Office Bearers of Trade Associations Can Be Personally Liable for Anti-Competitive Conduct: SC Upholds CCI’s Power Under Section 48

“Failure to Prove Lack of Knowledge or Due Diligence Will Attract Personal Liability Under Competition Law” –  In a significant ruling that clarifies the contours of individual liability under the Competition Act, 2002, the Supreme Court of India held that office bearers of trade associations can be held personally liable for anti-competitive practices undertaken by the association, if they are found to be in charge of and responsible for its conduct.

The decision came in where the apex court upheld the Competition Commission of India’s (CCI) decision to penalise the President and General Secretary of the Kerala Film Exhibitors Federation (KFEF) for their active role in orchestrating a boycott against a rival theatre, amounting to a violation of Section 3(3)(b) of the Act.

CCI Invoked Section 48 To Hold Office Bearers Individually Liable

The Competition Commission, in its 2015 final order, imposed monetary penalties and behavioural restrictions not only on KFEF as an association but also on Mr. P.V. Basheer Ahmed (President) and Mr. M.C. Bobby (General Secretary), under Section 48 of the Competition Act, which deals with contraventions by companies and associations of individuals.

Section 48(1) states that: “Every person who, at the time the contravention was committed, was in charge of, and was responsible to the company (or association) for the conduct of its business, shall be deemed to be guilty of the contravention…”

The provision further includes a defence clause, allowing individuals to escape liability only if they can prove that the violation occurred without their knowledge or despite due diligence.

In the present case, the Supreme Court found no evidence from either respondent to demonstrate such a defence.

“Section 48 Creates a Statutory Presumption of Guilt Which Must Be Rebutted with Evidence”

Supreme Court Clarifies Burden on Individuals Once Found to Be in Charge

The bench comprising Justice Manoj Misra and Justice K.V. Viswanathan held that personal liability of office bearers under Section 48 does not require independent contravention to be proven against them. Once it is shown that they were in charge of the association during the contravention, the burden shifts to the individual to show that they were either unaware of the offence or took adequate preventive steps.

The Court categorically observed: “The notice of 10.06.2015 was categoric in pointing out the fact that there are contraventions alleged in the DG Report and it was clear in fixing the individuals who were the key personnel… A clear opportunity was given to file reply/objections.”

“In spite of ample opportunity given to them, they failed to adduce any evidence to establish that the anti-competitive decisions were made without their knowledge or that they had exercised all due diligence.”

The personal liability under Section 48, the Court clarified, arises not from mere membership, but from active managerial responsibility, which was clearly established in this case through evidence including statements by distributors, direct communication records, and past conduct in a similar case (Case No. 45/2012).

“Repeat Violation Strengthens Case for Personal Sanctions”

Prior Penalty Under Same Section Confirmed Pattern of Non-Compliance

One of the compelling factors for the Supreme Court in upholding the CCI’s order was the recurrence of anti-competitive conduct despite a previous penalty imposed on the same individuals.

In Case No. 45/2012, both Respondent No. 2 and 3 had been held guilty under Section 48 and penalised. Yet, they were again found orchestrating similar boycotts against Crown Theatre, prompting the Court to state:

“It is very clear that mere monetary penalty has not acted as a deterrent… A behavioural remedy like the one ordered in the present case would alone protect the interest of the consumers and uphold the majesty of law.”

Accordingly, the two-year disassociation directive against the individuals — barring them from any role in the federation's administration, management, or governance — was also restored by the Court.

“Personal Accountability Under Section 48 Is Constitutionally Valid and Essential to CCI’s Regulatory Role”

Court Rejects Freedom of Association Argument Under Article 19(1)(c)

Respondents had argued that penalising office bearers personally infringed their fundamental right to form associations under Article 19(1)(c) of the Constitution. The Supreme Court rejected this argument, observing:

“Unethical practices can always be checked since the right under Article 19(1)(c) is not absolute and reasonable restrictions can be imposed under Article 19(4).”

The Court reinforced the legislative intent that CCI must be a robust regulator, not a passive observer, and held that Section 48’s framework for imposing personal liability was constitutionally sound and essential for deterrence.

Office Bearers Cannot Hide Behind the Corporate Veil of Trade Associations

This judgment affirms that positions of responsibility come with legal accountability. Office bearers who orchestrate or tolerate anti-competitive conduct within their organisations cannot escape liability by pointing fingers or pleading ignorance.

“Once individuals are found to be in charge, and are named in the investigation report, they must rebut the presumption of guilt under Section 48 — silence or denial is not enough,” the Court declared.

The judgment is a clear message that compliance is not optional, and that individual accountability is a cornerstone of effective competition regulation.

Date of Decision: 26 September 2025