CCI DG Has Power Of Search And Seizure With Magistrate's Authorization: SC [Read Order]

It was in March 2014 that the CCI ordered an investigation against JCB to check the allegations whether it was abusing its dominant position. During the investigation, the Director-General of CCI had approached the Chief Metropolitan Magistrate seeking authorisation to conduct a search in the premises of JCB. The Magistrate allowed the application and search operation was conducted by the CCI.

JCB filed writ petition against the Magistrate's order before the Delhi High Court which stayed further proceedings before the CCI Director-General. On 2^nd June 2016, the court passed an injunction order restraining the appellant from utilising the seized material for any purpose whatsoever till the next date of hearing. The CCI then approached the apex court. Then the SC bench transferred the writ petitions pending before the high court in this matter to itself.

Mere search by itself will not be sufficient for the purposes of investigation

Last week, the bench comprising Justice DY Chandrachud and Justice Hemant Gupta heard the SLP filed against the high court order. The bench, referring to provisions of Section 240A of the Companies Act, said: "Section 41(3) specifically incorporates a reference to Section 240A in its application to an investigation by the Director General under the provisions of the Competition Act 2002. Under Section 240A, an Inspector who has reasonable ground to believe that books and papers of, or relating to, any company may be destroyed, mutilated, altered, falsified or secreted may apply to the Magistrate to secure an authorisation for the seizure of the books and papers. The provisions of Section 240A do not merely relate to an authorisation for a search but extend to the authorisation of a seizure as well. Unless the seizure were to be authorised, a mere search by itself will not be sufficient for the purposes of investigation."

Be more circumspect before restraining an investigation by DG

The bench also observed that the high court has blocked the investigation on an erroneous construction of the powers of the Director General.

"Having due regard to the provisions of Section 240A and the underlying purpose of Section 41(3), we are of the view that the blanket restraint which has been imposed by the learned Single Judge on the appellants utilising the seized material for any purpose whatsoever was not warranted. The High Court has blocked the investigation on an erroneous construction of the powers of the Director General. The High Court should, in our view, be more circumspect before it restrains an investigation under the statutory authority of the Director General," said the court while vacating the injunction order.

The bench also remitted back the writ petitions to the Delhi High Court.

Read Order