On December 19 2011 the Delhi High Court issued its decision in Jindal Steel & Power Ltd v Union of India. Concurrently, it disposed of a miscellaneous application filed by the Steel Authority of India Ltd (SAIL) in response to a writ petition filed by Jindal Steel & Power Ltd (JSPL), dealing with a dispute related to the Competition Commission’s jurisdiction. The court held that the two co-existent remedies available to JSPL (ie, the writ petition and the complaint before the commission) could not be said to be inconsistent, even if the relief sought in the writ petition and that sought in the complaint before the commission were non-identical.
JSPL filed a writ petition challenging a memorandum of understanding dated February 1 2003 between Indian Railways and SAIL. In its challenge, JSPL:
- raised the legitimate expectation that it be considered for empanelment for the supply of steel rail tracks to the respondent (Indian Railways);
- invoked the principle of promissory estoppel in view of the significant investments made by the petitioner.
SAIL raised an objection regarding this writ petition through a miscellaneous application, arguing that the petitioner had approached the court with an application to amend the writ petition specifically to challenge the memorandum of understanding of February 1 2003.
High Court decision
The Delhi High Court held that larger issues raised in the writ petition – including the legitimate expectation and the principle of promissory estoppel – would strictly fall within the domain of the High Court in the writ petition and could not possibly be considered by the commission. The court further held that the memorandum of understanding could fall under the subject matter of both the proceedings before the High Court and those before the commission – therefore, even if parallel proceedings were allowed to continue, conflicting decisions must be avoided. At the time of the High Court ruling, a decision was still awaited in the proceedings before the commission; therefore, although the writ proceedings were allowed to continue, the issues of promissory estoppel and legitimate expectation could not be pre-judged at this stage. The final order in this matter was therefore put on hold until the validity of the memorandum of understanding had finally been decided in the proceedings under the act. While declaring that the doctrine of election of remedies could not be applied to this case, the court held that the writ petition was maintainable and the parallel proceedings were permitted to continue.
While the Delhi High Court allowed both the writ petition and the complaint filed in 2009 by JSPL to continue, after two years of investigation into the exclusive agreement Competition – India Author MM Sharma between Indian Railways and SAIL for alleged breach of the competition law, on December 20 2011 the commission closed the matter and gave SAIL a clean sheet. The majority decision of three members of the commission (with only one member dissenting) held, among other things, that the absence of an exit clause in the memorandum of understanding between SAIL and Indian Railways did not lead to foreclosure of the market for the supply of rails, as alleged in the complaint filed by JSPL, as the market was still evolving at that time and demand for private sidings in ports and dedicated freight containers was still increasing. Furthermore, the commission found no evidence that SAIL had abused its dominant position by locking the entire purchase of Indian Railways through the memorandum of understanding.