Case No. 50 of 2014. Case: Prem Prakash Vs The Principal Secretary, Madhya Pradesh Public Works Department and Ors.. Competition Commision of India

Case Number:Case No. 50 of 2014
Party Name:Prem Prakash Vs The Principal Secretary, Madhya Pradesh Public Works Department and Ors.
Counsel:For Appellant: Party-in-Person and B.N. Gaur, Assistant and For Respondents: Sanjib Kumar Mohanty, Advocate, Sr. Panel Central Government Counsel
Judges:S.L. Bunker, Sudhir Mital, U.C. Nahta, Members and G.P. Mittal, J. (Member)
Issue:Competition Act, 2002 - Sections 19(1)(a), 2(h), 26(1), 26(2), 3, 4, 4(2)(a)(i), 45(1)
Judgement Date:March 17, 2017
Court:Competition Commision of India
 
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Order:

  1. The information in this case was filed by Shri Prem Prakash (the 'Informant') under Section 19(1)(a) of the Competition Act, 2002 (the 'Act') against the Principal Secretary, Public Works Department, Government of Madhya Pradesh ('OP-1') and the Director General, Central Public Works Department, New Delhi ('OP-2') alleging contravention of the provisions of Sections 3 and 4 of the Act.

  2. The Informant is the proprietor of Venus Testing and Research Laboratory. It is claimed that the laboratory of the Informant has been assessed and certified for physical and chemical material(s) testing by the Accreditation Commission for Conformity Assessment Bodies ('ACCAB') to meet the requirements of International Standard ISO/IEC 17025:2005.

  3. OP-1 is the Principal Secretary of the Public Works Department of the Government of Madhya Pradesh ('MPPWD'). MPPWD is the principal agency of the Government of Madhya Pradesh engaged in planning, designing, construction and maintenance of Government assets like roads, bridges, road over bridges, fly overs and buildings through its two wings i.e., Public Works Department (B & R) and Project Implementation Unit.

  4. OP-2 is the Director General of the Central Public Works Department ('CPWD'), New Delhi. CPWD is a comprehensive construction management department and the principal agency of the Government of India responsible for creating assets and providing services including planning, design, construction and maintenance of office and residential buildings as well as other structures of various ministries and departments of Government of India and other autonomous bodies and public sector enterprises. Its activities are spread throughout India.

  5. The Informant was aggrieved that the Opposite Parties (OP-1/MPPWD and OP-2/CPWD hereinafter collectively referred to as 'OPs') had refused to consider his laboratory for testing construction materials on the ground that it has not been accredited by the National Accreditation Board for Testing and Calibration Laboratories ('NABL').

  6. The Informant had submitted that MPPWD had issued an order dated 16.09.2013 wherein it was made mandatory for the contractors of PWD in the state that 20% of their construction material used in the work was to be tested by accredited laboratories of NABL. Earlier vide order dated 03.09.2012, MPPWD had made 10% quantity as mandatorily required to be tested by NABL accredited labs in the areas of Bhopal and Sagar. Similarly, CPWD had issued "Guidelines for Approval of New Products and Laboratories" dated 18.12.2013 as well as Office Memorandum dated 29.05.2014 for "Modification in CPWD Works Manual 2012" which imposed a condition that the outside private laboratories must be NABL approved.

  7. The Informant had alleged that there was nothing as 'NABL accreditation'. It was stated in the information that NABL is an autonomous body under the aegis of Department of Science and Technology ('DST'), Government of India registered under the Societies Registration Act, 1860. Further, the Informant has submitted that NABL is merely an accreditation body accrediting laboratories as per ISO/IEC 17025:2005 international standard. It is neither a statutory nor a constitutional body. The Informant had highlighted that, as per the requirement of this international standard, if a laboratory wanted to get accreditation for part or all of its testing and calibration activities, it should select an accreditation body that operated in accordance with ISO/IEC 17011 international standard. Thus, any organization that operated its system as per ISO/IEC 17011 international standard could accredit laboratory for ISO/IEC-17025:2005 international standard.

  8. The Informant averred that there were more than hundred accreditation bodies throughout the world and three accreditation bodies in India. However, the aforesaid orders/memorandum of the OPs were promoting the trade name of a single accreditation body i.e., NABL which was unfair as it consequently affected the business of those laboratories which were not accredited by NABL.

  9. Accordingly, it was alleged by the Informant that by incorporating the condition that materials used for construction should be tested by laboratories accredited only by NABL, the OPs had imposed arbitrary and unreasonable condition of eligibility, which was adversely affecting the competition in the relevant market. Hence, the Informant had challenged the circulars/orders of the OPs and alleged violation of Section 3 and 4(2)(a)(i) of the Act in the matter.

  10. The Commission had passed an order under Section 26(2) of the Act dated 29.10.2014 in this case wherein the Commission had held that "the activities being performed by the Opposite Parties do not come under the definition of 'enterprise' in terms of Section 2(h) of the Act as they are not directly engaged in any economic and commercial activities. The Opposite Parties have no existence in the relevant market, except for laying down norms as to the authorization of accreditation bodies for specific purposes. Their role is limited to planning, designing, construction and maintenance of Government assets as such provisions of Section 4 of the Act are not attracted against them. The Opposite Parties have issued circulars only and they were not operating in the relevant market. Therefore, the conduct of the Opposite Parties does not give rise to any competition concern."

  11. An Appeal No. 51/2015 (Prem Prakash v. The Principal Secretary, Madhya Pradesh Public Works Department and Ors.) was filed before the Competition Appellate Tribunal (the 'COMPAT') by the Informant against the above order passed by the Commission. The COMPAT in its order dated 17.02.2016 referred to its order in Rajat Verma v. Haryana Public Works (B & R) Department and others (Appeal No. 45 of 2015) dated 16.02.2016 and allowed the appeal.

  12. It noted that in Rajat Verma's case, while considering the issue of whether the Public Works Department of the Government of Haryana is an 'enterprise' under the Act, the COMPAT in its order referred to the observations made in the dissent note of Member Augustine Peter at length. Further, the COMPAT observed as follows:

    17. If the term 'enterprise' as defined in Section 2(h) is read in conjunction with the definition of the term 'person' and 'service' it becomes clear that the legislature has designedly included Government departments in relation to any activity relating to storage storage, supply, distribution, acquisition or control of articles or goods, or the provision of services of any kind. The width of the definition of 'enterprise' becomes clear by the definition of the term 'service'. The inclusive part of the definition of 'service' takes within its fold service relating to construction and repair. These two words are not confined to construction and repair of buildings only. The same would include all types of construction and repair activities including construction of roads, highways, subways, culverts and other projects etc. It is thus evident...

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