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CCI Monetary Penalty Regulations: HC Clarifies on Interest Accrual

Laying stress on the need to follow the prescribed manner in levying interest on the penalty imposed by the Competition Commission of India (CCI), the Delhi High Court recently held that such interest could be levied only on failure to deposit the amount within the time stipulated in the demand notice.[1]

Facts in Brief

A decision taken by the Commission, in August 2018, pertaining to cartelisation in the dry cell battery market was challenged by the petitioners before the National Company Law Appellate Tribunal (NCLAT). CCI’s decision was stayed during the pendency of the appeal. In March of last year, the NCLAT ruled that the petitioners were guilty of abusing their dominant position in the market, but reduced the amount of penalty applicable to petitioner no.1. Subsequently, demand notices were issued calling upon the petitioners to deposit the penalty amount with simple interest at the rate of 1.5% for every month or part of a month comprised in the period commencing from December 10, 2018, till the date of payment. The petitioners’ request to withdraw the demand notices with respect to the levy of such interest was turned down by the CCI vide order dated July 18, 2023. This order issued by the CCI came to be challenged before the Delhi High Court through the present writ petition.

Contentions of Parties

The petitioners contended that the levy of interest on the penalty amount was not in accordance with the CCI (Manner of Recovery of Monetary Penalty) Regulations, 2011. It was stated that the interest under Regulation 5 could be levied only when there was a delay in instalment payment and before such levy, a demand notice under Regulation 3 had to be issued.

On the other hand, the respondent asserted that the amount which was payable within 60 days from the 2018 order (i.e., when the original demand was made) attracted interest on its own. The respondent rejected the stance that the liability to pay interest arose only after the demand notice was served, referring to the provisions contained in Regulation 3 as only procedural in nature.

Decision of the Delhi High Court

After hearing the parties, the Court extracted relevant provisions of the 2011 Regulations which highlighted that an enterprise had to be provided time to comply with the demand notice and it was liable to pay interest if the amount specified in the demand notice was not paid within the given period. Reference was also made to the 2014 amendment through which Form-I was modified to intimate the concerned enterprise that the interest would be payable on failure to pay the penalty amount.

Holding that the interest could be levied “only in a manner provided by the statute”, the Court allowed the petition and set aside the impugned order in so far that it levied interest on the delayed payment of the penalty amount from December 10, 2018, till the date of payment.

[1] Geep Industries (India) Pvt Ltd. & Ors. v. Competition Commission of India [WP(C) 10332/2023]