Case BriefsTribunals/Commissions/Regulatory Bodies

Competition Commission of India (CCI): Ashok Kumar Gupta (Chairperson) and U.C. Nahta and Sangeeta Verma (Members) heard the information filed by MPCDF under Section 19(1)(a) of the Competition Act, 2002 and disposed of the same.

The Informant herein, was involved in pharmaceutical trade whereas, Opposite Party 1 (OP-1), was a registered state-level association of wholesalers and retailers of pharmaceutical companies. One of the Informant’s member, dealt in pharmaceutical products. The Informant had alleged that its aforesaid member, had approached clearing and forwarding agents of various pharmaceutical companies, seeking supply of their products, for which he made an advance payment to them in the form of cheques/Demand Drafts (DD). However, these cheques/DDs were returned and he was denied the supply of pharmaceutical products by said companies without assigning any reason.

It was alleged that OP-1 used to issue No Objection Certificate (NOC)/Letter of Consent (LOC) on the basis of which appointment of the stockist was made by pharmaceutical  companies and, the practice of mandating NOC/LOC was stifling competition in the market by limiting access of consumers to various pharmaceutical products and controlling supply of drugs in the market by ensuring that only those distributors which were favored by OP-1 were eventually selected by the pharmaceutical companies to do business with them. The Commission prima facie found merit in the allegations of the Informant. Accordingly, the Commission directed the Director General (DG) to cause an investigation.

Findings of the DG in the Main Investigation Report

The DG investigated the conduct of OP-1 to determine whether it was mandating the requirement of NOC/LOC to be taken from it prior to the appointment of stockist by the pharmaceutical companies. He observed that Clause 28(a) of the Drugs (Price Control) Order, 2013 created an obligation on a pharmaceutical company to sell drugs/medicines unless there was a “good and sufficient reason” to refuse. He also observed that member of the Informant, used to send indent along with a draft/cheque, without having been appointed as a stockist, despite being aware of the procedure for appointment of stockist. Instead of following the due procedure, the member of the Informant indulged in threatening the pharmaceutical companies, issuing reminders within a very short gap and sending letters at wrong addresses. The DG concluded that OP-1 was consistently using anti-competitive activities which included grant of approval before appointment of stockist, imposing restrictions on the rates of the products and regulating the supply of the goods and despite there being a circular in place against the practice of seeking and providing NOC/LOC, OP-1 was constantly violating it. According to the DG, the act of indulging in the said practices by OP-1, amounted to limiting and controlling supplies of pharma products, thereby contravening provisions of Section 3 of the Act.

Oral Submission by OP-1

OP-1 denied all the allegations made against it. OP-1 had no role to play between the distributors/stockist and the pharmaceutical companies. OP-1 further stated that the DG had cherry-picked the statements of witnesses to suit its findings and had not provided complete detailed versions of replies and submissions of the Informant or him.

Order

The Commission relied on DG’s Report and directed OP-1, to cease and desist from indulging in the practice of mandating clearance/NOC/LOC which had been held to be anti-competitive in terms of the provisions of Section 3 of the Act. It also directed OP-1 to organize, in letter and spirit, at least five competition awareness and compliance programs for its members. The Commission imposed a penalty on OP-1 at the rate of 10% of the average of its income.[Madhya Pradesh Chemists and Distributors Federation (MPCDF) V. Madhya Pradesh Chemists Druggist Association (MPCDA), 2019 SCC OnLine CCI 7, decided on 03-06-2019 ]

Case BriefsHigh Courts

Kerala High Court: P.V Asha, J. allowed a petition directing the respondent college to issue NOC to the students applying for transfer to another college as per the rules of the concerned university.

The petitioners, in this case, were students pursuing their engineering course from Cochin Institute of Science and Technology which was a self-funded college. All the petitioners were either in their 2nd or 4th semester and wanted to get themselves transferred to another self-funded college, as their institution had a provision of transferring students before the starting of their 3rd and 5th semester as per the wish of the students and after the issuance of  “No Objection Certificate (NOC)” by the principal. The deplorable condition of the college forced 106 students to file an application for their transfer which the college arbitrarily rejected. Principal of the college was even requested by the parents to issue the NOC but there was no revert. Feeling aggrieved by the act of college, students filed this petition requesting the Court to direct the college to issue the NOC.

Learned counsels for the petitioner D. Kishore and A.C Devasia argued that when the petitioners did not want to continue in the College and the University permitted inter-college transfer, denial of NOC recommendation on their applications was derogatory to their fundamental right to education under Article 21 of the Constitution. They also informed the Court that they apprehend vindictive measures against the students on their continuance in the college as such open declarations were made by the College and that such measures could adversely affect the very future and the career of all these petitioners. Furthermore, they placed their reliance on Kottayam Institute of Technology and Science v. Admission Supervisory Committee for Professional Colleges in Kerala, 2016(4) KHC 620 and argued that the transfer could be allowed even without the recommendation of the Principal of the College, as it was only a matter of procedure and not a necessity. Thus, it was submitted that the petitioners were entitled to get their certificates released for admission in another College.

Learned counsel for the respondent P. Ravindran argued that the petitioners did not have any right for transfer and the College was not under any obligation to grant NOC or to recommend their applications, as the applications were made based on the norms issued by the university which did not have any statutory force. It was argued that the petition itself was not maintainable for enforcement of guidelines. It was also argued that even as per the norms, it was open to the Principal to recommend or not and only if the application is recommended, the petitioners could further process the applications.

The Court observed that the petitioners did not come under any prohibited category and were entitled to get the NOC. It was further observed that “compelling the students, who did not want to continue in a college, could only affect the future and career of the students. An atmosphere without room for apprehensions and conducive to carry on the studies peacefully, was essential and hence it required paramount consideration.” Therefore, the Court ordered the principal of the college to recommend the applications of the petitioners for inter-college transfer within three days of passing of this judgment. It was also made clear that in the event of any delay on the part of the respondent, the opted Colleges was free to act upon and process the applications submitted by the petitioners as if the applications were recommended. Thus, the petition was allowed.[Jisin Jijo v. APJ Abdul Kalam Technical University of Kerala, 2019 SCC OnLine Ker 1691, decided on 31-05-2019]

Case BriefsHigh Courts

Rajasthan High Court: Shri Vinayak Mahavidhlaya, the petitioner-college has enrolled students in the academic session 2016-17 for B.Sc. First year without having a valid NOC from the State Government, or an affiliation for the course from the respondent-University. Retrospective affiliation to a college was refused to be granted as per clause 3.4.1 of the University Grants Commission (Affiliation of Colleges by Universities) Regulations, 2009 which provides that colleges can impart instruction only in subjects and for courses/programmes in the faculties, for which affiliation has been granted by the University concerned and retrospective affiliation will not be granted.

The University of Rajasthan affiliation rules apply to affiliations by the respondent-University by virtue of Section 49 of the Shekhawati University Act, 2012 under which it has been established. Rule 2.4.5 of the affiliation rules of the University of Rajasthan provides that an application to start a new college or to run fresh course(s) should be accompanied by an appropriate order from the Government permitting the Society/Trust to start the college with details of the courses/programmes intended to be offered. NOC of the State Government permitting the commencement of 3 year B.Sc. degree course was held to be a sine-qua-non for the respondent-University allowing affiliation to the petitioner college for its B.Sc. 3 year degree in the academic session 2016-17.

The respondent-University had informed the petitioner-college that it had violated the UGC Affiliation Regulations of 2009 as also the instructions of the State Government by admitting students in B.Sc. First Year in the academic session 2016-17 without having the requisite affiliation.

It was held that the petitioner-college was operating beyond the realm of law as it could not in any circumstance seek retrospective affiliation for its three year B.Sc. Degree course in the absence of a valid NOC issued by the State Government. [Shri Vinayak Mahavidhlaya v. Pandit Deendayal Upadhyaya Shekhawati University,  2017 SCC OnLine Raj 2205, decided on 10.08.2017]