Jul 18, 2020CCI Dismisses Allegations of Abuse of Dominance against Punjab National Bank
On May 22, 2020, CCI dismissed allegations against Punjab National Bank (‘PNB’) that it had abused its dominant position in terms of Section 4 of the Competition Act[1]. The informant alleged that PNB abused its dominant position by auctioning a property through a bidding process without first obtaining the possession of the property from its incumbent owners. As per the informant, the property was being auctioned by PNB for debt recovery, pursuant to the provisions of the SARFAESI Act. However, it was alleged that the debtor was interested in retaining the possession of the property (and had preferred any application to the Debt Recovery Tribunal (‘DRT’) in this regard) and yet PNB had initiated recovery proceedings in violation of the provisions of the SARFAESI Act. Further, PNB had also transferred the bid amount received from the informant to the incumbent owner of the property, without ensuring the clearance of title. This, as per the informant amounted to abuse of its dominant position by PNB, in terms of Section 4 of the Competition Act.
At the outset, CCI observed that the issue pertained to debt recovery by a secured creditor i.e., PNB, under the provisions of the SARFAESI Act. It further noted that any bank under the SARFAESI Act had a right to enforcing its security interest classify the account of a defaulter as a NPA. As such, a bank cannot be considered as dominant when exercising a statutory remedy available to it under the SARFAESI Act. To this extent, CCI also did not identify a relevant market for determining the dominance of PNB within that market. It also noted that the informant did not suggest the way in which allegations of violation of the SARFAESI Act would result in a violation of the provisions of the Competition Act, and reiterated its observation in M/s RH Agro Private Limited v. State Bank of India & Ors. (Case no 44 of 2019) that an auction/transaction initiated by a bank/financial institution for the purpose of recovery in terms of provisions of SARFAESI Act may not amount to violation of the provisions of Competition Act. Accordingly, CCI closed the matter in terms of Section 26(2) of the Competition Act.
[1] Lakshmi Sharma v. Punjab National Bank, Case No. 48 of 2019, order delivered on 22 May 2020.