SC to hear CCI appeal on ₹32.76 lakh interest claim in UII case in March

The Supreme Court has adjourned to March the CCI's appeal against a Delhi HC ruling that quashed its ₹32.76-lakh interest demand in the United India Insurance bid-rigging penalty case

The Supreme Court on Friday adjourned to March the Competition Commission of India’s (CCI’s) appeal against a Delhi High Court ruling that set aside its claim of ₹32.76 lakh as interest for an alleged delay in remitting a bid-rigging penalty imposed on United India Insurance Company Ltd.

 

A Bench comprising Justices K V Viswanathan and A S Chandurkar was told by Attorney General R Venkataramani, appearing for the CCI, that a related civil appeal concerning reduction of the penalty in the same case is already pending before the Court.

 

Taking note of the submission, the Bench directed that the present matter be listed for hearing on March 9.

 

The controversy stems from CCI proceedings initiated in September 2013 over allegations that four public sector general insurers had colluded in bids for health insurance tenders floated by the State of Kerala under the Rashtriya Swasthya Bima Yojana and the Comprehensive Health Insurance Scheme.

 

In July 2015, the regulator held the insurers guilty of bid rigging under Section 3(3) of the Competition Act and imposed a penalty of ₹156.62 crore on United India Insurance. The company challenged the decision before the Competition Appellate Tribunal (COMPAT), which in October 2015 stayed the operation of the penalty on condition that 10 per cent of the amount be deposited. The insurer complied within the stipulated period.

 

Prior to the stay, the CCI had issued a demand notice directing payment of the entire penalty within 30 days, warning that interest at 1.5 per cent per month would accrue under Regulation 5 of the 2011 recovery regulations in case of default. The notice was received after the stay had been granted.

 

In December 2016, COMPAT upheld the finding of contravention but drastically reduced the penalty to ₹1.56 crore. The insurer paid the revised amount in January 2017.

 

Subsequently, the CCI issued another notice seeking ₹32.76 lakh as interest, alleging a 14-month delay in payment.

 

The insurer moved the Delhi High Court against the interest demand. A Division Bench allowed the challenge, holding that the earlier demand notice had lost its force once the stay was granted and that, in the absence of a valid enforceable demand, interest could not be levied. The High Court also observed that once the appellate tribunal modified the penalty, the original order merged with the appellate decision, and since the reduced sum had been paid, no separate liability to pay interest survived.

 

The CCI has carried the matter to the Supreme Court, which will now examine it together with the connected appeal in March.