DAWN RAIDS: A NOVEL CONCEPT IN THE INDIAN

COMPETITION REGIME
- N. Asmitha (18BLB1020)

ABSTRACT:

Dawn Raids are a concept that is new to Indian Competition laws. The first raid was
conducted in 2014 by CCI authorities and ever since, numerous questions have been raised
about the procedure. Very similar to a search and seizure process, the Dawn Raid is an aid to
the investigative proceedings of the Director General. This article aims to analyse if it is
necessary to allow lawyers to be present during a dawn raid.

RESEARCH QUESTION:

Whether right to legal representation is a matter of right during dawn raids?

INTRODUCTION:

“Dawn raid” also known as unannounced or surprise search and seizure is a distinct type of
investigation, that is extensively used by all the investigative agencies around the world.
These surprise raids are made without any notice or warning and are usually conducted at
times when least expected, often at the crack of “dawn” and/or during weekends. These raids
are typically done in a covert manner leaving no scope for the party or the company being
inspected, to alter their records in any way.

The power to conduct a Dawn raid is conferred exclusively upon the Director General (DG)
of the Competition Commission of India (CCI). Every Dawn raid, conducted by the DG,
derives its authority from Section 41(3), which in turn derives its authority from Sections 240
and 240A of the erstwhile Companies Act. Consecutively, the provisions of the Companies
Act, follows the procedure established for Search and Seizure, as present in the Code of
Criminal Procedure, 1973.
The Competition Act creates two distinctive authorities, namely, the CCI, a quasi-judicial
body and the DG, a specialized investigative wing. Both are separate entities performing
unique roles.

In September 2014, the DG conducted its first raid in relation to allegations of an abuse of
dominant position at the office premises of JCB India Ltd and recently, in 2019, the Supreme
Court in the case of Competition Commission of India v. JCB India Pvt. Ltd and Others
recognized the raid as legally valid and well within the powers of the Commission. Following
this, the CCI recognized Dawn Raids conducted by the DG in its Suo-moto order in the case
of Re: Alleged Cartelisation in Flashlights Market in India and in many other cases that
followed.

Presently, the legislative framework is such that the DG is appointed by the Central
Government under Section 16(1) and the Competition Commission of India (Number of
Additional, Joint, Deputy or Assistant Director-General other officers and employees, their
manner of appointment, qualification, salary, allowances and other terms and conditions of
service) Rules, 2009 or the DG Office Rules, 2009 gives powers regarding recruitment, salary
and other powers to the Central Government. Hence, the DG is accountable only to the
Central Government and not to the Competition Commission.

Hence, within the framework of the Competition Act, only the Director General has powers
to search and seize. No such investigative powers are granted to the CCI. The CCI has the
powers of a civil court and hence its powers to conduct investigation is limited.
CASE NOTE: COMPETITION COMMISSION OF INDIA V. JCB INDIA PVT. LTD
AND OTHERS – THE FIRST DAWN RAID CASE

Background of the case

In the present case, CCI passed an order dated 11.03.2014 under Section 26(1) of the
Competition Act, 2002 ("the Act") directing the DG to initiate investigation into an alleged
abuse of dominant position by JCB. However, JCB filed a writ petition before the DHC
against the aforesaid order of the CCI. DHC passed an interim order dated 04.04.2014 on the
said writ petition directing that the DG may require JCB to furnish the information called by
the DG but, no final order/report shall be passed by the CCI. During the pendency of the writ
petition, the DG filed an application before the Chief Metropolitan Magistrate ("CMM")
under Section 41(3) of the Act read with Section 240A of the Companies Act, 1956 seeking
authorization to conduct a search in the premises of JCB for recovering incriminating
documents and papers related with the case. CMM allowed the application of the DG on
17.09.2014. Accordingly, an unannounced search operation (popularly known as "dawn
raid") was carried out by the DG for the first time in India , on 19 09.2014 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. Thereupon, an interim application was
filed by JCB before the DHC in the pending writ petition for quashing the search and seizure
and for return of all documents, hard drives and laptops seized during the course of the search
and seizure operation and for a stay on the investigation. The DHC vide its order dated
26.9.2014 stayed further proceedings before the DG.

In the appeal by CCI , the Division Bench of DHC vide order dated 2.12.2014 directed that
the parties would be at liberty to raise their contentions before the learned Single judge and
left it open to the CCI or, as the case may be, the DG to apply for vacating the order for a stay
on the investigation. Pursuant to the above direction, CCI filed an application for vacating the
interim order before the learned Single Judge. In the meanwhile, JCB filed another writ
petition before the DHC praying for setting aside of the search and seizure. It is in that writ
petition that the impugned order dated 2.6.2016 was passed by the learned Single Judge of
DHC restraining DG from acting on the seized material for any purpose whatsoever till the
next date of hearing.
The CCI then filed the present Special Leave Petition (SLP) before the Supreme Court
against this interim order of the Single Judge Bench of DHC.

SC OBSERVATIONS

The Supreme Court after hearing both sides observed that the provisions of the Companies
Act, 1956 read with Section 41(3) of the Act which enabled the DG to conduct investigation
were designed to authorize the DG to conduct both, searches and seizures. It was further
observed that unless a seizure was authorized, a mere search would not be sufficient for the
purposes of investigation in terms of the Act. Therefore, any interpretation imposing a
restraint on seizure where the CMM had already granted a warrant for searches would be
inappropriate. Accordingly, Supreme Court vacated the impugned order of injunction and
remitted back the pending writ petitions to the DHC to determine whether and if so to what
extent a reference to the seized material should be permitted to be made for the purposes of
testing the issue of jurisdiction.

PRESENCE OF LAWYERS DURING DAWN RAID

The role of a lawyer assumes great significance in a Dawn raid. Lawyer helps in
identification of relevant materials and documents for the purpose of investigation and
safeguards the privileged communication between the firm and lawyer. It has been observed
in numerous cases that a lawyer has a fundamental role to play in instances of investigation as
he shall guide the company and its members in exercising their rights.

The European Court of Justice, in the Deutsche Bahn case, held that the commission only has
the powers to search for documents that are within the subject-matter of the investigation and
the commission shall allow lawyers to be present during the raid for the convenience of the
parties.

Further, the position under the European Union Antitrust law is such that it allows for a legal
counsel at the investigative stages as well. In the landmark cases such as Hoechst v.
Commission and AM&S Europe v Commission of the European Communities, the ECJ held
that:

“The right to legal representation and the privileged nature of correspondence

between lawyer and client must be respected from a preliminary inquiry stage.”
In the United States, the right of legal representation is guaranteed by the U.S. Constitution
and Section 555(b) of U.S. Code. The US law provides that a person compelled to appear in
person before any agency, committee or representative, is entitled to be accompanied and
advised by his/her counsel. Further, the famous Miranda Rights, which include a right to
attorney, is an essential facet in the cases in the US judiciary.

Indian laws also regard right to legal representation on a high pedestal. In this regard,
reference shall be made to the observation made by the Supreme Court in Selvi v. State of
Karnataka, wherein it was pronounced that even an accused/arrested person, has the right to
have their lawyer present, during interrogation. Further relying upon similar observations of
the Apex Court in State v. N.M.T. Joy Immaculate and State NCT of Delhi v. Navjot Sandhu,
it is contended that a person who is an accused shall enjoy the Constitutional benefit of the
presence of a lawyer and an atmosphere free from coercion.

In the renowned judgment of Hussainara Khatoon and Ors. v. Home Secretary, State of
Bihar, Patna, Justice P.N.Bhagwati and D.A. Desai, among other things, observed that the
right to avail legal services was implicit in the constitutional guarantee of Article 21 that
guaranteed life and personal liberty. Numerous judgments that followed also reiterated this
observation.

In the case of Nandini Satpathy v. P.L. Dani and Anr, it was remarkably noted as follows:

“The right to consult an advocate of his choice shall not be denied to any person who
is arrested. This does not mean that persons who are not under arrest or custody can
be denied that right. The spirit and sense of Article 22(1) is that it is fundamental to
the rule of law that the services of a lawyer shall be available for consultation to any
person under circumstances of near custodial interrogation. Moreover, the
observance of the right against self-incrimination is best promoted by conceding to
the accused the right to consult a legal practitioner of his choice.”

Following the Nandini Satpathy case, a two-judge bench of the Supreme Court in D. K. Basu
v. State of West Bengal, laid down 11 guidelines for arrest and interrogation, of which it was
provided that a detainee had a right to seek guidance from his counsel, during interrogation.

Following this judgement, Section 41D was inserted to the Code of Criminal Procedure,
which provided that:
 “When any person is arrested and interrogated by the police, he shall be entitled to
meet an advocate of his choice during interrogation, though not throughout
interrogation.”

Additionally, according to Section 36(1) of the Competition Act, the CCR is guided by the
principles of natural justice which includes the right to be heard. Right to be heard
encompasses the right to legal representation. Thus, the right to counsel is a natural justice
principle which emanates from Audi Alteram Partem principle.

ARGUMENTS AGAINST ALLOWING LAWYERS FOR DAWN RAIDS

The intention of the Legislature, in interpreting any legislation, has to be gathered from the
language used, which means that attention should be paid to what has been said as also to
what has not been said. As a consequence, a construction, which requires for its support,
addition or substitution of words or which results in rejection of words as meaningless, has to
be avoided. This rule has been approved by the Supreme Court in a plethora of judgements.

The elementary principle of interpreting or construing a statute is to gather the mens or

sententia legis of the legislature. The Doctrine of Casus Omissus provides that the omissions
in a statute cannot be supplied by construction. A matter which should have been, but has not
been provided for in a statute cannot be supplied by courts, as to do so will be legislation and
not construction. The courts are no doubt to harmonise the various provisions of an Act.
However, it is not the duty of the courts to stretch the words used by the Legislature to fill the
gaps in the provisions.

Recently, the Apex Court in Petroleum and Natural Gas Regulatory Board v. Indraprastha
Gas Limited and Ors, had propounded that when the legislative intention is absolutely clear
and simple and any omission inter alia either in conferment of power or in the ambit or
expanse of any expression used is deliberate and not accidental, filling up of the lacuna as
perceived by a judicial interpretative process is impermissible.

In the United States, the predominant view is that when a court interprets a federal statute, it
seeks "to give effect to the intent of Congress". Under this view, judges attempt to act as mere
faithful agents of Congress. They are not permitted to simply substitute their views for those
of the legislature that enacted the statute. This belief is rooted in the constitutional separation
of powers: in the realm of legislation, the Constitution gives Congress, not courts, the power
to make the law46. The judicial power vested in the courts entails only the power to
pronounce the law as Congress has enacted it.

The European Union (EU) released an Explanatory Note on Commission Inspections

conducted in lieu of Article 20(4), where it provides that the undertakings may consult their
counsel, however, the presence of such counsel is not a condition for a valid inspection.

From a bare perusal of the provisions of the Competition Act, it can be understood that, the
Act does not envisage the presence of a lawyer during the Dawn raid.

Criminal Legislations in the country, which intended to provide right to counsel to the
accused persons, have explicitly laid down such provisions in the Act. For instance, the Code
of Criminal Procedure, through Sections 303 and 30453, provides that an accused shall have
the aid of a counsel in criminal trials and prosecutions. No such right to counsel is provided
in Sections 91 to 100 of the Code of Criminal Procedure, which deals with search and seizure
proceedings. The Prevention of Terrorism Act, through Section 52(2) expressly provides all
arrestees the right to consult a legal practitioner. Neither does the Competition Law, nor the
Companies Act envisage that a counsel should be present during search and seizure
proceedings. Hence, it shall not be right for the Appellants to pursue this Hon’ble court to
allow something that has not been provided for by the statutes.

The Apex Court in the case of Mohammed Ajmal Mohammad Amir Kasab and Ors. v. State
of Maharashtra and Ors, rather phenomenally observed that, in the Indian scenario, right to
consult and be defended by a legal practitioner is not to be construed as sanctioning or
permitting the presence of a lawyer during a police interrogation. According to our system,
the role of a lawyer is mainly dedicated towards court proceedings and right to legal
representation shall arise only in the course of such proceedings.

CONCLUDING REMARKS

Although no provision of the act requires for the presence of a lawyer, legal representation
should not be denied to anyone. As cited above, numerous judgements of the courts have also
reiterated the need to recognise the right of persons to avail legal help. That said, just because
representation by lawyer is not mentioned in the statutes, it cannot be denied to individuals. It
is a part of the principles of natural justice and hence cannot be denied arbitrarily.