Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): The Coram of Ashok Kumar Gupta (Chairperson) and Sangeeta Verma and Bhagwant Singh Bishnoi (Members) while addressing the complaint in regard to unfair business by WhatsApp, dismissed the same on finding no competition concern.

Informant has filed the present information under Section 19(1)(a) of the Competition Act, against Whatsapp and Facebook alleging a contravention of provisions of Sections 4 of the Act and both Facebook and Whatsapp are collectively known as “OPs”.

Users of WhatsApp automatically get the payment app owned by WhatsApp i.e. ‘WhatsApp Pay’ installed on their smartphones. This, as per the Informant leads to the contravention of Section 4(2)(a)(i) of the Act as automatic installation of WhatsApp Pay on existing WhatsApp Messenger user’s device amounts to the imposition of an unfair condition on the users/consumers.

COERCION

A user who does not wish to install the Payments App but only the Messenger App does not have the option to do so.

Contravention: Section 4(2)(e)

Automatic installation also amounts to a contravention of Section 4(2)(e) of the Act as the dominance of WhatsApp in the Internet-based instant messaging App market favours and protects it in the UPI enabled Digital Payments Applications Market.

Informant further alleges that the acquisition of WhatsApp, Instagram and Oculus by Facebook causes an adverse effect on the competition as these companies to have huge data sets of users that they can use for their commercial advantage.

Decision and Analysis

Coram observes that the preamble to the Act unequivocally voices the ethos with which the Act was enacted, keeping in view the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

The mere fact that a case has been filed by an aggrieved party under the Competition Act, does not take away its character of being a case in rem involving a larger question of fair and competitive markets.

Further, it was observed that the Informant need to necessarily be an aggrieved party to file a case before the Commission.

Forum Shopping

Informant has indulged in forum shopping being closely associated with a petitioner who has approached the Supreme Court against WhatsApp and Facebook and this apparent non-disclosure reveals the mala fide intent and unclean hands with which the Informant has approached the Commission.

The Commission observes that WhatsApp and Facebook are third-party apps broadly providing internet-based consumer communications services. Consumer communications services can be sub-segmented based on different parameters.

Commission agrees with the Informant that the second relevant market for assessing the allegations of the Informant would be ‘market for UPI enabled Digital Payments Apps in India’.

At the outset, the Commission observes that Facebook and WhatsApp are group entities and though they may operate in separate relevant markets, their strengths can be attributed to each-others’ positioning in the respective markets in which they operate.

Commission added that in the absence of concrete data/information available in the Indian context other than the subjective information on the popularity of WhatsApp, the Commission is of the view that these trends and results can be used as a proxy, the said trends point towards Whatsapp’s dominance.

Barriers to Entry

The barriers to entry, may arise indirectly as a result of the networks effects enjoyed by the dominant player in the market, i.e. WhatsApp, in the present case. Since network effects lead to increased switching costs, new players may be disincentivized from entering the market.

Hence, Commission prima facie finds WhatsApp to be dominant in the first relevant market — market for OTT messaging apps through smartphones in India.

As regards Section 4(2)(a)(i), the Commission does not find much merit in the allegation of the Informant as mere existence of an App on the smartphone does not necessarily convert into transaction/usage.

Incorporating the payment option in the messaging app does not seem to influence a consumer’s choice when it comes to exercising their preference in terms of app usage, particularly since there seems to be a strong likelihood of a status quo bias operating in favour of the incumbents, at present.

With regard to the allegation under Section 4(2)(d) of the Act, the Commission observes that though the Informant has used the word ‘bundling’, the nature of such allegation is more akin to ‘tying’ as understood in the antitrust context generally.

While ‘tying’ refers to a practice whereby the seller of a product or service requires the buyers to also purchase another separate product or service, which essentially is the allegation of the Informant.

Installation of the WhatsApp messenger does not appear to explicitly mandate/coerce the user to use WhatsApp Pay exclusively or to influence the consumer choice implicitly in any other manner, at present.

UPI Market

UPI market is quite established with renowned players competing vigorously. Given the fact that WhatsApp ecosystem does not involve paid services as such for normal users, it seems unlikely that the consumer traffic will be diverted by WhatsApp using its strength in the messenger market. 

Facebook and WhatsApp undeniably deal with customer sensitive data which is amenable to misuse and may raise potential antitrust concerns among other data protection issues.

In the present case, the Informant has only alleged that WhatsApp/Facebook have access to data which they are using for doing targeted advertising, hence there is no concrete allegation.

Informant has also claimed that WhatsApp is in serious non-compliance with critical and mandatory procedural norms.

In view of the above allegation, Commission, do not seem to raise any competition concern and as such may not need any further scrutiny by it.

Therefore, based on the aforesaid analysis, Commission does not find alleged contravention of the provisions of Section 4 of the Act against WhatsApp or Facebook being made out. [Harshita Chawla v. WhatsApp,  2020 SCC OnLine CCI 32, decided on 18-08-2020]

Case BriefsHigh Courts

Gujarat High Court: A Division Bench of Sonia Gokani and N.V. Anjaria, JJ., initiated suo motu contempt proceeding of an extremely unfortunate event, wherein fingers have been raised against the High Court, Administration of High Court and Registry by irresponsible, sensational and intemperate delivery in an interview by the President of Gujarat High Court Advocates’ Association — Senior Advocate Yatin Oza.

Senior Advocate Yatin Oza levelled false and contemptuous allegations of corruption, malpractices against the administration of the High Court.

President of GHCAA by calling journalists on a live press conference made serious allegations of corruption against the registry and also categorically alleged Forum shopping in no uncertain terms without any valid, significant or true basis.

Further Court noted that, he has questioned the very credibility of High Court Administration and raised fingers at some of the Honourable Judges indirectly with scandalous remarks of a few Advocates being successful in getting their matters circulated in three courts and also getting contemplated orders.

President in his “complete consciousness and with total responsibility“ as declared by him in his interview called this August Institution a ‘Gambling den’ and an Institute which caters only to the litigants with means and money power, smugglers and those who are traitors.

Broadly following are allegations made by the President in the live press conference held by him:

  1. corrupt practices being adopted by the registry of the High Court of Gujarat,
  2. undue favour is shown to high-profile industrialist and smugglers and traitors,
  3. The High Court functioning is for influential and rich people and their advocates,
  4. The billionaires walk away with order from the High Court in two days whereas the poor and non VIPs need to suffer,
  5. if the litigants want to file any matter in the High Court person has to be either Mr Khambhata or the builder or the company. This also was circulated in Gujarati daily Sandesh titled as ‘Gujarat HighCourt has become a gambling den – Yatin Oza’

Bench also observed that, the President without caring for the truth, riding on the wave of populism, appears to have crossed all limits by condemning recklessly the Institution.

Being aware of the consequences, he gave an open challenge to the authority of this Court in the very interview which is even worse than the very action.

Court emphasises that,

In the present times, Bench-and the Bar are duty bound to work together and discharge their respective obligations.

In times of such crisis and the need to have a coordinated functioning of the Courts, such demeaning utterances would indeed result in more aggravating and retrograding effects.

Through the framers of the Constitution, the people of this nation have given to themselves the Constitution and have reposed their faith in the courts of justice. Their confidence cannot be allowed to be diminished by contemptuous behaviour of any person.

 It is in these times when attempt to shake the foundation of Judiciary is done, that the Court exercises its extraordinary powers under Article 215 of the Constitution of India to initiate actions for contempt of courts against those who attempt to undermine the authority of law and bring disrespect and disrepute to this institution by scandalising the same.

Criminal Contempt of this Court

Bench noted that President by his scandalous expressions and indiscriminate as well as baseless utterances attempted to cause damage to the prestige of the High Court and attempted to lowering the image of Administration, thus Court found him responsible for committing the criminal contempt of thus Court under Section 2(c) of Contempt of Courts Act and took cognizance of the same under Section 15 of the said Act.

Following directions have been issued by the Court:

  • Office shall register the matter as Suo motu Contempt Proceedings under Article 215 of the Constitution of India read with Section 15 of the Contempt of Courts Act.
  • Notice to be issued under Section 17 of the Contempt of Courts Act to the President.
  • The case of criminal contempt under Section 15 of the said Act is statutorily permitted to be heard and decided by the Bench of not less than two Judges as provided under Section 18 of the said Act.
  • Court deemed it appropriate to place before the Chief Justice consideration at the hands of the full Court whether to divest the stature of respondent under contempt, of designation of a senior Counsel under the circumstances.

[Suo Motu v. Yatin Narendra Oza, 2020 SCC OnLine Guj 856 , decided on 09-06-2020]

Case BriefsHigh Courts

Orissa High Court: S.K. Panigrahi, J., while addressing the present petition held that the present case to be a clear case of forum shopping.

Present petition challenges the termination letter by OP 1/ Hindustan Petroleum Corporation Ltd. (HPCL) on ground of violation of natural justice.

Facts of the Case

Petitioner was appointed as Distributor of LPG under Rajiv Gandhi Gramin LPG Vitarak through a Selection Process by way of an open advertisement issued by HPCL.

Core issue surrounding the present dispute is the submission of “Residence Certificate” of the advertised location. Accordingly, he submitted a “Residence Certificate” issued in his favour by the Tahasildar, Dharmasala.  Further it was noted that, Dharmashala Tahasil underwent a bifurcation namely Dharashala Tahasil and Rasulpur Tahasil.

In the meantime, the HPCL authority, during the Field Verification of Credential (FVC), asked the petitioner to submit Residential Certificate issued by the Tahasildar, Rasulpur since the new jurisdictional Tahasil is Rasulpur. Accordingly, the petitioner submitted another “Residence Certificate.”

Finally, he was found suitable for final award of distributorship.

Upon a complaint made by one of the unsuccessful complainants (OP 6), it was discovered that the furnished “Residential Certificate” mentioned him to be the resident of Brahmabarada alleged to be false and incorrect as he is not an ordinary resident of advertised location “Brahmabarada” which is under Rasulpur Block.

Upon perusal of records, petitioner was found to be the resident of village Chandapur and not Brahmabarada

Residential Certificate issued to the petitioner by the Tahasildar, Rasulpur was issued by OP 6 before Sub-Collector, Jaipur, though the Sub-Collector had allowed the appeal and concluded that the petitioner is a resident of “Chandapur” and not ” Brahamabarada”. Further aggrieved by the same, petitioner had approached this Court and the same was dismissed confirming Sub-Collector’s decision.

Petitioner further invoked the provisions of intra-court Appeal, further the Division Bench took the confirmatory view taken by Single Judge.

Thus, the findings of Appellate Authority-cum-Sub-Collector, Jajpur attained finality.

Conclusion

Bench stated that, petitioner secured the distributorship by means of illegal Residential Certificate and thereby he violated the terms of Distributorship Agreement.

There is sufficient convolution in the instant lis making it a clear case of forum shopping at the behest of the petitioner, who, having lost in the earlier round of litigation which attained finality, has sought similar remedy in the instant proceedings.

Court has time and again deprecated the practice of forum shopping by litigants and viewed it as an abuse of law

Court observed that, Selection alleged to have been done through Residence Certificate shrouded with doubts and smacks a fraudulent behavior on the part of the Petitioner. Fraud and justice cannot go together.

It is a settled law that “Fraud” vitiates every solemn act.

Time and again, it has been reiterated by the Apex Court that the contract between private party and the State or instrumentality of State is under the realm of a private law and there is no element of public law, the normal course for the aggrieved party, is to invoke the remedies available under ordinary civil law rather than approaching the High Court

Procedural formalities for the termination of contract need to be performed in fairness and good faith.

In the instant case, the employer has faithfully attempted to observe the principle of natural justice vide its show-cause letter dated 22.11.2017 and dated 11.01.2018; hence the plea of violating the principles of natural justice is ill-founded.

The instant issue has sufficiently occupied the time of this Court and there have been attempts to circumvent the spirit of litigation by using different forums, hence no substantial miscarriage of justice shall be caused if the instant Writ Petition is dismissed.

In view of the above, petition stands dismissed. [Talim Ali v. HPCL,  2020 SCC OnLine Ori 323 , decided on 24-04-2020]

Case BriefsSupreme Court

Supreme Court: Dismissing the petition filed by advocate Kamini Jaiswal wherin it was alleged that that attempts were made to bribe some Supreme Court Judges in the matters relating to Medical admission scam, the 3-judge bench of RK Agrawal, Arun Mishra and AM Khanwilkar, JJ held that there was no question of registering any FIR against any sitting Judge of the High Court or of this Court as it is not permissible as per the law laid down by a 5-judge Constitution Bench in K. Veeraswami v. Union of India, (1991) 3 SCC 655 ,wherein this Court observed that in order to ensure the independence of the judiciary the apprehension that the Executive being largest litigant, it is likely to misuse the power to prosecute the Judges.

Noticing that the FIR mentioned by the petitioner did not reflect the names of any of the Supreme Court judges, the bench said:

“The entire judicial system has been unnecessarily brought into disrepute for no good cause whatsoever. It passes comprehension how it was, that the petitioner presumed, that there is an FIR lodged against any public functionary.”

It was held that there cannot be registration of any FIR against a High Court Judge or Chief Justice of the High Court or the Supreme Court Judge without the consultation of the Hon’ble Chief Justice of India and, in case there is an allegation against Hon’ble Chief Justice of India, the decision has to be taken by the Hon’ble President, in accordance with the procedure prescribed in the said decision.

Upon the contention that a judicial order cannot be violated, and it could not have been rendered ineffective by the Constitution Bench decision of this Court dated 10.11.2017 and that by doing so the Chief Justice was being a judge in his own case, the bench relied upon the 3-judge bench decision in Dr. D C Saxena v. Chief Justice of India, (1996) 5 SCC 216, where it was held:

it was the duty of the Chief Justice to assign judicial work to brother Judges. By doing so, he did not become a Judge in his own cause. It is contempt to imply that the Chief Justice would assign it to a Bench which would not pass an order adverse to him.”

Regarding the contention that A.M. Khanwilkar, J. should have recused himself from the bench as he was a member of the Bench which disposed of the matter of Prasad Education Trust vide order dated 18.9.2017, the Court said that it was nothing but another attempt of forum hunting which cannot be permitted. The bench said:

“it is the duty of the Bench to take up such matter firmly; such unscrupulous allegations and insinuations cannot be allowed to be hurled by oral prayer made on behalf of the petitioner for recusal.”

To conclude, the bench said:

“Though it is true, that none of us is above law; no person in the higher echelons is above the law but, at the same time, it is the duty of both the Bar and the Bench, to protect the dignity of the entire judicial system.”

Coming down heavily upon the petitioner, who after arguing at length, at the end, submitted that she was not aiming at any individual, the Court said:

“If that was not so, unfounded allegations ought not to have been made against the system and that too against the Hon’ble Chief Justice of this country.”

Upon the question of unprecedented situation being created on 10.11.2017, the bench said:

“As Hon’ble Chief Justice of India had to assign it to a Bench, situation of dilemma was created for Hon’ble Chief Justice of India whether to assign the matter of CJAR to an appropriate Bench or to go by the judicial order by constituting a Bench of 5 senior Judges on 13.11.2017.”

The Court said that it deprecated the practice of forum hunting and that it cannot fall prey to such unscrupulous devices adopted by the litigants, so as to choose the Benches, as that is a real threat to very existence of the system itself and it would be denigrated in case we succumb to such pressure tactics. [Kamini Jaiswal v. Union of India, 2017 SCC OnLine SC 1322, decided on 14.11.2017]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Tribunal, New Delhi: Cyrus Investment, the petitioners filed an application under Rule 11, read with Rule 16 of the NCLT Rules, 2016 with a prayer for transfer/reassignment of the Company Petition No. 82/2016 pending before the NCLT, Mumbai Bench to any other appropriate Bench other than the Bench comprising Shri B.S.V. Prakash Kumar, Member (J) and Shri V. Nallasenapathy, Member (T).

The appellants Cyrus Investments Pvt. Ltd. and Sterling Investment Corporate Pvt. Ltd., both shareholders of 1st Respondent Company Tata Sons Limited, had earlier preferred Company Petition No. 82 of 2016 before the National Company Law Tribunal, Mumbai under Sections 241, 242 and 244 of the Companies Act, 2013 alleging continuing act of ‘Oppression & Mismanagement’ of members of 1st Respondent. The NCLAT, Mumbai Bench, holding that shareholding of 10% must be computed by including preference share capital along with equity share capital, granted waiver to the appellants’ entities falling in the filing criteria of having 10 per cent shares of Tata Sons so as to enable them to file application under Section 241.

Learned Senior Counsel for the appellants argued that the Mumbai Bench of the NCLT has already prejudged the facts specifically relating to the applicants and thus he apprehended by virtue of a reasonable inference that the same Bench would not be able to deal with the same issues fairly. Learned Senior Counsel for the respondents stated that there is active concealment on the part of the applicants as they want to opt for the relief by forum shopping.

While adjudicating the question on whether any case is made out for the transfer of proceedings from the NCLT, Mumbai Bench to any other appropriate Bench at the Delhi forum, the Tribunal explicitly held that there is no rule of universal application that if a finding has been recorded while discussing a preliminary issue, then such a judge is disqualified to hear the matter. Dismissing the plea of transferring the petition to any other Bench instead of NCLT, Mumbai Bench, the Tribunal held that the appeal was devoid of any merit, thereby, imposing a penalty of Rs. 10 lakh to be borne equally by Mr. Mistry’s two investment firms. [Cyrus Investment v. Tata Sons Ltd., 2017 SCC OnLine NCLT 1257, decided on 6.10.2017]