CCI Can't Impose Interest Retrospectively From Date Preceding Valid Service Of Demand Notice: Delhi High Court

The Delhi High Court has ruled that the Competition Commission of India (CCI) is not empowered to impose interest retrospectively or from a date preceding the valid service of a demand notice.A division bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar noted that the issuance of a demand notice under Regulation 3 of the Competition Commission of India (Manner of Recovery of Monetary Penalty) Regulations, 2011, and the consequent imposition of interest for default under Regulation 5 form part of a sequential and mandatory statutory process.“These provisions nowhere empower the CCI to impose interest retrospectively or from a date preceding the valid service of a demand notice. Since these procedural requirements are both mandatory and chronological, they must be followed in that precise manner alone, and any deviation therefrom renders the levy of interest legally unsustainable,” the Court said.It added that any attempt by the CCI to impose interest retrospectively, or without compliance with the prescribed statutory procedure, would not merely constitute a procedural irregularity but a substantive violation of constitutional guarantees under Articles 14, 19, 21, 265, and 300A of the Constitution of India.The Bench noted that the provisions collectively safeguard individuals and enterprises from arbitrary or excessive executive action, ensure fairness and non-discrimination in administrative processes and prohibit the imposition or collection of any tax, duty, or charge except by the authority of law. It said that the levy of interest without the statutory foundation of a valid demand notice would offend both the rule of law and the constitutional prohibition against deprivation of property without valid authority of law.The Court made the observations while dismissing CCI's appeal and upholding a single judge order in a matter concerning Geep Industries (India) Private Limited. The single judge had set aside the CCI' order and had confirmed the demand of interest on the penalty amounts imposed upon the company.The CCI had upheld the demand of interest on the penalty amounts with retrospective effect till the date of payment as conveyed through demand notices issued to the company under the 2011 Regulations. Dismissing the appeal, the Court noted that despite extensive legislative changes to the Competition Act, the Parliament chose not to modify, clarify or expand the provisions relating to the recovery of penalties or the levy of interest thereon, either under the principal Act or through any supplementary amendment to the Regulations. It added that the deliberate omission is not accidental but demonstrative of a conscious legislative intent to uphold the existing procedural safeguards embedded within the Regulations.“The legislative silence, in the face of such a sweeping statutory overhaul, unmistakably conveys the Parliament's endorsement of the procedure laid down under Regulations 3 and 5 of the 2011 Regulations, which make the issuance of a demand notice a condition precedent for the accrual of any liability to pay interest,” the Court said.”Had the legislature intended to empower the CCI to impose interest automatically from the date of the penalty order, it could have explicitly provided for such an automatic accrual mechanism in the amended Act. The absence of such a provision clearly militates against the interpretation advanced by the CCI,” it added.It further ruled that under the Competition Act and the 2011 Regulations, there is no pari materia provision that creates an equivalent or automatic liability to pay interest upon the expiry of a particular time period, without following the procedure.“Pithily put, the imposition of interest on the penalty that is recoverable is contingent upon and triggered by the non-compliance with the ―”Demand Notice” as expressly specified in the 2011 Regulations. The principle of restitution cannot be invoked in a manner such as to give retrospective operation to the triggering event, namely the ―”Demand Notice” itself,” the Court concluded. Title: COMPETITION COMMISSION OF INDIA v. GEEP INDUSTRIES & ORSCitation: 2025 LiveLaw (Del) 1440Click here to read order

CCI Can't Impose Interest Retrospectively From Date Preceding Valid Service Of Demand Notice: Delhi High Court

Nupur Thapliyal

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