NCLAT Upholds Penalty Imposed By CCI On Adani Gas

Shruti Sareen
9 March 2020 11:32 AM GMT
NCLAT Upholds Penalty Imposed By CCI On Adani Gas
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The National Company Law Appellate Tribunal dismissed an appeal filed by Adani Gas Limited (AGL) challenging an order of the Competition Commission of India (CCI) where it had imposed a penalty of around 26 crores or 4% of the average annual turnover of the relevant three years.

The court further upheld that AGL had abused its dominant market position by imposing unfair conditions on its buyers under a Gas Supply Agreement (GSA) in Faridabad.

Justice S.J. Mukhopadhaya and Justice Bansi Lal Bhat while reducing the penalty imposed from 4% to 1% held :

"…...Such modifications which in effect eliminated discrimination qua Industrial Consumers and subsequent emergence of competitors of natural gas on the scene coupled with the fact that AGL not only came up with voluntary revision of GSAs even before conclusion of enquiry by the Commission and was amenable to the advice/ suggestions falling from this Appellate Tribunal resulting in incorporation of the consumer friendly clauses substituting the contravening provisions in the GSAs, in our considered opinion carve out mitigating factors/ extenuating circumstances in favour of AGL outweighing the only aggravating factor i.e. abuse of dominant position. Keeping that in view we are of the considered opinion that reducing the penalty imposed on AGL from 4% of the average annual turnover of the relevant three years to 1% would be commensurate with and proportionate to the level of proved abusive conduct of AGL. We are of the firm opinion that this reduction would meet the ends of justice and achieve the desired object of the statue in the peculiar facts and circumstances of the case."

Faridabad Industries Association (FIA) had alleged that AGL, by grossly abusing its dominant position in the relevant market of supply and distribution of natural gas in Faridabad, had put unconscionable terms and conditions in GSA which were unilateral and lopsided besides being heavily tilted in favour of AGL. It was further alleged that the terms of GSA had been drafted unilaterally by AGL leaving no scope for Members of FIA, who were solely dependent for supplies upon AGL .AGL was alleged to have imposed its diktat upon the buyers of natural gas under the garb of executing GSA and thus clearly demonstrated abuse of dominant position.

CCI had directed AGL to modify the terms of the GSA which AGL had complied.

The Court further stated " The only conclusion deducible on the basis of material available on record is that during the relevant period there was no gaseous substitute of natural gas available to Industrial Units in Faridabad. It is emphatically clear that PNG was not interchangeable with other fuels as contended on behalf of AGL. Furthermore, it cannot be ignored that during the relevant period LPG was not available to Industrial Units as an alternate fuel as revealed from the submissions made before the DG. It is therefore futile on the part of AGL to contend that it had successfully demonstrated that PNG was interchangeable with other fuels at the relevant time."

Mr. Parcival Billomoria appeared for AGL.

Mr. Pallav Sishodiya, Senior Advocate appeared for CCI

TA (AT) (Competition) No. 33 of 2017, Old Appeal No. 50/2014

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