The judgment establishes the principle that trade or business conducted by government departments or public agencies, including monopolies created by states, cannot be considered as engaged in sovereign functions.

S. RAVINDRA BHAT, J.

Caveat No.905/2017

Caveator/respondent No.2 is represented through counsel.

Caveat is discharged.

LPA 674/2017 & C.M. 37420-21/2017

1. The Uttrakhand Agricultural Produce Marketing Board impugnes an order of the learned Single Judge rejecting its writ petition, challenging an order of the Competition Commission of India (CCI) made under Section 26(1) of The Competition Act, 2002 (hereinafter referred to as “the Act”) expressing prima facie opinion that the Board had restricted production by Indian Made Foreign Liquor (IMFL), resulting in denial of marketing access and thus, provisions of Section 4(2) of the Act were attracted. The CCI required the Director General to investigate into the matter and to report to it. The Single Judge was of the opinion that the order made under Section 26 of the Act was not adjudicated and merely an administrative one, in aid of investigation and that it did not entail any adverse consequences. The impugned judgment relied upon the Supreme Court’s decision in Competition Commission of India vs. Steel Authority of India Ltd. & anr. (2010) 10 SCC 744 and also distinguished the decision in Agricultural Produce Market Committee Vs. Ashok Harikuni & anr., (2000) 8 SCC 61. The Single Judge repelled the contention that the liquor business conducted by the State was part of its sovereign functions and in doing so, he restricted the observations in Ashok Harikuni (supra) to the effect that even though the appellants were performing a function entrusted by the State, they were not discharging a sovereign function. The learned Single Judge further noticed the judgment in Union of India v. Competition Commission of India & ors, (2012) 187 DLT 697 where the Railways was held to be amenable to the jurisdiction of the Competition Commission. Thereafter, the Single Judge delineated the functions of the CCI, in the context of arguments that the policy impugned before the Commissioner was upheld by the Uttarakhand High Court with the following observations:-

“17. Before I consider the submissions of the learned ASG in relation to the meaning of the expression “enterprise” contained in Section 2(h) of the Act, I may note that by referring to the various reliefs sought by respondent No. 2 before the Commission; the clauses of the agreement between the parties and by reference to the statutory Rules aforesaid, the petitioner is confusing the issue arising for determination, i.e., whether the petitioner is an “enterprise” under Section 2(h) of the Act. These submissions of Mr. Parasaran, really, touch upon the merit of the complaint and proceedings before the Commission. They do not have a bearing on the issue of jurisdiction of the Commission to conduct an investigation and deal with the information furnished by respondent No. 2. These are all defences that the petitioner may raise before the Commission in support of its defence that it is not abusing its position of dominance or that its agreement with respondent No. 2 is not in contravention of the provisions of Section 3(1) of the Act.

18. Section 2(h) of the Act defines the expression “enterprise” in the following manner:

“2(h) “enterprise” means a person or a department of the Government who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Ce