Issuing new regulations aims to mitigate delays that have long hampered the swift enforcement of penalties.
The Competition Commission of India (CCI) on Thursday notified new regulations regarding the recovery of ‘monetary penalties,’ replacing the 2011 framework with significant updates designed to streamline the penalty recovery process.
The new regulation introduces a major change by requiring that a demand notice be issued simultaneously with the penalty order. This marks a departure from the previous practice, where the notice was issued only after a 60-day period during which parties often sought stays from the National Company Law Appellate Tribunal (NCLAT).
Under the previous regime, once a penalty order was issued, the defaulting party had a full two months to deposit the imposed amount. During this interval, many opted to file appeals and secure stays, effectively stalling the recovery process for years.
Once the appeals were dismissed, the CCI would then issue a demand notice, often accompanied by interest calculated from the original order date.
However, a recent Delhi High Court ruling underscored that interest could not be levied without an accompanying demand notice— especially if the notice had been delayed by a stay — highlighting a significant procedural gap.
In response, the new regulations ensure that when a penalty order is passed, the demand notice reaches the concerned party immediately, setting a statutory minimum of 60 days for payment.
This measure not only aligns with the statutory right to appeal under Section 53B of the Competition Act, 2002, but also seeks to eliminate the incentive for delaying proceedings through the appellate route.
Should an appeal be filed and a stay obtained, and if the appeal is later dismissed, the penalty will attract interest from the originally stipulated period, thereby discouraging frivolous or dilatory appeals.
The CCI undertook a public consultation between November 7 and December 6, 2024, receiving inputs from seven stakeholders. These consultations led to targeted changes, including adjustments in the language governing the issuance of demand notices and the calculation of interest on delayed payments.
Source: The Hindu Business Line
