Experts CornerKhaitan & Co

Indian tax law is routinely amended by the Parliament. While well-reasoned amendments serve as a tool to rectify lacunae in the existing law, retrospective amendments are inherently controversial.


Retrospective amendments introduced in 2012 enabled the Government to tax gains on certain transactions from 1-4-1961. The tax net was widened to include share transfers of foreign entities deriving substantial value from assets in India (also colloquially referred to as “indirect transfer”). Against this backdrop, there was widespread apprehension on the possible negative impact of capital inflows in an emerging economy like ours.


Fast forward to today, the Government has passed a separate amendment[1] (2021 Act) in the Income Tax Act to nullify the retrospectivity in the law on offshore indirect transfers undertaken prior to 28-5-2012. Accordingly, orders raising demand on account of retrospective charge would stand nullified where the taxpayers agree to withdraw all pending litigation and waive their rights in all forums (including international arbitrations). As part of such trade-off, the Indian Government will refund all taxes collected on account of such retrospective application of law.



Offshore indirect transfers took center stage during the Vodafone[2] controversy wherein the  Supreme Court unequivocally held that Indian domestic tax law (at the time) did not permit taxing an offshore indirect transfer. However, the legislature expressed that the Supreme Court judgment was   inconsistent with the legislative intent of the then existing provisions under Indian tax law (as acknowledged by the Statement of Objects and Reasons of the Bill of 2021 Act). Subsequently, the Parliament retrospectively amended the statute to “clarify” that an offshore indirect transfer in India has always been deemed to be a taxable event.


In some other parts of the world too, Revenue Authorities have sought to tax offshore indirect transfers (such as Bharti Airtel’s acquisition of Zain Telecom in Africa and purchase of Petrotech by Ecopetrol in Peru). From a source country perspective, transferring source country’s assets through indirect share transfers at an offshore level is nothing but an effective “transfer” of assets in the source country. The source country naturally wants its share of the pie and claims tax on proportionate gains attributable to value derived from the assets located in the source country.

Ensuing disputes and arbitrations

The need to undertake concrete measures to address the negative effect on foreign investor sentiment was evident almost immediately. An Expert Committee chaired by Dr Parthasarathi Shome in 2012 made a case for the amendments to be made effective prospectively[3]. However, despite successive changes of Governments, the amendments stayed in the statute.


According to Government’s own data, tax demands were raised in 17 cases involving indirect transfers undertaken prior to 2012. Out of the above, two cases were stayed by the High Courts and bilateral investment treaties (BITs) with UK and the Netherlands were invoked in other four. In the past few months, Arbitral Tribunals ruled in favour of the taxpayers in the arbitrations of Vodafone International Holdings BV v. Republic of India (Vodafone)[4] and Cairn Energy Plc and Cairn UK Holdings Ltd. v. Republic of India (Cairn)[5]. The tribunals based their view upon violation of the “fair and equitable treatment” standard guaranteed to the investors under bilateral investment treaties. Consequently, the Arbitral Tribunal awarded Cairn a billion dollar in damages for the “total harm” suffered by them as a result of breach of BIT with India. Such cases are a reminder of limits placed by international law upon sovereign right of taxation. International law recognises States sovereign right to tax and determine whether a specific transaction is chargeable to tax or not. However, the manner and imposition of tax on the foreign investor can be tested on the anvil of “fair and equitable treatment” under various BITs.


Until recently, news reports suggested that India did not accept the arbitration awards and appealed the decision in both Vodafone[6] and Cairn case[7].  At the same time, Cairn moved the United States District Court in the Southern District of New York (SDNY) on 14-5-2021 stating that they intended to enforce the arbitration award[8]. Cairn sought seizure of assets of Air India as “an alter ego of Indian Government” on the premise that Air India is State owned and “legally indistinct” from the State. For now, the US District Court has stayed the proceedings in light of any potential settlement that might be agreed between Cairn and India[9].


Course correction


The key aspects of the 2021 Act are as follows:

  • Non-levy of taxes on offshore indirect transfers undertaken prior to 28-5-2012 i.e. the law on taxation of indirect transfers has been made prospectively applicable from the date of the amendment.
  • Government would nullify the demands raised, subject to withdrawal of pending litigation by the taxpayers (including, international arbitration). The taxpayers are also required to furnish an undertaking waiving their rights to seek or pursue any remedy in connection thereto.
  • Refund of taxes which were collected pursuant to demand raised on account of indirect transfers. However, the Government would not be paying any interest on refund of the tax amounts.


The enactment of 2021 Act as a means to settle the long-drawn controversy is a welcome move. Though delayed, the amendment, along with the Government’s efforts to revamp the tax ecosystem to bring out a change in how taxpayers are assessed could enhance investor confidence. Having said that denial of interest on principal tax amount not only denies the existing right of a taxpayer enshrined in the statute book, but it also results in inequitable treatment. However, the larger construct behind the enactment cannot be faulted with.


Way forward

It is hoped that 2021 Act will draw the final curtains to the decade long controversy. There are however some notable lessons that may be drawn from this matter:

  • Changes in law, specifically tax law, should be guided by sound policy rather than revenue considerations alone. While the controversy disparaged India’s image as an investment jurisdiction, no meaningful revenue was collected from such measure. In a world driven by cross-border investments, having a sound tax policy will ensure that India is seen positively as a country that honours its treaty obligations and presents tax certainty which will in turn attract more investment, possibly leading to higher tax collections.
  • In addition, considering the changing international tax ecosystem, it would serve well if the dispute resolution mechanisms were relooked at to provide for a faster resolution of tax disputes.

Partner, Khaitan & Co.

†† Associate, Khaitan & Co.

[1] Taxation Laws (Amendment) Act, 2021, See HERE

[2] Vodafone International Holdings BV v. Union of India, (2012) 6 SCC  613 : (2012) 341 ITR 1.

[3] See HERE.

[4] (2012) 6 SCC  613

[5] PCA Case No. 2016-7.

[6]See HERE.

[7]See HERE.

[8]See HERE.

[9]See HERE.

Case BriefsSupreme Court Roundups


Maintenance of wife|Husband doesn’t have to pay maintenance in each of the proceedings under different Maintenance laws [Explainer on Supreme Court guidelines]

Supreme Court has framed guidelines on overlapping jurisdiction under different enactments for payment of maintenance, payment of Interim Maintenance, the criteria for determining the quantum of maintenance, the date from which maintenance is to be awarded, and enforcement of orders of maintenance.

Also read: Guidelines

Anvay Naik Suicide|High Court abdicated it’s duty by failing to make prima facie evaluation of FIR. Here’s why SC granted interim bail to the accused

If the High Court were to carry out a prima facie evaluation, it would have been impossible for it not to notice the disconnect between the FIR and the provisions of Section 306 of the IPC.

Also read: SC grants interim bail to 3 accused in Anvay Naik suicide case. Calls Bombay HC order erroneous

Appointments and functioning of Tribunals| Tribunal Rules 2020 valid but need modifications, National Tribunals Commission to be constituted; directs SC [Read Directions]

Dispensation of justice by the Tribunals can be effective only when they function independent of any executive control: this renders them credible and generates public confidence.

Also read: ‘It’s high time we put an end to the disturbing trend of Govt ignoring our directions.’ Read why Supreme Court directed constitution of National Tribunals Commission

All is not lost for Shiksha Mitras as SC dismisses their plea challenging 2019 Assistant Teachers’ recruitment process but asks UP Govt to give them a third chance

Uttar Pradesh Government can now fill up 69, 000 posts in terms of the result declared on 12.05.2020.

COVID-19| Seeking waiver of interest for loan during the moratorium period? SC asks Govt to implement decision to forego interest on 8 categories

All steps to implement the decision dated 23.10.2020 of the Government of India, Ministry of Finance be taken so that benefit to the eight categories contemplated in the affidavit can be extended.

COVID-19| ‘You can’t stop at issuing advisory’; SC directs Centre to ban the use of disinfection tunnels

In event, use of disinfectant on human body is to cause adverse effect on the health of the people, there has to be immediate remedial action.

Govt sits over land for 33 years without authority. SC directs handing over of land to owners within 3 months; says such lawlessness cannot be condoned

The courts’ role is to act as the guarantor and jealous protector of the people’s liberties: be they assured through the freedoms, and the right to equality and religion or cultural rights under Part III, or the right against deprivation, in any form, through any process other than law.

Nothing wrong with TRAI seeking information to ensure transparency; SC directs Airtel, Vodafone Idea to disclose segmented offers details to TRAI

SC has asked TRAI to ensure that such information is kept confidential and is not made available to the competitors or to any other person.

Are you a homebuyer planning to take builder to Court? SC says you can choose between seeking remedy under the RERA Act or the Consumer Protection Act

The RERA Act does not bar the initiation of proceedings by allottees against the builders under the Consumer Protection Act, 1986.


‘Law should not become a ruse for targeted harassment’; SC reminds Courts of their duty to ensure human liberty

Liberty survives by the vigilance of her citizens, on the cacophony of the media and in the dusty corridors of courts alive to the rule of (and not by) law. Yet, much too often, liberty is a casualty when one of these components is found wanting.

Candidate suppresses his over-qualification during recruitment process. Can he later contend that over-qualification can’t be a disqualification? Here’s what SC says

Employers prescribe qualifications to any post, not Courts.

PCS (Judicial) Exam| As 47 seats remain vacant, SC asks Justice AK Sikri & Justice SS Saron to re-check some papers in 2 subjects to gather what went wrong

“We propose to pass an order to satisfy our judicial conscious in the given scenario where only 28 people have been recruited in pursuance to an examination process where 75 vacancies existed.”

Thinking of seeking transfer of petition for restitution of conjugal rights under Section 21-A(2)(b) of the Hindu Marriage Act, 1955? SC says you can’t

Sub-section (2) of Section 21-A has no independent existence de hors Sub-section (1).

Signature obtained by fraud? Burden of proof is on the party alleging such forgery; says SC

For invoking Section 17 of the Limitation Act, 1963, two ingredients i.e. existence of a fraud and discovery of such fraud, have to be pleaded and duly proved.

No mention of intention to blacklist in the show cause notice? SC says such show cause notice and consequent blacklisting order liable to be quashed

Blacklisting can effectively lead to the civil death of a person.

Mere lack of State Government’s prior consent does not vitiate CBI investigation in absence of prejudice caused to accused; says SC

State of Uttar Pradesh has accorded a general consent for investigation of cases by CBI in the whole of UP.

Two men walk free after 12 years in prison as SC holds that conviction cannot be based solely on refusal to undergo a Test Identification Parade

The finding of guilt cannot be based purely on the refusal of the accused to undergo an identification parade.

Despite many witnesses turning hostile, SC finds man guilty of killing his wife in 1999; Says it’s not an unusual event in long drawn out trials in India

A large number of witnesses turning hostile is not an unusual event in the long drawn out trials in our country and in the absence of any witness protection regime of substance, one has to examine whatever is the evidence which is capable of being considered, and then come to a finding whether it would suffice to convict the accused.

Nominated person faces trial for 30 years in Dalda Ghee adulteration case while HUL never gets convicted. SC says either both get convicted or none

In the absence of the Company, the Nominated Person cannot be convicted or vice versa.

Timing of crime saves man from facing gallows or prison for the rest of his life for raping and killing 2.5 year old niece. SC commutes sentence under Section 376A IPC

In a chilling crime, a 21-year-old man was had raped and killed his 2.5 years-old niece just a week after the amended Section 376A was brought into force in the year 2013.

Not just the petitioning creditor but ‘any’ creditor can initiate transfer of winding up proceedings from a Company Court to NCLT; holds SC

Proceedings for winding up of a company are proceedings in rem to which the entire body of creditors is a party, hence, by a deeming fiction the petition by even a single creditor is treated as a joint petition.

High Court not obliged to frame substantial question of law if no error is found in First Appellate Court’s findings; says SC

The formulation of substantial question of law or reformulation of the same in terms of the proviso arises only if there are some questions of law and not in the absence of any substantial question of law.

Can NSE realise withheld securities prior to expulsion or declaration of defaulter? SC discusses in detail

Vesting does not take place in favour of the Exchange unless a formal expulsion order is passed. The relevant point of time, therefore, is the date of expulsion. Without such legal vesting, the Exchange only sits upon the withheld assets as a custodian.

Is obstruction & abuse by upper caste person due to property dispute an offence under SC/ST Act? Not in all cases, says SC

The property disputes between a vulnerable section of the society and a person of upper caste will not disclose any offence under the Act unless, the allegations are on account of the victim being a Scheduled Caste.

SC dismisses Tej Bahadur’s plea against rejection of his Nomination Papers to contest against PM Modi from Varanasi in 2019 Lok Sabha Polls

Ex-BSF Jawan Tej Bahadur’s nominations were rejected by the returning officer for want of a certificate to the effect that he has not been dismissed for corruption or disloyalty to the State.

2015 Guru Granth Sahib sacrilege| ‘No threat to the lives of accused or to fair trial’; SC refuses to transfer the trial outside Punjab

The transfer of trial from one state to another would inevitably reflect on the credibility of the State’s judiciary. Except for compelling factors and clear situation of deprivation of fair justice, the transfer power should not be invoked.

Remedy under Section 14 of SARFAESI Act does not become redundant if DM is unable to take possession of secured assets within time limit

The time limit is to instill a confidence in creditors that the District Magistrate will make an attempt to deliver possession as well as to impose a duty on the District Magistrate to make an earnest effort to comply with the mandate of the statute.

No relief to Skoda Volkswagen as SC refuses to quash FIR over alleged use of cheat devices

The law is well settled that Courts would not thwart any investigation.

Madras HC refuses to decide vires of Section 40(a)(iib) of the Income Tax Act pending assessment proceedings. SC disapproves the approach

Vires of a relevant provision goes to the root of the matter.

Railway Protection Force officer fails to detect & prevent thefts. SC answers if his compulsory retirement is justified or not

A police officer in the Railway Protection Force is required to maintain a high standard of integrity in the discharge of his official functions.

No reservation for in-service doctors in Super Specialty Medical Courses for the academic year 2020-2021; holds SC

The counselling for admission to Super Specialty Medical Courses for the academic year 2020- 2021 shall proceed on a date to be fixed by the competent authority without providing for reservations to in-service doctors for the academic year 2020-2021.

Direct Recruits to Rajasthan’s Tax Assistant posts cry foul after Departmental Promotees appear senior. SC finds seniority justified

Keeping in mind that the advertisements for filling the entire cadre, in both the quotas or streams of recruitment were issued one after the other, and more importantly, that this was the first selection and recruitment to a newly created cadre, the delay which occurred on account of administrative exigencies and also the completion of procedure, such as verification of antecedents, the seniority of the promotees given on the basis of their dates of appointment was justified.

Connection with agricultural land a must for homestead land & waterbodies to come within the purview of the WB Restoration of Alienated Land Act, 1973

Homestead land when included within the meaning of the term “land” in 1973 Act means homestead of an agriculturist and not any and every structure on non-agricultural land.


Sharing links or screen of Video Conference hearings without authorisation? Be ready to face “adverse consequences”. SC cautions AORs, Parties-in-person

Mysterious discrepancy in case details and judgement files on Supreme Court’s website creates confusion

Case BriefsSupreme Court

Supreme Court: The 3-judge bench of SA, Bobde, CJ* and AS Bopanna and V. Ramasubramanian, JJ has directed telecom giants Bharti Airtel and Vodafone-Idea to disclose information/details regarding segmented offers to TRAI. It asked TRAI to ensure that such information is kept confidential and is not made available to the competitors or to any other person.

Facts leading to this order

  • The Telecommunication Tariff (63rdAmendment) Order, 2018 issued by TRAI on 16.02.2018 was challenged by Bharti Airtel Limited, Idea Cellular Limited and Vodafone Mobile Services Limited. Apart from “Reporting Requirements”   and   “Significant   Market   Power”(SMP), a grievance was also raised against insistence of TRAI about the disclosure of segmented discounts/concessions.
  • TDSAT issued an interim arrangement on 24.04.2018 staying the relevant clauses relating to the Reporting Requirements and the definition of SMP. However, the Tribunal permitted TRAI to ask for details of segmented discounts/concessions for analysis but exempted the Telecom Service Providers (TSPs) from disclosing the names of their customers and other sensitive information.
  • After the High Court refused to interfere with the aforementioned order, the TDSAT heard the appeals finally and allowed them partially by a final order dated 13.12.2018, setting aside the Telecom Tariff 63rd Amendment Order in so far as it changes the concepts of SMP, Non-predation and the related provisions;
  • TRAI hence moved the Supreme Court against TDSAT’s order and sought an interim direction to the service providers to disclose information/ details sought by the appellant regarding the segmented offers.

The TSPs argued before the Court that segmented offers constitute “confidentially designed trade practices” and the same has been recognised by TDSAT in it’s order. However, at the same time TDSAT allowed TRAI to seek the number of segmented offers made available to their existing customers, along with a declaration that the principles of non-discrimination were being followed. According to the TSPs, they are complying with the said direction.

TRAI, on the other hand, submitted before the Court considering the number of segmented offers provided by TSPs from January, 2019 to December, 2019 in various states, the details of these offers are not even disclosed to TRAI and that therefore, despite being a regulator, TRAI is not in a position to analyse whether the plans are transparent and non-discriminatory and whether predatory pricing is resorted to by TSPs in the garb of segmented offers or not. It was contended that the TSPs are under a statutory obligation to offer tariffs in a transparent and non-discriminatory manner and to report all tariffs to the authority.

Considering the facts and circumstances, the Court said that that the information being sought by TRAI to ensure adherence to the regulatory principles of transparency, non-discrimination and non-predation, cannot be said, at least prima facie to be either illegal or wholly unjustified.

[Telecom Regulatory Authority of India v. Bharti Airtel Ltd., 2020 SCC OnLine SC 910, order dated 06.11.2020]

*Justice SA Bobde, Chief Justice of India has penned this order

Case BriefsSupreme Court

Supreme Court: In some relief to the financially stressed telecom giant Vodafone Idea, the bench of UU Lalit and Vineet Saran, JJ has directed a tax refund of Rs.733 Crores to the company within 4 weeks. The Court also directed the Income Tax department to conclude the proceedings initiated pursuant to notice under sub-section (2) of Section 143 of the Act in respect of AY 2016-17 and 2017-18 as early as possible.

Background of the case

Vodafone Idea had, however, sought Rs 4,759.07 crore in tax refund from for Assessment Years 2014-15, 2015-16, 2016-17 and 2017-18. The IT Department had, however, withheld the returns on account of multiple issues like Transfer Pricing Adjustment, Capitalization of Licence Fees, 3G Spectrum Fees, Asset Restoration Cost Obligation including the effect of amalgamation of group entities which required thorough scrutiny and determination. It had argued that processing any refunds, in light of pending special audit, scrutiny and tax demands of more than Rs 4,700 crore, will be prejudicial to the interest of the revenue department.

Vodafone Idea, on the hand, argued that after the lapse of the one-year period, by reason of second proviso to Section 143 (1), the right to claim refund is vested in any assessee. This is independent of the Revenue’s power to issue a scrutiny notice under Section 143 (2), for which the period of limitation is longer. However, if the Assessing Officer does not issue any notice, or intimation, if the assessee can claim refund, that right is a statutorily vested one if, within the said period of one year, a reasoned order is not made under Section 143 (1D) within the said one year period.

On relevance of non-obstante clause under Section 143 (1D)

The Court explained that the power under sub-section (1) of Section 143 of the Act is summary in nature designed to cause adjustments which are apparent from the return while that under sub-sections (2) and (3) is to scrutinize the return and cause deeper probe to arrive at the correct determination of the liability of the assessee. It further said that if the power under sub-section (2) of Section 143 of the Act is initiated in a manner known to law, there cannot be any insistence that the processing under sub-section (1) of Section 143 be completed and refund be made before the scrutiny pursuant to notice under sub-section (2) of Section 143 is over.

It, however, going into the legislative intent behind introduction of the non-obstate clause under Section 143 (1D), said that the intent to have the general principle emanating from subsection (1) of Section 143 overridden, in case where the proceedings are initiated pursuant to notice under sub-section (2) of the Act, gets more pronounced and emphasized by use of non-obstante clause in sub-section (1D).

It explained,

“irrespective of some change in the text of said provision which was sought to be introduced by Finance Act 2016 and not accepted by Finance Act, 2017, the legislative intent is clear from the expression, “… the processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2)” and by use of non-obstante clause.”

The bench, further, said that though the period for which it would not be necessary to process the return was sought to be specified by Finance Act, 2016, mere absence of such period in the provision as it stands today, makes no difference.

“As against the general principle which mandates an action in a particular manner, when an exception is to be carved out, the relevant provisions stipulate “it shall not be necessary” to adhere to and follow the manner mandated by such general principle; and if the contingency contemplated by such exception arises, the general principle is to stand overridden.”

On whether separate intimation to the assessee is mandatory or not

On the issue whether any intimation is required to be given to the assessee that because of initiation of proceedings pursuant to notice under sub-section (2) of Section 143 of the Act processing of return in terms of sub-section (1) of Section 143 of the Act, would stand deferred, he bench held that a separate intimation was neither contemplated by the statute nor would it achieve any purpose. It said,

“the issuance of notice under sub-section (2) of Section 143 is enough to trigger the required consequence.”

The Court explained that the  processing of return in terms of subsection (1A) of Section 143 of the Act is to be done through centralized processing and the scope of processing under subsection (1) of Section 143 of the Act is purely summary in character. Once deeper scrutiny is undertaken and the matter is being considered from the perspective whether there is any avoidance of tax in any manner, issuance of notice under sub-section (2) itself is sufficient indication.

“Sub-section (1D) of Section 143 of the Act does not contemplate either issuance of any such intimation or further application of mind that the processing must be kept in abeyance. It would not, therefore, be proper to read into said provision the requirement to send a separate intimation.”

[Vodafone Idea Ltd. v. Assistant Commissioner, Income Tax Circle 26 (2), 2020 SCC OnLine SC 418 , decided on 29.04.2020]

Hot Off The PressNews

Supreme Court:  The bench of Arun Mishra and MR Shah, JJ has dismissed a petition filed by Vodafone against the levy of one-time spectrum charges (OTSC).

When Senior advocate Abhishek Manu Singhvi, appearing for Vodafone, told a bench that the charges are related to the adjusted gross revenue (AGR), a rather furious Justice Mishra said,

“Don’t pay anything… not this, not AGR. You will still not be touched,”

The Department of Telecommunications (DoT) had sought to levy a one-time spectrum charge on telecom service providers. This comes after the telecom companies paid their AGR dues to the Central government after the Supreme Court pulled them up for violating its earlier order and not paying the money on time.

Last year, in Union of India v. Association of Unified Telecom Service Providers of India, 2019 SCC OnLine SC 1393the bench of Arun Mishra, SA Nazeer and MR Shah, JJ had refused to change the definition of gross revenue as defined in clause 19.1 of the licence agreement granted by the Government of India to the Telecom Service Providers. It had held,

“The definition in agreement is unambiguous, clear, and beyond the pale of doubt, and there is no confusion in the definition of gross revenue, which is the basis for realisation of the licence fee. Licensees have made a futile attempt to wriggle out of the definition in an indirect method, which was rejected directly in the decision of 2011 between the parties and it was held that these very heads form part of gross revenue.”

Vodafone Idea’s total AGR dues, as estimated by the DoT stand at Rs 53,038 crore, which includes Rs 24,729 crore of spectrum dues and Rs 28,309 crore as the license fee. On the other hand, Bharti Airtel’s total AGR dues reportedly amount to Rs 35,586 crore.

(Source: ANI)

Case BriefsSupreme Court

Supreme Court: A Bench comprising of A.K. Sikri and Ashok Bhushan, JJ. dismissed an appeal filed against the judgment of Bombay High Court whereby it held that Competition Commission of India had no jurisdiction to pass order in the instant matter as the issues were covered by Indian Telegraph Act, 1885 and Telecom Regulatory Authority Act, 1997 and the appropriate forum was the Telecom Dispute Settlement and Appellate Tribunal (TDSAT).

In the present matter, the Court was faced with determining the width and scope of the powers of the CCI under the Competition Act, 2002 pertaining to telecom sector vis-a-vis the scope of the powers of TRAI under the TRAI Act, 1997.

Factual Matrix

On 21-10-2013, Reliance Jio Infocomm Ltd. was granted a licence under Section 4 of the Telegraph Act by the Department of Telecom (DoT) for providing telecommunication services in all 22 circles in India. Soon thereafter, RJIL executed interconnection agreements with existing telecom operators including Airtel, Idea and Vodafone. RJIL  requested these companies to augment Point of Interconnection (POIs) for access as the capacity already provided to it was causing huge POI congestion, resulting in call failures on its network. According to RJIL, these companies intentionally ignored the aforesaid request.

Subsequently, in November 2016, RJIL filed information under Section 19 of the Competition Act before the CCI, As per RJIL, the respondent service providers, along with Cellular Operators Association of India, formed a cartel and acted in an anti-competitive manner which is prohibited by the Act. The CCI passed order dated 21-4-2017 under Section 26(1) as per which it came to a prima facie conclusion that case for investigation was made out and directed the Director-General to cause investigation in the case. Aggrieved thereby, respondents filed writ petitions before the High Court which quashed the order of CCI on the ground that CCI lacked jurisdiction to entertain such complaints/information filed under Section 19 as such matter falls within the exclusive jurisdiction of another regulatory authority, namely, TRAI.

Challenging this order passed by the High Court, the appellants were before the Supreme Court.

The Supreme Court considered the matter on following points:

(a) Jurisdiction of CCI

After noting salient features of Competition Act and TRAI Act, the Court concluded that as TRAI is constituted as an expert regulatory body which specifically governs the telecom sector, the aforesaid aspects of the disputes were to be decided by TRAI in the first instance. These were jurisdictional aspects. The High Court was right in concluding that the concepts of “subscriber”, “test period”, “reasonable demand”, etc, arising out of TRAI Act and the policy so declared, are the matters within the jurisdiction of TDSAT under the TRAI Act. Only when the jurisdictional facts in the present matter were determined by the TRAI against the respondents, the next question would arise as to whether it was a result of any concerted agreement between the respondents. It would be at that stage the CCI can go into the question as to whether violation of the provisions of TRAI Act amounts to ‘abuse of dominance’ or ‘anti-competitive agreements’.

(b) Whether TRAI has the exclusive jurisdiction to deal with matters involving anti-competitive practices to the exclusion of CCI altogether?

The function that is assigned to CCI is distinct from the function of TRAI. It is within the exhaustive domain of CCI to find out as to whether a particular agreement will have an appreciable adverse effect on competition within the relevant market in India. Such functions not only come within the domain of CCI, but TRAI is not at all equipped to deal with the same.

The Court, thus, did not agree with the appellants that CCI could have dealt with this matter without availing the inquiry by TRAI. It also did not agree with the respondents that insofar as the telecom sector is concerned, the jurisdiction of the CCI under the Competition Act is totally ousted.

In incidental issues, the Court decided that the petitions field by other companies before the Bombay High court were maintainable. When such jurisdictional issues arise, the writ petition would clearly be maintainable. In view of the above discussion, the Court dismissed the appeal while upholding the decision of the High Court. [CCI v. Bharti Airtel Ltd., 2018 SCC OnLine SC 2678, decided on 05-12-2018]