Dcr Distillery Private Ltd vs Union Of India

NEUTRAL CITATION NO. 2026:MPHC-JBP:68110
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IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR

BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA,
&
HON'BLE SHRI JUSTICE PRADEEP MITTAL
WRIT PETITION No. 10304 of 2024
ASSOCIATED ALCOHOLS AND BREWERIES LIMITED
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Piyush Mathur - Senior Advocate with Shri Amit Dubey -
Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri Suyash
Mohan Guru - Deputy Solicitor General (through VC) for the respondent
No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with Shri Shoeb
Hashan Khan and Shri Anans Hasan Khan - Advocate for the respondents
No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the respondent/State.
WITH
WRIT PETITION No. 25377 of 2023
GREAT GALLEON VENTURES LIMITED WHOLESALE COUNTRY
LIQUOR SUPPLIER OF MADHYA PRADESH GOVERNMENT
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Mallikarjun Khare - Advocate for the petitioner.
Signature Not Verified
Signed by: ASHISH KOSHTA
Signing time: 17-09-2026
17:30:59

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Shri Sunil Kumar Jain - Assistant Solicitor General with Shri

Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
respondent No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the
respondent/State.
WRIT PETITION No. 13623 of 2024
OASIS DISTILLERIES LIMITED
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Mallikarjun Khare - Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri
Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
respondent No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the
respondent/State.
WRIT PETITION No. 13706 of 2024
BAPUNA ALCOBREW PRIVATE LIMITED (ERSTWHILE GWALIOR
ALCOBREW PRIVATE LIMTED)
Signature Not Verified
Signed by: ASHISH KOSHTA
Signing time: 17-09-2026
17:30:59

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Versus
UNION OF INDIA AND OTHERS

Appearance:
Shri Sameer Kumar Shrivastava, Shri Ruchir Jain and Shri Surbhit
Saxena - Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri
Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
respondent No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the
respondent/State.
WRIT PETITION No. 14030 of 2024
AGRAWAL DISTILLERIES PRIVATE LIMITED
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Rohan Harne - Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri
Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
respondent No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Signature Not Verified
Signed by: ASHISH KOSHTA
Signing time: 17-09-2026
17:30:59

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Dr. S. S. Chouhan - Government Advocate for the

respondent/State.
WRIT PETITION No. 26997 of 2024
VINDHYACHAL DISTILLERIES PRIVATE LIMITED
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Siddharth Sharma - Advocate and Shri Shashank Sahu -
Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri
Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
respondent No.1/Union of India.
Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the
respondent/State.
WRIT PETITION No. 40830 of 2024
DCR DISTILLERY PRIVATE LTD
Versus
UNION OF INDIA AND OTHERS
Appearance:
Shri Mohammad Aadil Usmani - Advocate for the petitioner.
Shri Sunil Kumar Jain - Assistant Solicitor General with Shri
Suyash Mohan Guru - Deputy Solicitor General (through VC) for the
Signature Not Verified
Signed by: ASHISH KOSHTA
Signing time: 17-09-2026
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respondent No.1/Union of India.

Shri N. Venkat Ramanna Naidu - Senior Advocate with
Shri Shoeb Hashan Khan and Shri Anans Hasan Khan - Advocate for
the respondents No.2 and 3.
Dr. S. S. Chouhan - Government Advocate for the
respondent/State.
Reserved on : 31.08.2026
Pronounced on : 17.09.2026
.....................................................................................................................................
Per: Vivek Rusia, J.
Since common questions of law are involved in these writ petition,
therefore, they were heard analogously and are being decided by this
common order.
2. The present batch of writ petitions under Article 226 of the
Constitution of India has been preferred by the petitioners, primary
manufacturing distilleries and bottling units operating within the State of
Madhya Pradesh challenging the legality & validity of orders dated
20.3.2024, 28.7.2023 & 04.8.2020 passed by the respondent No.2-
Competition Commission of India (hereinafter referred to as the "CCI") in
Suo Motu Case No. 05/2020. Thus, the petitioners specifically challenge the
initiation order dated 04.08.2020 passed by respondent No.2 under Section
26(1) of the Competition Act, 2002; the consequential Investigation Report
dated 31.03.2023 submitted by the respondent No.3/Director General; the
procedural order dated 28.07.2023 passed by respondent No. 2 accepting the
redacted report and directing circulation of only the non-confidential version;
Signature Not Verified
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and the substantive procedural order dated 20.03.2024 whereby the

respondent No. 2 rejected the petitioners' preliminary objections regarding
jurisdiction and decided to proceed with the inquiry under Section 26(8) of
the Act.
Brief facts of the case are given hereunder:-
3. The petitioners are commercial distilleries engaged in the
manufacture, rectification, bottling, and wholesale supply of country liquor
('desi madira' in plain and spiced/masala variants) exclusively within the
territorial limits of Madhya Pradesh. The supply of country liquor across the
51/52 administrative districts of the State is undertaken through annual or
multi-year tender processes floated by the Excise Department of the
Government of Madhya Pradesh under the statutory framework of the
Madhya Pradesh Excise Act, 1915, and the statutory rules framed thereunder.
4. The genesis of the impugned proceedings traces back to Audit
Report No. 1 on the Revenue Sector of the Government of Madhya Pradesh
for the Financial Year 2016–17, prepared by the Comptroller and Auditor
General of India (hereinafter referred to as the ‘CAG’). In the said audit
observations, the CAG commented on the tender process conducted by the
State Excise Department between the years 2012–13 and 2016–17, observing
that the same distilleries were emerging as successful L-1 bidders in
identical districts with narrow price variations, allegedly indicating the
possibility of collusive bidding or market allocation.
5. On the strength of un-tabled copy of the said CAG Report for FY
2016–17, the respondent No. 2 registered Suo Motu Case No.05/2020. On
Signature Not Verified
Signed by: ASHISH KOSHTA
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04.08.2020, the respondent No. 2 passed an order under Section 26(1) of the

Competition Act, 2002 (hereinafter referred to as the "2002 Act"), holding
that a prima facie case of bid-rigging and horizontal market sharing under
Section 3(3) read with Section 3(1) of the 2002 Act existed, and accordingly,
directed the respondent No. 3/Director General to conduct an investigation
into the affairs of eight named distilleries.
6. During the course of investigation, the Director General not only
investigated the distilleries but also summoned and recorded the depositions
of high-ranking State officials, including the Principal Secretary (Excise) and
the Excise Commissioner of Madhya Pradesh, to ascertain the rationale
behind the State’s tender conditions, bottling directives and price
determination policies. The Director General also carried out search and
seizure operations at the premises of the distilleries, seizing digital devices,
emails and physical records.
7. On 31.03.2023, the respondent No. 3 submitted a voluminous
Investigation Report comprising over 1,200 pages. In paragraph 5.10 of the
said report, the Director General specifically recorded that none of the
opposite parties had claimed confidentiality over their pleadings or
submissions. Notwithstanding this express observation, the Director General
suo motu bifurcated the report into a ‘confidential version’ and a ‘non-
confidential (redacted) version,’ blacking out material portions of
documents, analysis and third-party communications.
8. On 28.07.2023, the respondent No. 2 took the Director General's
Investigation Report on record and forwarded only the redacted, non-
Signature Not Verified
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confidential version to the petitioners, inviting their objections and

suggestions. The petitioners raised preliminary objections asserting that the
initiation was void ab initio for want of jurisdiction; the CAG report could
not have been relied upon under Article 151(2) of the Constitution; the M.P.
Excise Department was the sole statutory sectoral regulator, and that the
unauthorized suo motu redaction of the report haS severely prejudiced their
right of defence.
9. On 20.03.2024, respondent No. 2 declined to halt its proceedings
or refer the matter to the State Government under Section 21A, and decided
to proceed with the inquiry. Consequently, the petitioners approached this
Court under Article 226 of the Constitution of India, wherein ad-interim
protection against coercive steps was granted, and the matter was heard on
the question of maintainability and jurisdiction.
SUBMISSIONS ON BEHALF OF THE PETITIONERS:
10. Learned senior counsel for the petitioners submitted that under
Entries 8 & 51 of List II (State List) of the Seventh Schedule to the
Constitution of India, the State Legislature possesses exclusive and plenary
legislative competence over intoxicating liquors, encompassing production,
manufacture, possession, transport, purchase, and sale. Senior counsel placed
heavy reliance on nine-Judge Constitution Bench judgment of the Supreme
Court in State of U.P. v. Lalta Prasad Vaish, (2024) 17 SCC 1 , which
reaffirmed that Parliament lacks legislative competence to control the field
of potable alcohol merely by making a declaration under Entry 52 of List I
read with Article 246. He urged that when Parliament itself is
Signature Not Verified
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constitutionally barred from enacting direct legislation over potable alcohol,

a statutory authority created under an Act of Parliament (the CCI) cannot
indirectly encroach upon, supervise, or penalize transactions occurring within
the exclusive state excise framework.
11. Learned senior counsel further submitted that country liquor is
not an open-market commercial commodity governed by ordinary market
forces of demand and supply. The manufacture, movement, price and
allocation of country liquor in Madhya Pradesh form a closed, rigidly
monitored statutory framework under the M.P. Excise Act, 1915, the M.P.
Distilleries Rules, and the M.P. Country Spirit Rules. Every step is strictly
regulated and an Assistant Excise Officer is permanently posted at each
distillery premises. Further, the bottles cannot be moved without statutory
transit passes and labels, formulas and alcohol content are prescribed by the
State Government. The petitioners are mere licencees executing State orders
with no autonomy over production volumes or consumer pricing.
12. Learned senior counsel emphasized on paragraph 24 of the State
Government's counter-affidavit, which demonstrates that 50% to 55% of the
retail price goes to the State exchequer as excise duties, 35% to 40%
constitutes the retail contractor's margin, and a restricted margin of barely
10% to 15% is left for the distilleries to cover raw material, manufacturing
and transport costs. The State Excise Department pre-fixes the base rate as
well as the maximum selling price, leaving a narrow difference of ₹ 1 to ₹ 5.
The tender requires successful bidders to match the lowest bid (L-1), and the
final allocations are subjected to approval by the State Cabinet. Hence, the
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tender framework is an administered statutory process where distillers have

no room to exploit consumers or alter prices.
13. Learned Senior Counsel additionally also submitted that the field
regarding tender manipulation is already occupied by State statutory
authorities. Under Rule 6 of the General Application Rules framed under
Section 62 of the M.P. Excise Act, the District Collector is expressly
empowered to inspect bids and cancel any tender or auction where there is
reason to believe that the bid is collusive, non-genuine or intended to create a
private monopoly. Since an express statutory mechanism exists within the
State law to tackle bid-rigging and monopolies, the CCI has no jurisdiction to
supersede the local statutory authority.
14. Learned senior counsel also submitted that the entire foundation
of the Section 26(1) order rests on the CAG Report for F.Y. 2016–17. Under
Article 151(2) of the Constitution of India, the reports of the CAG relating to
the accounts of a State must be submitted to the Governor, who shall cause
them to be laid before the Legislature of the State. Until a CAG report is
tabled before the Legislative Assembly and examined by the Public Accounts
Committee (PAC), it remains a privileged, internal document and that is not a
part of the public domain. He relied upon decision in Centre for Public
Interest Litigation v. Union of India, (2013) 7 SCC 1 to argue that CAG
findings are subject to legislative debate and departmental replies, and the
courts or statutory tribunals cannot place reliance upon them as gospel truth
to initiate adverse proceedings. In the absence of a lawful complaint from a
private person or a formal reference by the State, the CCI had no
Signature Not Verified
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constitutional or statutory access to this document under Section 19(1) of

2002 Act.
15. Learned senior counsel has also placed extensive reliance on
Competition Commission of India v. Bharti Airtel Ltd. & Ors., (2019) 2 SCC
521 to submit that where a sector is governed by an expert statutory sectoral
regulator (in this case, the M.P. Excise Department), the market regulator
(CCI) cannot usurp jurisdiction in the first instance. The Supreme Court
affirmed the Bombay High Court's ruling that until the sectoral regulator
returns findings on jurisdictional facts and regulatory breaches, the CCI is ill-
equipped to intervene and its action is premature. He further urged that if the
CCI harboured suspicion regarding tender conditions or price uniformity, it
was statutorily mandated to make a reference to the State Government under
Section 21A of the Competition Act, rather than initiating an adversarial
investigation.
16. Learned senior counsel also submitted that the Director General
and the CCI committed a fundamental economic error by equating parallel
bidding behaviour with illegal cartelization. Relying on Rajasthan Cylinders
and Containers Ltd. v. Union of India, (2020) 16 SCC 615, he urged that in a
market characterized as an oligopsony—where there is only one buyer (the
State Government) and a handful of licensed sellers subject to capacity caps
(e.g., maximum cap of 2 crore proof litres)—identical or near-identical bid
pricing is the natural, inevitable outcome of ‘conscious parallelism’ and
market interdependence. Suppliers quote close to the pre-fixed base price
merely to remain in the fray, which is a recognized, legitimate market
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condition and not proof of a conspiratorial cartel under Section 3(3) of 2002

Act.
17. Relying on Competition Commission of India v. Steel Authority
of India Ltd. (SAIL), (2010) 10 SCC 744, learned Senior Counsel submitted
that while an order under Section 26(1) is administrative, the Commission is
legally bound to record minimal independent reasons demonstrating the
formation of a prima facie opinion. The order dated 04.08.2020 reflects
failure to apply its mind to the M.P. Excise Act, ignoring the presence of a
sectoral regulator, and merely copying of paragraphs of the CAG's report in
verbatim. A void prima facie order cannot be retrospectively validated by
materials gathered subsequently during an investigation.
18. Learned senior counsel submitted that under Regulation 35 of the
CCI (General) Regulations, 2009 (as amended in 2022), confidentiality can
only be granted upon a specific, reasoned application made by a party
demonstrating commercial injury. The Director General having explicitly
recorded in paragraph 5.10 that no party claimed confidentiality, acted
wholly without jurisdiction in suo motu redacting the report. By serving a
truncated non-confidential report, the CCI has deprived the petitioners of the
actual evidence, electronic data and third-party communications relied upon,
thereby crippling their ability to file an effective reply under Section 26(8)
and violating principles of natural justice.
19. Learned senior counsel submitted that the CCI exercises quasi-
judicial functions that culminate in civil and financial penalties under Section
27. Relying on State of Gujarat v. Utility Users' Welfare Association, (2018)
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6 SCC 21, Union of India v. R. Gandhi, (2010) 11 SCC 1, and the Division

Bench judgment of the Delhi High Court in Mahindra Electric Mobility Ltd.
v. CCI, 2019 SCC OnLine Del 8032, he contended that the presence and
participation of a qualified Judicial Member is mandatory for adjudicatory
functioning. The continued functioning of the respondent No. 2 in the
absence of a Judicial Member renders its proceedings legally vulnerable, and
the mere pendency of an SLP against the Mahindra judgment (supra) does
not stay its binding effect.
SUBMISSIONS ON BEHALF OF RESPONDENT NO. 2 (CCI):
20. The learned Additional Solicitor General for the respondent No.
2 submitted that the Competition Act, 2002, is an enactment traceable to
Entry 21 of List III (Concurrent List) of the Seventh Schedule (‘Commercial
and industrial monopolies, combines and trusts’). He submitted that there is
no conflict between the State's power to regulate/tax liquor under List II,
Entries 8 & 51, and the Parliament's power to prevent anti-competitive
agreements under List III, Entry 21. The CCI is not challenging the State's
excise policy, fixing duties or regulating potable alcohol. It is a solely
investigating independent horizontal anti-competitive conduct, collusive bid-
rigging, and geographical market allocation amongst private bidders under
Section 3(3) of the Act.
21. The learned Additional Solicitor General submitted that while
the State has the constitutional privilege to prohibit trade in potable alcohol
under Article 47 as res extra commercium, once the State chooses not to
enforce prohibition and permits private parties to manufacture and sell liquor
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under commercial licenses, such activity constitutes trade and commerce

[See:Khoday Distilleries Ltd. v. State of Karnataka, (1995) 1 SCC 574 )].
Relying on the three-Judge Bench decision in Coal India Ltd. v. Competition
Commission of India, (2023) 10 SCC 345, he further submitted that under
Section 2(h) of the Competition Act, only core sovereign functions (atomic
energy, currency, defense and space) are excluded from the definition of an
‘enterprise’. Even government companies, statutory monopolies and entities
operating under strict regulatory regimes or Article 39(b) remain fully
subject to the Competition Act, when engaging in economic activity.
22. The learned Additional Solicitor General further contended that
under Section 19(1) of the Competition Act, the Commission is empowered
to inquire into contraventions suo motu based on its "own knowledge or
information received." The Commission does not require a formal complaint
from a private citizen or a state reference to act upon. The CAG report was
not treated as a conclusive finding of guilt, but merely as an informational
trigger that had raised prima facie suspicion. The Additional Solicitor
General distinguished CPIL v. Union of India (ONGC's case) by pointing out
that in that case, a writ of mandamus was sought, based solely on a CAG
report, which the Supreme Court declined. Here, no penalty was imposed on
the basis of the CAG report, instead it was merely used as a starting point to
direct to carry out an investigation under Section 26(1) of 2002 Act.
23. The learned Additional Solicitor General also argued that the
petitioners' attempt to confine the case to the CAG report is completely
untenable because the Director General conducted a comprehensive,
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independent investigation spanning 1,200 pages. His findings are based on

independent primary evidence unearthed during search and seizure
operations, including:
i. Thousands of email exchanges and internal corporate records
demonstrating advance determination of tender rates;
ii. WhatsApp group communications among distillery
representatives operating under the unregistered pseudonym ‘M.P. Distillers
Association,’ explicitly agreeing on district-wise quota allocations; and
iii. Arrangements to submit deliberate cover bids (surrogate bidding)
in identified districts to ensure that designated distillers won at predetermined
rates.
Counsel submitted that this independent evidence of cartelization
exists entirely outside and independent of the CAG report.
24. The learned Additional Solicitor General also putforth that the
reliance on Bharti Airtel (supra) is entirely misconceived. In the said case,
dispute arose out of contractual clauses of interconnection agreements
(POIs), directly governed by the TRAI Act, an enactment with an express
Dispute-resolution Tribunal (TDSAT) actively seized of the exact dispute.
Relying on the decision in Division Bench in the case of Competition
Commission of India v. Star India/Geostar (which has been affirmed by the
Supreme Court), he stated that where allegations involve core cartelization,
market sharing, and bid-rigging under Section 3, the CCI's jurisdiction is
paramount and is not ousted by the existence of a statutory licensing body.
Furthermore, Sections 21 and 21A are purely directory, enabling statutory
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consultation, and do not constitute a mandatory bar or jurisdictional

condition precedent to an investigation under Section 26 of 2002 Act.
25. Relying upon CCI v. SAIL, (2010) 10 SCC 744 the learned
Additional Solicitor General submitted that an order under Section 26(1) is
purely administrative, inquisitorial and preliminary in nature, determining no
civil rights and imposing no penalties. The present writ petitions are grossly
premature as the proceedings are only at the stage of Section 26(8) of 2002
Act. The petitioners have been provided with the non-confidential version of
the Director General report and have every opportunity to submit their
replies, seek cross-examination and contest the evidence before the
Commission. An efficacious alternative statutory remedy is provided under
Section 53B (appeal to the NCLAT) and the extraordinary writ jurisdiction
under Article 226 ought not to be exercised to stall an on-going statutory
inquiry.
26. The Additional Solicitor General also submitted that the Director
General bifurcated the report into confidential and non-confidential versions
to protect commercially sensitive third-party business data, pricing
compositions, and internal corporate secrets gathered across 11 enterprises. If
the petitioners genuinely require access to redacted materials for their
defense, the statutory framework under Regulation 35 permits them to apply
to the Commission for the constitution of a ‘Confidentiality Ring.’ The
furnishing of a non-confidential report does not violate natural justice when
an established regulatory mechanism exists to inspect protected records upon
executing appropriate undertakings.
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27. The Additional Solicitor General submitted that the Commission

is constituted strictly in terms of the Competition Act, 2002, as enacted by
Parliament. The principles laid down in Union of India v. R. Gandhi applied
specifically to tribunals that replaced traditional courts (such as the NCLT),
whereas the CCI is a specialized, multi-disciplinary regulatory body
comprised of experts in economics, commerce, law, and public affairs. The
correctness of the Delhi High Court's judgment in Mahindra Electric
Mobility (supra) is pending consideration before the Supreme Court, and in
the absence of any stay or declaration of invalidity of the statute, the ongoing
proceedings of the Commission are fully protected and valid.
SUBMISSIONS OF THE STATE OF M.P.(RESPONDENT NO.4):
28. Learned Counsel appearing for the State of Madhya Pradesh
(Excise Department) submitted that under the constitutional scheme of List
II, Entry 8, the State possesses the absolute and exclusive prerogative to
regulate every facet of country liquor manufacturing, supply and sale. The
country liquor is strictly monitored to protect public health, prevent the
circulation of spurious and illicit liquor and safeguard vital state revenues.
29. The learned counsel for State also submitted that the tender
conditions, eligible participant criteria, distillation ceilings and supply
allocations are finalized and approved directly by the State Cabinet of
Ministers. The tender requires successful bidders to guarantee 1.5 times the
estimated supply of the district to maintain continuous availability. He
supported the petitioners' contention that the price band is strictly
compressed between the base price and the maximum selling price, leaving a
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marginal profit of 10% to 15% for wholesale suppliers.

30. The State Government submitted that its excise policy was
formulated to balance multiple socio-economic objectives, including the
promotion of local industrial investment and the protection of excise duty
collections. Counsel submitted that to preserve federal balance and avoid
jurisdictional conflicts, respondent No. 2 (CCI) should have respected the
constitutional mandate of the State and refrained from intervening in the
tender process without first consulting or seeking a reference from the State
Government under Sections 21 and 21A of the Competition Act.
REJOINDER SUBMISSIONS ON BEHALF OF THE
PETITIONERS:
31. Learned senior counsel for the petitioners, in rejoinder,
submitted that the respondent's reliance on Coal India Ltd. (supra) is
completely misplaced. The petitioners are not claiming sovereign immunity
under Section 2(h) of the Act. The petitioners' primary challenge is to the
absolute lack of jurisdiction of the CCI over a subject matter that is
constitutionally isolated under List II, Entry 8, and governed by an
administered pricing framework under a complete state code.
32. Learned counsel also contended that the legality of the order
under Section 26(1) of 2002 Act must be tested on the basis of the reasons
and material available to the Commission on 04.08.2020 (Mohinder Singh
Gill v. Chief Election Commissioner, (1978) 1 SCC 405). The subsequent
discovery of emails or WhatsApp chats by the Director General during
search operations cannot retrospectively cure an initiation order that was
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founded solely on an un-tabled, constitutionally inadmissible CAG report. If

the initial assumption of jurisdiction was void, all consequential proceedings,
including the DG report, are non-est.
33. Learned counsel reiterated that offering a ‘Confidentiality Ring’,
is not the remedy for the illegality committed by the Director General. Under
Regulation 35, the Director General has no statutory authority to grant
confidentiality suo motu when the parties themselves had expressly stated in
paragraph 5.10 that they claimed no confidentiality. By denying access to
unredacted materials while demanding replies to show-cause notices under
Section 26(8), the respondent No. 2 has subjected the petitioners to an
impermissible and one-sided inquiry in violation of the basic tenets of
natural justice.
Appreciations and conclusion
34 We have heard learned counsel for the parties. The first
contention raised by Shri Mathur, learned senior counsel for the petitioner is
that Entries 8 & 51 of the List-II (State List) of Seventh Schedule of the
Constitution give exclusive powers to the Legislature in the matter of
intoxicating liquor, production, manufacture, possession, transport, purchase
and sale. The Parliament lacks the legislative competence to control the
fields of aforesaid subject. Hence, the statutory authority created under the
Act of Parliament i.e. Competition Commission of India (CCI) cannot
directly encroach upon the exclusive State exercise frame work. It is further
submitted that M.P. Excise Act, 1915, M.P. Distillries Rules and M.P.
Country Spirit Rules strictly regulate through Excise Department of the State
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of Madhya Pradesh in the matter of manufacturing, production,

transportation and sale of all liquor product. The State Excise Department
prefixes the base rate as well as the maximum sale price leaving narrow
margin between one to five rupees and the selection of L-I and the financial
allocations are subject to approval by the State Cabinet. Hence, there is no
scope and jurisdiction for CCI to supersede the local authority. The M.P.
Excise Act 1915 consolidate the laws relating to import, export,
transportation, manufacturing, sale and possession of intoxicating liquor and
drugs. There is no fundamental right of the citizen to carry on trade or to do
business in liquor as the State enforces public morality to prohibit trade in
noxious trade or dangerous goods. There is power of State to enforce and
absolute prohibition over manufacture or sale of intoxicating liquor. The
State has exclusive right of privilege of manufacture or sale of the liquor
under the public morality, public interest and harmful & dangerous character
of the liquor. The State possesses the right to complete control over all the
aspects of intoxication, namely, manufacturing, sale and consumption of
liquor. Since the State has exclusive right or privilege of manufacturing or
sale of liquor, therefore, the State grants such right or privilege in the shape
of licence or a lease, by way of holding the public auction to a private
individual. Therefore, M.P. Excise Act and the Rules made thereunder only
control the manufacturing and selling of right of the State Government
through the grant of licences to private person. The State has a power to
declare what shall be deemed to be a country liquor or foreign liquor and
also to decide the area as regards to retail sale of liquor under the licence.
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The State also possesses the power to appoint officers as the Excise

Commissioner to enjoy the superintendence and administration of the Excise
Department and collection of excise revenue. The State also possesses the
power to prohibit throughout the State or the specified area by way of
notification for import or export of any intoxication. Chapter-IV of Excise
Act deals with manufacturing, possession and sale of intoxicant. Section 13
deals with the licence required for manufacturer. Section 14 thereof provides
for establishment of license of distilleries and warehouses. Section 16
stipulates that possession of intoxicant and section 17 imposition the terms
and conditions of the licence for sale of intoxicant.
35 So, therefore, there is exclusive control of the State Government
over the licence, manufacturing, sale of intoxicant, cancellation, suspension,
penalty by way of M.P. Excise Act and the Rules made thereunder.
Therefore, the issue is whether the Competition Act, 2002 (“2002 Act”) is
encroaching upon the area of the State Government in the matter of excise in
respect of manufacturing and sale of intoxicant. A High Level Committee on
Competition Policy and Law was constituted by the Central Government to
reconsider "The Monopolies and Restrictive Trade Practices Act, 1969". The
Committee submitted its report on 22.5.2000. Thereafter, Competition Bill,
2001 was moved to ensure fair competition in India by prohibiting trade
practices which causes appreciable adverse effect on competition in markets
within the India and for this purpose provides for the establishment of a
quasi-judicial body to be called the Competition Commission of India (for
short the “CCI”) which shall also undertake and aims at curbing negative
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aspects of competition. The CCI through its Principal and Additional

Benches look into the violations of the Act, based on its own knowledge or
information or complaints received and the references made by the Central
Government, State Government or the statutory authorities. The Commission
has been given powers to pass an interim orders or any other appropriate
interim relief and compensation or the penalty and to rule out the adverse
effect on the competition and to promote and sustain the competition in
markets, in order to protect the interests of consumers and to ensure freedom
of trade carried on by other participants in markets, in India. The
Competition Bill was passed in both the Houses of Parliament and received
the assent of the President on 13.1.2003 and came on the statute Book in the
name as “The Competition Act, 2002” [12 of 2003].
36. The Chapter-II of the Competition Act deals with prohibition of
certain agreements, abuse of dominant position and regulation of
combinations, under which no enterprises or association of enterprises or
person or association of persons shall enter into any agreement in respect of
production, supply, distribution, storage, acquisition or control of goods or
provision of services, which causes or is likely to cause an appreciable
adverse effect on competition within the India. As per definition of term
“goods” as provided under section 2(i) the goods means as defined in the
Sale of Goods Act, 1930 and includes products manufactured, processed or
mined; debentures, stocks and shares after allotment; in relation to goods
supplied, distributed or controlled in India and goods imported into India.
As per section 2(u) of the 2002 Act the term “service” means service of any
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description which is made available to the potential users and includes the

provision of service in connection with business of an industry or
commercial matters. Likewise, section 2(x) thereof defines term “trade”
which means any trade, business, industry, profession or occupation relating
to the production, supply, distribution, storage or control of goods and
includes the provisions of any service. Section 4 of the 2002 Act provides
for controlling the abuse of dominant position of any enterprise or group,
directly or indirectly in the matter of purchase or sale of goods or services,
price, production etc.
37. Chapter-III of the Act deals with establishment of “Competition
Commission of India” (CCI) by way of a notification for the purpose of the
Act of 2002. Sections 8, 9, 10, 11, 12, 13, 14 & 15 of 2002 Act deal with
appointment, selection of the Committee for chairperson and members of
Commission, service conditions and salaries. Section 16 thereof deals with
appointment of Director General, Additional, Joint, Deputy or Assistant
Director General for the purposes of assisting the Commission in conducting
inquiry into a contravention of any of the provisions of the Act and for
performing such other functions as are, or may be, provided by or under the
Act. The duties, powers and functions of the Commission are given in
Chapter-IV of the Act in relation to eliminate practices having adverse effect
on competition, promote and sustain competition, protect the interest of
consumers and in order to ensure freedom of trade carried on by other
participants in markets in India. Therefore, the fields on which the Excise
Department, and the aims & object of Excise Act are altogether different
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from the aims & object of enacting Competition Act, 2002. None of the Acts

are interfering in the respective fields created under the enactments. The
Competition Act nowhere provides to take control on issuance of licence,
manufacture, sale Policy framed by the State Government in the matter of
intoxicant. The CCI is established only to examine and eliminate practices
having adverse effect on competition and promote and sustain competition,
protect interest of consumers and ensure freedom of trade and to act as a
quasi judicial authority.
38 Therefore, the contention of Shri Mathur, learned senior counsel
is that Central Legislation (Competition Act, 2002) is interfering with the
subject matter of liquor by virtue of Item 8 & 15 of Seventh Schedule of the
Constitution. The jurisdiction vested in the State Government is not trumped
by CCI exercising the power under the Act of 2002 enacted by the Union of
India under the residuary vested in the Union under Entry 97 of List-I of the
Seventh Schedule of the Constitution. There is absolutely no conflict
between 2002 Act and MP Excise Act. The CCI is not exercising any parallel
or concurrent jurisdiction in the matter of distilleries, manufacture, sale of
country as well as foreign liquor.
39. Shri Mathur, learned senior counsel, has placed heavy reliance
on the decision of the Apex Court in the case of CCI Vs. Bharti Airtel
Limited (supra). In this case, the issue was whether the CCI had jurisdiction
in view of the TRI Act, 1997 and the authorities and regulations made
thereunder. The Apex Court has held that the CCI is specifically entrusted
with duties and functions to deal with anti-competitive practices, and to
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eliminate such practices that have an adverse effect on competition, to

protect the interests of consumers and to ensure freedom of trade carried on
by other participants in India. In the state of Madhya Pradesh under the
Excise Act and Rules made thereunder, no such regulatory body like TRAI
has been constituted to examine such practices having an adverse effect on
competition and protection of consumers. The state authorities established
under the Excise Act have only the power to issue licenses for manufacturing
and sale of intoxicants. The State Government frames the policy for grant of
license, but there is no independent authority to examine the adverse effect
on competition and the protection of consumer interest. Therefore, the CCI
established under the central statute operate in a different fields and having
different purpose. Hence, it cannot be said that there is an implied repeal of
the powers and authority given under the Madhya Pradesh Excise Act by the
Competition Act, which is a special statute to deal with anti-competition
matters alone. It is an exclusive domain of the CCI to find out whether the
particular agreement will have an appreciable adverse effect on competition
within the relevant market in India. For this purpose, the CCI is to take into
consideration the provisions in the Competition Act. The CCI is experienced
in conducting competition analysis under the Competition Act. The Apex
Court has not completely ousted the jurisdiction of interference of the CCI
even in the matter of the telecom sector and held that once the exercise is
done and there are findings recorded by the TRAI, which lead to a prima
facie conclusion that IDOS have indulged in anti-competitive practice, the
CCI can be activated to investigate the matter going by the criteria laid down
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in the relevant provision of the Competition Act. In the MP Excise Act and

the rules made their under, there is no such authority or provision to examine
the issues related to anti-competition practice within the license folder.
40. The next contention of Shri Mathur, learned senior counsel is
that on the basis of Comptroller & Auditor General report No.-I the CCI can
initiate suo motu proceedings against the petitioner under section 26(1) of
the 2002 Act directing the Director General to investigate the matter. Shri
Mathur submitted that CCI can direct the Director General to do
investigation only on receiving references from the Central Government or
the State Government or the statutory authority or on its own knowledge or
information received under section 19 of this Act. In this case, the CCI took
up the matter suo motu on the basis of CAG report. Section 19(i) says that
the Commission may enquire any alleged contravention on its own motion or
in receiving any information in such manner accompanied by such fee as
may be determined from any person or consumer or trade association or by a
reference made to it by the Central Government or the State Government or
the statutory authority. The CAG report cannot be the basis of information
under which Commission may initiate enquiry under Article 151 of the
Constitution of India. The reports of the Comptroller and Auditor-General of
India relating to the accounts of the Union shall be submitted to the
President, who shall cause them to be laid before each House of Parliament.
The reports of the CAG relating to the accounts of a State shall be submitted
to the Governor of the State, who shall cause them to be laid before the State
Legislature. Therefore, unless the report given by the CAG is submitted to
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the Governor and placed before the Legislature it cannot relied upon by the

CCI for the purpose of initiation of enquiry under sections 19 and 26 of the
Act. In support of his submission, Shri Mathur, leaned senior counsel has
placed reliance on the decision of Supreme Court in the case of Arun Kumar
Agrawal Vs. Union of India and others (2013) 7 SCC 1, it has been held that
CAG report is always subject to scrutiny by Parliamentary debates and PAC
can accept Ministry concerned's objection to CAG report or reject CAG
report. The CAG is an independent constitutional functionary. However, it is
for the Parliament to decide whether after receiving the report i.e. PAC to
make its comments on the CAG's report. In this case the Supreme Court has
also held that report of CAG is from a constitutional authority. It commands
respect and cannot be brushed aside, as such. In the present case, the CCI has
not accepted the report of CAG as it is, but directed the Director to conduct
an enquiry. Therefore, this judgment is of no help to the petitioner, as on
today the CCI has passed an order under section 26(1) of the Act directing
the Director General to conduct enquiry in the matter within its power under
sections 19 & 26 of the Act. As on today, the CAG report has been taken as
received information for the purpose of enquiry into alleged contravention of
the provisions of the Act.
41. In the matter of Bharti Airtel (supra) the jurisdiction of CCI is
explained in paragraph 79 onwards. The Apex Court has examined the
power of TRAI in the field of telecom infrastructure, production, consumers
interest vis a vis the jurisdiction of CCI to deal with the
complaint/information filed before it. In paragraph 106 the Apex Court
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examined the issue whether the TRAI has exclusive jurisdiction to involve

anti competition practice to the exclusion of jurisdiction of CCI. Finally, in
paragraph 112 the Apex Court held that it is only the CCI which is
empowered to deal with anti competition from the laws of the Competition
Act. If such activity offends that Act, then consequences of that Act would
also follow. The CCI is an expert body in collecting the competition analysis.
The specified and important role assigned to CCI cannot be completely
washed away the difference between the regulatory sector i.e. TRAI and
market regulators i.e. CCI, and same has to be maintained. Paragraphs 111
& 112 of the aforesaid decision of the Apex Court are reproduced below:-
"111. Moreover, it is within the exclusive domain of
CCI to find out as to whether a particular agreement
will have appreciable adverse effect on competition
within the relevant market in India. For this purpose,
CCI is to take into consideration the provisions
contained in the Competition Act, including Section 29
thereof. Sections 45 and 46 also authorise CCI to
impose penalties in certain situations.
112. Obviously, all the aforesaid functions not only
come within the domain of CCI, TRAI is not at all
equipped to deal with the same. Even if TRAI also
returns a finding that a particular activity was anti-
competitive, its powers would be limited to the action
that can be taken under the TRAI Act alone. It is only
CCI which is empowered to deal with the same anti-
competitive act from the lens of the Competition Act. If
such activities offend the provisions of the Competition
Act as well, the consequences under that Act would also
follow. Therefore, contention of the IDOs that the
jurisdiction of CCI stands totally ousted cannot be
accepted. Insofar as the nuanced exercise from the
standpoint of the Competition Act is concerned, CCI is
the experienced body in conducting competition
analysis. Further, CCI is more likely to opt for structural
remedies which would lead the sector to evolve a point
where sufficient new entry is induced thereby
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promoting genuine competition. This specific and
important role assigned to CCI cannot be completely
wished away and the "comity" between the sectoral
regulator (i.e. TRAI) and the market regulator (i.e. CCI)
is to be maintained."

42. Finally, in paragraph 121 of the aforesaid Apex Court decision it
has been held that order passed under section 26(1) of the Competition Act is
administrative in nature and that is further directive directing the Director
General to make enquiry. The High Court would not adjudge the validity of
such order on merit. Finally, the Apex Court held that giving findings on
merit would not be proper. The aforesaid judgement will be of no help to the
petitioner since as on today the CCI has only passed an order under section
26(1) of the Act directing the Director General to conduct an inquiry into the
matter.
43. Relying on the decision in the case of State of U.P. Vs. M/s
Lalta Prasad Vaish and Sons, 2024 (17) SCC 1 it has been argued by Shri
Mathur, learned senior counsel that Parliament cannot take under its control
the subject pertaining to intoxicating liquor under any Law such as IDRA
made under Entry 52 of List-I. Therefore, the subject intoxicating liquor falls
exclusively within the domain of State Legislature which also has obligation
to prevent industrial alcohol being covered into intoxicating liquour as an
abuse.
44. Learned counsel for CCI has placed reliance on the judgment of
Apex Court in the case of Rajasthan Cylinders and Containers Limited Vs.
Union of India, (2018) SCC Online SC 1718 and referred to the observation
wherein it has been held that section 18 of the Act casts a specific and
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positive obligation on CCI to eliminate anti competition area, practice and

promote competition and protect the interest of consumer and to ensure free
trade. There is presumption that four types of agreements in sub-section (3)
of section 19 will have appreciable adverse effect on competition. Section
19(3) of the Act mentions the factor which is to be examining for
determining whether any agreement has an appreciable adverse effect on
competition under section 3. No further exercise is needed by the CCI once a
finding is arrived at that a particular agreement fell into any of the aforesaid
four categories.
45. In the case of CCI Vs. SAIL and another, (2010) 10 SCC 744
the Apex Court observed in paragraphs 97, 98 & 113 as under:-

"97. The above reasoning and the
principles enunciated, which are
consistent with the settled canons
of law, we would adopt even in
this case. In the backdrop of these
determinants, we may refer to the
provisions of the Act. Section 26,
under its different sub-sections,
requires the Commission to issue
various directions, take decisions
and pass orders, some of which are
even appealable before the
Tribunal. Even if it is a direction
under any of the provisions and not
a decision, conclusion or order
passed on merits by the
Commission, it is expected that the
same would be supported by some
reasoning. At the stage of forming
a prima facie view, as required
under Section 26(1) of the Act, the
Commission may not really record
detailed reasons, but must express
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its mind in no uncertain terms that
it is of the view that prima facie
case exists, requiring issuance of
direction for investigation to the
Director General. Such view
should be recorded with reference
to the information furnished to the
Commission. Such opinion should
be formed on the basis of the
records, including the information
furnished and reference made to
the Commission under the various
provisions of the Act, as
aforereferred. However, other
decisions and orders, which are not
directions simpliciter and
determining the rights of the
parties, should be well reasoned
analysing and deciding the rival
contentions raised before the
Commission by the parties. In
other words, the Commission is
expected to express prima d facie
view in terms of Section 26(1) of
the Act, without entering into any
adjudicatory or determinative
process and by recording minimum
reasons substantiating the
formation of such opinion, while
all its other orders and decisions
should be well reasoned. C
98. Such an approach can also be
justified with reference to
Regulation 20(4), which requires
the Director General to record, in
his report, findings on each of the
allegations made by a party in the
intimation or reference submitted
to the Commission and sent for
investigation to the Director
General, as the case may be,
together with all evidence and
documents collected during
investigation. The inevitable

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consequence is that the
Commission is similarly expected
to write appropriate reasons on
every issue while passing an order
under Sections 26 to 28 of the Act.
xxxxxxxx
113. This Court in Brahm Dutt v.
Union of India 43, while
considering the constitutional
validity of Section 8 of the Act
observed that the Commission is
an expert body which had been
created in consonance with
international practice. The Court
observed that it might be
appropriate if two bodies are
created for performing two kinds
of functions, one advisory and
regulatory, and the other
adjudicatory. Though the Tribunal
has been constituted by the
Competition (Amendment) Act,
2007, the Commission continues
to perform both the functions
stated by this Court in that case.
Cumulative effect of the above
reasoning is that the Commission
would be a necessary and/or a
proper party in the proceedings
before the Tribunal."


46. The petitioner has approached this Court in order to seek
quashing and setting aside order of Commission dated 04.8.2020 passed
under section 26(1) of the 2002 Act, by which, the Director General was
directed to conduct investigation. Thereafter, the Commission considered the
investigation report submitted on 21.7.2023 and directed for supply to
opposite parties in order to submit objection/suggestions. The petitioners
waited till submission of final report by the Director General. The petitioners
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ought to have approached this Court immediately after passing of the order

dated 04.8.2020. When the report of the Commission came against them, and
when CCI started proceeding against the petitioners/OPs and calling upon
them to submit an objection, then the petitioners approached this Court by
way of these writ petitions. The petitioners continued to participate on
21.9.2023, 15.11.2023 & 03.1.2024, and finally on 21.3.2024. Some of the
OPs/petitioners filed interlocutory applications which were for extension of
time, cross-examination of five individuals, supply of oral statements, etc.
Therefore, in mid of the proceedings the petitioners have approached this
Court for challenging the authority of CCI which has yet to pass final order
under section 27 of the 2002 Act. Even if any order is adverse and against
the petitioners, then they shall have a remedy under section 53A before the
National Company Law Appellate Tribunal constituted under section 410 of
the Companies Act. The orders passed under sub-section (2) of section 26
and section 27 are appealable. Therefore, despite availabilty of statutory and
efficacious remedy the petitioners have approached this Court by way of writ
petition and got the proceedings stayed.
47. In view of above, all the writ petition stand dismissed. Interim
order passed is vacated. The CCI is directed to complete the enquiry under
section 26 of 2002 Act and pass final order under section 27 thereof.
(VIVEK RUSIA)
(PRADEEP MITTAL)
JUDGE
JUDGE
ak/rm
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