In a significant legal development on February 3, 2026, the Supreme Court of India set aside a six-year-old order from the National Company Law Appellate Tribunal (NCLAT) that had directed a competition probe into Flipkart.
A three-judge bench, led by Chief Justice Surya Kant, has remanded the case back to the NCLAT for fresh adjudication, citing procedural and evidentiary flaws in the original 2020 decision.
1. The “Invalid Evidence” Rationale
The Supreme Court’s intervention centers on the integrity of the evidence used to establish a prima facie case against the e-commerce giant.
- Overturned Tax Findings: The NCLAT’s 2020 order relied heavily on observations made by an Income Tax Assessing Officer (AO) regarding Flipkart’s business model and predatory pricing.
- The “Defunct” Foundation: Flipkart’s legal counsel, Senior Advocate Abhishek Manu Singhvi, argued that these tax findings had already been set aside by the Income Tax Appellate Tribunal (ITAT).
- Independent Reassessment: The SC ruled that because the foundational tax evidence no longer survives, the NCLAT must reconsider the case independently, without drawing support from those nullified observations.
2. The Core Legal Dispute
The case traces back to a 2018 complaint filed by the All India Online Vendors Association (AIOVA), representing over 2,000 sellers.
- Allegations: AIOVA accused Flipkart of abuse of dominant position and predatory pricing (Section 4 of the Competition Act). They alleged that preferential treatment was given to select large sellers (like WS Retail), which disadvantaged smaller vendors.
- CCI’s Initial Closure: The Competition Commission of India (CCI) originally dismissed the complaint in 2018, famously stating that neither Flipkart nor Amazon was considered “dominant” in the relevant market at that time.
- NCLAT Reversal: In March 2020, the NCLAT overturned the CCI’s closure and ordered the Director General to launch an investigation—a move that the Supreme Court has now stayed and sent back for review.
3. SC’s Directions to NCLAT
The Supreme Court has laid out clear “ground rules” for the NCLAT’s fresh review:
- The “Coal India” Test: The tribunal must apply the objective norms for determining market dominance as established in the landmark Coal India Ltd. (2023) judgment.
- Open Questions: The SC clarified that it is not expressing an opinion on the merits; all questions of law and fact remain open for the NCLAT to decide.
- Burden of Proof: The tribunal must now determine if there is legally permissible evidence—other than the overturned tax findings—to justify a probe by the competition regulator.
4. What This Means for E-commerce
This ruling is seen as a victory for procedural fairness in India’s antitrust landscape.
- Higher Threshold for Probes: It reinforces that regulators and tribunals cannot rely on “subjective criteria” or findings from unrelated legal proceedings (like tax) to initiate heavy-handed antitrust investigations.
- Market Dynamics: During the hearing, Flipkart’s counsel maintained that the CCI’s own assessment found them not to be dominant, suggesting that Amazon held a stronger market position in the online marketplace segment.
Conclusion: A Seven-Year Saga Continues
The Flipkart dominance case has effectively hit the “reset” button. While the vendors’ association (AIOVA) maintains that the factual observations about Flipkart’s business model remain relevant, the NCLAT now has the difficult task of finding fresh, untainted evidence to prove a prima facie violation of competition law.
