The Director General: appointment, duties and investigation powers

Competition Law · Unit V · Topic 14 of 18 · 5 min read

The investigating arm of the CCI: appointment under section 16, the trigger in section 26(1), civil court powers, the duty of parties to preserve and produce records, examination on oath, search and seizure with the Chief Metropolitan Magistrate's order under section 41 as rewritten in 2023, the investigation report, and penalties for non-cooperation.

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On this page

1. Appointment and office: section 16
2. When the DG acts
3. Powers: section 41
4. The report
5. Sanctions for non-cooperation
How this is examined

Cases checked to exist. Read the judgment before quoting a holding.

Every case cited here has been checked to exist — the citation resolves and names the right parties. The propositions attributed to each case have not been verified line by line against the judgment. Case names link through to the full judgment: read it before quoting a holding in an examination answer, and never carry a proposition from notes into court on trust.

The examinable core. The Director General (DG) does not act on his own. He investigates only when directed by the Commission (section 41(1)), after a prima facie order under section 26(1). He has the civil court powers of the Commission (section 41(2) read with section 36(2)) and, since the 2023 amendment, a self-contained code of investigation powers in section 41(3) to (12), including search and seizure on an order of the Chief Metropolitan Magistrate, Delhi. The investigation ends in a report; the Commission, not the DG, decides.

1. Appointment and office: section 16

A Director General is appointed “for the purposes of assisting the Commission in conducting inquiry into contravention of any of the provisions of this Act” and for other functions under the Act (section 16(1)). Before 2023 the Central Government appointed by notification; now the Commission appoints, with the prior approval of the Central Government.
Additional, Joint, Deputy and Assistant Directors General and other staff are appointed as prescribed (section 16(1A)), and work under the DG’s general control, supervision and direction (section 16(2)).
They must be persons of integrity and outstanding ability with experience in investigation and knowledge of accountancy, management, business, public administration, international trade, law or economics (section 16(4)).
“Director General” in section 2(g) includes the Additional, Joint, Deputy and Assistant Directors General.

The DG is the successor in function to the Director General of Investigation and Registration under the MRTP Act, without the registration role.

2. When the DG acts

Agreements and abuse: on a direction under section 26(1), after the Commission forms a prima facie view on information, a reference or its own motion. The direction is administrative and not appealable (Competition Commission of India v. Steel Authority of India Ltd., 2010).
Further investigation: if, after considering the report, the Commission wants more, it directs further investigation and the DG files a supplementary report (section 26(3A), (3B), 2023); and where the DG has reported no contravention and the Commission disagrees, it may direct further investigation (section 26(7)).
Combinations: the Commission may call for a DG report after the parties’ response to the show-cause notice (section 29(1A)).
Compliance: the Commission may cause an inquiry into compliance with its orders (section 42(1)).

The scope of the investigation is not confined to the four corners of the information. In Excel Crop Care Ltd. v. Competition Commission of India, 2017 INSC 1286, (2017) 8 SCC 47, the Supreme Court held that the DG may investigate related conduct (there, later tenders) that comes to light in the course of an investigation, since the purpose is to find out whether the Act has been contravened, not merely to test the informant’s allegations.

3. Powers: section 41

Civil court powers (section 41(2)): the DG has all the powers conferred on the Commission by section 36(2) — summoning and examining on oath, discovery and production of documents, receiving affidavits, issuing commissions, and requisitioning public records.

The 2023 code (section 41(3) to (12), replacing the old reference to sections 240 and 240A of the Companies Act, 1956):

Duty of the party: officers, employees and agents of a party under investigation (past and present, including bankers, auditors and legal advisers) must preserve and produce all records in their custody, and give all assistance (section 41(3) and Explanation).
Third parties: the DG may require any other person to furnish information or produce records relevant to the investigation (section 41(4)).
Custody: records produced may be kept for 180 days, extendable by a further 180 days by written order; certified copies on request (section 41(5)).
Examination on oath: of officers, employees and agents of the party; and, with the Commission’s prior approval, of any other person; the statement is recorded, read over, signed and may be used in evidence (section 41(6), (7)).
Search and seizure (“dawn raids”): where the DG has reasonable grounds to believe records may be destroyed, mutilated, altered, falsified or secreted, he may apply to the Chief Metropolitan Magistrate, Delhi, who may authorise him to enter, search and seize (section 41(8), (10)). Police and Central Government officers must assist on requisition (section 41(9)). Seized records are kept no longer than the conclusion of the investigation (section 41(11)). Searches follow the Code of Criminal Procedure provisions on search and seizure, now the Bharatiya Nagarik Suraksha Sanhita, 2023 (section 41(12)).

4. The report

The DG submits his report within the time fixed by the Commission (section 26(3)). The report states the facts found, the evidence, and the DG’s conclusion whether a contravention has occurred, and identifies persons in charge of the enterprise for the purposes of section 48. It is a recommendation only. The Commission may forward it to the parties (section 26(4)), invites objections where it finds no contravention (section 26(5)), and must give a hearing and show-cause notice before any adverse order (section 26(8), (9)). The DG may appear before the Commission (section 35).

5. Sanctions for non-cooperation

Failure without reasonable cause to comply with a direction of the DG exercising section 41(2) powers: penalty up to Rs. 1 lakh for each day of failure, maximum Rs. 1 crore, as the Commission determines (section 43).
False statements, omission of material facts, or wilful alteration, suppression or destruction of documents required to be furnished: penalty up to Rs. 1 crore (section 45).
Leniency applicants must cooperate fully with the DG; non-cooperation forfeits the lesser penalty (section 46).

Who decides? A frequent error is to write that the DG “imposes penalty” or “passes orders”. He does not. The DG investigates and reports; the Commission hears the parties and decides; the NCLAT hears appeals. The one coercive step outside the Commission, search and seizure, needs a magistrate’s order.

How this is examined

“Duties of Director General” is the first item of Unit V of the syllabus and is asked as a 6-mark note or as part of an essay on procedure or penalties. Write sections 1 to 3 as the core, mention SAIL and Excel Crop Care once each, and always say that the search and seizure provision was rewritten in 2023 so the old reference to the Companies Act, 1956 no longer applies.

Now try the real questions: Competition Law past question papers.