Competition Commission of India Vs State of Mizoram (Supreme Court of India)
The Supreme Court has ruled that the Competition Commission of India (CCI) cannot be prevented from investigating anti-competition Element in the tendering process of lotteries on grounds of lottery business outside the ambit of commercial intercourse.
We must take note of the expansive definition of ‘Service’ under Section 2(u) of the Competition Act. It means service of any description, which is to be made available to potential users. The purchaser of a lottery ticket is a potential user and a service is being made available by the selling agents in the context of the Competition Act. Suffice for us to say the inclusive mentioning does not inhibit the larger expansive definition. The lottery business can continue to be regulated by the Regulation Act. However, if in the tendering process there is an element of anti-competition which would require investigation by the CCI, that cannot be prevented under the pretext of the lottery business being res extra commercium, more so when the State Government decides to deal in lotteries.
We would like to say that the intervention by the High Court was extremely premature. It ought to have waited for the CCI to come to a conclusion but on the other hand what has happened is that the CCI proceedings have been brought to a standstill while the High Court opined on the basis of some aspects which may or may not arise.
We are, thus, of the view that there was really no need for the High Court to proceed in the manner and in the direction it sought to proceed. The correct approach, more so once the statement was made on behalf of the CCI, would have been to close the proceedings filed by the State Government and let the private parties face the ultimate decision of the CCI. If they were aggrieved by any adverse decision of the CCI they were entitled to avail of the appellate remedy under Section 53B of the Competition Act.
The complaint having been made by respondent No.4 under Section 19 of the Competition Act, which provides that the Commission “may” inquire into certain agreements and dominant position of enterprise as envisaged under sub-section (1) of Section 3 and sub-section (1) of Section 4 of the Competition Act. The CCI found out a prima facie case for investigation by the DG under Section 3(1) of the Competition Act, the DG opined adversely, and the CCI issued notice giving an opportunity to the affected parties to place their stand before it. This process ought to have been permitted to conclude with the right available to the affected parties to avail of the appellate remedy under Section 53B of the Competition Act.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. A complaint received by the Competition Commission of India (for short ‘appellant/CCI’) from respondent No.4 seeking investigation under the Competition Act, 2002 (hereinafter referred to as the ‘Competition Act’) in respect of State Lottery run by the State of Mizoram (respondent No.1) has given rise to the present dispute. The jurisdiction of CCI to inquire into allegations of bid rigging, collusive bidding, and cartelisation in the tender process for appointment of selling agents and distributors for lotteries organised in the State of Mizoram has been challenged in the present proceedings by the successful bidders, and to a much lesser extent, by the State of Mizoram.
2. The State of Mizoram issued an Invitation for Expression of Interest (for short ‘EoI’) through respondent No.2, the Director, Institutional Finance and State Lottery (IF&SL) on 20.12.2011 inviting bids for the appointment of lottery distributors and selling agents for state lotteries to be organised by the Government of Mizoram in terms of the Mizoram Lotteries (Regulation) Rules, 2011 (hereinafter referred to as the ‘Regulation Rules’) framed under the Lotteries (Regulation) Act, 1998 (hereinafter referred to as the ‘Regulation Act’). The EoI was for appointment of lottery distributors/selling agents to organise, promote, conduct, and market the Mizoram State Lottery through both conventional paper type and online system. The EoI specified that the minimum rate fixed by the Government of India is Rs.5 lakh per draw for Bumper and Rs.10,000 per draw for others – bids less than these rates would be summarily rejected. In pursuance of the EoI, five bids were received of which four were accepted. The accepted bids quoted identical rates as per the following table:
