HC dismisses Monsanto plea against CCI probe of directors

In a setback to US biotechnology major Monsanto, the Delhi High Court on Tuesday dismissed its plea to stop the Competition Commission from probing its top officials' role in a case related to alleged unfair business practices in the Indian seeds market.

A division bench of the high court rejected the appeal of Monsanto and its Indian arm, against an order of a single judge bench which had refused to interfere with the direction of the Competition Commission of India (CCI).

A bench of Chief Justice Rajendra Menon and Justice V K Rao said the officers or directors of a company can be proceeded against, along with the entity.

The bench also said that the officers or directors would be held liable only if CCI were to come to a conclusion that they were the key persons who were in-charge of the company at the time of the alleged unfair practice or abuse of dominant position.

The court also said that section 27 of the Competition Act makes it clear that if CCI finds any contravention of the provisions, it "can pass orders against an 'enterprise' and a 'person' i.e an individual, who has been proceeded against, imposing penalty".

The companies -- Monsanto and its group company Mahyco Monsanto Biotech (India) Ltd (MMBL) -- had contended that according to the provisions of the Act, penalty was to be imposed on the 'turnover' which would not apply to an individual, like officers or directors.

Disagreeing with the submission, the bench said: "Turnover, in the context of officers / directors has to be interpreted as the income of the officers / directors from the company, as there cannot be an income of an officer / director from an infringing product".

"We have been told, during the course of the arguments that CCI has been imposing penalty on the income of the officers / directors of the company. We agree with such an action," the high court said and dismissed the companies' pleas against the single judge's order of October 12.

Monsanto had moved the single judge against CCI's July 26, 2016 decision on the ground that individuals can be probed only if the company does not comply with orders.

On July 26, CCI had rejected the companies' review pleas against the regulator's decision to probe the role of their officers/persons in-charge.

They had contended that it was not permissible for the regulator to issue any directions to look into the role of the persons responsible for the conduct of business unless violation of competition norms was made out.

CCI in early 2016 had ordered a detailed probe against US-based genetically-modified seed major Monsanto after finding prima facie evidence of violating competition norms.

The regulator had proceeded against the company on the basis of complaints filed against it by the Agriculture Ministry and the National Seeds Association of India (NSAI), among others.