Delhi High Court dismisses Monsanto’s plea against CCI probe of directors

Date:12-24-2018

The Delhi High Court on 18 December dismissed the US biotechnology major Monsanto’s plea to prevent the Competition Commission from probing its chief officials' role in a case linked to alleged unjust business practices in the Indian seeds market.

A division bench of the high court has rebuffed the plea of Monsanto and its Indian arm, against an order of a single judge bench that had declined to interfere with the direction of CCI or Competition Commission of India.

A bench of Chief Justice Rajendra Menon and Justice V K Rao told that the directors or officers of a firm can be proceeded against, together with the entity. They also said that the directors/officers will be held accountable only if Competition Commission of India were to come to a conclusion that they were the main persons who were in-charge of the firm at the time of suspected unfair practice or abuse of leading position.

The court told that section 27 of the Competition Act clearly states that if CCI finds any infringement of the provisions, “it has the right to pass orders against an 'enterprise' and a 'person', who has been proceeded against, imposing penalty".

Monsanto and its group company, Mahyco Monsanto Biotech (India) Ltd (MMBL), had argued that as per the provisions of the Act, penalty was to be imposed on the 'turnover' that would not apply to an individual (directors or officers).

The bench disagreed with the submission and said, "Turnover, in the context of directors or officers has to be interpreted as the income of the directors or officers from the firm, because there cannot be an income of a director/officer from an infringing product".

The high court dismissing the firms' pleas against the single judge order said, "We have been told, during the course of the arguments that CCI has been imposing penalty on the income of the directors/ officers of the company. We agree with such an action".