The Delhi High Court, led by Hon’ble Mr Justice Vibhu Bakhru has expounded on the matter, clarifying that the Competition Commission of India does not possess any authority over the activities conducted by the Institute of Chartered Accountants of India.
Brief Facts:
A Petition was filed before the Delhi High Court challenging the impugned order passed by the Competition Commission of India (hereafter referred to as “CCI”) under Section 26(1) of the Competition Act, 2002 (hereinafter referred to as “Competition Act”).
Institute of Chartered Accountants of India (hereinafter referred to as “ICAI”), with the aim of upholding the standards of professional services provided by its members, recognized the importance of Continuing Professional Education (hereinafter referred to as “CPE”). In 2003, ICAI issued a Statement on CPE, outlining the requirements for undergoing CPE activities. The CPE program mandated members to dedicate specific hours to CPE learning activities, which were categorised as structured and unstructured.
ICAI also set minimum CPE credit hour requirements for its members based on their age and whether they held a Certificate of Practice (hereinafter referred to as “CoP”). Members below 60 years of age holding a CoP were required to earn ninety CPE credit hours in a rolling three-year period, with at least sixty credit hours from structured learning. Out of the sixty, twenty structured credit hours were mandatory each calendar year. The remaining thirty credit hours could be completed through unstructured learning. Members without a CoP were required to earn a total of forty-five CPE credit hours, either structured or unstructured, in a rolling three-year period, with ten credit hours per calendar year.
The Informant, a qualified chartered accountant and journalist in the field of Finance and Fiscal Laws, filed a complaint with the CCI under Section 19(1) of the Competition Act. The Informant's primary concern was that only ICAI and its organs conducted structured learning activities, and ICAI had not affiliated with or recognized any other body to conduct such activities. The Informant believed this violated Section 4 of the Competition Act. The CCI provisionally agreed with this view and issued the challenged order.
Contentions of the Petitioners:
It was argued that ICAI was a statutory body entrusted with regulatory responsibilities under the CA Act. It was claimed that the organisation's program for continuing professional education, which was carried out to fulfil its statutory obligations, did not involve any commercial activity and therefore fell outside the purview of the Competition Act.
It was asserted that there was no commercial market for conducting the CPE program, as it was conducted by ICAI through its Program Organizing Units (hereinafter referred to as “POU”). Further, that the CCI had no jurisdiction to review ICAI's decisions in the discharge of its statutory functions.
It was stated that ICAI carried out its activities in pursuit of its non-profit objectives.
Moreover, it was asserted that ICAI did not qualify as an "enterprise" under Section 2(h) of the Competition Act because it did not engage in economic activities.
Contentions of the Respondents:
It was contended that this petition was not maintainable since an order under Section 26(1) of the Competition Act was merely an administrative or interdepartmental directive. It was emphasised that the CCI had simply directed the initiation of investigations and that interference with this directive was unwarranted.
Further, it was stated that the CCI had the authority to determine its own jurisdiction, and therefore, it was necessary for ICAI to raise the jurisdictional issue before the CCI.
It was contended that a person engaged in charitable activities would also fall within the definition of the term "enterprise." It was also argued that the only exception was the carrying out of sovereign functions as defined in Section 54 of the Competition Act, and the functions performed by ICAI did not qualify as sovereign functions.
Observations of the Court:
It was noted that the CCI's power was for regulating markets; it did not extend to addressing any grievance regarding arbitrary action by any statutory authority. In this case, the CCI proceeded on the basis that there was a relevant market for organising recognized CP Seminars/Workshops/Conferences.
However, this view was deemed erroneous as there was no market for organising CPE seminars, workshops, or conferences. The ICAI, responsible for maintaining professional standards and conducting educational programs for structured CPE credits, was charged with this function. The Informant sought to outsource this function, which would create a market where other entities could participate as market players.
The Bench could not accept that the jurisdiction of the CCI extended to compelling a statutory body to outsource its functions performed in the discharge of its statutory duties, even if they fell within the sphere of economic activity. It was erroneous to assume that any activity falling within the broad definition of economic activity necessitated the creation of an open market. The Court rejected that the CCI could compel an organisation or enterprise to outsource its activities.
The decision of the Court:
The Delhi High Court allowed the petition and quashed the impugned order of the ICC.
Case Title: Institute of Chartered Accountants of India v The Competition Commission of India And Ors.
Case No.: Writ Petition Civil No. 2815 of 2014
Coram: Hon’ble Mr Justice Vibhu Bakhru
Advocates for Petitioner: Advs. Mr A.N. Haksar, Senior Advocate with Ms Pooja M. Saigal, Mr Simrat Singh and Mr Chaitanya Pandey, Mr Neil Hildreth, Mr Abeer Kumar, Ms Hitakshi Mittal, Ms Sitwat Nabi, Mr Sahil Sharma
Advocates for Respondent: Advs. Mr Vaibhav Gaggar, Ms Kokila Kumar, Mr Prerak Khurana, Mr Dhruv Mehta, Mr Zoheb Hossain
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