Appeal No. 29 of 2014. Case: Tavoy Apparels Limited and Ors. Vs Competition Commission of India and Ors.. COMPAT (Competition Appellate Tribunal)
| Case Number | Appeal No. 29 of 2014 |
| Counsel | For Appellant: Neeraj Choudhary, Anu Monga and Neeraj Lalwani, Advocates and For Respondents: Kamal Sultanpuri, Deputy Director (Law) |
| Judges | G.S. Singhvi, J. (Chairman) and Rajeev Kher, Member |
| Issue | Code of Criminal Procedure, 1973 (CrPC) - Sections 482, 483; Competition Act, 2002 - Sections 19(1)(a), 26(2), 27, 28, 3, 3(3), 3(4), 4, 53B(1), 53B(2), 53N(2), 63(2)(ma); Constitution of India - Articles 14, 20(3), 21, 226, 227, 32; Indian Penal Code 1860, (IPC) - Sections 120B, 420, 468, 471; Uttar Pradesh Imposition of Ceiling On Land ... |
| Judgement Date | October 26, 2015 |
| Court | COMPAT (Competition Appellate Tribunal) |
Order:
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Having failed to convince the Competition Commission of India (for short, 'the Commission') to entertain their prayer for ordering an investigation into the alleged abuse of dominant position by Respondent No. 2-The Export Credit Guarantee Corporation of India Limited by not deleting their names from the Specific Approval List (SAL), the appellants have preferred this appeal under Section 53B(1) and (2) of the Competition Act, 2002 against order dated 12.02.2014 passed by the Commission in Case No. 84/2013.
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Appellant No. 1-Tavoy Apparels Limited is a company registered under the Companies Act, 1956. It is engaged in the manufacture and export of readymade garments, work wear, industrial and institutional garments. It has a manufacturing unit in Kandla Special Economic Zone, Kutch, Gujarat. Appellant Nos. 2 to 4, namely - Tavoy Work Wear (P) Limited, Tavoy Workwear and Rajee Apparels are sister concerns of Appellant No. 1.
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In 1957, the Government of India set up Export Risk Insurance Corporation. Subsequently, it was renamed as Export Credit Guarantee Corporation of India Limited (Respondent No. 2 herein). It works under the administrative control of the Ministry of Commerce and Industry, Government of India. The main functions of Respondent No. 2 are:
(i) To provide a range of credit risk insurance covers to exporters against loss in the process of export of goods and services.
(ii) To offer guarantees to banks and financial institutions to enable the exporters to obtain better facilities and to provide overseas investment insurance to Indian companies investing under joint ventures abroad in the form of equity or loan.
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Respondent No. 2 is registered with the Insurance Regulatory and Development Authority (IRDA) as a non-life insurance company dealing in credit insurance policies/covers. It provides insurance in the form of policies to safeguard exporters against unforeseen losses. It also offers insurance cover to Banks with the object of expediting adequate Bank finances to Indian exporters. In addition, it assists Indian exporters in managing their credit risks by providing timely information on the credit worthiness of the buyers. One of the several tasks performed by Respondent No. 2 is to provide insurance cover to banks, which is known as Export Credit Insurance for Banks (for short 'ECIB'). It is in the nature of indemnity to advances given to exporters as credits/loans by the banks. ECIB is primarily intended to protect banks against losses that may occur due to non-repayment of packing credit/post-shipment advances granted to the exporters.
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Respondent No. 3 - Union Bank of India is a scheduled bank with whom Appellant No. 1 had entered into a borrowing arrangement. On 17.08.1995, Respondent No. 3 sanctioned credit facilities to Appellant No. 1, which included a packing credit of Rs. 2.75 Crores and export bills purchase of Rs. 1 Crore. Respondent No. 2 provided insurance cover for these credits.
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On account of failure of Appellant No. 1 to repay the amount of export credit, Respondent No. 3 submitted reports of default to Respondent No. 2 on 20.06.1999 and 29.11.1999. Thereupon, Respondent No. 2 settled the insurance claim and paid Rs. 2,74,67,467/- to Respondent No. 3. The details of the claims made by Respondent No. 3 and the payments made by Respondent No. 2 are as under:
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Since Appellant No. 1 did not reimburse Respondent No. 2 in respect of payments made to Respondent No. 3, the latter issued notice, which was followed by circular No. 1294 dated 06.08.1999 whereby the appellants were placed in the Specific Approval List in accordance with paragraph 11.1 read with paragraph 11.2 of the Operational Guidelines issued by Respondent No. 2 for Whole turnover Packing Credit Guarantee (WPCG), which are reproduced below:
11.1 What is SAL?
Specific Approval List (SAL) (maintained by the Corporation and circulated among all banks) contains names and addresses of the exporters to whom packing credit advances granted by a bank can be covered under WTPCG only if the Corporation has given its approval in writing. The list provided to banks is an important source of information for identifying exporters who have defaulted. The list is mainly aimed at advising banks to exercise caution while dealing with such exporters.
11.2 Need for placing an exporter in SAL
Generally speaking the necessity for placing an exporter in SAL may arise in cases where:
(i) Exporter has defaulted to a bank: This default to a bank may be reflection of the financial difficulties of the exporter or some serious problems in his business.
(ii) A claim has been filed under a guarantee on account of the exporters by any bank: The intention of the Corporation is to avoid undertaking further liability on account of the exporter.
(iii) The exporter is purported to be involved in a fraud: When it comes to the knowledge of the Corporation that an exporter is involved in fraud; he ceases to be a desirable customer and all banks have to be cautioned in regard to the potential danger in dealing with such an exporter.
(iv) The exporter is in financial difficulties: If an exporter is in serious financial difficulties, a close monitoring of his account is called for.
While placing the name of an exporter under SAL, Corporation may also consider including the names of sister concerns as the financial difficulties of the exporter might adversely affect their financial position as well. Names of proprietor/partners and guarantors/directors are also included in SAL with a view to prevent them from obtaining finance in the names of some other concerns floated by them.
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As the amount paid by Respondent No. 2 to Respondent No. 3 was not sufficient to cover the total amount claimed by Respondent No. 3, it filed O.A. No. 906 of 2000 under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 before the Debts Recovery Tribunal, Mumbai (for short, 'DRT') for recovery of Rs. 7.05 Crores with interest. Respondent No. 2 was not impleaded as party to the application filed by Respondent No. 3 before the DRT.
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On receipt of the notice issued by the DRT, Appellant No. 1 filed Writ Petition No. 674 of 2005 before the Bombay High Court and prayed that the recovery proceedings may be quashed. During the pendency of the writ petition, Appellant No. 1 executed One Time Settlement (OTS) with Respondent No. 3 whereby the latter agreed to receive Rs. 1.75 Crores for settlement of the account. After taking cognizance of OTS, the DRT passed order dated 13.06.2005, the relevant portions of which read as under:
"The Applicant's Officer Mr. D.S. Dhawde and Defendant Nos. 2 to 5 have filed these Consent Terms. The Defendant No. 2 has filed the same as Director of the 1st Defendant. They are identified by their Counsel.
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I have explained the Consent Terms to the parties. The parties admit that from out of settlement amount of Rs. 1.75 Crores, a sum of Rs. 43.75 Lacs has been paid. They also admit that balance amount is to be paid in quarterly installments of Rs. 18.75 Lacs with interest on reducing balance at PLR. The parties also admit the default clause. The admission appears to be voluntary and unconditional. Therefore, acting upon the same the Consent Terms are verified and taken on record.
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Order passed below Exh. 1."
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The consent terms, which constituted foundation of the aforesaid order are also reproduced below:
Consent Terms
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The Defendants agree and admit the claim of the applicant Bank in the Original Application and agreed and declared that O.A. be decreed against the Defendants as per Prayers.
(a), (b), (c), (d) and (e) to pay the amounts of Rs. 9,05,48,916/- along with further interest and cost as prayed in the Original Application jointly and/or severally.
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It is further agreed that if the defendants pay a sum of Rs. 1.75 crores in the following manner, the decree be marked satisfied.
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The Defendants paid a sum of R. 25,00,000/- to the Applicants as per the terms of compromise and the Applicant Bank accepted the amount towards settlement amount.
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The balance amount of Rs. 1,50,00,000/- shall be paid by the Defendants in eight equal quarterly installments payable with interests @ PLR simple on reducing balance. The first installment shall be paid by the Defendants on or before 30.6.2005. Towards the payment of eight quarterly installments defendants have issued the following post dated cheques drawn in favour of applicant Bank details of cheques are as follows:
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If the Defendants commits default in payment as per any of the clause 2, 3 and 4 mentioned above, the entire claim amount in the O.A. 906/2000 as per clause (1) above mentioned shall become due and payable and all the concessions granted to the Defendants shall stand forfeited and Applicant Bank will be entitled to receive entire claim amount from the defendants.
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The Defendants agree to withdraw the counter claim filed by them against the Applicants in the above Original Application as also withdraw Writ Petition No. 674/2005 filed by Defendants against Applicants in the Bombay High Court on execution of these consent terms, and filing the consent terms, the counter claim stands withdrawn.
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The Defendants agree that the Applicants shall be at liberty to refund the proportionate claim amount to Export Credit and Guarantee Corporation out of the recoveries made.
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Unit the adjustment of the account all attachment and charges over the properties or defendants in favour of the Applicant Bank will continue.
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The Defendants agree and undertake that till that the entire payment is made as agreed hereinabove, the Defendants shall not dispose off, charges, encumber, create third party interest in or part with possession of any of their assets.
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Agreed and declared by the Applicant that on payment by the Defendant to the Application the sum of Rs. 1,75,00,000/- (Rupees One crore Seventy Five Lakhs only) in the manner provided in clause 2, 3...
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