The Curious Case of Cross-Examination: Right v. DG's Discretion
Authors: Anushka & Nishtha Khandelwal
The authors are students at Dr. Ram Manohar Lohiya National Law University, Lucknow (RMLNLU).
Competition law has attracted a lot of commentaries in India, mostly in the realm of substantive law ranging from anti-competitive agreements to abuse of dominant position to merger control. However, not much has been written about the requirements of procedural fairness in the proceedings before the Commission and other ancillary procedures such as investigation by the Director General (DG).
Section 36(1) of the Competition Act, 2002 (the “Act”) provides that “in discharge of its functions, the Competition Commission of India (“CCI”) should be guided by the principles of natural justice” A question which has troubled the Courts as well as the Competition Commission of India in this regard is the ambit of the term ‘functions’. Does the term ‘functions of the CCI’ include the investigation of the DG as well? It was opined by the CCI that it is apposite to include that the “investigation by the DG” is within the meaning of “functions of the CCI”.
Regulation 41(5) of the Competition Commission of India (General) Regulations, 2009, provides “if the Commission or the Director General, as the case may be, directs evidence by a party to be led by way of oral submission, the Commission or the Director General, as the case may be, if considered necessary or expedient, grant an opportunity to the other party or parties, as the case may be, to cross examine the person giving the evidence.” In BCCI v. CCI, the COMPAT overturned the CCI order for its lack of due process and procedural fairness in relation to the investigation and held that, before issuing any adverse decision, the CCI must comply with the principles of natural justice, including following the rule of audi alteram partem. Therefore, the denial of cross examination is tantamount to denying the right of audi alteram partem.
There have been different opinions regarding cross examination being the discretion of the DG or the right of the parties. This article tries to resolve this tussle and provides for certain parameters which can be adhered to while granting the opportunity to cross-examine.
Cross-Examination as a Discretion of the DG
The discretion of the DG can be understood in the light of Regulation 41(5) that very rightly permits cross examination of witnesses.
It is important to refer to MP Chemists and Distributors Federation in order to truly analyze the issue. In the impugned case, the Commission stipulated that, “In the scheme of the General Regulations, 2009, the Commission notes that the words ‘if considered necessary or expedient’ are of great import. When the information supplied by a party is based on personal knowledge, the other party may be granted the right to cross-examine the party giving evidence. However, when the information provided by a party is based on documents, the same can be sufficiently rebutted by filing affidavits and cross-examination of such a party may not be required in every case.”
The Hon’ble Delhi High Court in Cadila noted that, “the discretion, which is undoubtedly vested with the CCI to permit or refuse cross examination of a witness, is to be exercised judiciously. Mere “dissatisfaction” does not imply judicious exercise of discretion.” It is of great importance for the DG to assess that the depositions to be cross-examined are related to relevant facts. Such depositions should weaken the case of the Opposing Parties (OP’s) by alleging or accusing them of serious contraventions of the provisions of the Act. Such testimony should be differentiated from the testimonies that are mere facts not alleging the OP’s of any violation. Permitting cross-examination of every witness is unnecessary and a lengthy process because the DG’s opinion is not final and the last verdict still vests with the CCI.
Denial of Cross-Examination: Violation of Principles of Natural Justice
The exclusion of the principles of natural justice is also an equally known concept and the legislature has the competence to enact laws which specifically exclude the application of principles of natural justice in larger public interest and for valid reasons.
In CCI v. SAIL, the following principles were classified under three categories. First, where application of principles of natural justice is excluded by specific legislation; Second, where the law contemplates strict compliance with the provisions of the principles of natural justice and default in compliance therewith can result in vitiating not only the orders but even the proceedings taken against the delinquent; and Third, where the law requires compliance with these principles of natural justice, but an irresistible conclusion is drawn by the competent court or forum that no prejudice has been caused to the delinquent and the non-compliance is with regard to an action of directory nature. The cases may fall in any of these categories and therefore, the court has to examine the facts of each case in light of the Act or the rules and regulations in force in relation to such a case. It is not only difficult but also not advisable to spell out any straitjacket formula that can be applied universally to all cases without variation.
The Office of the DG is the investigating arm of the Commission and to demand natural justice during the investigation as against the adjudication stage is to render the investigation meaningless. Therefore, there is no violation of principles of natural justice in rendering the discretion of cross- examination at the hands of the DG provided the power is exercised judiciously
Other Side of the Spectrum: Cross-examination as the Right of the Parties
Section 36(1) of the Competition Act, 2002 provides that CCI should be guided by the principles of natural justice. The Competition Act, 2002 is the only Indian legislation mandating that a regulatory body must comply with the principles of natural justice.
The right to cross-examine the depositions made by the other parties stems from the principle of audi alteram partem. Cross-examination is a vital part of the fact finding process. The aspect of procedural fairness gets wiped out as soon as untested statements are blindly accepted. Therefore, the Evidence Act along with the Constitution of India upholds the idea of giving the other party an opportunity to rebut the statements made against him.
In the case of Himachal Pradesh Society of Chemist & Druggist Alliance v. Rohit Medical Store, it was opined that the opportunity to cross-examine could only be granted upon a request for the same. But after the intervention of Schott Glass India Pvt. Ltd. v. CCI, it was held that it is not necessary for a party specifically to make an application for cross-examination. Consequently making cross-examination a natural right.
The importance of cross-examination can be understood by the graveness of its violation. The COMPAT has reiterated that a denial of the opportunity to cross-examine is tantamount to a violation of principles of natural justice. Thus, CCI is duty bound to take this into consideration.
What can be deduced from the above-mentioned authorities is that there is a case on each side; Authorities on the first hand propound that cross examination at the investigation stage is a matter of discretion of the DG in light of the non-binding nature of the conclusions of DG’s investigatory process and expedient nature of the Act. Authorities on the other hand propound that cross-examination is a right of the parties considering the importance of cross-examination at the initial stage which shall be further highlighted in the subsequent section.
The Importance of Cross-Examination at the Initial Stages
The gravity of prejudice cannot be understood until the consequential effect of the denial for cross-examination is taken into consideration. The DG takes into account all the statements made by all the aggrieved parties during the investigation. Based on the investigation, he prepares a report which is subsequently open to any objections which the parties may file. The objections or suggestions pertaining to the DG’s report is limited to the allegations raised in that report and cannot go beyond the scope of what is identified by the DG. The opportunity to cross-examine if not granted at the initial stage of the fact finding process, cannot be raised as an objection to the DG’s report, therefore denying the right of audi alteram partem.
The DG records the evidences in the course of his investigation. As a result of denying the opportunity to cross-examine, the opposite party is handicapped in producing any evidence in rebuttal during the investigation. Therefore, the Investigation Report made by the DG is without the rebuttal of the opposite parties and is not reflective of the correct findings or conclusion. More often than not, the CCI passes an order which is heavily based on the DG’s report. This can create a fundamental problem as the DG’s report in itself becomes an invalid document in the eyes of law as the denial to cross-examine at the investigation stage resulted in the violation of principles of natural justice. Therefore, the issue as far as precedents and standing law are concerned, remains unsolved.
The authors are of the opinion that the right of cross examination is not an absolute right. During the investigation process, the principles of natural justice can be excluded. However, the discretionary power to grant the opportunity of cross-examination should be exercised judiciously and on merits of each case and not arbitrarily. In the simplest of terms, there is a need to strike a balance between the two contrasting opinions. But, how can this be done?
Authors’ Insight: Parameters For Granting Opportunity to Cross-Examine
‘Necessary and expedient’ as provided in Regulation 41(5) is to be construed as per the facts of each case. There can be no straitjacket formula for determining the scope of “necessary and expedient”. In cases where specific request for cross-examination is made, it should not be dismissed straightaway without giving due regard to its consequential effect and the reasons as to why a particular party is so vehemently requesting for it.
The close connectivity of cross-examination with the principles of natural justice cannot be ignored. On one hand, such a right of cross-examination cannot be misused to prolong the proceedings. While on the other hand, cross-examination cannot be completely denied as it would violate the principles of natural justice. Hence, thus there is a grave need to strike a perfect balance between the two. Therefore, the authors lay down certain parameters which can be adhered to while granting the opportunity for cross-examination
1. The OP’s while making a request for cross-examination, should specify the particular deposition they want to cross-examine.
2. The OP’s should also specify the requirement of such cross-examination to their case.
3. The DG should analyze the importance of the depositions that are to be cross-examined and its nexus with the final order by the CCI.
4. The DG while rejecting such a request should specify the reasons for doing so.
What is the possible relief for a party whose request for cross-examination has been denied arbitrarily? A possible relief can be that; If the CCI finds that cross-examination has been denied at the initial stage arbitrarily and without the due application of mind, the CCI must remand the matter back to the DG for a fresh-investigation.
Therefore, the abovementioned parameters can be a tool to measure the necessity and expedient nature of cross-examination requested by the party. These rules can be helpful in minimizing prejudice to one party and give equal as well as fair opportunity to both the parties to be heard.