Competition Act Applicable To Coal India Ltd : Supreme Court

The Supreme Court today held that Coal India Ltd. would come under the purview of the Competition Act, 2002 despite being a Public Sector Undertaking. A Bench of Justices KM Joseph, BV Nagarathna and Ahsanuddin Amanullah delivered the judgement today. "We reject the appellant's contention that the Competition Act does not apply to them because of the Coal Mines (Nationalisation) Act....The Nationalisation Act cannot be reconciled with the [Competition] Act." The Court also remanded the matter back to the Competition Commission of India for deciding the issue on merits. It also clarified that the IAs seeking interim relief as well as the contempt petitions would be listed in July. “The transferred case shall be sent back so that they may be dealt with on their own merits. The transferred cases are disposed of. Equally, the appeal shall be posted for being dealt with on its own merits. The interlocutory applications seeking interim relief in the pending appeals shall be listed in the second week of July 2023. The contempt petitions shall be listed in July 2023." The Bench was hearing petitions by Coal India contending that since it operates Coal Mines covered under the Coal Mines Nationalisation Act, it would not come under the Competition Act. The CCI had opposed the plea. The competition watchdog had earlier, imposed a penalty of over Rs 1,773 crore on Coal India for imposing unfair/discriminatory conditions in Fuel Supply Agreements with the power of producers for supply of non-coking coal.The bench was hearing Coal India’s plea challenging the Competition Appellate Tribunal order which affirmed the findings and conclusion of the Competition Commission of India alleging abuse of dominant position against the appellants. Former Attorney General for India KK Venugopal appeared for the CIL and Additional Solicitor General N Venkataraman appeared for the CCI.Interplay Of The Two Legislations: Competition Act Vs Nationalisation ActThe Court firstly noted that working of the Monopolies and Restrictive Trade Practices Act, 1969 was found to be inadequate particularly in the context of changes which happened not only in the country but also on a larger scale. Subsequently, a high-level Committee-Raghavan Committee delved into various issues and formed a report, basis which the Competition Act, 2002 was enacted.The Bench went ahead to note some of the relevant provisions keeping in mind the factual matrix.Section 4 of the Act prohibits abuse of dominant position. Section 18 indicates CCI’s power to bring about the sweeping changes in the economy. Section 19 empowers the Commission to make inquiries into agreements which are anti-competitive within the meaning of Section 3. More importantly, Section 19(4) deals with inquiring into the question as to whether an enterprise enjoys a dominant position or not.The Bench opined that coal continues to be an important and scarce natural resource. Nothing more is required to establish the same than the very lis over it, it said.“It forms an important raw material in the production of vital final products. Also, it forms a kind of fuel, which drives power plants. A monopoly, undoubtedly, stood created by the Nationalisation Act. The mines, which were the subject matter of the Act, stood vested with the Central Government. The first appellant is a Government Company, which came into being, as contemplated under Section 5 of the Nationalisation Act. The appellant Company operates the mines. It is tasked with the power and the duty to distribute coal. This attracts the Directive Principle enshrined in Article 39(b). The said Directive Principle contemplates that the ‘State’ should direct its policy towards securing that the ownership and control of the ‘material resources’ are so ‘distributed’ so as to ‘subserve the common good’.”The Bench noted that the Nationalisation Act was enacted to vest in the Central Government, the rights of the lessees in the coal mines so that they could be operated so as to ensure the rational, coordinated and scientific development and utilization of the coal resources consistent with the growing requirements of the country.“The Preamble clearly indicates that the Law-Giver had in mind the goal in Article 39(b), viz., acquiring ownership over coal mines so that coal mined from the mines could be so distributed so that common good was best subserved. The Statement of Objects and Reasons of Act 67 of 1976, by which the Nationalisation Act was amended, indicated that after the nationalisation took place, persons holding mining leases took to unauthorized mining and in a most reckless and unscientific manner. This was noted to be without bearing in mind considerations of conservation, safety and the welfare of the workers. A valuable national asset was being destroyed. There were safety concerns. Large profits were being reaped but by paying very low wages to the workers. All privately held coal leases were brought under the umbrella of the...

Competition Act Applicable To Coal India Ltd : Supreme Court

Rintu Mariam Biju

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