# COAL INDIA LIMITED AND ANR v. COMPETITION COMMISSION OF INDIA AND ANR

- **Citation:** [2023] 7 S.C.R. 827
- **Court:** Supreme Court of India
- **Decided:** 2023-06-15
- **Case number:** Civil Appeal No.2845 of 2017
- **Bench:** K. M. Joseph, B. V. Nagarathna, Ahsanuddin Amanullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/coal-india-limited-and-anr-v-competition-commission-of-india-and-anr-37498
- **Pages:** 60

## Headnote

Competition Law: Competition Act, 2002 - ss. 2(h), 19(4)(g)
and 28 - "Enterprise" - Applicability of the Act - Competition
Appellate Tribunal affirmed the findings recorded by the Competition
Commission of India on various facets of abuse of dominant position
against the Coal India Limited and its subsidiary company - Whether
the Competition Act, 2002 applies to the appellants or not - Held:
The appellants are Government Companies - They were created to
take the place of the Central Government in the matter of supervising
control and managing the affairs of the mines - The "Sovereign
function" of the Government has been excluded from the ambit of
s.2(h) - Carrying on business in mining, cannot be described as a
sovereign function - Hence, the appellant is a person within the
meaning of s.2(h) , therefore comes under the preview of
"enterprise" - The appellants being State, have a duty to keep
uppermost, in their minds, the goal in Art.39(b) - There is nothing
in the definition which excludes a State monopoly which is even set
up to achieve the goals in Art.39(b) - When Parliament enacts laws,
it is deemed to be aware of all the existing laws - Parliament was
aware of the Nationalisation Act - Therefore the express reference
in s.19(4)(g) of the Act to monopolies created under Statutes as
also Government Companies and Public Sector Units for determining
existence of dominant position indicates the intention of Parliament
to bring State Monopolies, Government Companies and Public
Sector units within the purview of the Act - No reason to hold that
a State Monopoly being run through the medium of a Government
Company, even for attaining the goals in the Directive Principles,
will go outside the purview of the Act - As a matter of fact there may
be forums other than the CCI whereunder redress may be sought
against action of the appellants - But that by itself cannot result in
denial of access to a party complaining of contravention of a law
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which is otherwise applicable - The appellants cannot resist the
imposition of standards of fairness and the duty to avoid
discriminatory practices when a specialized forum has been created
by Parliament under the Act - No merit in the contention of the
appellants that the Act will not apply to the appellants for the reason
that the appellants are governed by the Nationalisation Act and
that Nationalisation Act cannot be reconciled with the Competition
Act - The Coal Mines (Nationalisation) Act, 1973 - ss. 5, 11, 28
and 32 - Constitution of India - Art. 39 (b).
Competition Act, 2002 - s.28 - The Coal Mines
(Nationalisation) Act, 1973 - s.32 - Conflict between s.28 of the
Competition Act, and s.32 of the Coal Mines (Nationalisation) Act
- Under s.32 of the Nationalisation Act, the mining companies
cannot be wound up - This stands in contrast to s.28 of the Act
which empowers the CCI to divide enterprises abusing dominant
position including adjustment of contracts, formation of winding
up of enterprises among other things - Held: Parliament has
authored both the Act - There is no question of lack of legislative
competence - The words of s.28 of the Competition Act do not admit
of reading down the same - If s.28 of the Competition Act is evoked
and a direction is given to order division, it would be inconsistent
with the provisions of the Coal Mines (Nationalisation) Act - It is
made apparent by way of abundant caution in s.28(1), that all that
the CCI could order would be notwithstanding anything contained
in any other law for the time being in force - Parliament has
intended, in order to ensure the proper implementation of the Act,
confer power to order division of an enterprise enjoying dominant
power - This would include the appellants as well.
Competition Act, 2002: ss. 2(r), 2(s), 2(t), 3, 4, 19 - Anti
Competitive Agreements - Abuse of Dominant Position - Historical
Background of the Act - Scheme and Provisions of the Act -
Discussed.

## Text

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 [2023] 7 S.C.R. 827
827
COAL INDIA LIMITED AND ANR.
v.
COMPETITION COMMISSION OF INDIA AND ANR.
(Civil Appeal No.2845 of 2017)
JUNE 15, 2023
[K. M. JOSEPH, B. V. NAGARATHNA AND AHSANUDDIN
AMANULLAH, JJ.]
Competition Law: Competition Act, 2002 - ss. 2(h), 19(4)(g)
and 28 - "Enterprise" - Applicability of the Act - Competition
Appellate Tribunal affirmed the findings recorded by the Competition
Commission of India on various facets of abuse of dominant position
against the Coal India Limited and its subsidiary company - Whether
the Competition Act, 2002 applies to the appellants or not - Held:
The appellants are Government Companies - They were created to
take the place of the Central Government in the matter of supervising
control and managing the affairs of the mines - The "Sovereign
function" of the Government has been excluded from the ambit of
s.2(h) - Carrying on business in mining, cannot be described as a
sovereign function - Hence, the appellant is a person within the
meaning of s.2(h) , therefore comes under the preview of
"enterprise" - The appellants being State, have a duty to keep
uppermost, in their minds, the goal in Art.39(b) - There is nothing
in the definition which excludes a State monopoly which is even set
up to achieve the goals in Art.39(b) - When Parliament enacts laws,
it is deemed to be aware of all the existing laws - Parliament was
aware of the Nationalisation Act - Therefore the express reference
in s.19(4)(g) of the Act to monopolies created under Statutes as
also Government Companies and Public Sector Units for determining
existence of dominant position indicates the intention of Parliament
to bring State Monopolies, Government Companies and Public
Sector units within the purview of the Act - No reason to hold that
a State Monopoly being run through the medium of a Government
Company, even for attaining the goals in the Directive Principles,
will go outside the purview of the Act - As a matter of fact there may
be forums other than the CCI whereunder redress may be sought
against action of the appellants - But that by itself cannot result in
denial of access to a party complaining of contravention of a law
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which is otherwise applicable - The appellants cannot resist the
imposition of standards of fairness and the duty to avoid
discriminatory practices when a specialized forum has been created
by Parliament under the Act - No merit in the contention of the
appellants that the Act will not apply to the appellants for the reason
that the appellants are governed by the Nationalisation Act and
that Nationalisation Act cannot be reconciled with the Competition
Act - The Coal Mines (Nationalisation) Act, 1973 - ss. 5, 11, 28
and 32 - Constitution of India - Art. 39 (b).
Competition Act, 2002 - s.28 - The Coal Mines
(Nationalisation) Act, 1973 - s.32 - Conflict between s.28 of the
Competition Act, and s.32 of the Coal Mines (Nationalisation) Act
- Under s.32 of the Nationalisation Act, the mining companies
cannot be wound up - This stands in contrast to s.28 of the Act
which empowers the CCI to divide enterprises abusing dominant
position including adjustment of contracts, formation of winding
up of enterprises among other things - Held: Parliament has
authored both the Act - There is no question of lack of legislative
competence - The words of s.28 of the Competition Act do not admit
of reading down the same - If s.28 of the Competition Act is evoked
and a direction is given to order division, it would be inconsistent
with the provisions of the Coal Mines (Nationalisation) Act - It is
made apparent by way of abundant caution in s.28(1), that all that
the CCI could order would be notwithstanding anything contained
in any other law for the time being in force - Parliament has
intended, in order to ensure the proper implementation of the Act,
confer power to order division of an enterprise enjoying dominant
power - This would include the appellants as well.
Competition Act, 2002: ss. 2(r), 2(s), 2(t), 3, 4, 19 - Anti
Competitive Agreements - Abuse of Dominant Position - Historical
Background of the Act - Scheme and Provisions of the Act -
Discussed.
Competition Act, 2002: ss. 18, 26, 27, 33, 36 and 41 -
Competition Commission of India - Director General - Power and
Duties - Discussed.
The Coal Mines (Nationalisation) Act, 1973 - ss. 3, 4, 5 and
11 -Preamble and Object - Discussed.
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Word and Phrases: Constitution of India - Art.39 (b) -
"Common Good" - The expression 'common good' in Art.39(b) in a
Benthamite sense involves achieving the highest good of the
maximum number of people - The meaning of the words 'common
good' may depend upon the times, the felt necessities, the direction
that the Nation wishes to take in the future, the socio-economic
condition of the different classes, the legal and Fundamental Rights
and also the Directive Principles themselves.
Report/Recommendation - Competition policy - Raghavan
Committee Report - Discussed.
Posting the appeal for being dealt on merits, the Court
HELD:1. The Law-Giver has taken care to expressly
include even Departments of the Government separately within
the ambit of the word 'enterprise'. Things could not be more
clear. The only activity of the Government, which has been
excluded from the scope of Section 2(h) of the Competition Act
and therefore, the definition of the word 'enterprise' is any activity
relatable to the sovereign functions of the Government. Sovereign
functions would include, undoubtedly, all activities carried on by
the Departments of the Central Government, dealing with atomic
energy, currency, defense and space. The first appellant is not a
Department of the Government. It is a Government Company.
In fact, what is excluded from the definition of the expression
'enterprise', is a Government Department carrying on
Government functions. Carrying on business in mining, cannot,
by any stretch of imagination, be described as a sovereign function.
There is nothing in the definition which excludes a State monopoly
which is even set up to achieve the goals in Article 39(b) of the
Constitution. [Paras 80 and 81][868-G-H; 869-A-D]
2. The CCI is bound to take into consideration the factors
which have been indicated. Section 19(4) in fact, empowers the
CCI to have regard to "all" or "any" of the factors to arrive at
the finding that an enterprise enjoys a dominant position or not.
Does not this mean that even a single factor being "any" factor
may form the foundation to find whether an enterprise enjoys
dominance? In a given case the answer would be in the affirmative.
Closer home in the facts, this Court finds that Section 19(4)(g)
COAL INDIA LIMITED v. COMPETITION COMMISSION
OF INDIA
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declares that "monopoly" or "dominant position", whether
acquired as a result of the Statute or by virtue of being a
Government Company or a Public Sector Undertaking or
otherwise, is to be a relevant factor. This is a clear indication that
far from excluding governmental bodies like a government
company, a public sector undertaking or a body under a Statute
from the purview of the Act, the lawgiver has evinced its intention
to include government companies, public sector companies and
bodies acquired under a Statute within the ambit of the Act. Now,
this Court proceeds on the basis that the appellant is a monopoly.
Further that it is a government company within the meaning of
Section 5 of the Nationalisation Act. The interplay of Sections 3,
5 and 11 of the Nationalisation Act has the said inevitable effect.
A monopoly position under Section 19(4)(g) is treated essentially
as being in the league of a dominant position. [Para 86][870-F-H;
871-A-B]
3. Dealing with what would indeed constitute abuse of
dominant position as declared imperatively in Section 4(2), if one
takes Section 4(2)(a), it forbids imposing of unfair or
discriminatory condition in purchase or sale of goods and services
either directly or indirectly. It further likewise forbids an
imposition of an unfair or discriminatory price in purchase or sale
including a predatory price of goods or service. The explanation
indicates that discriminatory conditions or prices, which may be
adopted to meet competition, is not within the scope of the
mischief. Next, under Section 4(2)(b), the Law-Giver has
proclaimed that there will be abuse of a dominant position by an
enterprise or group if it limits or restricts production of goods or
provision of services or market therefor. [Para 92][873-G-H]
4. Parliament was aware of the Nationalisation Act. One
must also take into consideration the fact that coal stood removed
from the list of essential commodities under the Essential
Commodities Act in February, 2007. The express reference in
Section 19(4)(g) of the Act to monopolies created under Statutes
as also Government Companies and Public Sector Units for
determining existence of dominant position, undoubtedly,
indicates the intention of Parliament to bring State Monopolies,
Government Companies and Public Sector units within the
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purview of the Act. The Raghavan Committee Report provides
an invaluable input. [Para 97][877-C-D]
5. It is true that the actions of the appellants can be
challenged in proceedings in judicial review as contended by the
appellants. Equally, the appellants are justified in pointing out as
a matter of fact that there may be forums other than the CCI
such as the Controller of Coal whereunder redress may be sought
against action of the appellants. But that by itself, cannot result
in denial of access to a party complaining of contravention of a
law which is otherwise applicable. It must also be remembered
that action can also be taken by the CCI suo motu. Such is the
width of the power vouchsafed for the authority under the Act.
[Para 119][883-F-H]
6. It is clarified that it will be open to the appellant as the
State monopoly to take up all contentions to demonstrate that
there is no abuse of the dominant position. Be it differential pricing
or a decision to limit or restrict production, if it is part of national
policy or based on Presidential Directives and the appellant raises
such a contention after bonafide following the Directives or policy
themselves, it may be a matter, which the CCI would have to
consider in deciding whether there is abuse of dominant position.
If the appellants answer the description of State in Article 36,
then there is a continuing duty to pay obeisance to the Directive
Principles. The Act cannot result in transforming the appellants
into mere profit-making engines or require of them to be oblivious
to their obligations under the Constitution. But that cannot equally
mean that they can act with caprice, or unfairly or treat otherwise
similarly situated persons or things with discrimination. The
matter must be considered on its own merits both in the appeal
as in all the transferred cases. In judicial review the appellants
would be held to the standard of fairness as also the duty not to
discriminate. The appellants cannot resist the imposition of
standards of fairness and the duty to avoid discriminatory practices
when a specialized forum has been created by Parliament under
the Act where also apart from the CCI being an expert body, it
can seek and receive valuable inputs from experts and what is
more, the matter is preceded by the report of Director General
of Investigation. [Para 120][884-A-E]
COAL INDIA LIMITED v. COMPETITION COMMISSION
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7. Section 54 of the 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. [Para
124][886-C-D]
8. There is no merit in the contention of the appellants that
the Act will not apply to the appellants for the reason that the
appellants are governed by the Nationalisation Act and that
Nationalisation Act cannot be reconciled with the Act. This is
subject to the appellants having all the rights to defend their
actions under the law. [Para 125][886-D-E]
Tara Prasad Singh and Others v. Union of India and
Others 1980 (4) SCC 179 : [1980] 3 SCR 1042 and
State of Karnataka and Another v. Shri Ranganatha
Reddy and Another (1977) 4 SCC 471 : [1978] 1 SCR
641- relied on.
In Re Gujarat Assembly Election matter (2002) 8 SCC
237 : [2002] 3 Suppl. SCR 366; Election Commission
of India v. Ashok Kumar and Others (2000) 8 SCC 216
: [2000] 3 Suppl. SCR 34; Ashoka Smokeless Coal India
(P) Ltd. and Others v. Union of India and Others (2007)
2 SCC 640 : [2006] Suppl. SCR 954; Sanjeev Coke
Mfg. Co. v. Bharat Coking Coal Ltd. and Another (1983)
1 SCC 147 : [1983] 1 SCR 1000; Kasturi Lal Lakshmi
Reddy and Others v. State of Jammu and Kashmir and
Another (1980) 4 SCC 1 : [1980] 3 SCR 1338;
Employees Provident Fund Commissioner v. Official
Liquidator of Esskay Pharmaceuticals Limited (2011)
10 SCC 727 : [2011] 15 SCR 336; Sanwarmal Kejriwal
v. Vishwa Coop. Housing Society Ltd. and Others (1990)
2 SCC 288 : [1990] 1 SCR 862; New Delhi Municipal
Council v. State of Punjab & others (1997) 7 SCC 339
: [1996] 10 Suppl. SCR 472; Waman Rao and Others
v. Union of India and Others (1981) 2 SCC 362 : [1981]
2 SCR 1; I.R Coelho (dead) by LRs v. State of T.N. (2007)
2 SCC 1 : [2007] 1 SCR 706; Khoday Distilleries Ltd.
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v. State of Karnataka & others (1995) 1 SCC 574 :
[1994] 4 Suppl. SCR 477; Parag Ice & Oil Mills &
another v. Union of India (1978) 3 SCC 459 : [1978] 3
SCR 293; Ajaib Singh v. Sirhind Coop. Marketing-cumProcessing Service Society Ltd. and another (1999) 6
SCC 82 : [1999] 2 SCR 505; Bangalore Water Supply
& Sewerage Board v. A. Rajappa (1978) 2 SCC 213 :
[1978] 3 SCR 207; N. Nagendra Rao & Co. v. State of
A.P. (1994) 6 SCC 205 : [1994] 3 Suppl. SCR 144;
Chairman, Railway Board and others v. Chandrima Das
(Mrs.) and others (2000) 2 SCC 465 : [2000] 1 SCR
480; Agricultural Produce Market Committee v. Ashok
Harikuni and another (2000) 8 SCC 61 : [2000] 3
Suppl. SCR 379; Hasan Murtza v. State of Haryana
(2002) 3 SCC 1; Sanwarmal Kejriwal v. Vishwa Coop.
Housing Society Ltd. and Others (1990) 2 SCC 288 :
[1990] 1 SCR 862; State of Tamil Nadu and Others v.
L. Abu Kavur Bai and Others (1984) 1 SCC 515 : [1984]
1 SCR 725 and Samatha v. State of A.P. and others
(1997) 8 SCC 191 : [1997] 2 Suppl. SCR 305 - referred
to.
Case Law Reference
[2006] Suppl. SCR 954
referred to
Para 7
[1983] 1 SCR 1000
referred to
Para 7
[2002] 3 Suppl. SCR 366
referred to
Para 8
[2000] 3 Suppl. SCR 34
referred to
Para 8
[1980] 3 SCR 1338
referred to
Para 8
[2011] 15 SCR 336
referred to
Para 13
[1990] 1 SCR 862
referred to
Para 13
[1996] 10 Suppl. SCR 472
referred to
Para 16
[1981] 2 SCR 1
referred to
Para 19
[2007] 1 SCR 706
referred to
Para 19
[1994] 4 Suppl. SCR 477
referred to
Para 19
COAL INDIA LIMITED v. COMPETITION COMMISSION
OF INDIA
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[2023] 7 S.C.R.
[1978] 3 SCR 293
referred to
Para 19
[1999] 2 SCR 505
referred to
Para 20
[1978] 3 SCR 207
referred to
Para 22
[1994] 3 Suppl. SCR 144
referred to
Para 22
[2000] 1 SCR 480
referred to
Para 22
[2000]3 Suppl. SCR 379
referred to
Para 22
(2002) 3 SCC 1
referred to
Para 23
[1984] 1 SCR 725
referred to
Para 113
[1980] 3 SCR 1042
relied on
Para 113
[1978] 1 SCR 641
relied on
Para 115
[1997] 2 Suppl. SCR 305
referred to
Para 116
CIVIL APPELLATE JURISDICTION : Civil Appeal No.2845
Of 2017.
From the Judgment and Order dated 09.12.2016 of the Competition
Appellate Tribunal at New Delhi in Appeal No.80 of 2014.
With
Contempt Petition (C) No.896 of 2018 In C.A. No.2845 Of 2017
And T.C. (C) Nos.19, 20, 16-18, 21 Of 2023
N. Venkataraman, A.S.G., K K Venugopal, Maninder Singh, Ranjit
Kumar, Birendra Saraf, Sr. Advs., Ms. Sheena Taqui, Ms. Akansha Saini,
Mrs. Bina Gupta, Harman Sandhu, Ms. Shally Bhasin, Yaman Verma,
Chaitanya Safaya, Prateek Gupta, Ms. Raveena Lalit, Abhishek Hazari,
Ms. Sanjana L.B., S. S. Shroff, Ajay Nandalike, Achyuth Ajithkumar,
Talha Abdul Rahman, Rishad Ahmed Chowdhury, Ms. Anuja Mishra, V.
Chandrashekara Bharathi, Ms. Shruti Shiv Kumar, Ms. Shruthi Shiv
Kumar, Ms. Amritha Chandramouli, Rahul Vijayakumar, Sakya Singha
Chaudhuri, Ms. Radhika Gupta, Amit Gautam, Matrugupta Mishra, Ms.
Ishita Thakur, Ms. Ritika Singhal, Ms. Divya Roy, Prabhat Kaushik,
M.A. Venkata Subramanian, Nagarkatti Kartik Uday, M/s. D.S.K. Legal,
G. Saikumar, Samir Malik, Ms. Nikita Choukse, Akash Lamba, Advs.
for the appearing parties.
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The Judgment of the Court was delivered by
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 CompetitionCommission 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
appellantcannot 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 pendingbefore the Commission/Tribunal
wherein a similar question would directly arise,transfer petitionswere
filed to call for such proceedings to this Court. It is hence, that the
COAL INDIA LIMITED v. COMPETITION COMMISSION
OF INDIA
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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 of the category of ordinary monopoly; this is for the reason
that the State has been charged with the duty to bear in mind the principles
of 'common good' being secured by the 'distribution of scarce resources';
coal, with which mineral we are concerned with, is, indeed, a mineral of
the highest importance in the economic life of the nation; its equitable
distribution in the manner so as to secure the common good which is the
directive contained in Article 39(b) led to the creation of a statutorily
mandated monopoly; when such is the thrust of the Nationalisation Act,
then, it is wholly inconceivable that the Act would still be applicable to
the appellants. It is pointed out, with reference to the Nationalisation
Act, that the superintendence of the mines vests with the Central
Government or with a corporate body or the company, which it may
create. The first appellant is the holding company and there are subsidiary
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companies under it. This is contemplated under the Nationalisation Act.
The mantle of operating the monopoly therefore, fell on the appellants.
The appellants are State within the meaning of Article 12 of the
Constitution. Theycontinue to be charged with the duty to be guided by
the Directive Principles contained in Article 39(b). Learned Senior
Counsel would point out that the Act does not deal with a company like
the appellant. In other words, while there may be indication in Section
19(4)(g) of the Act that the fact that a body is a monopoly under the
statute may indicate the presence of dominant position, there is a subtle
distinction. Unlike an ordinary monopoly, a corporate body like the
appellant represents a case of a monopoly with the added and unique
feature that it is an 'Article 39(b)' monopoly.Such a monopoly is outside
the purview of the Act. Reliance is placed on decisions of this Court to
emphasize the point that the Nationalization Act was enacted with a
view to give effect to the provision of Article 39(b) (See Ashoka
Smokeless Coal India (P) Ltd. and Others v. Union of India and
Others1 following Sanjeev Coke Mfg. Co. v. Bharat Coking Coal
Ltd. and Another2).
8. Learned Senior Counsel drew our attention to Sections 3 and
11 of the Nationalisation Act to contend that general superintendence,
direction, control and management of the affairs and business of a coal
mine,inter alia, as contained in Nationalisation Act, must be given the
widest interpretation. In this regard, reliance is placed by appellants on
Judgments interpreting similar words in Article 324 of the Constitution
(See In Re Gujarat Assembly Election matter3and Election
Commission of India v. Ashok Kumar and Others4). Our attention is
drawn also to Article 31C of the Constitution for the proposition that a
law which gives effect to Article 39(b) or 39(c) cannot be impugned on
the ground that it is inconsistent with Articles 14 and 19 of the Constitution.
Such a law is to be treated as reasonable. On the other hand, if an action
is inconsistent or runs counter to the Directive Principles, it may,prima
facie, be brushed with the tarnish of it being unreasonable.(See Kasturi
Lal Lakshmi Reddy and Others v. State of Jammu and Kashmir and
Another5).It is further pointed out by the appellants that on a conspectus
1 (2007) 2 SCC 640
2 (1983) 1 SCC 147
3 (2002) 8 SCC 237
4 (2000) 8 SCC 216
5 (1980) 4 SCC 1
COAL INDIA LIMITED v. COMPETITION COMMISSION
OF INDIA [K. M. JOSEPH, J.]
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of the Nationalisation Act and on placing it side-by-side with the provisions
of the Act, the divergence and the consequent anomalous results of
bringing the appellant under the Act, would clearly emerge. Our attention
is drawn to the long title of the Act. It is pointed out that the object of the
Act is to ensure freedom of trade. This is contrasted with a long title of
the Nationalisation Act which indicates that the Law-Giver intended to
vest ownership and control of the coal mines in the State so that the said
resource is so distributed as to best serve the common good. It is
contended that CIL does not operate in the commercial sphere. Great
emphasis is laid on the fact that out of 462 mines operated by CIL, 345
have suffered losses amounting to Rs.9,878 Crores in the year 20122013. As part of its constitutional responsibility, it engages 51 per cent of
its manpower which is about 1,80,726 persons in such mines. Despite
the fact that these underground mines only contribute 9 per cent to its
total coal production, it is emphasized that the appellants are not free as
a private player to lay off its employees.
9. Section 4(2)(a) of the Act prohibits unfair and discriminatory
price fixation or conditions for the sale or purchase of goods or services.
It is submitted that the Court may bear in mind that price fixation of
coal,as far as the appellants and the coal companies under it is concerned,
it is based on the Constitutional mandate under Article 39(b) which may
be inconsistent with market principles.
10. Under the Nationalisation Act as much as under Article 39(b),
the appellants may have to follow differential pricing mechanism to
encourage captive coal production. Applying the Act would adversely
affect pursing such a differential pricing mechanism. This again would
defeat the object underlying the Nationalization Act.
11. Next, the point of contrast consists of Section 4(2)(b) declaring
it to be an abuse of the dominant position where an enterprise limits or
restricts production of goods, provision of services or market. The impact
ofthe provisions would have on policy decisions taken by the Ministry of
Coal to encourage certain industries through a coal supply and pricing
mechanism is emphasized. As an illustration, it is pointed out that the
Ministry of Coal takes action to encourage growth in backward areas
by allocating more coal supply. If such policy or actions thereunder are
to be tested on the anvil of Section 4(2)(b) of the Act, it may not pass
muster. This again would undermine the object of the Nationalisation
Act and what is more, the wholesome principle enshrined in Article 39(b).
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Section 3 of the Nationalisation Act, it is next pointed out, vests the
ownership of the coal mines in the Central Government. However, under
Section 19 the CCI is obliged to take into consideration the monopoly
position whether controlled by the Government or not, as a factor to
determine the dominant position.
12. Next, it is contended that Section 27(a) of the Act, clothes the
CCI with the power to order the cessation of abuse. This would be
inconsistent with the appellants pursuing welfare policy in relation to
pricing and distribution of coal.Under Section 32 of the Nationalisation
Act, the mining companies cannot be wound up. This stands in contrast
to Section 28 of the Act which empowers the CCI to divide enterprises
abusing dominant position including adjustment of contracts, formation
of winding up of enterprises among other things.
13. Next, it is pointed out that Section 28 of the Nationalisation
Act declares that the provisions of the said Act would prevail
notwithstanding anything inconsistent therewith contained in any other
law in force, inter alia. (Reliance is placed on the Judgments of this
Court in Employees Provident Fund Commissioner v. Official
Liquidatorof Esskay Pharmaceuticals Limited6 as also Sanwarmal
Kejriwal v. Vishwa Coop. Housing Society Ltd. and Others7). Section
60 of the Act, which declares that the provisions of the Act shall have
effect notwithstanding anything inconsistent therewith contained in any
other law for the time being in force, may not assist the second respondent
or the CCI in the stand that a Nationalisation Act must make way for the
operation of the Act on its own terms.It is contended that the appellants
even if they constituted a monopoly, they cannot act independently of
Presidential Directives, which are binding on them. The policy framed
by the Central Government must be mandatorily followed. This brings
about an inevitable clash between the actions of the appellant with the
requirements which are stipulated in the Act. The appellants are not to
be driven by a profit motive. The appellants are the extended arms of
the welfare State. The activities of the appellantsare not any ordinary
commercial activities. They must not be so perceived when a complaint
of abuse of dominant position is considered under Section 4 of the Act.
The mines in question were cost plus mines operated by the appellants
to ensure more availability of coal. They may lose their viability if they
are operated at notified prices.
6 (2011) 10 SCC 727
7 (1990) 2 SCC 288
COAL INDIA LIMITED v. COMPETITION COMMISSION
OF INDIA [K. M. JOSEPH, J.]
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14. Shri K. K. Venugopal, learned Senior Counsel, would submit
that the actions of the appellants are susceptible to judicial review in
proceedings under Article 226 or even Article 32. It is, infact, pointed
out there are other forums such as the Coal Controller wherein complaints
of the nature, viz., quality of coal as for illustration could be ventilated.
Subjecting the appellants to the provisions of the Act is wholly unjustified.
SUBMISSIONS OF THE RESPONDENTS
15. Per contra, the learned Additional Solicitor General on behalf
of the CCI,stoutly contended that the Act, indeed, applies inspite of the
non-obstante clause contained in Section 28 of the Nationalisation Act.
He would point out that the object of the Act is to bring out a paradigm
shift in the economic policy of the nation. There is no conflict between
the Nationalisation Act and the Act inkeeping with the changing times
and the imperative need to ensure the best economic interest of the
Nation. The Act was born after great deal of contemplation. A Committee
known as the Raghavan Committee, a high-level Committee, went into
the issue relating to State monopoly as well. A perusal of the said Report
would indicate that it was realized that the operation of the State
monopolies did not conduce to secure the best interest 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 would point out
that the Court should keep in mind that an examination of the merits of
the case would clearly indicate that the attempt of the appellants is to
wriggle out of the situation when its actions have been found to be violative
of the Act and the fine questions which have been raised do not actually
even arise on the defense actually set up before the CCI. He poses the
question as to whether the appellants could justify the supply of
substandard goods and justify it on the high pedestal of a Constitutional
goal being imperiled if the same is questioned under the Act.
16. He would point out that there is no challenge mounted to the
vires of the Act. There is no scope for reading down the law in the
absence of the challenge. He also relied upon the Judgment of this Court
in the New Delhi Municipal Council v. State of Punjab &others8 to
contend that when the instrumentality of the State proceeds to enter the
8 (1997) 7 SCC 339
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commercial field and is carrying on a business activity, it cannot claim
immunity from the laws of the land. Though the said case was delivered
in the context of Article 286, he would submit that the principle is apposite.
17. It is submitted that the Act provides for a detailed procedure
where information is received or it acts suo motu.Invariably,it calls for a
report by the investigation wing. The Constitution of the CCI is sufficient
safeguard as it is composed of people who are experts in various branches
of knowledge. Complaints such as abuse of dominant position are gone
into at great length, full opportunity is given to the persons concerned to
place their objections. It is only when a clear case of abuse of dominant
position, inter alia, is found established, that the CCI acts. He would
contend that the appellant is a government company within the meaning
of Section 617 of the erstwhile Companies Act. He would point out that
it is not the law that such an entity can claim that its acts are placed
beyond the pale of scrutiny by reason of the fact that the law under
which they operate has been placed in the Ninth Schedule. He would
point out that there are three filters provided in the Act insofar as
information relating to abuse of dominant position is concerned. In the
first place, an entity must answer the description of an enterprise as
contained in Section 2(h) of the Act. Once the said hurdle is crossed, the
CCI must ascertain whether the enterprise occupies a dominant position.
This is a matter which is covered in Section 19(4) of the Act. There are
several factors which are indicated. The rear is brought up by the
residuary clause, viz., Section 19(4)(m) which provides for any other
factor which the Commission may consider relevant for the enquiry.
Thisis the second filter. In other words, it is not the abuse by any entity
but it must be abuse by an enterprise. Next, the enterprise must enjoy a
dominant position. As to what is a dominant position, has been detailed in
the second explanation to Section 4(2) of the Act. Thus, the Commission
is governed by pre-determined and objective criteria to arrive at a finding
as to whether an enterprise occupies the dominant position both with
reference to the explanation provided in Section 4(2) as also the factors
which have been elaborately laid down in Section 19(4). It is after the
second filter is passed, that CCI must pass on to actually find whether
there is abuse of its dominant position. Section 4(2) appears to provide
for what shall be abuse of dominant position. This being the scheme of
the Act, he contends that there may be no merit in the attempt of the
appellants to extricate themselves from a well thought out law provided
by the same Law-Giver.
COAL INDIA LIMITED v. COMPETITION COMMISSION
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18. He would point out that initially coal was an essential
commodity under the Essential Commodities Act, 1955. When this Court
delivered the Judgment relied upon by the appellants as well, viz., Ashoka
Smokeless Coal India (P) Ltd. and Others v. Union of India and
Others9, coal was an essential commodity. The Court proceeded on the
said basis as well. However, in February, 2007, coal ceased to be an
essential commodity. Next, it is pointed out that the Nationalisation Act
itself, which is projected as the sheet anchor of the appellants entire
case was itself taken out from the Ninth Schedule in the year 2017. The
Nationalisation Act itself stands repealed. Therefore, he would point out
that the Court is being invited to pronounce on the basis of the 'hallowed'
position that the Nationalisation Act occupied,which itself is no longer
the case. (We must notice here that even in his opening submissions Shri
K. K. Venugopal, learned Senior Counsel, pointed out these developments.
However, it is his contention that the contracts with which this Court is
concerned all arose during the period of time when the Nationalisation
Act continued to grace the Ninth Schedule.)
19. Shri N. Venkataraman would point out again that the Court
may not lose sight of the fact that while thefirst appellant was fully
owned bythe Central Government in terms of its shareholding, after 2010,
following disinvestment, the Government shareholding has declined to
nearly 67 per cent. The balance of the shareholding is in private hands.
Reliance is placed on the Judgment of this Court in Waman Rao and
Others v. Union of India and Others10. Considerable support is sought
to be drawn from the I.R Coelho (dead) by LRs v. State of T.N.11 for
the proposition that the immunity,laws enjoyed on their insertion in the
Ninth Schedule and the laws, which may be placedin the Ninth Schedule,
stands considerably diluted. It is pointed out further with reference to
Judgment in Khoday Distilleries Ltd. v. State of Karnataka &others12
(paragraph-25) that Fundamental Rights are not absolute and they are
'qualified Fundamental Rights'. Placing reliance on the Judgment in
Parag Ice& Oil Mills &anotherv. Union of India13,it is pointed out
that unlike the law which may be protected under Article 31C, an order
passed under the law may not be entitled to the same immunity. He
9 (2007) 2 SCC 640
10 (1981) 2 SCC 362
11 (2007) 2 SCC 1
12 (1995) 1 SCC 574
13 (1978) 3 SCC 459
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would caution the Court against adjudicating matters which may at best
arise in the abstract. Questions must be answered when they arise on
facts.
20. He would contend that the Court may place an interpretation
as would advance the object of the law, which in this case, is to bring
about a transformation in the economy for the greater good of the
common man (See in this regard Ajaib Singh v. Sirhind Coop.
Marketing-cum-Processing Service Society Ltd. and another14).
21. Shri Ranjit Kumar, learned Senior Counsel for the second
respondent, would point out that concept of common good so heavily
relied upon by the appellant, found in Article 39(b), must be interpreted
as meaning the interest of the common man or the citizens. 80 per cent
of the coal is supplied by CIL to power companies. Second respondent
is a power company. The second respondent it is pointed out in fact
supplies power generated using coal to distribution companies
(represented, in fact, before us incidentally by the Maharashtra State
Agency), who, in turn, would finally supply power to the end consumer.
The continual supply of coal and prompt performance of the contracts
and the reasonableness of the rates and quality of coal, in other words,
according to the second respondent, are related to the very common
good, which is emphasized by the appellants. He would further point out
that the Nationalisation Act was an expropriatory legislation.
22. Next, he would point out that the predecessor enactment, viz.,
the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter
referred to as MRTP Act),which stood repealed by the Act, may be
borne in mind. In the said Act, Section 3 clearly declared that, unless it
was otherwise notified, the MRTP Act would not apply to Government
Agencies, as indicated therein. There is no such provision in the Act. He
drew our attention to Section 21A of the MRTP Act. Drawing inspiration
from the preamble to the Act, he emphasizes that the center stage of
attention in the Act is occupied by the consumer. Common good in other
words, must be associated with the good of the consumer.