[Sanjana Rebecca Samuel is a 4th year B.A., LL.B. (Hons.) student at Symbiosis Law School, Pune]
On 19 January 2024, the Madras High Court dismissed the suit filed by several app developers against Google. The developers asserted that Google’s policies within the Play Store contravened stipulations and directives outlined in the Payment and Settlement Systems Act, 2007 (“PSS Act”). Additionally, the app developers contended that Google was exploiting its dominant market position to compel application developers into accepting purportedly inequitable and unilaterally favorable terms and conditions.
The Madras High Court was faced with the question of whether it could entertain several civil suits or whether its jurisdiction was precluded by specialized statutes like the Competition Act, 2002 and the PSS Act.
Issues before the Madras High Court
Google filed for a rejection of plaint and argued that the High Court’s Jurisdiction is barred on three grounds: firstly, that the cause of action out of which the plaint arises has already been dealt with by the Competition Commission of India (“CCI”) and is therefore barred; secondly, that the High Court’s jurisdiction is implicitly barred since the Competition Act and the PSS Act are self-contained codes with their own adjudicatory mechanisms; thirdly, that the Developer Distribution Agreement (“DDA”) between Google and system providers contains an exclusivity clause that stipulates that all disputes arising out of the agreements are subject to the jurisdiction of relevant courts in the State of California.
Existing Regulatory Landscape
The Competition Act serves as the primary legislative framework aimed at promoting fair market competition and preventing anti-competitive practices within India. Under this legislation, the CCI is designated as the authority responsible for enforcing competition laws and ensuring market efficiency.
On the other hand, the PSS Act focuses on regulating and supervising payment and settlement systems in India, particularly those dealing with digital financial transactions. The Reserve Bank of India (“RBI”) serves as the regulatory authority under the PSS Act, overseeing the functioning and stability of payment systems. The RBI regulates disputes within the realm of payment and settlement systems under the PSS Act. Thus, both the statutes explicitly identify specific authorities that are vested with jurisdiction to entertain disputes arising out of the respective legislation.
The Case for Ousting High Court’s Jurisdiction
The Supreme Court in Fuerst Day Lawson v. Jindal Exports Ltd. held that the High Court’s jurisdiction could be impliedly excluded by a special enactment, thereby crystallizing the position that High Court’s powers are subject to legislative enactments. It was also held that such an enactment must be a complete and self-contained code in order to oust High Court’s Jurisdiction.
The Supreme court has previously refused to apply the adjudicatory provisions of other statutes when a self-contained code explicitly lays down an adjudicatory mechanism for disputes arising out of it. In Dhulabhai v. State of Madhya Pradesh, the Supreme Court established that when a statute confers finality to the decisions of a specialized tribunal, it effectively ousts the jurisdiction of civil courts. Section 24(3) of the PSS Act mandates the dispute between a “system participant” and a “system provider” to be referred to the RBI. Furthermore, finality to the RBI’s decision has been granted under section 24(4). Therefore, the PSS Act is a complete and self-contained code as it has explicitly laid down a remedy for disputes arising out of it.
On the ouster of civil courts’ jurisdiction by the Competition Act, the Madras High Court explained that section 61 of the Competition Act bars the jurisdiction of the civil court in respect of matters of which cognizance can be taken by the CCI. Moreover, section 62 states that the provision under the Competition Act shall be in addition to and not in derogation of other legislation. The Court clarified that section 62 would apply to those cases wherein the CCI does not have the power or authority under the Competition Act to pass orders. In such cases, the provisions of other statutes are not barred.
Implications of the Judgement
The Madras High Court’s decision to not assume the adjudicative responsibilities delegated to specialized bodies possessing expertise in specific subject matters aligns with the legislative intent of ousting the jurisdiction of civil courts to deter the potential misuse of legal proceedings. In clarifying the interpretation of sections 61 and 62 of the Competition Act, the judgment dispels any lingering ambiguity surrounding the jurisdiction of civil courts vis-à-vis Competition Act violations. Emphasizing the interplay between these statutory provisions, the judgement highlights that the invocation of section 62 cannot occur in isolation, without due regard for section 61. This recognition not only fortifies legal coherence but also acts as a bulwark against forum shopping tactics.
Notably, the judgement echoes a series of recent orders, such as Shyam Steel Industries Ltd. v. Union of India and Agni Steels Private Limited v. Union of India wherein High Courts have recognized the distinct mandate of the CCI as a statutory body vested with extensive jurisdiction and comprehensive powers, and have refused to interfere with the CCI’s investigation. Regulatory overlap may induce forum shopping, cause delays, and trigger multiple proceedings, ultimately leading to conflicting views between two regulators. The Court has provided much needed clarity on the forum to litigate violations of the PSS Act by clearly demarcating the scope and scheme of both the PSS Act and Competition Act, thereby mitigating any possible tussle for Jurisdiction between the RBI and the CCI.
The Way Forward: Need for Consultation between Sectoral Regulators
The case highlights the potential for enhanced collaboration between the CCI and sector-specific regulators like the RBI to address issues necessitating input from diverse regulatory bodies. This collaborative approach involves soliciting the opinions of relevant sectoral regulators as a means of resolving cross-sectoral challenges.
Section 21A of the Competition Act grants the CCI the authority to refer matters to the appropriate statutory authority when its decisions may involve the implementation of other statutes. However, this consultation process is voluntary and not mandatory. The Standing Committee on Finance in its eighty-third Report recommended that the consultative process between the CCI and other sectoral regulators should be mandatory if the decision made or planned by the CCI goes against any provision of the Competition Act that falls under the jurisdiction of that statutory authority. It would be prudent to implement this recommendation under the Competition Act.
The prevailing international legal perspective also advocates for a compulsory consultative process between competition authorities and sectoral regulators. UNCTAD’s Model Law on Competition underscores the importance of fostering a consultative framework between competition authorities and regulatory bodies operating within various sectors.
Drawing from the Mauritian example, India could consider instituting mechanisms such as Memoranda of Understanding (“MoUs”) between the CCI and other sector regulators. These MoUs would delineate the roles and responsibilities of each regulatory body and establish frameworks for practical cooperation in addressing cross-sectoral competition issues.
Similarly, the requirement to negotiate agreements with sector regulators, as observed in the South African Competition Act, could serve as a model for India. These agreements would facilitate coordination and collaboration in the exercise of jurisdiction over competition matters, taking into account the specific characteristics and dynamics of different industries or sectors.
Conclusion
The Madras High Court’s decision to not assume the adjudicative responsibilities delegated to specialized bodies possessing expertise in specific subject matters is a prudent one. The case underscores the tension between specialized regulatory frameworks and the jurisdiction of civil courts in matters involving intricate commercial disputes. This decision provides legal certainty to businesses operating within India by clarifying the roles and powers of the CCI, the RBI and civil courts vis-à-vis disputes arising out of the Competition Act and the PSS Act.
By promoting dialogue and coordination among regulatory bodies, India can better address complex cross-sectoral competition issues and promote a fair and competitive business environment. Leveraging the principles of collaboration and cooperation emphasized in international models and exemplified in the practices of other jurisdictions can enhance the effectiveness of competition regulation in India, particularly in the context of section 21A of the Competition Act. This approach would help ensure that competition concerns are effectively addressed while minimizing regulatory overlaps and conflicts.
– Sanjana Rebecca Samuel