Competition Act applies to Coal India: Supreme Court

The Supreme Court on Thursday ruled that the Competition Act, 2002 applies to to public sector company, Coal India Limited [Coal India Limited and anr vs Competition Commission of India and Anr.].A bench of Justices KM Joseph, BV Nagarathna and Ahsanuddin Amanullah delivered the judgment. The Court rejected Coal India's contention that the Competition Act does not apply to them because of the Coal Mines (Nationalisation) Act. The bench stated,"Section 54 of the [Competition] Act gives power 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 ground for exemption can be security of the State or even public interest. It is not as if the appellants, if there was a genuine case made out for being taken outside the purview of the Act in public interest, the Government would be powerless. We say no more.".The verdict came in a batch of appeals, the lead plea of which was one by Coal India challenging a December 2016 ruling of the erstwhile Competition Appellate Tribunal (COMPAT). The Compat had dismissed Coal India's challenge to an October 2014 order of the Competition Commission of India (CCI).The CCI had found the public-sector coal company guilty of abuse of dominance in terms of the production and supply of non-coking coal to thermal producers, in violation of the Competition Act. Pertinently, CCI had directed Coal India to 'cease such anti-competitive conduct'. While it had initially imposed a penalty of ₹1733.05 crore, the same was reduced to ₹591.01 crore after the COMPAT had in the first round of litigation remanded the matter for a fresh decision.The competition watchdog had acted on information filed by Sai Wardha, a Maharashtra-based coal-fired thermal power generation company. It had also received complaints from the Maharashtra Generating Company Limited, the Gujarat State Electricity Corporation Limited, the Madhya Pradesh Power Generating Corporation Limited, the West Bengal Power Development Corporation Limited, and the Sponge Iron Manufacturers Association..The thermal companies alleged that CIL had delayed the execution of fuel sales agreements it had compelled them to sign, even as it effectively enjoyed a monopoly. Further, these agreements were anti-competitive as the instant respondents had no bargaining or negotiating power, it was contended. The thermal companies stated that Coal India had increased the price of coal from ₹1,631 per metric tonne to ₹2,177 per metric tonne without any justification and had imposed discriminatory pricing on buyers..Before the top court, Coal India, represented by Senior Advocate and former Attorney General KK Venugopal argued that the coal mines it operates pursuant to the Coal Mines (Nationalisation) Act renders its operations wholly outside the purview of the Competition Act. The CCI, represented by Additional Solicitor General (ASG) N Venkataraman, opposed the argument and pointed out that there was no constitutional challenge to any provision of the Competition Act. The ASG submitted that Coal India had unilaterally fixed prices of coal, and supplied substandard coal to power companies.The hearings had seen discussion around the concept of “common good” as mentioned in Article 39 of the Constitution, with the CCI arguing that Coal India cannot use the same as a shield in such cases..The Supreme Court underscored that the economy has changed since independence, and the same cannot be perceived in isolation. "No nation can remain unaffected by the changes in the state of the world economy. Policies, which are suitable at a given point of time, are not cast in stone. Each generation of people have the right as also the duty to revisit economic policies which found favour with the past. The present cannot put posterity in chains. Equally, the past cannot hold the present hostage to ideas which would then degenerate into what was once original and suitable into dogma which no longer can serve the people."It rejected the contention that Coal India had powers similar to the Election Commission of India with regard to superintendance over commercial coal operations.Further, the public sector company cannot be oblivious to its duty to bear in mind the sublime goal with regard to distribution so as to subserve the ‘common good’. "The appellants may qualify as State for the purpose of Chapter IV if it fulfills the requirement of State under Article 12. We bear in mind in this regard the argument of the appellants that a remedy is open to a party against the appellant in proceedings under Article 226 or Article 32 of the Constitution. Thus, the appellants also, even if the appellants are Government Companies but being State, have a duty to keep uppermost, in their minds, the goal in Article 39(b).".Venugopal was assisted by advocates Yaman Verma and Raveena Lalit. Senior Advocate Maninder Singh also appeared for Coal India. Senior Advocate Ranjit Kumar also appeared for the respondents. Advocate Matrugupta Mishra appeared for a party in a transferred case..[Read judgment]