Competition Commission of India v. Kerala Film Exhibitors Federation, 2025 INSC 1167

Decided on 26 September 2025, this is the most important recent decision on procedure and on the personal liability of office-bearers. A federation of film exhibitors and two of its office-bearers were penalised for a collective boycott. The appellate tribunal upheld the finding against the federation but set aside the penalty and directions against the individuals, holding that they were entitled to a second show cause notice proposing the penalty. The Supreme Court allowed the Commission's appeal, held that no second notice is required, and restored the order in its entirety including the behavioural remedy.

1. The Facts and the Finding

Information was filed by a theatre alleging that the federation had organised a concerted refusal to supply films to it. The Director General found a concerted refusal to deal and identified the President and the General Secretary as the key decision-makers. By its order of 8 September 2015 the Commission found a contravention of Section 3(1) read with Section 3(3)(b), being an agreement limiting or controlling the supply of goods and services, penalised the federation, penalised the two office-bearers under Section 48, and directed as a behavioural remedy that the federation not associate with those individuals, and they with it, for a period of two years. The Commission recorded that the federation had been penalised earlier for similar conduct and that the individuals had continued the conduct during the investigation.

2. The Question before the Court

Whether the notice issued to the office-bearers, forwarding the Director General's report which found the contravention and named them, was sufficient notice; or whether a second, penalty-specific show cause notice proposing the penalty was required before a penalty could be imposed on them under Sections 27 and 48.

3. The Decision

1. One notice suffices. The Act does not require a second show cause notice detailing the proposed penalty. The purpose of notice and of the supply of the Director General's report is to enable the party to answer the case on contravention; once that opportunity has been given, and financial details have been called for, the requirements of natural justice are satisfied.
2. Proportionality is for the Commission. It is for the Commission, in imposing a penalty under Section 27, to maintain proportionality, and the orders available to it include not only monetary penalty but behavioural and structural remedies.
3. Expedition is of the essence. Requiring a second notice would introduce delay, permitting anti-competitive conduct to continue and defeating the object of the Act, a consideration the Court traced to its earlier decision in Competition Commission of India v. Steel Authority of India Ltd., (2010) 10 SCC 744.
4. Freedom of association is not absolute. The argument that the behavioural remedy offended Article 19(1)(c) was rejected: the right is subject to reasonable restrictions under Article 19(4), unethical practices can always be checked, and the validity of the statute was not in question.
5. The result. The appellate tribunal's order was set aside so far as it quashed the penalties and directions against the individuals, and the Commission's order was restored in its entirety, including the monetary penalties on the office-bearers and the two-year bar on association.

4. The Substantive Point

The case is also a clear illustration of association liability under Section 3(3)(b). A collective refusal to supply, organised through a federation, is an agreement limiting the supply of goods and services, and the presumption of appreciable adverse effect applies. Section 3(3) applies expressly to a practice carried on or a decision taken by an association of enterprises or persons, which is why the federation itself was liable, and Section 48 carried the liability through to the individuals who took the decision. The reasoning matches that of Competition Commission of India v. Coordination Committee of Artists and Technicians of W.B. Film and Television, (2017) 5 SCC 17, where a body of a similar character was held to be within the Act because what it did was economic.

5. Related Topics and Provisions