NCLAT Dismisses Travel Agents Association Of India's Allegations Of Anti-Competitive Practices Against Union Govt's Dept Of Expenditure

Update: 2024-10-28 12:40 GMT
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The NCLAT, New Delhi bench comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that the Department of Expenditure, Government of India does not qualify as an "enterprise" under Section 2(h) of the Competition Act, 2002, being a “consumer” of air ticketing services.The Travel Agents Association...

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The NCLAT, New Delhi bench comprising Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member) and Mr. Indevar Pandey (Technical Member) has held that the Department of Expenditure, Government of India does not qualify as an "enterprise" under Section 2(h) of the Competition Act, 2002, being a “consumer” of air ticketing services.

The Travel Agents Association of India had levelled allegations of anti-competitive practices against the Department of Expenditure, Government of India, that denied market access to private travel agents for official air travel bookings. The Tribunal dismissed the appeal under section 53B of the Competition Act on the ground of res judicata.

Brief Facts:

The Appellant, Travel Agents Association of India (TAAI) filed the appeal under Section 53B of the Competition Act, 2002, challenging the Competition Commission of India's (“CCI”) order dated 8.05.2020 (“impugned order”).

The Appellant had filed information under Section 19(1)(a) of the Act. The Appellant alleged that the Department of Expenditure, Government of India (“Respondent No. 2”), Balmer Lawrie & Co. Ltd. (“Respondent No. 3”), and Ashok Travels and Tours (“Respondent No. 4”) engaged in anti-competitive practices under Section 3(4) and Section 3(1) of the Competition Act, 2002 through exclusionary market practices that denied market access to private travel agents for official air travel bookings.

Respondent No. 3 is a government company under the Ministry of Petroleum and Natural Gas and Respondent No. 4 is one of the divisions of the India Tourism Development Corporation, a Government of India undertaking. Both Respondent No. 3 and 4 are the exclusive travel agents, approved by Respondent No. 2.

The Appellant had alleged that Respondent No. 2 had issued an Office Memorandum (No. 19024/1/E.IV/2005) on 24.03.2006. The Office Memorandum (“OM1”) contained direction to all government officials including the employees of the public sector companies to exclusively use the services of either Respondent No. 3 or 4 while booking air tickets for official travel and in this manner, foreclosed the market to the private sector travel agents. The appellant had filed an information earlier to challenge OM1, which Respondent No. 1 closed vide its order dated 15.09.2010 under Section 26(2) on the ground that Respondent No. 2 is not an “Enterprise” and the Government being the consumer for such services was entitled to make the choice for booking of air tickets through its authorised travel agents only.

The Appellant in the second information had prayed that an enquiry under Section 26(1) of the Act may be initiated against Responent No. 2 and 3 to ascertain whether the OMs issued by the R1 have caused an appreciable adverse effect on competition (“AAEC”) in the market in India. The CCI in the impugned order closed the information under Section 26(2) of the Act, leading to the appeal.

Submissions:

The Respondents alleged that the second information filed by the Appellant is barred by the principle of res judicata (Section 11 of the Code of Civil Procedure, 1908) because the same issues had already been decided on merit between the same parties in the first information submitted by the Appellant. It was further submitted that the Appellant cannot abuse the process of court by seeking a review of the earlier order dated 15.09.2010 and 26.09.2012 which had been passed in the first information.

The Appellant submitted that the market is dynamic. Therefore, second information was filed, which should not have been dismissed by the Tribunal only on the ground of res judicata.

The Appellant submitted that the conclusion drawn by Respondent No. 1 that Respondent No. 2 is not an “enterprise” is ex-facie erroneous. Respondent No. 2 is an “enterprise” under section 2(h) of the Act, as it is controlling an economic activity and has foreclosed the entire market for private travel agents. Reliance was placed upon the decision of the Supreme Court in CCI vs. Coordination Committee of Artists and Technicians of W.B. Film and Television [(2017) 5 SCC 17] to contend that any entity constitutes an enterprise within the meaning of section 3 of the Act when it engages in economic activity (herein, the procurement of air tickets through a travel agent).

It was further submitted that since the Appellant had challenged OM dated 19.07.2017 and 27.02.2018, the cause of action for filing the information arose almost 7 to 8 years since the CCI last assessed competition in the relevant market. Therefore, CCI's observation that the Appellant had earlier filed a case raising similar issues is untenable under the law.

Observations:

The tribunal observed Respondent No. 2 does not qualify as an "enterprise" under Section 2(h) of the Act. The tribunal noted the following observations of the CCI:

"Government of India is the consumer of air ticketing services…. Department of Expenditure, Ministry of Finance, Government of India cannot be said to be engaged in any activity which relates to production, storage, supply, distribution, acquisition or control of article of goods or provision of services. Therefore, the Government of India is not covered under the definition of enterprise provided in section 2(h) of the Act.”

The CCI had stated that the main objective of this OM was to rationalize the expenditure by taking advantage of competition among airlines. Moreover, there was a direct accrual of benefit to the Government of India.

The CCI had noted that the OM did not constitute a horizontal agreement/restraint under Section 3(3). It had observed that "the opposite parties and the Government of India are not engaged in the business of identical or similar trade of goods or provision of service." It was further observed that the Government of India, being a consumer, was not producing anything. Thus, could not be said that there was a vertical agreement between the Government of India and the opposite parties.

The CCI had held that the Government of India, like a normal consumer had the choice of availing the service of a particular travel agency. Hence the provisions of Section 3(4) were not attracted. The Appellate Authority in its order dated 26.09.2012 affirmed the order of CCI.

“If the Government has to secure the services, it obviously becomes a consumer receiving those services with a choice to select the entity to provide those services. Merely because it is a Government, there is nothing in law from prohibiting it to be a consumer. Government like any other person must have choice to choose the travel agencies with which it has to do the business.”, it observed.

The Appellate Authority had also observed that there was no evidence of 'abuse of dominance'. It had concluded that "the Government of India, being itself a consumer, cannot be said to be a dominant enterprise in the relevant market". Therefore, no case of contravention of section 4 of the Act was made out.

Both the CCI and the Appellate Authority had closed the matter, holding that the allegations made in the information did not fall within the mischief of either section 3 or section 4 of the Act.

The Tribunal referred to the judgment in CCI vs. Co-Ordination Committee of Artists and Technicians of W.B. Film and Television and Ors., wherein the Supreme Court held that the Department of Expenditure, Ministry of Finance, Government of India is not an “enterprise” in terms of Section 2(h) of the Act, 2002.

The Tribunal observed that the Appellant had approached Respondent No. 1 by filing a second information on the same facts and circumstances against the same opposing parties with the same prayer which had already been declined in the first information. It held that the maxim 'nemo debet lis vexari pro una et eadem causa' would be applicable. Both the adjudications had held that Respondent No. 2 is not an “enterprise” and that OM1 is not an “agreement” in violation of section 3(4) of the Act. The Tribunal, therefore held that these issues cannot be re-agitated.

The Tribunal dismissed the appeal. The Appellant was ordered to deposit Rs. 5 lakhs in the Prime Minister Relief Fund within 15 days.

Case Title: Travel Agents Association of India vs. Competition Commission of India & Ors.

Case Number: Competition App. (AT) No. 26 of 2020

For Appellants: Mr. MM Sharma, Ankit Singh Rajput, Adv.

For Respondent: Ms. Shiva Lakshi, Cgsc; Mk Ghosh, Tina Garg, Adv. for R3; Srashti Parashar, CCI; Shama Nargis, Dy. Director; Ranjan Sardana, CCI.

Date of Judgment: 25.10.2024

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