1. Appeal against findings of abuse of dominant position by a statutory monopoly created under the Coal Mines (Nationalisation) Act, 1973. (Para 1 , 2 , 5 , 75 )
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2023 Supreme(SC) 584
SUPREME COURT OF INDIA
K.M. Joseph, B.V. Nagarathna, Ahsanuddin Amanullah, JJ.
Coal India Limited and Anr. – Appellants
Versus
Competition Commission of India and Anr. – Respondents
Civil Appeal No. 2845 of 2017 with Contempt Petition (C) No.896/2018 in C.A. No.2845 of 2017, T.C.(C) No.19 of 2023, T.C.(C) No.20 of 2023, T.C.(C) Nos.16-18 of 2023, T.C.(C) No.21 of 2023
Decided On : 15-06-2023
Important Points
Abuse of dominant position--In judicial review appellants would be held to standard of fairness as also duty not to discriminate--Appellants cannot resist imposition of standards of fairness and duty to avoid discriminatory practices when a specialized forum has been created by Parliament under Competition Act, 2002.
Subject
Antitrust Law - Regulations on Monopolies
Act Referred
COAL MINES NATIONALISATION AMENDMENT ACT: S.3
COMPANIES ACT: S.617, S.529(a), S.19(4)(g), S.4(2)(a), S.27(a), S.2(h), S.54, S.60
CONSTITUTION OF INDIA: Art.39(b), Art.31(b), Art.12, Art.324, Art.14, Art.19, Art.39(c), Art.31(a), Art.31(c), Art.226
EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT: S.11(a)
MAHARASHTRA CO-OPERATIVE SOCIETIES ACT: S.91
MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT: S.21, S.3
NATIONALISATION ACT: S.28, S.32, S.3(1), S.5, S.11
COMPANIES ACT: S.617, S.529(a), S.19(4)(g), S.4(2)(a), S.27(a), S.2(h), S.54, S.60
CONSTITUTION OF INDIA: Art.39(b), Art.31(b), Art.12, Art.324, Art.14, Art.19, Art.39(c), Art.31(a), Art.31(c), Art.226
EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT: S.11(a)
MAHARASHTRA CO-OPERATIVE SOCIETIES ACT: S.91
MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT: S.21, S.3
NATIONALISATION ACT: S.28, S.32, S.3(1), S.5, S.11
Headnote
(A) Competition Act, 2002 - Section 4(2)(a) and 4(2)(b) - Nationalisation Act, 1973 - Applicability of Competition Act to a statutory monopoly - Court confirmed that a government company engaging in mining is subject to Competition Act even as it serves public interest under Article 39(b) of the Constitution - The arguments presented by the appellants focusing on the statutory nature of their operations and the directive principles under Article 39(b) do not provide immunity from the Competition Act, which requires compliance with fair competition standards. (Para 101-126)
(B) Legal principles discussed - The Competition Act applies to monopolies created by statute. The Act does not allow enterprises to disregard obligations under competition law when engaged in public welfare activities. (Para 76-80)
(C) Court underscored that the Nationalisation Act's objectives do not exempt the appellants from the purview of the Competition Act, reinforcing accountability and compliance to promote fair trading. (Para 118-120)
(D)
Findings of Court:
The appellants are government companies and subject to the law against anti-competitive practices, emphasizing fair competition and consumer welfare. (Para 75) (E)
Issues: Determining the application of the Competition Act to monopolies created by statute versus public interest obligations. (Paras 8-10) (F)
Ratio Decidendi: The court held that compliance with both the Nationalisation Act and the Competition Act is necessary, suggesting that legislative intent is to ensure competition even in the public sector. (Para 118) (G)
Result: Appeal dismissed; Competition Act applies to appellants.
(B) Legal principles discussed - The Competition Act applies to monopolies created by statute. The Act does not allow enterprises to disregard obligations under competition law when engaged in public welfare activities. (Para 76-80)
(C) Court underscored that the Nationalisation Act's objectives do not exempt the appellants from the purview of the Competition Act, reinforcing accountability and compliance to promote fair trading. (Para 118-120)
(D)
Findings of Court:
The appellants are government companies and subject to the law against anti-competitive practices, emphasizing fair competition and consumer welfare. (Para 75) (E)
Issues: Determining the application of the Competition Act to monopolies created by statute versus public interest obligations. (Paras 8-10) (F)
Ratio Decidendi: The court held that compliance with both the Nationalisation Act and the Competition Act is necessary, suggesting that legislative intent is to ensure competition even in the public sector. (Para 118) (G)
Result: Appeal dismissed; Competition Act applies to appellants.
Legal Category Hierarchy
- constitutional law
- competition law
- administrative law
Advocates appeared:
For the Appellant(s) : Mr. Ajay Nandalike, Adv. Mr. Achyuth Ajithkumar, Adv. Mr. Talha Abdul Rahman, AOR Mr. Mohd Shaz Khan, Adv. Ms. Gayatri Dahiya, Adv. Mr. Adnan Yousuf, Adv. Mrs. Bina Gupta, AOR Mr. Harman Sandhu, Adv. Ms. Shally Bhasin, Adv. Mr. Yaman Verma, Adv. Mr. Chaitanya Safaya, Adv. Mr. Prateek Gupta, Adv. Ms. Raveena Lalit, Adv. Mr. Abhishek Hazari, Adv. Ms. Sanjana L.b., Adv. Mr. S. S. Shroff, AOR
For the Respondent(s): Mr. Sakya Singha Chaudhuri, AOR Mr. N. Venkataraman, ASG. Mr. Rishad Ahmed Chowdhury, AOR Mr. S. S. Shroff, AOR Mr. Matrugupta Mishra, Adv. Ms. Ritika Singhal, Adv. Ms. Ishita Thakur, Adv. Ms. Divya Roy, AOR Mr. Prabhat Kaushik, AOR Mr. M. A. Venkata Subramanian, Adv. Mr. Ranjit Kumar, Sr. Adv. Ms. Sheena Taqvi, Adv. Ms. Akansha Saini, Adv. Mrs. Bina Gupta, AOR Mr. Nagarkatti Kartik Uday, AOR Mr. G. Saikumar, Adv. Mr. Samir Malik, Adv. Ms. Nikita Choukse, Adv. Mr. Akash Lamba, Adv. Ms. Ekssha, Adv. M/S. D.S.K. Legal, AOR
For the Appellant(s) : Mr. Ajay Nandalike, Adv. Mr. Achyuth Ajithkumar, Adv. Mr. Talha Abdul Rahman, AOR Mr. Mohd Shaz Khan, Adv. Ms. Gayatri Dahiya, Adv. Mr. Adnan Yousuf, Adv. Mrs. Bina Gupta, AOR Mr. Harman Sandhu, Adv. Ms. Shally Bhasin, Adv. Mr. Yaman Verma, Adv. Mr. Chaitanya Safaya, Adv. Mr. Prateek Gupta, Adv. Ms. Raveena Lalit, Adv. Mr. Abhishek Hazari, Adv. Ms. Sanjana L.b., Adv. Mr. S. S. Shroff, AOR
For the Respondent(s): Mr. Sakya Singha Chaudhuri, AOR Mr. N. Venkataraman, ASG. Mr. Rishad Ahmed Chowdhury, AOR Mr. S. S. Shroff, AOR Mr. Matrugupta Mishra, Adv. Ms. Ritika Singhal, Adv. Ms. Ishita Thakur, Adv. Ms. Divya Roy, AOR Mr. Prabhat Kaushik, AOR Mr. M. A. Venkata Subramanian, Adv. Mr. Ranjit Kumar, Sr. Adv. Ms. Sheena Taqvi, Adv. Ms. Akansha Saini, Adv. Mrs. Bina Gupta, AOR Mr. Nagarkatti Kartik Uday, AOR Mr. G. Saikumar, Adv. Mr. Samir Malik, Adv. Ms. Nikita Choukse, Adv. Mr. Akash Lamba, Adv. Ms. Ekssha, Adv. M/S. D.S.K. Legal, AOR
Table of Contents
2. Appellants claim immunity as a statutory monopoly serving Article 39(b) goals; respondents argue the Act applies to all non-sovereign government enterprises. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 )
3. The court held that the appellants are enterprises engaged in non-sovereign activities and that fair competition aligns with the evolving concept of common good. (Para 77 , 78 , 79 , 80 , 81 , 82 , 84 , 85 , 86 , 87 , 88 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 103 , 107 , 117 , 118 , 119 , 120 )
4. Statutory monopolies and government companies are enterprises under the Competition Act unless performing sovereign functions, and the Act prevails over inconsistent prior statutes. (Para 81 , 86 , 103 , 123 )
5. The Competition Act applies to the appellants; the appeal and transferred cases are remanded for adjudication on merits. (Para 125 , 126 )
6. Does the Competition Act, 2002 apply to statutory monopolies or government companies?
Yes, provided they are not performing sovereign functions. Section 2(h) defines enterprise to include government departments and companies, and Section 19(4)(g) specifically identifies statutory monopolies as a factor in determining dominant position. (Para 79 , 80 , 81 , 86 )
7. What constitutes a sovereign function that would exempt an entity from the Competition Act?
Sovereign functions include activities such as atomic energy, currency, defence, and space. Commercial activities, including coal mining, do not qualify as sovereign functions and are thus subject to the Act. (Para 54 , 80 , 81 )
8. How is a conflict resolved between the Competition Act and an earlier statute like the Coal Mines (Nationalisation) Act?
The Competition Act prevails due to its non-obstante clause in Section 60 and specific provisions like Section 28, reflecting a paradigm shift in economic policy toward fair competition. (Para 73 , 103 , 123 )
9. Does the mandate to serve the common good under Article 39(b) exempt a state enterprise from competition laws?
No. The concept of common good is dynamic. Promoting fair competition and preventing abuse of dominance is considered consistent with the modern interpretation of serving the common good. (Para 95 , 96 , 117 )
JUDGMENT :
K.M. Joseph, J.
1. The Civil Appeal is directed against the Order passed by the Competition Appellate Tribunal, New Delhi (hereinafter referred to as ‘Tribunal’), by which Order, the Tribunal affirmed the findings and conclusion recorded by the Competition Commission of India (hereinafter referred to as ‘CCI’) on various facets of abuse of dominant position. The abuse of dominant position was ascribed to the appellants. The appeal was dismissed.
2. The second respondent had provided information to the CCI which the CCI proceeded to consider and it found the abuse of dominant position by the appellants.
3. The appellants have filed Interlocutory Application, viz., I.A. No. 66587 of 2017 being an application seeking permission to take additional grounds. Parties exchanged pleadings in the interlocutory application. We have allowed the application seeking permission to urge the new grounds.
4. When the matter came up on 16.09.2022 before a Bench of two learned Judges, the Court felt that since modification of order dated 03.08.2017 was sought, it would be appropriate that these matters are heard by a Bench of three learned Judges. It is, accordingly, that the matter stood posted before a Bench of three learned Judges.
5. The principal bone of contention of the appellants in the I.A. 66587 of 2017 appears to be that Coal India Limited, the first appellant (hereinafter referred to as ‘CIL’) being a monopoly created by a statute and what is more important, geared and duty bound to achieve the objects declared in Article 39(b) of the Constitution of India and the second appellant, Western Coalfields Limited, a subsidiary company of the first appellant cannot be bound by the Competition Act, 2002 (hereinafter referred to as the ‘Act’). In other words, having regard to the very object and purpose for which it was brought into being and the law surrounding such a body, applying the Act would produce such anomalous results as would stultify the sublime goal enshrined in Article 39(b) as also the statute under which CIL witnessed its birth. Since it was found that there were proceedings pending before the Commission/Tribunal wherein a similar question would directly arise, transfer petitions were filed to call for such proceedings to this Court. It is hence, that the Transfer petitions which we are dealing with came to be allowed. This is however, on the understanding that the Court would not go into the merits of the individual cases but would confine itself to ruling on the question of law raised by the appellants, viz., the applicability of the Act to them.
6. We have heard Shri K.K. Venugopal, learned Senior Counsel, ably assisted by Shri Yaman Verma, learned Counsel. Shri Maninder Singh, learned Senior Counsel, also appears on behalf of the appellant. Also, we have heard Shri N. Venkataraman, learned Additional Solicitor General, on behalf of CCI and Shri Ranjit Kumar, learned Senior Counsel, appearing on behalf of the second respondent in the Appeal/Application. We have further heard learned Counsel appearing in the transferred cases.
SUBMISSIONS OF THE APPELLANTS/APPLICANTS
7. Shri K. K. Venugopal, learned Senior Counsel, would submit that the coal mines operated by the appellants pursuant to the provisions of the Coal Mines (Nationalization) Act, 1973 (hereinafter referred to as the ‘ NATIONALISATION ACT ’) would be wholly outside the purview of the Act. This is for the reason that the very purpose and policy underlying the Nationalization Act, was to monopolise the operation of the coal mines and coal mining in the hands of the Central Government and its agencies such as the appellants. It is not an ordinary monopoly. It is a monopoly created by the Nationalization Act; it is, having regard to the need to immunize it from challenge, that it was accorded protection of Article 31B of the Constitution of India; it has been inserted in the Ninth Schedule to the Constitution; Article 39(b) of the Constitution of India takes it out o
