The Limits of the CCI's Investigative Powers: Independent Application of Mind and Procedural Fairness under Section 26(1) of the Competition Act, 2002

• Court: High Court of Orissa at Cuttack
  
• Case No.: W.A. No. 909 of 2026
  
• Citation: 2026:OHC:284-DB
  
• Date: 10 November 2026
  
• Bench: Chief Justice Harish Tandon and Justice Chittaranjan Dash
  
• Appellants: Competition Commission of India and Director General (Investigation)
  
• Respondents: M/s Rungta Mines Limited and Others.  
  

Summary

Background and facts

1. The dispute originated from a complaint dated 6 March 2021 filed by the Coimbatore Corporation Contractors Welfare Association before the Central Bureau of Investigation, alleging cartelisation and price-fixing by certain steel manufacturers. The complaint was subsequently forwarded to the Director General of the Competition Commission of India (CCI).
   
2. Following proceedings before the Madras High Court, which directed the authorities to take appropriate action in accordance with law, the CCI registered Suo Motu Case No. 02 of 2021 in August 2021 and directed an investigation.
   
3. Rungta Mines Limited was not named in the original complaint. Nevertheless, during the investigation, the Director General conducted search and seizure operations at its Kolkata office in December 2022 and recorded statements of its employees. The investigation eventually extended to Rungta Mines, which was treated as an Opposite Party.
   
4. The Director General submitted an investigation report in January 2024, followed by further investigation and supplementary reports in April and August 2025.
   
5. After obtaining inspection of the CCI's records in August 2025, Rungta Mines discovered that it had been treated as an Opposite Party in the proceedings. It consequently approached the Orissa High Court under Article 226 of the Constitution, challenging the jurisdictional foundation of the investigation and the manner in which it had been included.
   
6. The Single Judge allowed the writ petition on 22 May 2026 and quashed the investigation and consequential proceedings insofar as Rungta Mines and its Whole-Time Director were concerned. The CCI and the Director General challenged this decision before the Division Bench.
   

Issues before the Court

• The Division Bench considered several important questions:
  
• Whether a writ petition under Article 226 could be entertained against an ongoing CCI investigation despite the availability of statutory remedies.
  
• Whether the Orissa High Court had territorial jurisdiction to entertain the petition.
  
• Whether the Madras High Court's direction to take action in accordance with law could substitute the CCI's statutory obligation to form a prima facie opinion under Section 26(1) of the Competition Act.
  
• Whether the Director General could extend an investigation to enterprises not named in the original complaint.
  
• Whether Rungta Mines had been brought into the investigation in accordance with the prescribed procedure and principles of procedural fairness.
  

Court's observations and reasoning

A. The statutory requirement of independent application of mind under Section 26(1)

The Court emphasised that Section 26(1) vests the CCI with the power to form a prima facie opinion and direct the Director General to investigate an alleged contravention of the Competition Act.

Although the direction under Section 26(1) is administrative and preliminary in nature, it is not an automatic consequence of receiving a complaint. The CCI must independently examine the material placed before it and arrive at its own satisfaction that a prima facie case exists.

Relying on Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744, the Court clarified that the CCI is not required to pass an elaborate speaking order at this stage. However, it must record at least some reasons demonstrating that it applied its mind and formed the requisite prima facie opinion.

In the present case, the minutes dated 23 August 2021 merely recorded that detailed deliberations had taken place and that the CCI had decided to register a suo motu case. The direction to the Director General was to investigate the matter in terms of the directions contained in the Madras High Court's order.

The minutes did not record any prima facie opinion regarding the allegations of cartelisation or disclose even briefly the basis on which the CCI considered an investigation necessary.

The Court therefore held that the minutes failed to demonstrate the independent statutory satisfaction required under Section 26(1).

B. A judicial direction cannot replace a statutory requirement

The CCI argued that the investigation had been initiated pursuant to the Madras High Court's order dated 29 July 2021, which had attained finality.

The Division Bench rejected this argument. It held that the Madras High Court had merely directed the authorities to take appropriate action in accordance with law. That direction did not dispense with the statutory requirements of the Competition Act.

The Court further clarified the distinction between the respective functions of the CCI and the Director General. The power to form a prima facie opinion and direct an investigation belongs to the CCI, whereas the Director General conducts the investigation pursuant to that direction.

A judicial direction to act in accordance with law cannot transfer the CCI's statutory power to the Director General or authorise an investigation without satisfying the statutory precondition.

C. The Director General's power to investigate enterprises not named in the original complaint

An important aspect of the judgment concerns the scope of the Director General's investigative powers.

The Court relied on Excel Crop Care Ltd. v. Competition Commission of India, (2017) 8 SCC 47, and recognised that an investigation need not remain restricted to the enterprises specifically named in the original complaint.

If evidence emerging during a valid investigation reveals the involvement of additional enterprises in anti-competitive conduct, the Director General may investigate them as well. A separate Section 26(1) direction against every additional enterprise is not necessarily required.

However, the Court placed an important qualification on this principle: the additional enterprise must have a demonstrable connection with the subject matter of the original inquiry. The expression in rem does not grant the Director General unrestricted authority to investigate every enterprise operating in a particular industry.

Most importantly, the power to expand an investigation presupposes that the investigation was validly initiated in the first place. It cannot cure the absence of the statutory foundation under Section 26(1).

D. Procedural fairness in formally including an enterprise as an Opposite Party

The Court distinguished between two separate situations:

An enterprise does not have a right to prior notice or hearing merely because the CCI is forming its preliminary opinion under Section 26(1).

However, where an enterprise is formally brought into the proceedings and treated as an Opposite Party, the authority must follow the applicable statutory procedure.

The Court noted that the Director General had obtained the CCI's permission through an order dated 1 July 2025 to investigate certain associations that were not named in the original complaint. No corresponding order or procedure was shown to have been followed in respect of Rungta Mines.

The Court therefore found procedural infirmity in the manner in which Rungta Mines had been brought into the proceedings, particularly in light of Regulation 24 of the CCI (General) Regulations, 2009.

Final decision

• The Division Bench dismissed the CCI's writ appeal and affirmed the Single Judge's judgment dated 22 May 2026.
  
• It upheld the quashing of the investigation arising from Suo Motu Case No. 02 of 2021, together with all consequential proceedings and measures, insofar as Rungta Mines Limited and its Whole-Time Director were concerned.
  
• Importantly, the Court clarified that its decision did not determine the merits of the allegations against the other enterprises or individuals involved in the investigation. The relief was confined to the writ petitioners.
  

Legal significance

• The judgment is important because it clarifies the relationship between the CCI's investigative autonomy and the statutory safeguards governing the exercise of its powers.
  
• It establishes three significant principles:
  
• The CCI must independently form and disclose its prima facie satisfaction before directing an investigation under Section 26(1). The administrative nature of the direction does not eliminate this requirement.
  
• The Director General may investigate additional enterprises whose involvement emerges during a valid investigation, but the power to expand an inquiry cannot substitute for a valid jurisdictional foundation.
  
• The absence of a right to prior hearing at the preliminary investigation stage does not give the authorities unrestricted power to formally include an enterprise as an Opposite Party without following the prescribed procedure.
  
• The decision is particularly useful for research concerning administrative discretion, statutory jurisdiction, procedural fairness and the limits of regulatory investigative powers.
  

Central principle: The CCI's investigative powers are broad, but they must be exercised within the statutory framework. An investigation cannot be sustained merely because the subject matter concerns public interest or competition in the market; the statutory foundation for initiating it must first exist.