Orissa High Court quashes CCI probe against Rungta Mines over DG powers

The Orissa High Court has ruled that the CCI's investigative arm cannot probe a company without a valid prima facie order under the Competition Act

The Orissa High Court has quashed a Competition Commission of India (CCI) investigation against Rungta Mines, holding that the anti-competition regulator's investigative arm cannot initiate or continue a probe without a valid prima facie order under Section 26(1) of the Competition Act.

 

Section 26(1) of the Competition Act, 2002 empowers CCI to order a formal probe into suspected anti-competitive practices. It requires the watchdog to direct the Director General (DG) to investigate if a preliminary review reveals a prima facie case.

 

"This Court is also mindful of the submission that an order under Section 26(1) is administrative in nature and ordinarily not amenable to judicial review at an interlocutory stage. However, the present case stands on a different footing, as it involves not the correctness of such an order but the complete absence thereof. The bar on interference in administrative directions cannot be extended to shield actions taken without jurisdiction," the judgment said.

 

In a judgment delivered on May 22, Justice Sanjeeb Kumar Panigrahi set aside the probe and all consequential actions against the company, including search-and-seizure operations and summons issued by the Director General (DG) in a cartelisation probe that originated from allegations of steel price-fixing in Tamil Nadu.

 

The case stems from a 2021 complaint by the Coimbatore Corporation Contractors Welfare Association alleging cartelisation by several steel manufacturers. The complaint was initially forwarded by the Central Bureau of Investigation to the CCI's Director General after the former concluded it lacked jurisdiction.

 

Subsequently, the Madras High Court directed the DG to take appropriate action on the complaint “in accordance with law”.

 

Rungta Mines, however, was not among the companies named in the original complaint. Despite this, DG CCI conducted search-and-seizure operations at the company’s premises in December 2022. Later it summoned two of its senior executives. The company contended that it was never informed it had been arrayed as an opposite party in the proceedings. It only discovered this status after obtaining access to CCI records in August 2025.

 

The court agreed with the company’s challenge, holding that CCI had misconstrued the Madras HC’s order as a mandate to investigate.

 

Justice Panigrahi observed that a direction to proceed “in accordance with law” could not be interpreted as dispensing with statutory requirements under the Competition Act.

 

According to the court, Section 26(1) requires the CCI to independently apply its mind and form a prima facie opinion before directing the DG to investigate.

 

The judgment noted that the commission's records did not disclose any such exercise or indicate that the regulator had considered the allegations against Rungta Mines before the investigation was initiated.

 

The court further held that the DG, while possessing broad investigative powers, cannot assume jurisdiction on its own. 

 

Referring to Supreme Court precedents, including Competition Commission of India versus Steel Authority of India Ltd, the judgment reiterated that the DG can investigate only pursuant to a valid direction issued by the commission.

 

Justice Panigrahi also found fault with the manner in which Rungta Mines was brought within the scope of the investigation. The court observed that the company had not been named in the original complaint and that the record did not reveal any material basis for its inclusion. In the absence of a valid Section 26(1) order, the DG's decision to investigate the company was held to be beyond the scope of its statutory authority.

 

On procedural fairness, the court ruled that the company’s impleadment as an opposite party without notice or intimation violated principles of natural justice.

 

While a prima facie order under Section 26(1) may not require a prior hearing, the court said, entities must at least be informed of the status in which their participation is sought. This is particularly required where such status carries civil and reputational consequences.

 

Rejecting the CCI's objections on delay, prematurity and territorial jurisdiction, the court held that Rungta Mines approached it promptly after discovering its status in the proceedings. Challenges involving jurisdictional defects could be raised even at a later stage, it added.

 

Allowing the writ petition, the court quashed the probe against Rungta Mines and all consequential actions taken. 

 

At the same time, the judgment noted the importance of competition law enforcement, observing that while CCI plays a critical role in preserving market competition, its powers must be exercised strictly within the framework laid down by statute and in compliance with principles of fairness and natural justice.