| CITATION | I.A.No.66587 of 2017 |
| DATE OF JUDGMENT | 15th June,2023 |
| COURT | The Supreme Court of India |
| CASE TYPE | The Monopolistic and Restrictive Trade Practices Act,1969 |
| APPELLANT | Coal India Limited and Anr. |
| RESPONDENT | Competition Commission of India and Anr. |
| BENCH | Hon’ble Judge K.M.Joseph Hon’ble Judge B.V. Nagarathna Hon’ble Judge Ahsanuddin Amanullah |
Facts of the Case
In the 2017, Competition Commission of India imposed a penalty of Rs.591 crores on Coal India Limited for supplying lower quality non-coking coal at higher prices and further imposing unfair and discriminatory conditions in fuel supply agreements. Coal India Limited is the largest coal producer and a public sector undertaking. The Coal mines (Nationalization) Act, of 1973 give Coal India Limited monopoly over coal mining and distribution in the country. Coal India petitioned the court, that as a largest producer and operator of the coal mines comes under the Nationalization Act, and should be exempted from Competition Act. Government holds a majority of 67% of shares in Coal India Limited.
Important Sections
Section 2(h) “Enterprise” under the Competition Act states that it refers to a person of a government department engaged in various activities related to the production, storage, supply, distribution, acquisition, or control of goods, as well as the provision of services. It also includes involvement in investment or the business of acquiring, holding, underwriting or dealing with shares, debentures, or other securities of any other company.
Section 4(1) of the Competition Act, 2002: This section declares that no enterprise or group shall abuse its dominant position in the market.
It prohibits anti-competitive
practices that hinder competition.
Section 4(2) of the Competition Act: This section defines “dominant position” as a position of strength enjoyed by an enterprise in the relevant market in India. It further elaborates on the criteria for determining dominant position.
• Section 19(4) of the Competition Act: This section enumerates the factors to be considered while determining whether an enterprise holds a dominant position in the market.
• Article 39(b) of the Indian Constitution: This article falls under the Directive Principles e Policy and aims to ensure the ownership and control of material resources are contributed for the common good.It emphasizes the goal of resource distribution for welfare of the society.
ISSUE RAISED
Whether Coal India Limited comes under purview of Competition Act,2002 or not?
Arguments of the Parties
Coal India Limited
- Coal, as being a vital natural resource, operates on the principle of ‘common good’ and ensures equal distribution of coal.
- Under Nationalization Act 1973, Coal India Limited is a monopoly business and a government authorized company.
- Coal India limited supports national policies by promoting growth and development in economically disadvantaged areas by rapid increase in allocation.
- It aims at pursuing welfare objectives and is established as a monopoly for efficient coal production and distribution.
Competition Commission of India
- Relying on Raghavan Committee Report (2020), Competition Commission of India which comes to the conclusion that state monopolies like CIL are against the national interests and should not operate without any competition. This needs promotion and accountability in the market.
- The laws that cannot be challenged in the court (Nationalization Act) were removed from the 9th Schedule in 2017.This highlights that coal is a matter of market dynamics and should not be exempted from Competition Act,2002.
- Coal is no longer in the category of ‘essential commodity’ since 2007.
- The unfair trade practices carried out by Coal India Limited would directly affect the consumers’ interests.
- The supply of lower quality coal with high prices is significantly highlighted by the CCI.
- CCI argued what serves the common good? So, the common good serves a regular supply of coal, sticking to contracts, quality and reasonable pricing.
- For the welfare of the nation, connect coal supply to power companies.
- Former Attorney General KK Venugoapl represented Coal India, while Additional Solicitor General N Venkataraman appeared for the CCI.
- The bench heard Coal India’s appeal against the Competition Appellate Tribunal’s order, which upheld the CCI’s findings of abuse of dominant petition by Coal India.
JUDGMENT
The Supreme Court dismissed the CIL’s argument that it cannot be exempted from the Competition Act,2002. As the judgment was made against CIL and the court proceeded with the views presented by CCI. By proceeding with the report of Raghavan Committee judgment goes for the development of the nation and the committee clearly states that Competition Act,2002 should be made adhered to all the government agencies. The court emphasized the need for fair competition and equality among entities, regardless of their sector and reinforced the principle of “competitive neutrality” and the need for a level playing field.
“The CCI is now legally competent to investigate and take measures against statutory monopolies similar to the CIL in those cases where their actions are found in violation of the mandate of the Act.”
References
Manupatra
Drishti IAS
Indian Kanoon
Author: Deepika Jain, BM Law College, Jodhpur 5th Semester, Intern at Legal Vidhiya.
