Supreme Court upholds NCLAT order scrapping ₹301.6 crore penalty on Grasim, remands case to CCI

The Supreme Court on Friday upheld an order by the National Company Law Appellate Tribunal (NCLAT) that set aside a ₹301.6 crore penalty imposed by the Competition Commission of India (CCI) on Grasim Industries. The court directed the fair trade regulator to hear the Aditya Birla Group firm afresh in connection with allegations of dominance in the viscose staple fibre market.

A Bench comprising Justices J.B. Pardiwala and K. Vinod Chandran dismissed the CCI's appeal challenging the NCLAT's May 5 order. The tribunal had earlier observed that the CCI did not provide Grasim an opportunity to present its arguments after it differed from the findings of the Director General (DG), the regulator's probe unit.

The CCI had imposed the penalty in March 2020, alleging that Grasim abused its dominant position in the supply of viscose staple fibre (VSF) to spinners in India. The regulator accused the company of charging discriminatory prices from customers and imposing supplementary obligations upon them.

Grasim challenged the order before the NCLAT, which acts as an appellate authority over the CCI. The tribunal asked the regulator to hear the matter afresh, noting that the CCI had “differed from the findings of the DG” regarding directions for disclosure of discounting and pricing policy, as well as sale to buyers who can trade VSF.

The NCLAT, citing previous judgments, held that in cases where there is a difference between the CCI and its DG, it “requires the Commission to give opportunity to the opposite party”. The tribunal further stated that the CCI “had omitted to give notice” to Grasim regarding the disagreement, thereby depriving the company “an opportunity to defend itself” against the proposed actions.

“We set aside the impugned order and remand it back to the Commission with a direction to provide an opportunity to the appellant wherever the Commission differs with the findings of the DG and to decide the case expeditiously in a time-bound manner,” the NCLAT had said. The tribunal clarified that it had “not commented on the merits of the case” and that the CCI “should not be influenced by anything contained in this judgement”.

The original CCI order had directed Grasim to “refrain from adopting unfair/discriminatory pricing practices and also refrain from seeking the consumption details of VSF from the buyers”. It also asked the company to implement a transparent and non-discriminatory discount policy, made easily and publicly accessible.

The case originated from a complaint filed against the Association of Man Made Fibre Industry of India, Grasim Industries, Thai Rayon, and Indo Bharat Rayon, all part of the Aditya Birla Group. VSF is a biodegradable, cellulosic fibre widely used in fashion apparel, home textiles, and hygiene products. It is often blended with cotton, polyester, or linen for enhanced comfort and durability.

With the Supreme Court's dismissal of the CCI's appeal, the matter now returns to the regulator for fresh adjudication. The CCI has been directed to provide Grasim a proper hearing wherever its views diverge from the DG's findings, ensuring procedural fairness in the competition law framework.