Authorization for search includes authorization of seizure as well

CCI VS. JCB INDIA LIMITED & OTHERS
SUPREME COURT OF INDIA
DATED 15/01/2029

THE APEX COURT HELD THAT-Authorization for search includes authorization of seizure as well.

PROVISIONS OF COMPETITION ACT, 2002

SECTION 41- DIRECTOR GENERAL TO INVESTIGATE CONTRAVENTION

(1) The Director General shall, when so directed by the Commission, assist the Commission in investigating into any contravention of the provisions of this Act or any rules or regulations made thereunder.

(2) The Director General shall have all the powers as are conferred upon the Commission under subsection (2) of section 36.

(3) Without prejudice to the provisions of sub-section (2), sections 240 and 240A of the Companies Act, ), so far as may be, shall apply to an investigation made by the Director General or any other person investigating under his authority, as they apply to an inspector appointed under that Act.

SECTION 240A OF THE COMPANIES ACT, 1956

Seizure of documents by inspector

(1) Where in the course of investigation under section 235 or section 237 or section 239 or section 247, the inspector has reasonable ground to believe that the books and papers of, or relating to, any company or other body corporate or any managing agent or secretaries and treasurers or managing director or manager of such company or other body corporate, or any associate of such managing agent or secretaries and treasurers may be destroyed, mutilated, altered, falsified or secreted, the inspector may make an application to the Magistrate of the First Class or, as the case may be, the Presidency Magistrate, having jurisdiction for an order for the seizure of such books and papers.

(2) After considering the application and hearing the inspector, if necessary, the Magistrate may by order authorise the inspector--

(a) to enter, with such assistance, as may be required, the place or places where such books and papers are kept;

(b) to search that place or those places in the manner specified in the order; and

(c) to seize books and papers he considers necessary for the purposes of his investigation.

(3) The inspector shall keep in his custody the books and papers seized under this section for such period not later than the conclu- sion of the investigation as he considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing agent, or the secretaries and treasurers or the associate of such managing agent or secretaries and treasurers or the managing director or the manager or any other person, from whose custody or power they were seized and inform the 3 Magistrate] of such return:

Provided that the inspector may, before returning such books and papers as aforesaid, place identification marks on them or any part thereof.

(4) Save as otherwise provided in this section, every search or seizure made under this section shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 (5 of 1898 ), relating to searches or seizuresmade under that Code.

FACTS OF THE CASE

1. CCI ordered an investigation into an alleged abuse of dominant position by JCB. Pursuant to the same, dawn raid was carried out by the DG in the JCB premises, and all incriminating documents, hard drives and laptops found by the inspecting team during the course of the “dawn raid” were seized.
2. A writ petition before the Delhi High Court was filed for setting aside of the search and seizure conducted by the DG.
3. The Single Judge Bench of Delhi High Court, vide order dated 02nd June 2016 stayed the investigation restraining DG from acting on the seized material for any purpose whatsoever till the next date of hearing.
4. CCI filed an SLP in the Supreme Court against the order of the Delhi High Court.

THE SUPREME COURT in its judgment dated 15th Janaury 2019 in CCI vs JCB observed that the provisions of Section 240A of the Companies Act, 1956 do not merely relate to an authorization for a search but extend to the authorization of a seizure as well. Unless the seizure were to be authorized, a mere search by itself will not be sufficient for the purposes of investigation. By virtue of Section 240A read with Section 41(3) of the Competition Act, DG was authorised to conduct search and seizures.
The Apex court vacated the stay stating that the blanket restraint which had been imposed by the Delhi High Court on the DG from acting on the seized material for any purpose whatsoever was not warranted.

The appeal was allowed, and the transferred matters were remitted back to the Delhi High Court to be decided in the writ petitions pending before Delhi High Court.

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