A 13th century tenet can help CCI clear its regulatory logjam

The regulator can invoke the judicially-recognised doctrine of necessity for a short period of time till the government appoints a chairperson. (File image)

India’s market regulator – the Competition Commission of India (CCI) – finds itself facing an unprecedented predicament: it doesn’t have the adequate number of members to clear big-ticket mergers awaiting its approval or to decide numerous important antitrust cases. The CCI consists of a chairperson and at least two and not more than six members who are collectively tasked with making important decisions. However, since the superannuation of its last chairman in October 2022, the Commission has remained in regulatory limbo. Without the minimum three members required to make decisions, it cannot approve routine M&A deals that pose no competition concerns which are reportedly worth over a staggering Rs10,000 crore. Equally, it cannot decide important cases, including alleged steel and cement cartels, that are pending adjudication, and which could have wide-ranging repercussions for the Indian economy.

While the situation is unprecedented for the CCI, it is not the first time that Indian regulators have been hamstrung by the delay in appointments. Take for instance the central government’s inability for four years to find a suitable “technical member” to the Intellectual Property Appellate Board’s (IPAB) patent bench responsible for hearing patent-related appeals. Or for that matter – India’s well-respected securities market regulator SEBI whose appellate tribunal – the Securities Appellate Tribunal (SAT) functioned without a technical member for nearly a year after its technical member CKG Nair retired in March 2021 and his replacement appointed only a year later. The delay in the process of appointment of important members to both these tribunals hindered their ability to make important decisions and had tremendous economic and regulatory implications.

However, where timely appointments to important statutory bodies and tribunals have not happened– including in these two instances, the courts have stepped in and prevented paralysis in justice administration. In the IPAB instance, the Delhi High Court (Mylan Laboratories v Union of India, 2019) resurrected the IPAB’s patent bench and made it functional by observing that the Constitution mandated that all citizens must have the right to access justice which would be compromised if tribunals were not able to discharge their legal obligations simply because of the lack of quorum. Similarly, in the instance of the non-appointment of a technical member to the SAT, it held (Axis Bank v NSE, 2021) that the absence of a technical member should not stall the SAT’s functioning since its orders were valid even if there was a defect in its constitution.

In doing so, the courts have invoked the “doctrine of necessity” – which is a common law doctrine that suggests that actions which would have otherwise not been permitted, are made lawful by necessity. While the doctrine has its roots in the writings of a 13^th--century jurist, it has been used by Indian courts in numerous instances. It essentially permits tribunals to take certain actions in very specific situations, where such actions might not have otherwise been permitted. While invoking the doctrine, courts have allowed tribunals to continue to function in exceptional situations: such as the temporary lack of quorum caused by a delay in the appointment of a member. In the courts’ wisdom, the (temporary) deviation from the procedure prescribed by law is outweighed by the denial of access to justice that results from the lack of quorum. The 3-member quorum requirement contained in the Competition Act is designed to ensure a fair hearing by the CCI. Invoking the judicially-recognised doctrine of necessity for a short period of time while the government finalises its appointment would perhaps be appropriate in this unique situation.

The CCI is an important and growing piece of India’s regulatory ecosystem tasked with addressing anti-competitive behaviour in markets as varied as technology, cement, tyres and healthcare, to name just a few.

Additionally, the government has tasked it with looking into anti-profiteering under the Goods and Services Tax (GST) and the Parliamentary Standing Committee on Finance has recently recommended that the CCI set up a Digital Markets Unit to address growing concerns of concentration in the digital economy. With such a vital regulatory role, the hold-up caused due to the delay in appointing a chairperson or third member to the CCI gravely affects the Indian economy. The entire market – including companies and individuals will suffer an immense and perhaps irreparable loss as a result of delayed merger approvals and continued anti-competitive conduct. The CCI would be well within its rights to invoke the well-established judicial doctrine of necessity in this situation until the government finalises the appointment of its chairperson. This would permit it to continue to function and protect every citizen’s constitutional right to access justice.

PK Singh is former Secretary, CCI and senior advisor at Axiom5 Law Chambers. Samir R Gandhi is a Partner at Axiom5 Law Chambers and visiting faculty at NLSIU, Bangalore. Views are personal, and do not represent the stand of this publication.