NCLT has no power to direct deposit as precondition for hearing appeal-Supreme Court 

NCLT has no power to direct deposit as precondition for hearing appeal. No jurisdiction to dismiss appeal itself for failure to make deposit against condition of stay-SC 

ABCAUS Case Law Citation
ABCAUS 2376 (2018) 06 SC

The appellant partnership firm participated in two tenders and it was L-II and not the lowest bidder for allotment of the tenders. After one year, the appellant firm received a notice from the Competition Commission of India, New Delhi (‘CCI’) asking to show cause under Section 19(1)(a) read with Section 3 of the Competition Act, 2002 (the Act).

In the said notice, it was alleged that the appellant firm was involved in anti-competitive and unfair trade practices in collusion with nine other firms. The appellant firm filed its reply. The CCI after considering the same passed orders under Section 26 of the Act and directed the inquiry to be conducted by the Director General (DG) of the CCI.

DG submitted its report after the inquiry giving his findings to the effect that the appellant had indulged in anti-competitive and unfair trade practices in collusion with the other firms. The appellant was given a chance to file its objections thereto. After considering those objections, the CCI passed orders affirming the findings of the DG and imposed penalties on the appellant firm along with other parties.

The appellant filed the statutory appeal before the Appellate Tribunal. The Appellate Tribunal admitted the appeal. It also granted stay on the orders of the CCI with the condition of depositing 10% of the total penalty imposed by CCI, to be paid by the appellant, within two weeks. The appellant could not fulfill the said condition of deposit. When the matter was taken up, the appellant pleaded before the Appellate Tribunal that non-compliance because of financial crunch which the appellant was facing.

However, the Appellate Tribunal disposed off the appeal without referring further to the bench for the reason that the appellant failed to avail last opportunity to deposit 10% of the penalty amount.

The appellant sought modification of orders stating that it had incurred losses and therefore, was not in a position to deposit the said amount. The request of the appellant was, however, not acceded to and the Appellate Tribunal dismissed the appeal. At the same time, the appeal of the appellant was also dismissed for noncompliance of the previous order.

The Hon’ble Supreme Court  observed that the condition of deposit was attached to the order of stay. In case of noncompliance of the said condition, the consequence would be that stay has ceased to operate as the condition for stay is not fulfilled. However, non-compliance of the conditional order of stay would have no bearing insofar as the main appeal is concerned.

The Hon’ble Supreme Court observed that Section 53B of the Act confers a right upon any of the aggrieved parties mentioned therein to prefer an appeal to the Appellate Tribunal. This statutory provision does not impose any condition of pre-deposit for entertaining the appeal. Therefore, right to file the appeal and have the said appeal decided on merits, if it is filed within the period of limitation, is conferred by the statute and that cannot be taken away by imposing the condition of deposit of an amount leading to dismissal of the main appeal itself if the said condition is not satisfied. Position would have been different if the provision of appeal itself contained a condition of pre-deposit of certain amount which was not so.

It was observed that Subsection (3) of Section 53B specifically cast a duty upon the Appellate Tribunal to pass order on appeal, as it thinks fit i.e. either confirming, modifying or setting aside the direction, decision or order appealed against. It is to be done after giving an opportunity of hearing to the parties to the appeal. It, thus, clearly implies that appeal has to be decided on merits. The Appellate Tribunal, which is the creature of a statute, has to act within the domain prescribed by the law/statutory provision. This provision nowhere stipulates that the Appellate Tribunal can direct the appellant to deposit a certain amount as a condition precedent for hearing the appeal. In fact, that was not even done in the instant case. The Appellate Tribunal, thus, had no jurisdiction to dismiss the appeal itself.

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