The imposition of penalty under section 43A is on account of breach of a civil obligation, and the proceedings are neither criminal nor quasi-criminal; the penalty has to follow. Only discretion in the provision under section 43A is with respect to quantum of penalty, the bench said.
The Supreme Court, in Competition Commission of India vs. Thomas Cook (India) Ltd., has observed that the imposition of penalty under section 43A of the Competition Act is on account of breach of a civil obligation, and the proceedings being neither criminal nor quasi-criminal, there is no requirement of mens rea or intentional breach as an essential element for levy of penalty.
A bench of Justice Arun Mishra and Justice Navin Sinha upheld the order of Competition Commission of India whereby penalty of Rs 1 crore was imposed on the Thomas Cook (India) Ltd on the ground of noncompliance of provisions contained in section 6(2) of the Act.
Section 6(2) of the Act requires that advance notice has to be given of the proposal to enter into a combination and that has to be given within 30 days of approval of the proposal relating to merger or amalgamation, execution of any agreement or other document or acquisition referred to in section 5(a). Section 6(2) makes it clear that no combination shall come into effect until 210 days have elapsed from the date on which notice has been given to the Commission under section 6(2) and the Commission has passed orders under section 30(1), whichever is earlier.
The company in this case, had failed in notifying the ‘market purchase’ under section 6(2) of the Act. The order of CCI, imposing penalty was set aside by the Competition Appellate Tribunal. The CCI then approached the apex court in appeal.
Apart from factual contentions, one contention of the company was that there were no malafides on the part of the company as such penalty could not have been imposed. With respect to this, the bench said: “The mens rea assumes importance in case of criminal and quasi-criminal liability. For the imposition of penalty under section 43A, the action may not be mala fide in case there is a breach of the statutory provisions of the civil law, penalty is attracted simpliciter on its violation. The imposition of penalty was permissible and it was rightly imposed. There was no requirement of mens rea under section 43A or intentional breach as an essential element for levy of penalty. Section 43A of the Act does not use the expression "the failure has to be willful or mala fide" for the purpose of imposition of penalty. The breach of the provision is punishable and considering the nature of the breach, it is open to impose the penalty.”