Competition Commission Unveils New Penalty Recovery Regime

To streamline the penalty recovery process, the Competition Commission of India (CCI) has notified the CCI (Manner of Recovery of Monetary Penalty) Regulations, 2025.

These came into force on February 27, 2025, replacing the 2011 Regulations, which were subject to minor amendments in 2014 and 2021. The Regulations have been finalised after considering stakeholder comments on the draft released last year.

Here are some of the key changes introduced:

• Definition of “person in default”: Under Section 2(1)(k), a “person in default” is now defined as a person who has not paid the penalty imposed upon it within the stipulated time despite the demand notice being duly served.

• Issuance of demand notice concurrently with CCI order: Regulation 3(1) of the 2025 Regulations envisages the issuance of the demand notice concurrently with the CCI order imposing the penalty. Earlier, the demand notices were issued after the expiry of the period specified in the order. This change follows the Delhi High Court’s April 2024 ruling, which held that the interest on the penalty amount is not leviable unless and until a demand notice is issued.[1] In this case, the Court rejected the Commission’s submissions that the provisions of Regulation 3 were procedural and directory in nature, and the liability to pay interest could not have been said to arise solely after the demand notice was served.

• 60 days’ time to deposit penalty: Regulation 3(2) stipulates that the demand notice must provide at least 60 days from receipt of the order to deposit the penalty. This aligns with the 60-day period allowed for filing an appeal before the National Company Law Appellate Tribunal (NCLAT) under Section 53B(2) of the Competition Act, 2002. This provision ensures that interest does not accrue before the appeal can be filed.

• Reduced interest rate: In the event of a default in payment, enterprises and persons will now be liable to pay simple interest at a reduced rate of 1% per month (or part of a month) on the outstanding amount. Earlier, the interest rate was 1.5% as per Regulation 5. The revised rate now aligns with the rate prescribed under the Income-tax Act, 1961, for outstanding tax amounts.

• Liability of legal heirs to pay penalty: According to Regulation 9, after the period in the recovery certificate expires, the recovery officer can require the person in default or their legal heirs (if the person in default is deceased) to pay the penalty to the Commission. This payment should be made immediately when the penalty is due or within the time specified in the recovery certificate. If the payment is not made, the legal heirs will be treated as persons in default. Further, a recovery certificate may be issued to the legal heirs of a deceased person in default.

• Simultaneous recovery through sale: Regulation 10 now states that if a person or enterprise in default fails to pay the penalty on time as stated in the recovery certificate, the recovery officer may also simultaneously proceed to recover the amount of the penalty through attachment and sale of their movable and immovable property, in accordance with the rules laid down in the Second Schedule of Income-tax Act, 1961.

• Preventing parallel proceedings for recovery: To prevent parallel proceedings for recovery of monetary penalty, the Commission has introduced Sub-regulation (2) in Regulation 11 to ensure that in cases where the income-tax authority to which a reference has been made by the Commission initiates recovery proceedings, the recovery proceedings initiated by the Commission shall stand sine die deferred.

[1] Geep Industries (India) Pvt. Ltd. & Ors. v. Competition Commission of India [WP(C) 10332/2023]