No Prior Notice or Hearing Required Before Passing Section 26(2) Closure Order under Competition Act

The Petitioner, a solar energy MSME, availed a loan of ₹13.25 crores from Canara Bank (Respondent No. 2).

The Petitioner filed a complaint before the Competition Commission of India (CCI) alleging that the Bank engaged in anti-competitive practices by retrospectively increasing interest rates, demanding back-interest of ₹76 lakhs, and withholding collateral documents to prevent loan transfers.

On 19.05.2025, the CCI passed the "Impugned Order" under Section 26(2) of the Competition Act, closing the case on the grounds that no prima facie case of contravention of Sections 3 or 4 was made out.

The Petitioner challenged this order via a writ petition, alleging a violation of natural justice because the CCI did not grant them a hearing before passing the closure order.

1. Whether the Competition Commission of India is mandated to afford a prior hearing or notice to an informant before passing a closure order under Section 26(2) of the Competition Act, 2002.

2. Whether the availability of a statutory clinical appeal before the NCLAT bars the exercise of writ jurisdiction in the present matter.

The court primarily applied Section 26(2) regarding the closure of cases and Section 36(1) regarding the principles of natural justice under the Competition Act, 2002.

The court relied on the landmark Supreme Court decision in CCI v. Steel Authority of India Ltd. (SAIL), which established that the formation of a prima facie opinion is an administrative/departmental function not requiring a prior hearing.

The court also applied the doctrine of merger from Kunhayammed v. State of Kerala.

The principle from Samir Agrawal v. CCI confirms that an informant has the locus standi to appeal a Section 26(2) order under Section 53B.

The Court reasoned that the CCI's function at the Section 26 stage is "administrative, inquisitorial, and departmental," rather than adjudicatory.

Following the SAIL and Kerala Film Exhibitors Federation precedents, the Court held that the right to a hearing only matures after the prima facie stage or during an appeal.

The Court observed that while Section 26(9) (inserted by the 2023 Amendment) expressly mandates a hearing for post-investigation closures, Section 26(2) has no such requirement, indicating legislative intent to exclude it at the preliminary stage.

The Court noted that a Factually identical challenge in Karnataka Power Corporation Ltd. v. CCI was rejected by the NCLAT and subsequently dismissed by the Supreme Court in a Civil Appeal, leading to a merger of the orders and creating binding law that Section 26(2) does not necessitate a prior hearing.

The writ petition was dismissed as the Petitioner failed to establish a violation of natural justice and possessed an efficacious alternative remedy via a statutory appeal under Section 53A/53B to the NCLAT.

Liberty was granted to the Petitioner to approach the NCLAT.