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 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.
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) 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 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]
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. 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.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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