Supreme Court Upholds NCLAT Ruling on Closure Orders under Section 26(2)

On 24 April 2026, the Supreme Court dismissed⁴ a challenge to the order⁵ of the NCLAT concerning the procedural requirements applicable to closure orders passed by the CCI under Section 26(2) of the Competition Act. The ruling clarifies the scope of hearing rights at the prima facie stage and has significant implications for businesses involved in competition law proceedings.

Background: Allegations Against Coal India Limited

The matter arose from an information alleging abuse of dominance and cartel-like conduct involving Coal India Limited and a private entity.

The CCI closed⁶ the information at the prima facie stage, holding that the allegations did not disclose a contravention of Section 4 of the Competition Act and that the dispute was essentially commercial in nature. The Informant challenged the order before the NCLAT, contending that the CCI had violated the principles of natural justice by closing the matter without issuing notice or granting a hearing.

NCLAT’s Ruling on Hearing Rights at the Prima Facie Stage

The NCLAT rejected the challenge. It held that neither Section 26(2) of the Competition Act nor Regulation 19 of the CCI (General) Regulations, 2009, requires the CCI to issue notice or grant a hearing where it forms a prima facie opinion that no case exists.

The NCLAT’s key observations included:

• While Section 36(1) requires the CCI to be guided by the principles of natural justice, the provision must be read harmoniously with the statutory scheme governing closure orders.
• The CCI had examined the allegations in detail and passed a reasoned speaking order.

The Supreme Court upheld this reasoning and declined to interfere.

Delhi High Court Reinforces the Position

In a similar matter,⁷ the Delhi High Court rejected a challenge to a Section 26(2) closure order on the same ground. Relying on Karnataka Power Corporation Limited v. CCI,⁸ the Court reiterated that the Competition Act provides an adequate appellate remedy against closure orders before the NCLAT under Section 53A.

The Court also invoked the doctrine of merger as laid down in Kunhayammed & Ors. v. State of Kerala & Anr.,⁹ holding that the NCLAT’s decision on hearing rights at the prima facie stage stood merged with the Supreme Court’s affirming order.

Contrasting Approach: Grasim Industries and Final Orders

Notably, in Grasim Industries Ltd. v. CCI & Textile Consumer Foundation,¹¹⁰ the NCLAT adopted a different approach in the context of final orders.

While setting aside the CCI’s penalty of ₹301.6 crore imposed on Grasim Industries Limited (Grasim) and remanding the matter, the NCLAT held that the CCI had failed to inform Grasim that it disagreed with the DG’s findings, thereby depriving the company of a meaningful opportunity to defend itself.

The matter was remanded to the CCI for fresh consideration after granting Grasim a fair hearing.

Business Takeaway

Businesses should note the following key points regarding procedural rights in competition law proceedings:

• There is no statutory right to a hearing before the CCI closes a matter under Section 26(2).
• Once an investigation has been initiated, parties are entitled to a fair opportunity to respond, particularly where the CCI proposes to depart from the DG’s findings.
• Companies facing competition law proceedings should actively engage during the investigation stage, as procedural safeguards become significantly more robust after the matter proceeds beyond the prima facie stage.

Last Updated on 17 July, 2026