 "Coal India, coal")
The Supreme Court on Thursday said Coal India Ltd (CIL), a public-sector undertaking, would come within the ambit of the Competition Act, rejecting the miner’s contention that the law concerned did not apply to it because it operated under the Coal Mines (Nationalisation) Act.
“We hold there is no merit in the contention of the appellants (CIL) that the Act will not apply to (them) for the reason that (they) are governed by the Nationalisation Act and that the Nationalisation Act cannot be reconciled with the (Competition) Act. This is subject to the appellants having all the rights to defend their actions under the law and as indicated hereinbefore. The transferred cases shall be sent back so that they may be dealt with on their own merit. The transferred cases are disposed of,” a Bench of the judges -- K M Joseph, B V Nagarathna, and Ahsanuddin Amanullah -- said.
“Section 54 of the Competition Act (the Act) gives powers to the Central Government to exempt from the application of the Act or any provision and for any period, which is specified in the Notification. The grounds for exemption can be the security of the State or even the public interest. It is not as if … if there was a genuine case made out for being taken outside the purview of the Act in the public interest, the Government would be powerless. We say no more,” the Bench said.
The case has been sent back to the Competition Commission of India (CCI) for deciding the issue on merit.
Anshuman Sakle, partner, Khaitan & Co, said this ruling reinforced the principle of competitive neutrality under the Competition Act, and it applied to public-sector undertakings and private enterprises alike.
“Under the Competition Act, there is no distinction made between government-owned enterprises and private enterprises. However, CIL had contended before the court that considering the fact that it became a monopoly under the Nationalisation Act of 1973, the provisions of the Competition Act should not apply to it. The Supreme Court has disagreed with this view and stated that CIL could not resist the standards of fairness and the duty to avoid discriminatory practices,” he said.
The court dismissed the appeals by CIL, which challenged a December 2016 ruling of the Competition Appellate Tribunal. The tribunal had dismissed CIL’s appeal against a CCI order of 2014 holding the company guilty of abuse of dominance in the production and supply of non-coking coal (mainly used as thermal coal for power generation) to thermal power producers. This was in violation of the Competition Act.
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The CCI had imposed a penalty of Rs 1,773.05 crore on CIL for imposing unfair/discriminatory conditions in fuel-supply agreements. The tribunal reduced the amount to Rs 591.01 crore.
The competition regulator had acted on information from a Maharashtra-based coal-fired thermal power generation company. It received complaints from five other thermal power generation companies also.
These companies had said CIL had delayed the execution of fuel-sale agreements it had compelled them to sign.
Senior advocate and former attorney general K K Venugopal, arguing for CIL, said its coal mines came under the Coal Mines (Nationalisation) Act, 1973, and therefore its operations were outside the purview of the Competition Act.
“The very purpose and policy underlying the Nationalisation Act were to monopolise the operations of the coal mines and coal mining in the hands of the Central government and its agencies such as the appellant. It is not an ordinary monopoly. It is a monopoly created by the Nationalisation Act,” he had argued.
Meanwhile, Additional Solicitor General N Venkataraman, appearing for the CCI, said there was no conflict between the Nationalisation Act and the Competition Act in keeping with the changing times and the need to preserve the best economic interests of the nation.
“The state monopoly could not be allowed to operate in a state of inefficiency. It had to set its house in order and pull up its socks. It was specifically contemplated that such state monopolies must fall in line and operate in the midst of forces of competition,” he said.
