M/s. Lupin Limited Vs.

Competition Commission
of India, others
Observation of Hon’ble Competition Appelate Tribunal Appeal No.40 of 2016

Order passed u/s 53B

Date of Order: 7th December, 2016

Quorum Strength: 3

Dissenting Order-No

Reference PATICULARS
Points of Determination
1 Whether the impugned orders (under section 27) are vitiated due to
Page-2 violation of one of the facets of the principles of natural justice, i.e failed to
take cognisance of the fact that the Jt. DG had not examined the Managing
Director of Respondent No. 2, who had instructed Shri H. Chandra Sekhar,
Advocate to draft information, and the representatives of Sun
Pharmaceuticals Industries Ltd. and MSD Pharmaceuticals Ltd. and non-
examination of these persons was fatal to the finding recorded by him on
the issue of violation of Section 3(1) read with Section 3(3)(b) of the Act.
DG's investigation and Commission's Order is Legally Unsustainable
We have thoughtfully considered the respective arguments and
47 carefully scanned the entire record. In our opinion, the impugned order is
Page- liable to be set aside not only because the investigation ordered by the
156,157 Commission under Section 26(1) of the Act was mainly influenced by its
impression that the Chemists and Druggists Associations across the
country had adopted a recalcitrant attitude and continued with the
practice of NOC despite the same having been condemned as
anticompetitive but also because the Jt. DG had conducted investigation in
complete violation of the scheme of the statutory provisions and basic
principles of objectivity and fairness and the findings and conclusions
recorded by him, which have been approved by the Commission, are
based on pure surmises and conjectures and are otherwise legally
unsustainable. The penalty imposed by the Commission is liable to be
quashed on an additional ground that while doing so, the Commission
ignored the principles laid down by the Supreme Court and the Tribunal in
number of cases to which reference shall be made hereinafter.
On the issue of NOC
53 Unfortunately, the Commission repeated the same error and
Page-173 overlooked the above noted important factors. The Commission also failed
to take cognisance of the fact that the Jt. DG had not examined the
Managing Director of Respondent No. 2, who had instructed Shri H.
Chandra Sekhar, Advocate to draft information, and the representatives of
Sun Pharmaceuticals Industries Ltd. and MSD Pharmaceuticals Ltd. and
non-examination of these persons was fatal to the finding recorded by him
on the issue of violation of Section 3(1) read with Section 3(3)(b) of the Act.

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M/s. Lupin Limited Vs. Competition Commission
of India, others
54 The finding recorded by the Jt. DG, which has found its echo in the
Page- impugned order that non-supply of product by Appellant No.1 to
173,174 Respondent No.2 was on account of practice being followed by
Respondent No.3 of insisting that the stockist must obtain NOC as a pre-
condition for supply of medicines, is based on pure conjectures. The Jt. DG
and the Commission completely misread letter dated 05.06.2013, which
was sent by Appellant No.2 to the President and Secretary of Respondent
No.3 intimating them about appointment of Respondent No.2 as a stockist
of Diabetes Care Division of Appellant No.1 and the format attached with
email dated 18.07.2013 sent by Shri Umesh Surana to the Bangalore
Depot of Appellant No.1. There is nothing in the language of the two
documents as also letters dated 28.12.2010, 06.09.2011 and 05.01.2012
sent by Respondent No. 3 under the signatures of Respondent No. 2 to
MSD Pharmaceuticals Ltd., Bangalore, Merck Ltd., Bangalore and
Appellant No. 1, from which it can be inferred that Appellant No.1 or for
that reason Appellant No.2 had sought NOC from Respondent No.3 as a
pre-condition for supply of medicines to Respondent No.2.
56 To the misfortune of the appellants, the Jt. DG completely ignored the fact
Page- that Respondent No.2 had placed over 100 orders for supply of insulin
175,176 related products of Eli Lilly between August 2011 and August 2013 and
from January, 2014 onwards through email and the required medicines
were supplied by the appellants without NOC.
No agreement between the Appellant
63 The conclusion recorded by the Jt. DG, which has been approved by the
Page- Commission, that Appellant No. 1 has acted in violation of Section 3(1)
181,182 read with Section 3(3)(b) is ex facie erroneous. That section could not have
been invoked by the Jt. DG / Commission because there is not a shred of
evidence direct or circumstantial to show that the appellants and
Respondent No. 3 were engaged in identical or similar trade of goods or
provisions of services. Undisputedly, Appellant No. 1 is a manufacturer of
pharmaceutical products and Appellant Nos. 2 and 3 are its officers
engaged in the supply and distribution of those medicines. As against this,
Respondent No. 3 is an association of chemists and druggist engaged in
the business of selling medicines in the State of Karnataka. There is
absolutely no identity or similarity in the activities of the appellants on the
one hand and Respondent No. 3 on the other. Therefore, the Jt. DG and
the Commission committed a jurisdictional error by returning a finding that
Appellant No. 1 had acted in violation of Section 3(1) read with Section
3(3)(b) of the Act.
73 Decision
Page-198 In the result, the appeal is allowed and the impugned order is set aside.

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M/s. Lupin Limited Vs. Competition Commission
of India, others