MakeMyTrip challenges NCLAT pre-deposit condition before Delhi HC

Nasdaq-listed MakeMyTrip has filed a writ petition before the Delhi High Court challenging the interlocutory order passed by the National Company Law Appellate Tribunal (NCLAT) on December 6, whereby its appeal against the CCI order levying a penalty of ₹223 crore for anti-competitive conduct was admitted subject to deposit of 10 per cent of the penalty.  

In its writ, MMT has contended that NCLAT passed the order without jurisdiction, in gross violation of the principles of natural justice. It has also averred that the order passed is without due application of mind to relevant factors, and is arbitrary, unreasonable, and untenable in law, thereby causing grave prejudice to MMT in violation of Article 14 and Article 19 of the Constitution of India. 

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Competition watchdog also directs MMT-Go to remove/ abandon its agreements around ‘price parity’ and ‘room parity’

In the memorandum of appeal, it has been highlighted that Section 53 B of the Competition Act, 2002 confers a right upon any person aggrieved by the specified direction, decision, or order passed by CCI to prefer an appeal to NCLAT, accompanied by such fee as may be prescribed. 

“The statutory provision does not impose any condition of pre-deposit for entertaining the appeal” added the petition.

NCLAT’s Pre-Deposit Condition  

It may be recalled that NCLAT had last Tuesday stayed the ₹223.48-crore penalty levied by CCI on Nasdaq-listed MakeMyTrip-Goibibo (MMT-Go) for indulging in anti-competitive practices. The stay on penalty was granted subject to MMT-Go depositing 10 per cent of the penalty amount.

Mukul Rohatgi, Senior Advocate, Supreme Court and former Attorney General of India, had appeared on behalf of MMT and pressed for complete stay of the entire CCI order. However, the NCLAT Bench comprising Justice Rakesh Kumar, Member (Judicial) and Ashok Kumar Mishra, Member (Technical), declined to accede to this request of stay on entire CCI order. The Bench stayed only the penalty part on deposit of 10 per cent and no stay was granted on the non monetary measures directed by the CCI.

MMT-GO had in November filed an appeal before NCLAT against CCI order of October 19 levying a penalty of ₹223.48 crore against them. CCI also directed MMT-Go to change its market behaviour and, in particular, modify its agreements with hotels so as to remove the price and room availability parity obligations imposed by it on its hotel partners with respect to other Online Travel Agencies.

In the same order, CCI had also levied a separate penalty of ₹168.88 crore on OYO, which had filed an appeal before NCLAT on November 15. NCLAT had later granted OYO a stay on this penalty on deposit of 10 per cent.

Appeal before NCLAT

In its appeal before NCLAT, MMT-Go had pleaded that the CCI order suffers from serious fundamental flaws, including violation of the principles of natural justice, non-application of mind, failure to consider economic evidence on record, failure to meet the prescribed legal, and jurisdictional standard necessary to find a contravention of the provisions of the Competition Act, 2002. 

The appeal argues that the impugned order selectively rubber-stamps the one-sided observations and conclusions of the Director General, CCI, without even adverting to the submissions made by MMT-Go in some instances, let alone discharge its statutory obligation to pass speaking orders. The appeal also contains that cross-examination proceedings were never completed by the DG.

Complaint before CCI

The fair trade watchdog opened an investigation against MMT-Go and OYO in 2019, after Federation of Hotel & Restaurant Associations of India (FHRAI) lodged a complaint with it alleging that MMT-Go imposed a price parity in their agreement with hotel partners, whereby, the hotel partners are not allowed to sell their rooms at any other platform or on its own online portal at a price below the price at which it is being offered on MMT-Go’s platform. 

Also, the hotel partners are mandated to observe room parity, whereby they cannot refuse to provide rooms on MMT-Go at any given point in time if the rooms are being provided on any other platform. Further, it was alleged that MMT and OYO entered into confidential commercial agreements, wherein, MMT has agreed to give preferential treatment to OYO on its platform.

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