material must be disclosed to the person concerned and an effective opportunity has to be given to him to controvert the same. The Commission is also 32 required to pass a speaking order to demonstrate application of mind to the relevant factors/considerations and exclusion of irrelevant and extraneous factors/considerations.

16. The ambit and scope of principles of natural justice has been considered by the

Courts across the globe. In India, the High Courts and Supreme Court have invoked these principles in innumerable cases and quashed administrative, quasi judicial or even judicial orders the ground of violation thereof.

17. In Ridge vs. Baldwin, 164 AC 40, the House of Lords made the following observation :

“It may be convenient at this point to deal with an argument that, even if as a general rule a watch committee must hear a constable in his own defence before dismissing him, this case was so clear that nothing that the appellant could have said could have made any difference. It is at least very doubtful whether that could be accepted as an excuse. But, even if it could, the respondents would, in my view, fail on the facts. It may well be that no reasonable body of men could have reinstated the appellant. But as between the other two courses open to the watch committee the case is not so clear. Certainly on the facts, as we know them, the watch committee could reasonably have decided to forfeit the appellant's pension rights, but I could not hold that they would have acted wrongly or wholly unreasonably if they had in the exercise of their discretion decided to take a more lenient course.”

18. The judgment in State of Orissa vs. Dr. (Miss) Binapani Dei and others [AIR 1967

SC 1269], contains a lucid exposition of the principles of natural justice and their applicability to what was then thought as purely administrative action. The facts of that case were that the respondent had been retired from service by the State Government by relying upon the date of birth which was unilaterally changed by the competent authority. The Orissa High Court quashed the retirement of the respondent by declaring that it was punitive and amounted to removal from service within the meaning of Article

311 of the Constitution. The High Court further held that the order of retirement was 33 vitiated because the writ petitioner had not been given a reasonable opportunity of showing cause against the proposed change in the date of birth recorded in her service book. While approving the second part of the High Court’s order, the Supreme Court made the following observations :

“9. The deciding authority, it is true, is not in the position of a Judge called upon to decide an action between contesting parties, and strict compliance with the forms of judicial procedure may not be insisted upon. He is however under a duty to give the person against whom an enquiry is held an opportunity to set up his version or defence and an opportunity to correct or to controvert any evidence in the possession of the authority which is sought to be relied upon to his prejudice. For that purpose the person against whom in enquiry is held must be informed of the case he is called upon to meet, and the evidence in support thereof. The rule that a party to whose prejudice an order is intended to be passed is entitled to a hearing applies alike to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences. It is one of the fundamental rules of our constitutional set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would therefore arise from the very nature of the function intended to be performed: it need not be shown to be super- added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case. 12. It is true that some preliminary enquiry was made by Dr S. Mitra. But the report, of that enquiry officer was never disclosed to the first respondent. Thereafter the first respondent was required to show cause why April 16, 1907 should not be accepted as the date of birth and without recording any evidence the order was passed. We think that such an enquiry and decision were contrary to the basic concept of justice and cannot have any value. It is true that the order is administrative in character, but even an administrative order which involves civil consequences, as already stated, must be made consistently with the rules of natural justice after informing the first respondent of the case of the State, the evidence in support thereof and after giving an opportunity 34

to the first respondent of being heard and meeting or explaining the evidence.” (Emphasis supplied)

19. In Rajesh Kumar vs. CIT [(2007) 2 SCC 181], the Suprerme Court made the following observation :

“48. In any event, when civil consequences ensue, there is hardly any distinction between an administrative order and a quasi judicial order. There might have been difference of opinions at one point of time, but it is now well-settled that a thin demarcated line between an administrative order and quasi-judicial order now stands obliterated. 55. Justice, as is well known, is not only be done but manifestly seem to be done. If the assessee is put to notice, he could show that the nature of accounts is not such which would require appointment of special auditors. He could further show that what the assessing officer considers to be complex is in fact not so. It was also open to him to show that the same would not be in the interest of the Revenue. 56. In this case itself the appellants were not made known as to what led the Deputy Commissioner to form an opinion that all relevant factors including the ones mentioned in Section 142(2A) of the Act are satisfied. If even one of them was not satisfied, no order could be passed. If the attention of the Commissioner could be drawn to the fact that the underlined purpose for appointment of the special auditor is not bona fide it might not have approved the same.” (Underlining is mine)

20. In Kothari Filaments and another vs. Commissioner of Customs (Port), Kolkata

and others [(2009) 2 SCC 192], the Supreme Court considered the correctness of an

order passed by the Calcutta High Court dismissing the writ petition filed by the

appellant against the order of the Customs, Excise and Gold (Control) Appellate

Tribunal, Calcutta, which, in turn, approved the order of confiscation and penalty passed

by the competent authority under the Customs Act, 1962. After noticing the fact that the 35

appellant had not been given opportunity to explain the material used against it, the

Supreme Court observed :

“14. The statutory authorities under the Act exercise quasi- judicial function. By reason of the impugned order, the properties could be confiscated, redemption fine and personal fine could be imposed and in the event an importer was found guilty of violation of the provisions of the Act. In the event, a finding as regards violation of the provisions of the Act is arrived at, several steps resulting in civil or evil consequences may be taken. The principles of natural justice, therefore, were required to be complied with. 15. The Act does not prohibit application of the principles of natural justice. The Commissioner of Customs either could not have passed the order on the basis of the materials which were known only to them, copies whereof were not supplied or inspection thereto had not been given. He, thus, could not have adverted to the report of the overseas enquiries. A person charged with misdeclaration is entitled to know the ground on the basis whereof he would be penalized. He may have an answer to the charges or may not have. But there cannot be any doubt whatsoever that in law he is entitled to a proper hearing which would include supply of the documents. Only on knowing the contents of the documents, he could furnish an effective reply.” (Emphasis supplied)

21. In Balchandra L. Jharkihoili and others vs. B.S. Yeddyurappa and others [(2011)

7 SCC 1], the Supreme Court set aside an order passed by the Karnataka High Court which had upheld the decision of the Speaker of the Karnataka Assembly to disqualify the appellant. One of the questions considered by the Supreme Court was whether the speaker was duty bound to supply the affidavits filed by the two MLAs, which constituted the foundation of his order. While answering the question in affirmative, the

Supreme Court observed:

“124. The Speaker apparently did not take into consideration the rule of evidence that a person making an allegation has to prove the same with supporting evidence and the mere fact that the allegation was not denied, did not amount to the same having been proved on 36

account of the silence of the person against whom such allegations are made. Except for the affidavit filed by Shri K.S. Eswarappa, State President of the B.J.P., and the statements of two of the thirteen MLAs, who had been joined in the Disqualification Application, there is nothing on record in support of the allegations which had been made therein. Significantly, the said affidavits had not been served on the Appellants. Since Shri K.S. Eswarappa was not a party to the proceedings, the Speaker should have caused service of copies of the same on the Appellants to enable them to meet the allegations made therein. 125. In our view, not only did the Speaker's action amount to denial of the principles of natural justice to the Appellants, but it also reveals a partisan trait in the Speaker's approach in disposing of the Disqualification Application filed by Shri B.S. Yeddyurappa. If the Speaker wished to rely on the statements of a third party which were adverse to the Appellants' interests, it was obligatory on his part to have given the Appellants an opportunity of questioning the deponent as to the veracity of the statements made in the affidavit. This conduct on the part of the Speaker is also indicative of the “hot haste” with which the Speaker disposed of the Disqualification Petition as complained of by the Appellants.

126. The question does, therefore, arise as to why the Speaker did not send copies of the affidavit affirmed and filed by Shri Eswarappa as also the affidavits of the two MLAs, who had originally withdrawn support to the Government led by Shri Yeddyurappa, but were later allowed to retract their statements, to the Appellants. Given an opportunity to deal with the said affidavits, the Appellants could have raised the question as to why the said two MLAs, Shri M.P. Renukacharya and Shri Narasimha Nayak, were treated differently on account of their having withdrawn the letters which they had addressed to the Governor, while, on the other hand, disqualifying the appellants who had written identical letters to the Governor, upon holding that they had ceased to be members of the Bharatiya Janata Party, notwithstanding the Show-Cause notices issued to them. 37

155. As we have earlier indicated, even if the Disqualification Rules were only directory in nature, even then sufficient opportunity should have been given to the Appellants to meet the allegations levelled against them. The fact that the Show-Cause notices were issued within the time fixed by the Governor for holding the Trust Vote, may explain service of the Show-Cause notices by affixation at the official residence of the Appellants, though without the documents submitted by Shri Yeddyurappa along with his application, but it is hard to explain as to how the affidavits, affirmed by Shri K. S. Eswarappa, Shri M.P. Renukacharya and Shri Narasimha Nayak, were served on the learned Advocates appearing for the Appellants only on the date of hearing and that too just before the hearing was to commence. Extraneous considerations are writ large on the face of the order of the Speaker and the same has to be set aside.” (Emphasis added) 22. In Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra and others [(2013) 4

SCC 465], the Supreme Court considered the question whether the caste certificate issued in favour of the appellant could be cancelled without giving him reasonable opportunity of hearing including an opportunity to cross-examine the witnesses examined by the department. After noticing the judgment of the Constitutional Bench judgment in State of M.P. vs. Chintaman Sadashiva Waishampayan [AIR 1961 SC

1623] and large number of other decisions, a Bench of two judges observed :

“24. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan, AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice. (See also: Union of India v. T.R. Varma, Meenglas Tea Estate v. Workmen, M/s. Kesoram Cotton Mills Ltd. v. Gangadhar & Ors., New India Assurance Company Ltd . v . Nusli Neville Wadia and Anr., Rachpal Singh & Ors. v. Gurmit Singh & Ors., Biecco Lawrie 38

& Anr. v. State of West Bengal & Anr., and State of Uttar Pradesh v. Saroj Kumar Sinha). 25. In Lakshman Exports Ltd. v. Collector of Central Excise, this Court, while dealing with a case under the Central Excise Act, 1944, considered a similar issue i.e. permission with respect to the cross-examination of a witness. In the said case, the assessee had specifically asked to be allowed to cross-examine the representatives of the firms concern, to establish that the goods in question had been accounted for in their books of accounts, and that excise duty had been paid. The Court held that such a request could not be turned down, as the denial of the right to cross- examine, would amount to a denial of the right to be heard i.e. audi alteram partem. 26. In New India Assurance Company Ltd., v. Nusli Neville Wadia, this Court considered a case under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and held as follows : “45. If some facts are to be proved by the landlord, indisputably the occupant should get an opportunity to cross- examine. The witness who intends to prove the said fact has the right to cross-examine the witness. This may not be provided by under the statute, but it being a part of the principle of natural justice should be held to be indefeasible right.” In view of the above, we are of the considered opinion that the right of cross-examination is an integral part of the principles of natural justice.”

23. In the light of the propositions laid down in the above noted judgments, I shall now consider whether the impugned order is vitiated due to violation of the principles of natural justice. In paragraph 56 of the appeal, the appellant has raised the following contentions :

“Violation of principles of natural justice by the Commission

56. That the Commission has violated the principles of natural justice at various instances while passing the impugned order, as discussed below : 39

56.1 Denial of fair hearing – That the appellant was not given a fair chance to defend itself as highlighted below :-

(i) That the Commission has found the appellant guilty of abusing its dominant position solely on the basis impugned clause. That the said clause was not mentioned in the DG's Report. That nowhere in the DG's Report was the Impugned Clause relied on to establish abuse of dominance by the appellant. That on account of these reasons, no arguments/ justification in relation to the Impugned Clause were advanced by the Appellant either in the response or at the time of the oral hearing. That even at the time of hearing, the Commission never raised any issues regarding Impugned Clause. That the Appellant was not given any opportunity by the Commission to present arguments to defend the Impugned Clause. Despite this, the Commission relied on the Impugned Clause without giving an opportunity to the appellant to defend the same.

(ii) That in addition to above, the Commission by relying on the following materials (cited at paragraph 8.35 of the Majority Order) which were neither part of the DG's Report nor were provided by the Informant, to find the appellant guilty of contravention of the Competition Act has violated the tenets of audi alteram partem:

(a) TRP ratings available at www.indiantelevision.com;

(b) News reports relating to advertisement revenue earned by Sony Max from IPL as opposed to Doordarshan, for the Commonwealth Games;

(c) News reports relating to the price of advertisement slots during a screening of a movie, “3 Idiots”, the most expensive movie telecast on television (which assertion was based on the same news report) and general entertainment programmes such as Saath Nibhana Saathiya, in comparison with the prices for advertisement slots during the IPL;

(d) News reports indicating an increase in revenue market shares of Set Max from pre-IPL to post-IPL; 40

(e) KPMG-FICCI Report on Media and Entertainment in order to show the sports viewership is increasing in India;

(f) TAM ratings to compare viewership of various sports events such as the Cricket World Cup in 2007, the Olympics in 2004, the FIFA World Cup in 2006, the World Series Hockey League, Grand Slam Tennis events and IPL 5;

(g) TAM Ratings to show that the position of Set Max during IPL seasons increases to the top position, but this is not so during other times; and

(h) Section 32 of the ICC Bye Laws.

(iii) That the Commission has relied on random and unreliable newspaper reports and articles available on a website to provide the viewership data and advertisement rates. That the authenticity and credibility of the data provided in the newspaper articles relied on by the Commission cannot be verified. That is a settled law that newspaper reports cannot be considered evidence of contents thereof. That such newspaper reports per se do not constitute legally acceptable evidence.

(iv) That such conduct of the Commission shows clear bias and pre- conceived notion against the appellant. That the presence of bias results in violation of the principles of natural justice. That in such cases, the Impugned Order should be declared void.

(v) That in Fedco (P) Ltd. v. Bilgrami (AIR 1960 SC 415, paragraph 9), the Hon'ble Supreme Court while dealing with the concept of 'fair hearing' observed that :

“There can be no invariable standard for “reasonableness” in such matters except that the Court's conscience must be satisfied, that the person against whom an action is proposed has had a fair chance of convincing the authority who proposes to take action against him that the grounds on which the action is proposed are either non-existent or even if they exist they do not justify the proposed action.” 41

(vi) That the appellant has the right to know the evidence being used against it to rebut such evidence. That in Dakeshwari Cotton Mills Ltd. v. CIT, AIR 1955 SC 65 at Para 9, the Hon'ble Supreme Court held that :

“In this case we are of the opinion that the tribunal violated certain fundamental rules of justice in reaching its conclusions. Firstly, it did not disclose to the assessee the information that had been supplied to it by the departmental representative. Next, it did not given any opportunity to the company to rebut the material furnished to it by him, and, lastly, it declined to take all the material that the assessee wanted to produce in support of its case. The result is that the assessee had not had a fair hearing.”

24. In her affidavit, Secretary of the Commission has made an attempt to show that there is no difference in the finding/conclusion recorded by the Director General and the

Commission on the issue of ‘relevant market’ and the appellant got full opportunity to show that Organization of Private Professional Cricket League/ Events in India constituted the ‘relevant market’, but she has not disputed that in the order passed under Section 26(1), the Commission had clearly mentioned that its focus was on the underlying economic activities which are ancillary for the organization of sports events.

She has also not disputed that the Director General made investigation keeping in view the allegations contained in the information and the points formulated by the

Commission and recorded a finding that the ‘relevant market’ was underlying activities which are ancillary for organization of cricket in Twenty-20 format with respect to the IPL tournament. A careful scrutiny of the record reveals that while directing its Secretary to forward the report of the Director General to the appellant, the Commission had nowhere indicated that it did not agree with the finding recorded by the Director General on the issue of ‘relevant market’ and the appellant should show as to why Organization of Private Professional Cricket League/ Events in India may not be treated as the

‘relevant market’. It is, thus, evident that the appellant did not get any opportunity to contest the proposed determination of the ‘relevant market’ by the Commission. It is also worth mentioning that the appellant was served with copy of the Director General’s 42

report in two installments and was called upon to file its objections/suggestions.

Therefore, it was natural for the appellant to file reply only with reference to the findings

and the conclusions recorded by the Director General. The Commission was expected

to hear the appellant in the context of objections/suggestions filed in the context of the

findings recorded by the Director General. If the Commission wanted to differ with the

Director General on the issue of ‘relevant market’ then it should have given notice

spelling out its intention to do so and give an opportunity of hearing to the appellant,

which was admittedly not done. Therefore, there is no escape from the conclusion that

the finding recorded by the Commission that Organization of Private Professional

Cricket League/Events in India is the ‘relevant market’ is vitiated due to violation of the

rule of audi alteram partem.

25. Order dated 05.09.2014 passed by the Tribunal in the National Stock Exchange

vs. Competition Commission of India on which reliance has been placed in the affidavit

of Smt. Jhingran does not have any bearing on this case and the same cannot be

treated as laying down a proposition that the Commission can record finding on any

particular issue different than the one recorded by the Director General without giving

notice and opportunity of hearing to the affected party.

26. I shall now consider the question whether the Commission could rely upon TRPs

ratings available at www.indiantelevion.com; the news reports relating to the price of advertisement slots during a screening of a movie “3 Idiots” and general entertainment programmes such as “Saath Nibhana Saathiya” in comparison to the advertisement slots during the IPL; news reports showing an increase in revenue market share of ‘Set

Max’ from pre-IPL to post-IPL; KPMG-FICCI Report on media and entertainment in order to show that sports viewership needs increase in India; TAM ratings to compare viewership of various sports events like Cricket World Cup – 2007, the Olympics –

2004, the FIFA World Cup – 2006 etc. This question must be answered in negative and there are two reasons for doing so.

27. In the first place, the Secretary of the Commission has virtually admitted that the

Commission relied on the so called information available in public domain without 43

disclosing the same to the appellant. In my view the Commission’s failure to disclose

the information/material proposed to be used by it for arriving at a finding on the issue of

abuse of dominance and give an opportunity to the appellant to explain/controvert the

same has not only resulted in violation of the principles of natural justice but also

occasioned failure of justice.

28. Secondly the so called information available in the public domain could not have

been used by the Commission because no one had appeared in the witness box to

prove the same. The information downloaded by the Commission from the internet and

other similar sources can, at best be compared with newspaper report and it has been

consistently held by the Supreme Court that such reports have no evidentiary value

without further proof. In Samant N. Balakrishna v. George Fernandez [(1969) 3 SCC

238], the Supreme Court observed:

“...A news item without any further proof of what had actually happened through witnesses is of no value. It is at best a second-hand secondary evidence. It is well-known that reporters collect information and pass it on to the editor who edits the news item and then publishes it. In this process the truth might get perverted or garbled. Such news items cannot be said to prove them-selves although they may be taken into account with other evidence if the other evidence is forcible....”

29. In Manmohan Kalia v. Yash & Ors. [(1984) 3 SCC 499], the Supreme Court relied upon the observations made in the aforesaid judgment and held :

“The evidence of PWs. 8 and 13, however, is alleged to have been corroborated by a news item published in an Urdu daily 'Milap' whose Chief Sub-Editor (PW 5) was examined by the appellant. But the witness far from supporting his case has deposed that he had absolutely no personal knowledge of the Report made by Prashar which was published on 24.5.80. Moreover, it is very difficult for a court to rely on news items published on the information given by correspondents because that may not represent the true state of affairs.”

30. The same view was reiterated in Laxmi Raj Shetty v. State of Tamil Nadu [(1988)

3 SCC 319], in the following words : 44

“...We cannot take judicial notice of the facts stated in a news item being in the nature of hearsay secondary evidence, unless proved by evidence aliunde. A report in a newspaper is only hearsay evidence. A newspaper is not one of the documents referred to in Section 78(2) of the Evidence Act, 1872 by which an allegation of fact can be proved. The presumption of genuineness attached under Section 81 of the Evidence Act to a newspapers report cannot be treated as proved of the facts reported therein.” “It is now well-settled that a statement of fact contained in a newspaper is merely hearsay and therefore inadmissible in evidence in the absence of the maker of the statement appearing in Court and deposing to have perceived the fact reported....” 31. In State of Haryana v. Ch. Bhajan Lal and another Shri S.A. Khan [(1993) 3 SCC

151], it was observed :

“In the present case, no evidence has been let in proof of the statement of facts contained in the newspaper report. The absence of any denial by Ch. Bhajan Lal will not absolve the applicant from discharging his obligation of proving the statement of facts as appeared in the Press report. In fact, Ch. Bhajan Lal in his counter affidavit has taken a stand that the statements attributed to him based on the newspaper report are mere hearsay and cannot in law be relied upon for the purpose of initiating such proceedings. Therefore, in the absence of required legal proof, the Court will not be justified in issuing a suo moto notice for contempt of court.”

32. In Quamarul Islam v. S.K. Kanta [(1994) Supp. 3 SCC 5], the question relating to

admissibility of newspaper report was again considered and it was held :

“Newspaper reports by themselves are not evidence of the contents thereof. Those reports are only hearsay evidence. These have to be proved and the manner of proving a newspaper report is well settled. Since, in this case, neither the reporter who heard the speech and sent the report was examined nor even his reports produced, the produ ction of the newspaper by the Editor and publisher, PW4 by itself cannot amount to proving the contents of the newspaper reports. Newspaper, is at the best secondary evidence of its contents and is not admissible in evidence without proper proof of the contents under the Indian Evidence Act. The learned trial judge could not treat the newspaper reports as duly 'proved' only by the production of the copies of the newspaper.” “In the present case, we find that no legally admissible evidence has been led by the respondent-election petitioner, in proof of the facts contained in the 45

newspaper reports (news items), messages and advertisements. The appellant, returned candidate denied the making of the offending statements. The various newspaper reports, advertisements and messages, as published in Bahmani Newspaper cannot be treated as proof of the facts stated therein and cannot be used against the appellant in the absence of any evidence aliunde.”

33. In R. P. Luthra v. CBI [(W.P. (Crl.) 1520/2014], the Delhi High Court relied upon the proposition laid down in Laxmi Raj Shetty & anr. vs. State of Tamil Nadu and observed :

“It may be added that even the newspaper reports are held to be only hearsay evidence and not one of the documents referred to in Section 78(2) of the Evidence Act, 1872 by which an allegation of fact can be proved. In Laxmi Raj Shetty & Anr. v. State of Tamil Nadu, it was categorically held that the Court cannot take judicial notice of the facts stated in a news item published in a newspaper. In our opinion, the same analogy applies to the statements in a blog.”

34. In State (NCT of Delhi) v. Navjot Sandhu [(2005) 11 SCC 600], the Supreme

Court held that print outs taken from the computers/servers by mechanical process and certified by a responsible official of the service providing Company can be led into evidence through a witness who can identify the signatures of the certifying officer or otherwise speak to the facts based on his personal knowledge. This would make the call records admissible. The Supreme Court went further on to state that irrespective of the compliance of the requirements of Section 65B of the Evidence Act which is a provision dealing with admissibility of electronic records, there is no bar to adducing secondary evidence under the other provisions of the Evidence Act, namely Sections 63

& 65. The Court held that merely because a certificate containing the details in sub-

Section (4) of Section 65B is not filed in the instant case, does not mean that secondary evidence cannot be given even if the law permits such evidence to be given in the circumstances mentioned in the relevant provisions, namely Sections 63 & 65.

35. The views expressed in the last mentioned judgment was over ruled in Anvar PV v. PK Basheer [(2014) 10 SCALE 660], wherein it has held that any documentary evidence in the form of an electronic record can be proved only in accordance with the procedure prescribed under Section 65B of the Evidence Act. 46

“The evidence relating to electronic record, as noted herein before, being a special provision, the general law on secondary evidence Under Section 63 read with Section 65 of the Evidence Act shall yield to the same. Generalia special bus non derogant, special law will always prevail over the general law. It appears, the court omitted to take note of Sections 59 and 65A dealing with the admissibility of electronic record. Sections 63 and 65 have no application in the case of secondary evidence by way of electronic record; the same is wholly governed by Sections 65A and 65B. To that extent, the statement of law on admissibility of secondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case (supra), does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements Under Section 65B are satisfied.”

36. By relying upon the above noted judgments, I hold that the finding recorded by the Commission on the issue of abuse of dominance is legally unsustainable and is liable to be set-aside because the information downloaded from the net and similar other material do not have any evidentiary value and, in any case, the same could not have been relied upon by the Commission without giving an effective opportunity to the appellant to controvert the same.

37. The discussion made by the Commission in the context of clause 9.1(c)(i) of the media agreement is also vitiated due to breach of principles of natural justice because the same was neither referred in the order passed under Section 26(1) nor the Director

General recorded any finding qua its validity or otherwise and on this count the appellant did not get an opportunity to defend the said clause.

38. In the result, the appeal is allowed. The impugned order is set aside and the matter is remitted to the Commission for fresh disposal in accordance with law.

Consequently, I.A. is also disposed of.

[G.S. Singhvi] Chairman Dated : 23rd February, 2015