CIL, being a government company, will answer the definition of “person” and hence would come within the ambit of the definition of “enterprise” under Section 2(h) of the Competition Act, being a person engaged in activity relating to production, storage, supply, distribution and control of goods. The bench also noted that the Act separately and specifically includes a “government department” also within the definition of enterprise.
The only activity of the Government, which has been excluded from the scope of Section 2(h) and therefore, the definition of the word ‘enterprise’ is any activity relatable to the sovereign functions of the Government. CIL conceded that it is not performing any sovereign functions.
“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”,
“The role which was envisaged for the public sector company could not permit them to outlive their utility or abuse their unique position. Disinvestment done in a proper manner was perceived as a solution. However, sans disinvestment, State Monopolies, Public Sector Companies and Government Companies were expected to imbibe the new economic philosophy. The novel idea, which permeates the Act, would stand frustrated, in fact, if State monopolies, Government Companies and Public Sector Units are left free to contravene the Act”,
“Can it be said that free competition as envisaged under the Act which involves avoidance of anti-competitive agreements, abuse of dominant position and regulation of combinations are against the common good? As to how common good is best served is best understood by the representatives of the people in the democratic form of Government. We must bear in mind the wholesome principle that when Parliament enacts laws, it is deemed to be aware of all the existing laws.Properly construed and operated fairly, the ‘Act’ would, in other words, harmonise with common good being its goal as well,”
1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2845 of 2017
COAL INDIA LIMITED AND ANR. …APPELLANT(S)
VERSUS
COMPETITION COMMISSION OF INDIA AND ANR…RESPONDENT(S)
WITH
CONTEMPT PETITION (C) No.896/2018 in C.A. No.2845/2017
T.C.(C) No.19/2023
T.C.(C) No.20/2023
T.C.(C) Nos.16-18/2023
T.C.(C) No.21/2023
J U D G M E N T
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
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
3
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
4
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
5
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 companies under it.
6
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. They
continue 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
1 (2007) 2 SCC 640
7
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
matter3 and 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
2 (1983) 1 SCC 147
3 (2002) 8 SCC 237
4 (2000) 8 SCC 216
8
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 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 2012-2013. As part of its constitutional
responsibility, it engages 51 per cent of its manpower
5 (1980) 4 SCC 1
9
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
10
position where an enterprise limits or restricts
production of goods, provision of services or market.
The impact of the 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).
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
11
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 Liquidator of 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
6 (2011) 10 SCC 727
7 (1990) 2 SCC 288
12
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 appellants are 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.
14. Shri K. K. Venugopal, learned Senior Counsel, would
submit that the actions of the appellants are
13
susceptible to judicial review in proceedings under
Article 226 or even Article 32. It is, in fact, 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 in spite 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 in keeping 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
14
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.
15
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 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
8 (1997) 7 SCC 339
16
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. This
is 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
17
detailed in the second explanation to Section 4(2) of
the Act. Thus, the Commission is governed by predetermined 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.
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
18
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 the
9 (2007) 2 SCC 640
19
first appellant was fully owned by the 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 placed in 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 &
another v. Union of India13, it is pointed out that
unlike the law which may be protected under Article
10 (1981) 2 SCC 362
11 (2007) 2 SCC 1
12 (1995) 1 SCC 574
13 (1978) 3 SCC 459
20
31C, an order passed under the law may not be entitled
to the same immunity. He 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
14 (1999) 6 SCC 82
21
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,
22
must be associated with the good of the consumer. He
drew our attention to Section 54 of the Act which
provides for power to exempt. He pointed out two
notifications granting exemptions which were in favour
of rural regional banks. If the appellants
legitimately wished to be taken out of the purview of
the Act, Section 54 holds the key and there is a lawful
way. As long as there is no exemption, the Act applies
to the appellants. He would further contest the case
of the appellants that the appellants were running at
a loss as a result of a number of mines running at a
loss. He would purport to provide figures to
demonstrate that the appellants have been making huge
sums by way of profits and what is more, making it over
to the Government of India by way of dividend. This is
besides highlighting the dilution of the shareholding
of the Government of India. He would point out that
there can be no claim by the appellants that it is
carrying on of any sovereign functions. In this regard,
he drew our attention to the following decisions.
Bangalore Water Supply & Sewerage Board v. A. Rajappa15
15 (1978) 2 SCC 213
23
(See paragraphs-163 and 168), N. Nagendra Rao & Co. v.
State of A.P.16 (See paragraphs-9, 13, 19 and 25),
Chairman, Railway Board and others v. Chandrima Das
(Mrs.) and others17 (See paragraphs-38, 41 and 42) and
Agricultural Produce Market Committee v. Ashok Harikuni
and another18 (See paragraphs-21 and 32).
23. Shri M. Mishra, learned Counsel appearing on behalf
of one of the parties in the Transferred Cases would
support the respondents in the Appeal. He would point
out that in fact, he appears for the Maharashtra Power
Generation company. He would submit that the Court may
bear in mind that it is not as if the complaint against
the appellants is being voiced only by private players
like the second respondent in the Appeal. The acts and
omissions of the appellants is being objected to even
by public sector units such as his client. He would
point out that under the Electricity Act, 2003, the
price of power is regulated by the Commission under the
said Act. The return on investment is highly regulated.
16 (1994)6 SCC 205
17 (2000) 2 SCC 465
18 (2000) 8 SCC 61
24
Coal constitutes 60-70 per cent of the costs. The price
of coal has a bearing on both the Consumer Price Index
as also the Wholesale Price Index. He would submit
that the report of the Director General under the Act
brings out the facts. Regarding the contention of the
appellants that Writ Courts can go into the question,
it is pointed out that the cases may involve facts,
which are best dealt with by a Body like the CCI. He
drew our attention to the Judgment of this Court in
Hasan Murtza v. State of Haryana19 and also Employees
Provident Fund Commissioner v. Official Liquidator20.
Similar contention in support of the CCI and the second
respondent has been voiced by the other respondents in
the Transferred Cases.
24. In response to the submissions, Shri K.K Venugopal
would point out that it is not the case of the
appellants that the appellant is immune from all laws.
He would further point out that the deletion of the
Nationalisation Act from the Ninth Schedule may not
affect his contentions as the contracts in question
19 (2002) 3 SCC 1
20 (2011) 10 SCC 727
25
relate to the period when the Nationalisation Act was
very much in the 9th Schedule. He would submit that as
held in Ashoka Smokeless Coal India (P) Ltd. and Others
v. Union of India and Others21, it is not as if the
actions of the appellants are immune from judicial
review under Article 14. He would reiterate that an
affected party could seek redress in other forums. He
would emphasize again that the Act and even the Raghavan
Committee Report does not refer to the species of public
sector company which are geared to achieve the common
good under Article 39(b) and whose operation was
immunized from challenge by their insertion in the 9th
Schedule at the relevant point of time. The words in
Article 39(b) “so distributed” is a continuing command
to the State even after the Nationalisation Act was
passed. This is by way of countering the argument that
with the Nationalisation Act all was done and it was a
one-time affair. In other words, the command of Article
39(b) is that the State shall bear in mind the common
good and, therefore, coal even if it is taken out of
the Essential Commodities Act, remains a material
21 (2007) 2 SCC 640
26
resource of the country, which must be distributed to
achieve common good. He reiterates his contention in
this regard. He drew our attention to the distinction
between an ordinary monopoly and a State Monopoly,
which is covered by Article 39(b). They are not birds
of the same feather, it is pointed out. In fact, Shri
Yaman Verma, learned Counsel ably supplemented by
pointing to the constraints under which the appellants
are bound to operate. He points out to the new coal
policy and the Presidential Directives. He would then
point out that even if the Act were found to be
applicable, the Court may clarify that the appellants
could claim justification of their actions by relying
on criteria, which they are bound to follow. We must,
here at this juncture, record that when we queried Shri
K. K. Venugopal, learned Senior Counsel, as to whether
he was claiming that the appellants were carrying on
activities, which can be described as sovereign
functions, the answer was clear and forthright, namely,
that he was not having such a case.
27
25. When the aspect about the Presidential Directives
and the policy of the Government was pointed out to the
learned Additional Solicitor General, N. Venkataraman,
he would ask the question as to what is it that prevents
such a contention being raised is not pointed out. The
case must be decided on the basis of the actual
contentions raised and the relevant facts. He would
exhort the Court that bearing in mind the paramount
need to allow the Act to succeed in its operation, the
Court may not allow the appellants to wriggle out of
the well thought out provisions of the Act which law
will subserve the highest public interest. He would
submit that if a defense is set up that bonafide
adherence to Presidential Directives is being made
under the Act, it would be a matter which may have to
engage the CCI.
ANALYSIS
26. As we have noticed the question, we are called upon
to decide is whether the Act applies to the appellants
or not. It is necessary that we tread carefully so
28
that we skirt an incursion into the merits, which can
be undertaken only when the Appeal is heard on merits.
27. Before we pass on to the Act, it may be necessary
to look at the law, which it repealed. The MRTP Act
was enacted in the year 1969. It was intended to deal
with monopolistic and restrictive trade practices as
the very long title suggests. It held sway till the
Act repealed it in the year 2002. However, the Act
itself was actually brought into force in the year 2009.
What is relevant is to notice some of the provisions of
the MRTP Act.
28. Section 2(d) of the Act, as substituted by Act 30
of 1982, provided for definition of the words ‘dominant
undertaking’. The definition itself appears to be
fairly convoluted. The word ‘goods’ was, indeed,
defined as goods as defined in the Sale of Goods Act,
1930, and pertinently, it included products mined in
India, inter alia. The MRTP Act went on to deal with
concepts like associated persons, interconnected
undertakings and finally, the word ‘undertaking’. Sans
the three explanations, the word ‘undertaking’ was
contained in Section 2(v) and it read:
29
“2(v) “undertaking” means an enterprise which
is, or has been, or is proposed to be, engaged
in the production, storage, supply,
distribution, acquisition or control of
articles or goods, or the provisions of
services, of any kind, either directly or
through one or more of its units or divisions,
whether such unit or division is located at the
same place where the undertaking is located or
at a different place or at different places.
Explanation I.—In this clause,—
(a) “article” includes a new
article and “service” includes a new service;
(b) “unit” or “division”, in relation to an
undertaking includes,—
(i) a plant or factory established for the
production, storage, supply, distribution,
acquisition or control of any article or goods;
(ii) any branch or office established for the
provision of any service.
Explanation II.—For the purpose of this clause,
a body corporate, which is, or has been,
engaged only in the business of acquiring,
holding, underwriting or dealing with shares,
debentures or other securities of any other
body corporate shall be deemed to be an
undertaking.
Explanation III.—For the removal of doubts, it
is hereby declared that an investment company
shall be deemed, for the purposes of this Act,
to be an undertaking;”
30
The MRTP Act also provided for definition of the
words, monopolistic trade practice as also, restrictive
trade practices.
29. Section 3 of the MRTP Act, read as follows:
“3. Act not to apply in certain cases.—Unless
the Central Government, by notification,
otherwise directs, this Act shall not apply to—
(a) any undertaking owned or controlled by a
Government company,
(b) any undertaking owned or controlled by a
Government,
(c) any undertaking owned or controlled by a
corporation (not being a company) established
by or under any Central, Provincial or State
Act,
(d) any trade union or other association of
workmen or employees formed for their own
reasonable protection as such workmen or
employees,
(e) any undertaking engaged in an industry, the
management of which has been taken over by any
person or body of persons in pursuance of any
authorisation made by the Central Government
under any law for the time being in force,
(f) any undertaking owned by a co-operative
society formed and registered under any
Central, Provincial or State Act relating to
co-operative societies,
(g) any financial institution.
31
Explanation.—In determining, for the purpose
of clause (c), whether or not any undertaking
is owned or controlled by a corporation, the
shares held by financial institutions shall not
be taken into account.”
30. In other words, inter alia, the provisions of the
said Act did not apply to an undertaking owned or
controlled by a government company or any undertaking
owned or controlled by a corporation (not being a
company established by or under a central, provisional
or State Act) unless it was expressly made applicable
by a notification. It also did not apply to any
undertaking, the management of which was taken over by
any person or body of persons in pursuance of any
authorization made by the Central Government under any
law enforced for the time being in force [Clause (e)].
Conspicuous by its absence, is any such provision in
the Act.
31. The Colliery Control Order came to be passed in the
year 1945 under the Rules. It is the said Order, which
came to be continued under the Essential Commodities
Act. The Coal Controller controlled the quality and
quantity as noticed in Ashoka Smokeless Coal India (P)
32
Ltd. and Others22. Considering its vital importance, it
became the only mineral which was nationalized in terms
of the Coking Coal Mines Nationalization Act, 1972 and
the Coal Mines Nationalisation Act 1973. The Colliery
Control Order 1945 was repealed and replaced by the
Colliery Collar Control Order 2000 w.e.f. 01.01.2000.
32. The Preamble to the Nationalisation Act reads as
follows:
“An Act to provide for the acquisition and
transfer of the right, title and interest of
the owners in respect of the coal mines
specified in the Schedule with a view to reorganising and reconstructing such coal mines
so as to ensure the rational, co-ordinated and
scientific development and utilisation of coal
resources consistent with the growing
requirements of the country, in order that the
ownership and control of such resources are
vested in the State and thereby so distributed
as best to subserve the common good, and for
matters connected therewith or incidental
thereto.”
33. Section 3(1) of the Nationalisation Act reads as
follows:
“3. Acquisition of rights of owners in respect
of coal mines.—(1) On the appointed day, the
right, title and interest of the owners in
22 Ashoka Smokeless Coal India (P) Ltd. and Others v.
Union of India and Others (2007) 2 SCC 640
33
relation to the coal mines specified in the
Schedule shall stand transferred to, and shall
vest absolutely in, the Central Government free
from all incumbrances.”
34. It came to be amended by the Coal Mines
(Nationalisation) Amendment Act, 67 of 1976. There was
subsequent amendment, viz., Act 47 of 1993 dated
09.06.2003. After the amendment, Section 3(3) reads:
“3(3) On and from the commencement of section
3 of the Coal Mines (Nationalisation) Amendment
Act, 1976 (67 of 1976),—
(a) no person, other than—
(i) the Central Government or a Government,
company or a corporation owned, managed or
controlled by the Central Government, or
(ii) a person to whom a sub-lease, referred to
in the proviso to clause (c), has been granted
by any such Government, company or corporation,
or
(iii) a company engaged in— (1) the production
of iron and steel, (2) generation of power, (3)
washing of coal obtained from a mine, or (4)
such other end use as the Central Government
may, by notification, specify, shall carry on
coal mining operation, in India, in any form;
(b) excepting the mining leases granted before
such commencement in favour of the Government,
company or corporation, referred to in clause
34
(a), and any sub-lease granted by any such
Government, company or corporation, all other
mining leases and sub-leases in force
immediately before such commencement, shall,
in so far as they relate to the winning or
mining of coal, stand terminated;
(c) no lease for winning or mining coal shall
be granted in favour of any person other than
the Government, company or corporation,
referred to in clause (a):
Provided that the Government, company or
corporation to whom a lease for winning or
mining coal has been granted may grant a sublease to any person in any area on such terms
and conditions as may be specified in the
instrument granting the sub-lease, if the
Government, company or corporation is
satisfied that—
(i) the reserves of coal in the area are in
isolated small pockets or are not sufficient
for scientific and economical development in a
co-ordinated and integrated manner, and
(ii) the coal produced by the sub-lessee will
not be required to be transported by rail.”
35. Under Section 4, the Central Government was to
become the lessee of the State Government when vesting
took place under Section 3. Section 5 read as follows:
“5. Power of Central Government to direct
vesting of rights in a Government company.—
35
(1) Notwithstanding anything contained in
sections 3 and 4, the Central Government may,
if it is satisfied that a Government company
is willing to comply, or has complied, with
such terms and conditions as that Government
may think fit to impose, direct, by an order
in writing, that the right, title and interest
of an owner in relation to a coal mine referred
to in section 3, shall, instead of continuing
to vest in the Central Government, vest in the
Government company either on the date of
publication of the direction or on such earlier
or later date (not being a date earlier than
the appointed day), as may be specified in the
direction.
(2) Where the right, title and interest of an
owner in relation to a coal mine vest in a
Government company under sub-section (1), the
Government company shall, on and from the date
of such vesting, be deemed to have become the
lessee in relation to such coal mine as if a
mining lease in relation to the coal mine had
been granted to the Government company and the
period of such lease shall be the entire period
for which such lease could have been granted
under the Mineral Concession Rules; and all the
rights and liabilities of the Central
Government in relation to such coal mine shall,
on and from the date of such vesting, be deemed
to have become the rights and liabilities,
respectively, of the Government company.
(3) The provisions of sub-section (2) of
section 4 shall apply to a lease which vests
in a Government company as they apply to a
lease vested in the Central Government and
references therein to the “Central Government”
shall be construed as references to the
Government company.”
36
36. Section 11 is significant for the purpose of the
case. It read:
“11. Management, etc., of coal mines.—(1) The
general superintendence, direction, control
and management of the affairs and business of
a coal mine, the right, title and interest of
an owner in relation to which have vested in
the Central Government under section 3, shall,—
(a) in the case of a coal mine in relation to
which a direction has been made by the Central
Government under sub-section (1) of section 5,
vest in the Government company specified in
such direction, or (b) in the case of a coal
mine in relation to which no such direction has
been made by the Central Government, vest in
one or more Custodians appointed by the Central
Government under sub-section (2), and
thereupon the Government company so specified
or the Custodian so appointed, as the case may
be, shall be entitled to exercise all such
powers and do all such things as the owner of
the coal mine is authorised to exercise and do.
(2) The Central Government may appoint an
individual or a Government company as the
Custodian of a coal mine in relation to which
no direction has been made by it under subsection (1) of section 5.”
37. Suffice it for the purpose of this case that we
notice next Section 28:
“28. Effect of this Act on other laws.- The
provisions of this Act shall have effect
notwithstanding anything inconsistent
therewith contained in any other law for the
time being in force or in any instrument having
37
effect by virtue of any law other than this
Act, or in any decree or order of any court,
tribunal or other authority.”
38. Finally, we notice Section 32. It read as follows:
“32. No proceeding for the winding up of a
mining company, the right title and interest
in relation to the coal mine owned by which
have vested with Central Government called a
government company under this Act or for the
appointment of a receiver in respect of the
business of the company, shall lie in any Court
except with the consent of the Central
Government.”
39. The Nationalisation Act came to be inserted in the
Ninth Schedule to the Constitution. It remained in the
Ninth Schedule till it is removed therefrom in the year
2017.
40. Article 31B of the Constitution of India reads as
under:
“31B. Validation of certain Acts and
Regulations Without prejudice to the
generality of the provisions contained in
Article 31A, none of the Acts and Regulations
specified in the Ninth Schedule nor any of the
provisions thereof shall be deemed to be void,
or ever to have become void, on the ground that
such Act, Regulation or provision is
inconsistent with, or takes away or abridges
any of the rights conferred by, any provisions
of this Part, and notwithstanding any judgment,
decree or order of any court or tribunal to
38
the contrary, each of the said Acts and
Regulations shall, subject to the power of any
competent Legislature to repeal or amend it,
continue in force.”
41. Article 31C of the Constitution of India reads:
“31C. Saving of laws giving effect to certain
directive principles Notwithstanding anything
contained in Article 13, no law giving effect
to the policy of the State towards securing all
or any of the principles laid down in Part IV
shall be deemed to be void on the ground that
it is inconsistent with, or takes away or
abridges any of the rights conferred by Article
14 or Article 19 and no law containing a
declaration that it is for giving effect to
such policy shall be called in question in any
court on the ground that it does not give
effect to such policy: Provided that where such
law is made by the Legislature of a State, the
provisions of this Article shall not apply
thereto unless such law, having been reserved
for the consideration of the President, has
received his assent Right to Constitutional
Remedies.”
42. The working of the MRTP Act was found to be
inadequate particularly in the context of changes which
happened not only in the country but also on a larger
scale.
43. A high-level Committee known as Raghavan Committee
delved into the issues. It is, inter alia, stated in
39
the Report as follows: “the object of competition
policy is to promote efficiency and maximize welfare.
In this context, the appropriate definition of welfare
is the sum of consumer surplus and producer’s surplus
and also includes any taxes collected by the
Government.”(See paragraph-2.1.1)
We notice the following observations as well:
“2.1.1 Competition policy is defined as “those
Government measures that directly affect the
behaviour of enterprises and the structure of
industry” (Khemani, R.S. and Mark A. Dutz,
1996). The objective of competition policy is
to promote efficiency and maximize welfare.
In this context the appropriate definition of
welfare is the sum of consumers’ surplus and
producers’ surplus and also includes any taxes
collected by the Government.1[1] It is well
known that in the presence of competition,
welfare maximization is synonymous with
allocative efficiency. Taxes are generally
welfare-reducing.”
44. After referring to the reforms initiated in 1991
and dealing with public sector, it is stated as follows:
“2.6.4 Public sector
In 1991, Government abolished the monopoly of
the public sector industries except those where
security and strategic concerns still
40
dominated. These include arms and ammunition
and allied defence equipment, atomic energy and
nuclear minerals and railway transport. Major
industries including iron and steel, heavy
electrical equipment, aircraft, air transport,
shipbuilding, telecommunication equipment and
electric power are now open for private sector
investments. A large number of loss-making
public enterprises were referred to the Board
for Industrial and Financial Reconstruction
(BIFR). Essentially two different types of
reforms were envisaged: greater autonomy for
public sector enterprises and greater private
sector ownership.”
45. We may next notice paragraph-2.8.5:
“2.8.5 Public Sector To a large extent, the
imperative for privatisation of the public
sector has arisen from fiscal considerations.
From the point of view of economic efficiency
and competition policy, it is important that
the public sector does not enjoy monopoly power
and is subject to market disciplines through
competition. Most of the sectors where the
public sector operates have in recent years
been opened up to entry by private sector
firms. However, as we have noted earlier, the
public sector is given preferential treatment
in Government procurement. We are of the view
that the public sector should be exposed to
competition and not given any preferential
treatment.”
46. State Monopolies Policy is seen dealt with under
paragraphs-3.4.5 and 3.4.6. They read as follows:
41
“3.4.5 State Monopolies Policy State
monopolies are not only a reality but are
regarded by many countries as inevitable
instruments of public growth and public
interest. While ideology may have played some
role in spurring the growth of State
monopolies, much of this increase can be
attributed to the pragmatic response to the
prevailing milieu, which is frequently an
outcome of the historical past in different
countries. A view shared by many is that State
monopolies and public enterprises in India have
played a vital role in its developing process,
have engineered growth in critical core areas
and have performed social obligations.
Nonetheless, there is also a recognition,
consequent on the adverse financial results and
the resultant pumping of budgetary oxygen from
the Government treasury to those enterprises,
that there is not only scope for their
reformation but also for structural and
operational improvements. This recognition has
led to the trend towards privatising some of
them. This is also a part of the general
process of liberalisation and deregulation.
Privatisation involves not only divestiture
and sale of Government assets but also a
gradual decline in the interventionist role
played by them.
3.4.6 State monopolies may lead to certain
harmful effects, anti-thetical to the scheme
of a modern Competition Policy. They are :
A. The dominant power enjoyed by State
monopolies may be abused because of Government
patronage and support.
B. Because of the said patronage, State
monopolies may adopt policies which tantamount
to restrictive trade practices. For example,
preference to public sector units in tenders
42
and bids, insistence on using public sector
services for reimbursement from Government
(travelling allowance for Government
officials).
C. State monopolies suffer from the schemes of
administered prices, contrary to the spirit of
Competition Policy.”
47. In paragraph-3.4.7, it is, inter alia, stated that
in the interests of the consumer the State Monopolies
and Public Enterprises need to be competitive in
production of goods and service delivery. Thereafter,
it is stated:
“3.4.7 It is well accepted that competition is
a key to improving the performance of State
monopolies and public enterprises. The oftnoted inefficiency of Government enterprises
stems from their isolation from effective
competition (Aharoni, Yair, 1986). In the
interest of the consumers, State monopolies and
public enterprises need to be competitive in
the production and service delivery. While
Government should reserve the right to grant
statutory monopoly status to select public
enterprises in the broad national interest, it
is desirable for the Government to always keep
in mind that de-regulation of statutory
monopolies and privatisation are likely to
engender competition that would be healthy for
the market and consumers.”
48. In the summary contained in paragraph-3.5.2, we
only notice the following:
43
“3.5.2 Summary
xxx xxx xxx
6. Government should divest its shares and
assets in State monopolies and public
enterprises and privatise them in all sectors
other than those subserving defence and
security needs and sovereign functions. All
State monopolies and public enterprises will
be under the surveillance of Competition Policy
to prevent monopolistic, restrictive and
unfair trade practices on their part.”
49. Under the head, the Contours of Competition Policy,
in paragraphs-4.2.2 and 4.2.4, we notice the following:
“4.2.2 Scope
State Monopolies and Government Procurement.
In a number of countries, Government
enterprises are excluded from the purview of
the Competition Law. With the exception of
Government entities engaged in sovereign
functions, there is no valid justification for
such exclusion and all other Government
enterprises should be within the ambit of the
law.
4.2.4 By the same logic, Government enterprises
and departments engaged in any sovereign
function (like defence, law and order, currency
functions) may not be subjected to the rigours
of Competition Law.”
(Emphasis supplied)
44
50. In paragraph-4.4.7, we notice the following:
“4.4.7. Before assessing whether an
undertaking is dominant, it is important, as
in the case of horizontal agreement, to
determine what the relevant market is. There
are two dimensions to this – the product market
and the geographical market. On the demand
side, the relevant product market includes all
such substitutes that the consumer would switch
to, if the price of the product relevant to
the investigation were to increase. From the
supply side, this would include all producers
who could, with their existing facilities,
switch to the production of such substitute
goods. The geographical boundaries of the
relevant market can be similarly defined.
Geographic dimension involves identification
of the geographical area within which
competition takes place. Relevant geographic
markets could be local, national,
international or occasionally even global,
depending upon the facts in each case. Some
factors relevant to geographic dimension are
consumption and shipment patterns,
transportation costs, perishability and
existence of barriers to the shipment of
products between adjoining geographic areas.
For example, in view of the high transportation
costs in cement, the relevant geographical
market may be the region close to the
manufacturing facility.”
51. In the summary, we may notice paragraph-4.8.8, it
is stated as follows:
“4.8.8. Summary
45
1. The State Monopolies, Government
procurement and foreign companies should be
subject to the Competition Law. The Law should
cover all consumers who purchase goods or
services, regardless of the purpose for which
the purchase is made.
2. Bodies administering the various
professions should use their autonomy and
privileges for regulating the standard and
quality of the profession and not to limit
competition.
3. If quality and safety standards for goods
and services are designed to prevent market
access, such practices will constitute abuse
of dominance/exclusionary practices.
4. Certain anti-competitive practices should
be presumed to be illegal. Blatant price,
quantity, bid and territory sharing agreements
and cartels should be presumed to be illegal.
5. Abuse of dominance rather than dominance
needs to be frowned upon for which relevant
market will be an important factor.
6. Predatory pricing will be treated as an
abuse, only if it is indulged in by a dominant
undertaking.
7. Exclusionary practices which create a
barrier to new entrants or force existing
competitors out of the market will attract the
Competition Law.
8. Mergers beyond a threshold limit in terms
of assets will require pre-notification. If no
reasoned order, prohibiting the merger is
received within 90 days it should be deemed to
46
have been approved. In adjudicating a merger,
potential efficiency losses from the merger
should be weighed against potential gains.”
52. It is following the said Report, that in the year
2002, the Act came to be enacted. The Preamble to the
Act reads:
“An Act to provide, keeping in view of the
economic development of the country, for the
establishment of a Commission to prevent
practices having adverse effect on
competition, to promote and sustain
competition in markets, to protect the
interests of consumers and to ensure freedom
of trade carried on by other participants in
markets, in India, and for matters connected
therewith or incidental thereto.”
53. We notice the scheme of the Act by taking note of
the following provisions.
54. Section 2(h) defines the word ‘enterprise’:
“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
47
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 Central Government
dealing with atomic energy, currency, defence
and space.
Explanation.-For the purposes of this clause,—
(a) “activity” includes profession or
occupation;
(b) “article” includes a new article and
“service” includes a new service;
(c) “unit” or “division”, in relation to an
enterprise, includes
(i) a plant or factory established for the
production, storage, supply, distribution,
acquisition or control of any article or goods;
(ii) any branch or office established for the
provision of any service;”
55. Section 2(i) defines the word ‘goods’:
“2(i) “goods” means goods as defined in the
Sale of Goods Act, 1930 (8 of 1930) and
includes—
(A) products manufactured, processed or mined;
(B) debentures, stocks and shares after
allotment;
(C) in relation to goods supplied, distributed
or controlled in India, goods imported into
India;”
56. Section 2(l) defines the word ‘person’:
“2(l) “person” includes—
48
(i) an individual;
(ii) a Hindu undivided family;
(iii) a company;
(iv) a firm;
(v) an association of persons or a body of
individuals, whether incorporated or not, in
India or outside India;
(vi) any corporation established by or under
any Central, State or Provincial Act or a
Government company as defined in section 617
of the Companies Act, 1956 (1 of 1956);
(vii) any body corporate incorporated by or
under the laws of a country outside India;
(viii) a co-operative society registered
under any law relating to co-operative
societies;
(ix) a local authority;
(x) every artificial juridical person, not
falling within any of the preceding subclauses;”
57. The words ‘relevant market’, ‘relevant
geographical market’, ‘relevant product market’, are
all separately defined:
“2(r) “relevant market” means the market
which may be determined by the commission with
reference to the relevant product market or the
relevant geographic market or with reference
to both the markets;
2(s) “relevant geographic market” means a
market comprising the area in which the
conditions of competition for supply of goods
or provision of services or demand of goods or
services are distinctly homogenous and can be
49
distinguished from the conditions prevailing
in the neighbouring areas;
2(t) “relevant product market” means a
market comprising all those products or
services which are regarded as interchangeable
or substitutable by the consumer, by reason of
characteristics of the products or services,
their prices and intended use;”
58. Section 3 prohibits anti-competitive agreements.
They are declared void.
59. We are, in the main, concerned in this case, with
Section 4. Section 4 prohibits abuse of dominant
position. Section 4 reads as follows:
“4. (1) No enterprise or group shall abuse its
dominant position.
(2) There shall be an abuse of dominant
position under sub-section (1), if an
enterprise or a group.—-
(a) directly or indirectly, imposes unfair or
discriminatory—
(i) condition in purchase or sale of goods or
service; or
(ii) price in purchase or sale (including
predatory price) of goods or service.
Explanation.— For the purposes of this clause,
the unfair or discriminatory condition in
purchase or sale of goods or service referred
to in sub-clause (i) and unfair or
50
discriminatory price in purchase or sale of
goods (including predatory price) or service
referred to in sub-clause (ii) shall not
include such discriminatory condition or price
which may be adopted to meet the competition;
or
(b) limits or restricts— (i) production of
goods or provision of services or market
therefor; or (ii) technical or scientific
development relating to goods or services to
the prejudice of consumers; or
(c) indulges in practice or practices resulting
in denial of market access in any manner; or
(d) makes conclusion of contracts subject to
acceptance by other parties of supplementary
obligations which, by their nature or according
to commercial usage, have no connection with
the subject of such contracts; or
(e) uses its dominant position in one relevant
market to enter into, or protect, other
relevant market.
Explanation.—For the purposes of this section,
the expression—
(a) “dominant position” means a position of
strength, enjoyed by an enterprise, in the
relevant market, in India, which enables it to—
(i) operate independently of competitive
forces prevailing in the relevant market; or
(ii) affect its competitors or consumers or the
relevant market in its favour.
51
(b) “predatory price” means the sale of goods
or provision of services, at a. price which is
below the cost, as may be determined by
regulations, of production of the goods or
provision of services, with a view to reduce
competition or eliminate the competitors.
(c)“group” shall have the same meaning as
assigned to it in clause (b) of the Explanation
to section 5.”
60. Section 5 deals with regulation of combinations.
At this stage, we may only sum up and state that the
law prohibits anti-competitive agreements and also
abuse of dominant position. It also regulates
combinations as explained in Section 6. Chapter 3 deals
with the establishment of the CCI. Section 9 provides
that the Selection Committee for appointment of Members
of the CCI, including Chairperson, will include the
Chief Justice of India or his nominee among others.
61. Section 8 speaks about the composition of the
Commission. There must be a chairman and not less
than two and not more than six other members to be
appointed by the Central Government.
62. Section 8(2) reads as follows:
“8(2) The Chairperson and every other Member
shall be a person of ability, integrity and
standing and who has special knowledge of, and
52
such professional experience of not less than
fifteen years in, international trade,
economics, business, commerce, law, finance,
accountancy, management, industry, public
affairs or competition matters, including
competition law and policy, which in the
opinion of the Central Government, may be
useful to the Commission.”
63. Section 17 reads as follows:
“17. (1) The Commission may appoint a
Secretary and such officers and other employees
as it considers necessary for the efficient
performance of its functions under this Act.
(2) The salaries and allowances payable to and
other terms and conditions of service of the
Secretary and officers and other employees of
the Commission and the number of such officers
and other employees shall be such as may be
prescribed.
(3) The Commission may engage, in accordance
with the procedure specified by regulations,
such number of experts and professionals of
integrity and outstanding ability, who have
special knowledge of, and experience in,
economics, law, business or such other
disciplines related to competition, as it deems
necessary to assist the Commission in the
discharge of its functions under this Act.”
64. The duties of the CCI are spelt out in Section 18.
It reads as follows:
“18. Subject to the provisions of this Act,
it shall be the duty of the Commission to
eliminate practices having adverse effect on
competition, promote and sustain competition,
53
protect the interests of consumers and ensure
freedom of trade carried on by other
participants, in markets in India: Provided
that the Commission may, for the purpose of
discharging its duties or performing its
functions under this Act, enter into any
memorandum or arrangement with the prior
approval of the Central Government, with any
agency of any foreign country.”
65. The aforesaid provisions indicate the width of the
power lodged with CCI to bring about the sweeping
changes in the economy. Section 19 empowers the
Commission to make inquiries into agreements which are
anti-competitive within the meaning of Section 3. More
importantly, Section 19(4) deals with inquiring into
the question as to whether an enterprise enjoys a
dominant position.
66. Being a crucial provision, we notice the same.
“19(4) The Commission shall, while inquiring
whether an enterprise enjoys a dominant
position or not under section 4, have due
regard to all or any of the following factors,
namely:—
(a) market share of the enterprise;
(b) size and resources of the enterprise;
(c) size and importance of the competitors;
54
(d) economic power of the enterprise including
commercial advantages over competitors;
(e) vertical integration of the enterprises or
sale or service network of such enterprises;
(f) dependence of consumers on the enterprise;
(g) monopoly or dominant position whether
acquired as a result of any statute or by
virtue of being a Government company or a
public sector undertaking or otherwise;
(h) entry barriers including barriers such as
regulatory barriers, financial risk, high
capital cost of entry, marketing entry
barriers, technical entry barriers, economies
of scale, high cost of substitutable goods or
service for consumers;
(i) countervailing buying power;
(j) market structure and size of market;
(k) social obligations and social costs;
(l) relative advantage, by way of the
contribution to the economic development, by
the enterprise enjoying a dominant position
having or likely to have an appreciable adverse
effect on competition;
(m) any other factor which the Commission may
consider relevant for the inquiry.”
67. Section 19(5) declares that for determining whether
the market constitutes a relevant market for the
55
purpose of the Act, the CCI shall have due regard to
the relevant geographic market and relevant product
market.
68. Section 19(6) deals with the factors which are
relevant for determining the relevant geographic
market.
69. Section 19(7) deals with matters which are relevant
for determining the relevant product market.
70. Section 27 provides for orders which the CCI may
pass after inquiring into agreement or abuse of
dominant position:
“27. Where after inquiry the Commission
finds that any agreement referred to in section
3 or action of an enterprise in a dominant
position, is in contravention of section 3 or
section 4, as the case may be, it may pass all
or any of the following orders, namely:—
(a) direct any enterprise or association of
enterprises or person or association of
persons, as the case may be, involved in such
agreement, or abuse of dominant position, to
discontinue and not to re-enter such agreement
or discontinue such abuse of dominant position,
as the case may be;
(b) impose such penalty, as it may deem fit
which shall be not more than ten percent of
the average of the turnover for the last three
preceding financial years, upon each of such
56
person or enterprises which are parties to such
agreements or abuse:
Provided that in case any agreement referred
to in section 3 has been entered into by a
cartel, the Commission may impose upon each
producer, seller, distributor, trader or
service provider included in that cartel, a
penalty of up to three times of its profit for
each year of the continuance of such agreement
or ten percent. of its turnover for each year
of the continuance of such agreement, whichever
is higher.
(c) Omitted by Competition (Amendment) Act,
2007
(d) direct that the agreements shall stand
modified to the extent and in the manner as
may be specified in the order by the
Commission;
(e) direct the enterprises concerned to abide
by such other orders as the Commission may pass
and comply with the directions, including
payment of costs, if any;
(f) Omitted by Competition (Amendment) Act,
2007
(g) pass such other order or issue such
directions as it may deem fit.
Provided that while passing orders under this
section, if the Commission comes to a finding,
that an enterprise in contravention to section
3 or section 4 of the Act is a member of a
group as defined in clause (b) of the
Explanation to section 5 of the Act, and other
members of such a group are also responsible
57
for, or have contributed to, such a
contravention, then it may pass orders, under
this section, against such members of the
group.”
71. Section 28 provides for power to order division of
enterprise enjoying dominant position.
72. The CCI is given power to pass interim orders in
Section 33. The CCI can regulate its procedure as
provided in Section 36. Section 41 provides for the
duty of the Director General. He is to assist the CCI
by investigating into any controversies. Penalties are
contemplated under the Act. An appeal is provided to
the Tribunal and Section 53T provides for an appeal to
the Supreme Court against the order of the Tribunal.
Section 54 deals with the power to exempt. It reads:
“54. Power to exempt.— The Central Government
may, by notification, exempt from the
application of this Act, or any provision
thereof, and for such period as it may specify
in such notification—
(a) any class of enterprises if such exemption
is necessary in the interest of security of the
State or public interest;
(b) any practice or agreement arising out of
and in accordance with any obligation assumed
58
by India under any treaty, agreement or
convention with any other country or countries;
(c) any enterprise which performs a sovereign
function on behalf of the Central Government
or a State Government:
Provided that in case an enterprise is engaged
in any activity including the activity
relatable to the sovereign functions of the
Government, the Central Government may grant
exemption only in respect of activity relatable
to the sovereign functions.”
73. Section 60 reads as follows:
“60. The provisions of this Act shall have
effect notwithstanding anything inconsistent
therewith contained in any other law for the
time being in force.”
74. We must proceed on the basis that there is no
challenge to the Act. This means that we must take the
Act as it is and place an interpretation on it as would
be most suitable in accordance with well-established
principles. In other words, this is not a case where
the Court has been invited to pronounce on the vires of
the Act.
75. Coal continues to be an important and scarce
natural resource. Nothing more is required to establish
59
the same than the very lis over it. It forms an
important raw material in the production of vital final
products. Also, it forms a kind of fuel, which drives
power plants. A monopoly, undoubtedly, stood created by
the Nationalisation Act. The mines, which were the
subject matter of the Act, stood vested with the Central
Government. The first appellant is a Government
Company, which came into being, as contemplated under
Section 5 of the Nationalisation Act. The appellantCompany operates the mines. It is tasked with the power
and the duty to distribute coal. This attracts the
Directive Principle enshrined in Article 39(b). The
said Directive Principle contemplates that the ‘State’
should direct its policy towards securing that the
ownership and control of the ‘material resources’ are
so ‘distributed’ so as to ‘subserve the common good’.
The argument of the appellants is partly based on the
dictate of Article 31(B), which, together with the
Ninth Schedule, the insertion in which Schedule,
immunizes laws from being invalidated on the ground
that they take away or abridge Fundamental Rights. The
Nationalisation Act was inserted in the Ninth Schedule
60
on 10th August, 1975. We are not, in this case, called
upon to sit in Judgment over the insertion of the
Nationalisation Act on the basis that it is violative
of the basic structure of the Constitution in terms of
what has been laid down in I.R. Coelho (supra). We
proceed on the basis, therefore, that the
Nationalisation Act was insulated by virtue of Article
31B. Equally, we proceed on the basis that it can be
treated as a law giving effect to the policy of the
State towards securing the principles enshrined in
Article 39(b).
76. Here we are not dealing with a plea to overturn the
Nationalisation Act on the score that it is violative
of any of the Fundamental Rights. The Nationalisation
Act was enacted to vest in the Central Government, the
rights of the lessees in the coal mines so that they
could be operated so as to ensure the rational,
coordinated and scientific development and utilization
of the coal resources consistent with the growing
requirements of the country. The Preamble clearly
indicates that the Law-Giver had in mind the goal in
Article 39(b), viz., acquiring ownership over coal
61
mines so that coal mined from the mines could be so
distributed so that common good was best subserved. The
Statement of Objects and Reasons of Act 67 of 1976, by
which the Nationalisation Act was amended, indicated
that after the nationalisation took place, persons
holding mining leases took to unauthorized mining and
in a most reckless and unscientific manner. This was
noted to be without bearing in mind considerations of
conservation, safety and the welfare of the workers. A
valuable national asset was being destroyed. There were
safety concerns. Large profits were being reaped but by
paying very low wages to the workers. All privately
held coal leases were brought under the umbrella of the
Nationalisation Act except those held by privately
owned steel companies. The Nationalisation Act came to
be again amended by Act 22 of 1978. Thereafter, again
it was amended by Act 57 of 1986 and finally by Act 47
of 1993. Suffice it to notice that with the commencement
of the Coal Mines Nationalisation (Amendment) Act, 1976
on 29.04.1976, carrying on a coal mining operation or
leasing for mining coal by any private party, was
prohibited.
62
77. Section 11 of the Nationalisation Act contemplates
that the general superintendence, direction, control
and management of the affairs and business of a coal
mine, where the right of an owner, stood vested in the
Central Government under Section 3, would stand vested
in the Government Company specified in terms of the
direction made by the Central Government under
Section 5. The first appellant is a Government Company,
which was wholly owned by the Central Government and
was the Company contemplated under Section 5 and,
therefore, the general superintendence, direction,
control and management of all the mines, ownership of
which stood vested in the Central Government, vested
with the first appellant. The first appellant is the
holding Company and there are subsidiary companies.
Reliance is placed on the Judgment of this Court
rendered in the context of Article 324 of the
Constitution. It is true that the said Article, which
deals with the powers of the Election Commission of
India, employs the words general superintendence,
direction and control of, inter alia, for the conduct
of all elections to Parliament and the State
63
Legislatures, apart from elections to the Office of the
President and the Vice-President. It is, undoubtedly,
true that this Court has held that the words
‘superintendence, direction and control’, are words of
the widest import. It is subject to limitations,
flowing from constitutional provisions, binding laws
and directions, which may be issued by the Courts. It
is true that the Election Commission of India has been
clothed with the plenary jurisdiction. We must, no
doubt, not lose sight of the fact that Article 324 deals
with one of the most important Constitutional
Functionaries. The importance of holding free and fair
elections, cannot be understated. Even, according to
the appellants, the appellants are bound to act in
accordance with Presidential Directives and the extant
policy in the superintendence, control and management
of the affairs of the nationalized mines. It may not be
appropriate to describe the power, therefore, as fully
akin to the powers that vests with the Election
Commission of India under Article 324. However, we do
agree that subject to such directives and policy
considerations, there is a large measure of power with
64
the appellants. The appellants cannot, however, seek
immunity from the operation of laws, which otherwise
bind them. In fact, Shri K.K. Venugopal did state at
the bar that the appellants are not impervious to the
operation of laws, which would otherwise apply.
78. Exception, however, is taken by the appellants to
the applicability of the Act. This objection is founded
upon the inconsistencies and consequent anomalous
results, which would arise from the Act being applied
to the appellants. We have already captured the various
perceived inconsistencies in paragraphs-10-12.
79. Before we proceed to deal with the grievances of
the appellants, we must undertake a survey of the Act
to ascertain, whether the Act, in any manner, advances
the case of the appellants. The Act has been made in
the year 2002 and it was not a pre-existing Statute.
When the National Act was made, central to the scheme
of the Act, is the expression ‘enterprise’, as defined
in Section 2(h) of the Act. Let us decode it. An
‘enterprise’ is defined as a person or a Department of
the Government. Let us pause here for a moment. The
word ‘person’ has been defined in Section 2(l) as
65
including a company, a corporation established by or
under any Central, State or Provincial or a Government
Company, as defined in Section 617 of the Companies
Act, 1956. We need not probe further. The appellant is
a Government Company within the meaning of Section 617
of the Companies Act, 1956. Therefore, the appellant is
a person within the meaning of Section 2(h). The next
limb of Section 2(h) contemplates that the person is
one, ‘who’ or ‘which is’. Being an artificial person,
the appropriate word is ‘which’. Therefore, the first
appellant is a person, which is or has been engaged in
any activity. The activity must relate to the
production, storage, supply, distribution, acquisition
or control of articles or goods. There can be an
enterprise under Section 2(h) equally, if the activity
relates to the provision of services of any kind, inter
alia. We need not deal with the wide width of the other
part of Section 2(h). The word ‘goods’ has been defined
in Section 2(i) to mean goods, as defined in Sale of
Goods Act, 1930 and includes products manufactured,
processed or mined. There cannot be the slightest
amount of doubt that the appellant is a person, which
66
is engaged in activity relating to production, storage,
supply, distribution and control of goods, as defined
in the Act. It may also be within the ambit of Section
2(h) in regard to services it may provide, having regard
to the wide words used in Section 2(h).
80. It is noteworthy that 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) 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.
81. As we have noted earlier on, in answer to a specific
query, as to whether the appellants are carrying on any
sovereign functions, both Shri K.K. Venugopal and Shri
Yaman Verma, would contend that they are not carrying
67
on any sovereign functions. This relieves the Court of
undertaking a discussion, which, even otherwise, may be
unnecessary, having regard to the nature of the
function. 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.
82. As mentioned earlier, the Act aims at tabooing
anti-competitive agreements and thereby promoting
competition. It also prohibits abuse of dominant
position. What is prohibited is, however, abuse of
dominant position by an enterprise or a group. A group
has been defined in the context of Section 5 which deals
with regulation of combination. We find that the
68
appellant answers the description of an enterprise as
defined.
83. When it comes to Section 3, dealing with anticompetitive agreements, it encompasses a prohibition of
such agreements by not merely enterprises or
association of enterprises but by any person or
association of persons.
84. Dealing with abuse of dominant position being the
theme of the lis, Section 4(1) declares that no
enterprise or group shall abuse ‘its’ dominant
position. What is dominant position? The second
explanation in Section 4(2) defines that dominant
position for the purposes of Section 4 to be ‘a position
of strength enjoyed by an enterprise in the relevant
market in India’. Relevant market has been defined in
Section 2(r) to mean “the market which may be determined
by the CCI with reference to the relevant product market
or the relevant geographic market or with reference to
both the markets”. The words, relevant product market
has been defined in Section 2(t) as meaning “a market
comprising all of those products or services which are
regarded as interchangeable or substitutable by the
69
consumer, by reason of characteristics of its products
or services, their prices and intended use”. Section
2(s) defines ‘relevant geographic market’, as meaning
”a market comprising the area in which the conditions
of competition for supply of goods or provision of
services or demand of goods or services are distinctly
homogenous and can be distinguished from the conditions
prevailing in the neighbouring areas”. Thus, the
lawgiver has provided for a position of strength
enjoyed by an enterprise not in the vacuum. It is not
based on any subjective criteria. The question of
dominant position must stand answered with reference to
carefully thought-out objective norms, as aforesaid.
Continuing with the definition of the words ‘dominant
position’, it means a position of strength enjoyed by
the enterprise in the relevant market which in turn
involves adverting to the relevant geographic market or
relevant product market or both as defined and it should
enable the enterprise to enjoy the position of strength
to operate independently of competitive forces
prevailing in the relevant market. Another test to
find out whether the enterprise enjoys a dominant
70
position is to find out the said position with reference
to its ability to “affect its competitors or consumer
or the relevant market in its favour”.
85. The Act further expatiates and dwells on the method
to find out dominant position. Section 19(4) enumerates
the factors to be considered. We have referred to
Section 19(4)in paragraph-66.
86. 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? We would think that in a given case
the answer would be in the affirmative. Closer home in
the facts we find 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. We will at once
notice that this is a clear indication that far from
71
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, we proceed
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.
87. But does the inquiry end on an enterprise answering
the description of a monopoly or having a dominant
position pertinent to Section 19(4)(g)? In a given
case, it may. On the other hand, in the facts, it may
provide the CCI with one part of a larger whole. Other
factors whether expressly culled out or forming part of
the inexhaustibly large residuary clause, viz., Section
19(4)(m), may be projected to contend that, in reality,
despite its appearance, it is wholly but deceptive. In
72
other words, the CCI may be invited to have a cumulative
view of all the factors which are relevant in a given
case. In fact, the learned Additional Solicitor
General fairly states that the factors may be read as
cumulative.
88. Apposite in the facts is Section 19(4)(k). It
requires the CCI to factor in social obligations and
social cause. Equally, we may notice Section 19(4)(l).
It declares the relative advantage by way of
contribution to economic development having or likely
to have an appreciable effect on competition to be a
relevant factor. What we have deliberately omitted and
now supply are the following words to be found in
Section 19(4)(l). They are the words “by the enterprise
enjoying the dominant position”. Therefore, being found
in a dominant position under Section 19(4)(g) is only
one of the factors. We do not intend to elaborate
further on the scope and impact of the other factors.
It would all depend upon the facts of the individual
case. Equally, we may only indicate, that, in
particular, countervailing buying power would be a
relevant factor. Section 26 provides for the procedure
73
for holding the inquiry employing the methods declared
in Section 19(4) to find the presence or absence of
dominant position. Section 26 contemplates the CCI
acting on:
a.Reference by the Central Government or a
State Government or a statutory authority.
b.Information given under Section 19 of the
Act.
c.On its own motion.
89. Section 26 contemplates that, in such conditions,
if the CCI forms an opinion that a prima facie case
exists, then, it should direct the Director General to
cause an investigation into the matter. Under Section
26(2), the CCI may close the matter, if it finds that
there exists no prima facie case. The Director General
is obliged to submit a report on his findings. The CCI
is to forward the report to the parties. The Director
General may recommend that there is no contravention of
the Act. In such an eventuality, the CCI is obliged to
invite objections or suggestions on the said report.
74
The CCI may thereafter decide to close the matter after
considering the objections or it may order further
investigation or further inquiry by the Director
General. The CCI may itself proceed with the further
inquiry. Under Section 26(8), if the recommendation by
the Director General points to contravention of any of
the provisions of the Act, and the CCI is of the opinion
that further inquiry is to be held, it must hold an
inquiry. Section 27 speaks about the orders that may
be passed in the case of anti-competitive agreements
and abuse of dominant position. The orders which may
be passed include a direction to discontinue abuse of
dominant position as found in the case of abuse of
dominant position. The CCI may impose penalty as
provided therein. It can direct modification of the
agreement. It can also direct the enterprise to abide
by the orders that the CCI may pass. It has a residuary
power to pass any other order as is deemed fit. Section
28, no doubt, contemplates a division. Section 31 deals
with orders that may be passed on certain combinations.
Chapter V deals with the duty of the Director General.
The Director General is provided with powers available
75
to the CCI under Section 36(2). We may notice in this
regard that the CCI under Section 36 is to be guided by
Principles of Natural Justice and subject to the
provisions of the Act and any of the Rules made by the
Central Government, the CCI is to have powers to
regulate its own procedure. Section 36(2) confers
powers vested in a civil Court in regard to certain
matters on the CCI. Section 36(3) is significant. It
reads:
“The Commission may call upon such experts,
from the fields of economics, commerce,
accountancy, international trade or from any
other discipline as it deems necessary, to
assist the Commission in the conduct of any
inquiry by it.”
90. We have already noticed that the CCI itself is to
consist of persons of ability, integrity and standing
who have special knowledge of and such professional
experience of not less than 15 years in international
trade, economics, business, commerce, law, finance,
accountancy, management, industry, public affairs or
competition matters including competition law and
policy. We notice this for the reason that both the
76
composition of the CCI and it being enabled to call for
inputs from experts would go a long way in assuring the
Court that the decision-making process would be
meticulous, fair and informed. There is also a
provision for an appeal to the Tribunal and further
appeal to the Supreme Court.
91. As contended by the learned Additional Solicitor
General in the matter of proceeding under Section 4
read with Section 19 of the Act, in the matter of abuse
of dominant position, there are three stages. There
must be an enterprise as defined or a group as provided
under Section 5. Once it is so found, then, it must be
inquired as to whether the said enterprise or group
enjoys a dominant position. We have explained how this
is to be found with the aid of Sections 19(4) and the
second explanation to Section 4. After it is found
that there is an enterprise or group which enjoys a
dominant position, the matter progresses to the third
stage. At this stage, the CCI would have to inquire in
an appropriate case as to whether there is abuse of
dominant position by the enterprise or group. The third
stage is embraced by Section 4 (2) of the Act. Under
77
Section 4(2), the law giver has declared certain acts
or omissions to constitute abuse of dominant position.
We have already extracted the provision. While on
Section 4, we posed the question as to whether
Section 4(2), which declares that there shall be an
abuse of dominant position, if the facts attract
Clauses (a) to (e), is a species of a genus, which genus
is contained in Section 4(1). In other words, is
Section 4(2) exhaustive of abuse of dominant position
prohibited under Section 4(1) or is it only
illustrative of what can constitute abuse of dominant
position? The learned Additional Solicitor General
would submit that this question may not be gone into in
the facts of this case. We agree with his request.
92. Dealing with what would indeed constitute abuse of
dominant position as declared imperatively in Section
4(2), if we take 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.
78
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.
93. The appellants are Government Companies. They were
brought into being in the context of Sections 3 and 5
of the Nationalisation Act. Undoubtedly, they were
created to take the place of the Central Government in
the matter of supervising control and managing the
affairs of the mines. Still further, and, more
importantly, the Nationalisation Act itself was
intended to achieve the goals in Article 39(b) of the
Constitution. This means that the Nationalisation Act
contemplated coal to be a material resource and it was
to be distributed so as to subserve common good. The
exclusive right in regard to the mines as also the power
to manage and supervise the mines was vested with the
first appellant company and its subsidiaries. The ambit
79
of the power is unquestionably wide. We proceed on the
basis that the appellants cannot be oblivious to its
duty to bear in mind the sublime goal in the Directive
Principle, viz., “distribution”, so as to subserve the
‘common good’. We agree further that the expression
State for the purpose of Part IV of the Constitution is
to be understood with reference to its meaning in
Article 12 contained in Part III having regard to
Article 36 of the Constitution. 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). The argument runs
that it would require countenancing an irreconcilable
conflict between such a duty and the mandate of Section
4 (2) of the Act. To be more specific, the contention
goes that the appellants would have to follow the policy
80
of the Government of India in regard to coal, be it in
the matter of pricing or any other matter. There may
be necessity to resort to differential pricing so as to
encourage captive coal production. If this is to be
treated as being discriminatory or unfair within the
meaning of Section 4(2)(a), the question that is posed
is how can the appellant company which is the product
of the Nationalisation Act, a monopoly under the same
and obliged to observe the mandate of Article 39(b)
achieve its undoubted goal or perform its
unquestionable duty under law. The answer of the
respondents is that questions are being raised in the
abstract. The Act overrides all laws to the extent of
their inconsistency with the Act. It is also contended
that as far as the question relating to compliance with
Presidential Directives is concerned, if there is a
bona fide adherence to Presidential Directives, it may
pass muster. In fact, Shri Matrugupta Mishra, learned
Counsel, would point out that it is his complaint that
the appellant is not even following the Presidential
Directives. The respondents would point out that
questions are being raised in the air without there
81
being foundation on facts. Next, coming to the placing
of restrictions or limits on the production of a mineral
like coal, there may be Doctrines like Public Trust and
Intergenerational Equity.
94. The State and its agencies may have to put a cap
on production of vital resources if they are not
inexhaustible. A question may be raised if a bona fide
decision is taken by the appellants that ‘slaughter
mining’ which leaves little for the future must be
avoided, would it fall foul of Section 4(2)(b) of the
Act? Appellants also contended that as State, the
dictate of common good contained in Article 39(b) may
require of it to promote the interest of backward areas.
The question posed is would it be brushed with the paint
of unfairness or discrimination which is anathema to
the Act.
95. We have already noticed the report of the Raghavan
Committee. We have also perused the scheme of the Act.
We have culled out the consequences, which flow from
the Nationalisation Act. The economic condition of the
country at the time of its independence in 1947 stands
in stark contrast to its condition at varying points of
82
time thereafter. In the initial stages, for
understandable reasons, particularly, bearing in mind
the need for the State to be the prime mover of the
economy, huge investments by the State had to be made.
Public sector units became the arm for the State to
realize its economic goal, which, at the earlier point
of time, was to consist of building up the requisite
infrastructure. The public sector units fulfilled more
roles than one. Not only were the units to produce
goods but they were also burdened with the goal of
providing employment. The economic policy of the State
had a distinct socialist flavour. No doubt, under the
Five-Year Plans, what was contemplated was, a mixed
economy. The economy was highly regulated. Out of
sheer necessity, perhaps, taxation had to be maintained
at high levels. From being a toddler, the economy slowly
grew. As the life of the nation progressed, the
aspirations of its people, not unnaturally, also
expanded. The economic life of a nation can never 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,
83
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.
96. The expression ‘common good’ in Article 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. As far as
the time dictated content of common good goes, it simply
means that ‘economics’ itself not being bound in
chains, but it is a dynamic concept. The attainment of
common good would be dependent on the appreciation and
understanding of a generation as to how economic common
good is best achieved. The debate between the
advantages and disadvantages of pursuing the policy of
84
State intervention in economic policy which emasculates
private enterprise and competition has almost reached
its end. The advantages of a fearlessly competitive
economy have been realized by the Nation. There is a
backdrop to it. In the year 1991, the Nation was in a
manner of speaking compelled to revisit its economic
policy having regard to the precarious condition of its
foreign exchange reserves. The permit raj, which
involved acute regulation of economic activity by the
State with all its attendant evils, cried out for
reforms. A slew of highly liberal reforms in 1991 set
the stage for the Nation to make a paradigm shift. As
discussed in the Raghavan Committee Report, things
moved further in the direction of attaining faster
economic growth. The Act is a measure which is intended
to achieve the same. The role which was envisaged for
the public sector company could not permit them to
outlive their utility or abuse their unique position.
Disinvestment done in a proper manner was perceived as
a solution. However, sans disinvestment, State
Monopolies, Public Sector Companies and Government
Companies were expected to imbibe the new economic
85
philosophy. The novel idea, which permeates the Act,
would stand frustrated, in fact, if State monopolies,
Government Companies and Public Sector Units are left
free to contravene the Act. Now that the Nation was
more than 50 years old after it became a Republic and
it no longer was the infant it was, Parliament which
best knows the needs of its people, felt that the time
was ripe for ushering in the wholesome idea of fair
competition. Can it be said that free competition as
envisaged under the Act which involves avoidance of
anti-competitive agreements, abuse of dominant position
and regulation of combinations are against the common
good? As to how common good is best served is best
understood by the representatives of the people in the
democratic form of Government. We must bear in mind
the wholesome principle that when Parliament enacts
laws, it is deemed to be aware of all the existing laws.
Properly construed and operated fairly, the ‘Act’
would, in other words, harmonise with common good.
being its goal as well.
97. Therefore, we proceed on the basis that Parliament
was aware of the Nationalisation Act. We must also
86
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.
98. We may bear in mind that Government Departments are
also expressly covered within the expression
‘enterprise’ under the Act. No doubt, Departments
discharging sovereign functions are excluded but save
those Government departments which are excluded, the
Government Departments being State, are equally obliged
to bear in mind the Directive Principles. The radical
nature of the law contained in the Act has made a
perceptible departure from the erstwhile law contained
in the MRTP Act. We have noticed Section 3 of the MRTP
Act, which sought to protect Government entities, as
87
provided therein, from the reach of the MRTP Act. The
fact that Government Departments, which follow policies
of the Government, are expected to comply with the Act,
has a deep impact on the contentions of the appellant
that they are outside of the purview of the Act. It
would involve elevating the appellants to a status
above that of a Government Department to approve of the
argument that Article 39(b), would allow the appellants
to resist action under the Act, when it does not allow
the Government Department, under which, in fact, the
appellants operate to do so.
99. What actually Article 31B and Article 31C purport
to provide for is constitutional immunity for the laws
covered by the same from challenge on the ground that
they fall foul of the Fundamental Rights as provided
therein. In other words, the Courts cannot invalidate
the laws covered by the said Articles. We may agree
with the appellants that apart from providing
protection to the laws, the Directive Principles would
continue to govern ‘State’, which would include its
instrumentalities, having regard to Article 12 read
with Article 36. Here, we may notice one aspect. Even
88
where State and its instrumentalities are obliged to
follow the Directive Principles, it cannot, in their
actions, act in an unfair or discriminatory fashion.
Even the appellants agree that judicial review, under
Article 226, is permissible.
100. It is the appellants’ contention that Section 60
of the Act may not avail the respondents to contend
that the Nationalisation Act would pale into
insignificance and irrelevance when it cannot square
with the provisions of the Act. Section 28 of the
Nationalisation Act, on the other hand, is set up to
counter the argument. What is more, decisions of this
Court in Employees Provident Fund Commissioner v.
Official Liquidator of Esskay Pharmaceuticals Limited23
and Sanwarmal Kejriwal v. Vishwa Coop. Housing Society
Ltd. and Others24 are enlisted in support. In Sanwarmal
Kejriwal (supra), the question, which was considered
was, whether the protection under Section 15A of a rent
control law would not be available to a person on whom
a fictional status of tenant was conferred. This was
23 (2011) 10 SCC 727
24 (1990) 2 SCC 288
89
as Section 91 of the Maharashtra Cooperative Society
Act provided for eviction of a person from a flat. The
Court harmonized both the Acts by holding that in
matters governed by the earlier Rent Act, its
provisions would continue to apply.
101. In Employees Provident Fund Commissioner (supra),
the question which arose was whether the priority given
to the dues payable by an employer under the employees
under Section 11A of the Employees Provident Fund and
Miscellaneous Provisions Act, 1952 was subject to
Section 529A of the Companies Act, 1956. Under Section
529A, workers’ dues and debts due to secured creditors
was to be paid in priority to all other debts. This
Court held that the EPF Act was a social welfare
legislation. Section 11(2) of the EPF Act declared
that any amount due under the Act shall be the first
charge in priority to all other debts including debts
due to a Bank which was found to be falling under the
category of a secured creditor. It is in the context
of the statutes and the object sought to be achieved
that this Court held that a non-obstante clause
contained in the later Act, viz., the Companies Act,
90
1956, would not prevail. This Court held, in
paragraphs-42 and 44, as follows:
“42. The argument of Shri Gaurav Agrawal that
the non obstante clause contained in the
subsequent legislation i.e. Section 529-A(1)
of the Companies Act should prevail over
similar clause contained in an earlier
legislation i.e. Section 11(2) of the EPF Act
sounds attractive, but if the two provisions
are read in the light of the objects sought to
be achieved by the legislature by enacting the
same, it is not possible to agree with the
learned counsel. As noted earlier, the object
of the amendment made in the EPF Act by Act 40
of 1973 was to treat the dues payable by the
employer as first charge on the assets of the
establishment and to ensure that the same are
recovered in priority to other debts. As
against this, the amendments made in the
Companies Act in 1985 are intended to create a
charge pari passu in favour of the workmen on
every security available to the secured
creditors of the company for recovery of their
debts. There is nothing in the language of
Section 529-A which may give an indication that
the legislature wanted to create first charge
in respect of the workmen’s dues, as defined
in Sections 529(3)(b) and 529-A and debts due
to the secured creditors.
44. Another rule of interpretation of statutes
is that if two special enactments contain
provisions which give an overriding effect to
the provisions contained therein, then the
Court is required to consider the purpose and
the policy underlying the two Acts and the
91
clear intendment conveyed by the language of
the relevant provisions.”
102. Apparently, the Court apart from noticing the
objects sought to be achieved by the enactment took
into consideration the fact that Section 529A of the
Companies Act did not give any indication that the
lawgiver wanted to create a first charge in respect of
the preferred creditors under the said provision
whereas a first charge stood created under the EPF Act.
103. In the context of Section 28 of the Nationalisation
Act read with the object of the Act and bearing in mind
the scheme of the Act and the language employed as it
is, we would think that the later enactment must
prevail. This is subject to what we shall hold
hereinafter.
104. We do not think that the appellants have indicated
any decision of this Court which would establish the
appellants’ case.
105. In Ashoka Smokeless Coal India (P) Ltd. v. Union
of India25, the Court was concerned with the validity
25 (2007) 2 SCC 640
92
of the decision taken by the first appellant herein to
go in for e-auction of coal. It must be noticed that
the judgment was pronounced on 01.12.2006. At that
time, coal was an essential commodity under the
Essential Commodities Act. This aspect is echoed in
the Judgment. The Court went on to hold that the
holding of e-auction did not amount to price fixation.
In the course of its Judgment, the Court, inter alia
held:
“106. It may not be correct to say that any
action which is not in consonance with the
provisions of Part IV of the Constitution would
be ultra vires but there cannot be any doubt
whatsoever that the principles contained
therein would form a relevant consideration for
determining a question in regard to price
fixation of an essential commodity. Directive
principles of State policy provide for a
guidance to interpretation of fundamental
rights of a citizen as also the statutory
rights.
109. It may be true that prices are required
to be fixed having regard to the market forces.
Demand and supply is a relevant factor as
regards fixation of the price. In a market
governed by free economy where competition is
the buzzword, producers may fix their own
price. It is, however, difficult to give effect
to the constitutional obligations of a State
and the principles leading to a free economy
at the same time. A level playing field is the
key factor for invoking the new economy. Such
a level playing field can be achieved when
there are a number of suppliers and when there
are competitors in the market enabling the
93
consumer to exercise choices for the purpose
of procurement of goods. If the policy of the
open market is to be achieved the benefit of
the consumer must be kept uppermost in mind by
the State.”
106. In paragraph-111, the Court, inter alia, held as
follows:
“111. The State when it exercises its power of
price fixation in relation to an essential
commodity, has a different role to play. Object
of such price fixation is to see that the
ultimate consumers obtain the essential
commodity at a fair price and for achieving the
said purpose the profit margin of the
manufacturer/producer may be kept at a bare
minimum. The question as to how such fair price
is to be determined stricto sensu does not
arise in this case, as would appear from the
discussions made hereinafter, as here the
Central Government has not fixed any price. It
left the matter to the coal companies. The coal
companies in taking recourse to e-auction also
did not fix a price. They only took recourse
to a methodology by which the price of coal
became variable. Its only object was to see
that maximum possible price of coal is
obtained. … .”
107. We may notice here that the observations were made
at the time when coal was an essential commodity. Coal
ceased to be an essential commodity after the date of
the Judgment in February, 2007. We are not for a moment
holding that coal has ceased to be a vital national
94
resource. All that we are observing is that, the basis
for the observations in paragraph-111, stood removed.
108. The Court went on to hold further:
“113. The State or a public sector undertaking
plays an important role in the society. It is
expected of them that they would act fairly and
reasonably in all fields; even as a landlord
of a tenanted premises or in any other
capacity. (See Baburao Shantaram More v. Bombay
Housing Board [AIR 1954 SC 153 : 1954 SCR 572]
SCR at p. 577, Dwarkadas Marfatia & Sons v.
Board of Trustees of the Port of Bombay [(1989)
3 SCC 293 : (1989) 2 SCR 751] SCR at pp. 760,
762 and Pathumma v. State of Kerala [(1978) 2
SCC 1 : (1978) 2 SCR 537] SCR at p. 545.)”
109. Still further, we find that in paragraph-115, it
has been held that “coal companies are monopolies
within the meaning of the provisions of the
Nationalisation Act”.
110. It is again observed in paragraph-118 that the
first appellant and its subsidiary company enjoyed the
monopoly of production, distribution and sale thereof.
111. We may further notice that in paragraph-167, this
Court held:
“167. In fact the decisions of this Court on
price fixation also point out that although a
95
reasonable profit may be permissible,
profiteering would not be.”
112. Finally, we find the following observations to be
found in paragraph-193:
“193. However, discussions made hereinbefore
should not be taken to lay down a law that the
Central Government and for that matter the coal
companies cannot change their policy decision.
They evidently can; but therefor there should
be a public interest as contradistinguished
from a mere profit motive. Any change in the
policy decision for cogent and valid reasons
is acceptable in law; but such a change must
take place only when it is necessary, and upon
undertaking of an exercise of separating the
genuine consumers of coal from the rest. If the
coal companies intend to take any measure they
may be free to do so. But the same must satisfy
the requirements of constitutional as also the
statutory schemes; even in relation to an
existing scheme e.g. Open Sales Schemes,
indisputably the coal companies would be at
liberty to formulate the new policy which would
meet the changed situation. E-advertisement or
e-tender would be welcome but then therefor a
greater transparency should be maintained.
113. The appellants rely upon the judgment of this Court
in State of Tamil Nadu and Others v. L. Abu Kavur Bai
and Others26 for the proposition that the scheme of
monopoly or nationalisation subserves public good. In
26 (1984) 1 SCC 515
96
the said case, the Court was dealing with a case of
nationalisation of transport services. There can be no
quarrel with the proposition that the purpose of the
Nationalisation Act was indeed to subserve the common
good as held in Tara Prasad Singh and Others v. Union
of India and Others27. The purpose of the vesting under
the Nationalisation Act was to distribute the resource
to subserve the common good. (See paragraph-32)
114. We may, in fact, notice the concern of the Court
about coal being not inexhaustible and the need for a
wise and planned conservation of the resources being
expressed in paragraph-39. No doubt, all this was at
the time when the Nation was confronted with the
condition of the mines being what it was as brought out
in the Statement of Objects.
115. We agree with the appellants and as held by this
Court in State of Karnataka and Another v. Shri
Ranganatha Reddy and Another28 that distribution is a
word of wide meaning and it is covered by Article 39(b)
of the Constitution. It must be remembered that the
27 1980 (4) SCC 179
28 1977 (4) SCC 471
97
Court had occasion to hold so by way of dealing with
the argument that nationalisation did not have a nexus
with the word distribution.
116. The Judgment of this Court in Waman Rao and Others
v. Union of India and Others29 holds that laws passed
to give effect to Article 39(b) and 39(c) could not be
found violative of Article 14. There cannot be any
quarrel. We are, in this case, called upon to deal
with the case based on the actions taken by the
appellant, which is a Government Company based on its
powers under the Nationalisation Act, being challenged
on the anvil of a later law made by Parliament, the
validity of which, relevantly is not under challenge.
117. Distribution of coal is intended to subserve common
good holds this Court in Samatha v. State of A.P. and
others30
. The content of common good is itself not a
static concept. It may take its hue from the context
and the times in which the matter falls for
consideration by the Court. If Parliament has intended
that State monopolies even if it be in the matter of
29 (1981) 2 SCC 362
30 (1997) 8 SCC 191
98
distribution must come under the anvil of the new
economic regime, it cannot be found flawed by the Court
on the ground that subjecting the State monopoly would
detract from the common good which the earlier
Nationalisation Act when it was enacted, undoubtedly,
succeeded in subserving. We see 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.
118. We have projected some of the concerns of the
appellants in the matter of the appellants being
disabled to put up a justifiable defense under Section
4 of the Act.
119. 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
99
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.
120. We would only clarify 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
100
can act with caprice, or unfairly or treat otherwise
similarly situated persons or things with
discrimination. We do not say more as the matter must
be considered on its own merits both in the appeal as
in all the transferred cases. We may only add that 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.
CONFLICT BETWEEN SECTION 28 OF THE ACT AND
SECTION 32 OF THE NATIONALISATION ACT
121. Section 28 of the Competition Act, 2002, reads as
follows:
101
“28 (1) The Commission may, notwithstanding
anything contained in any other law for the
time being in force, by order in writing,
direct division of an enterprise enjoying
dominant position to ensure that such
enterprise does not abuse its dominant
position. (2) In particular, and without
prejudice to the generality of the foregoing
powers, the order referred to in sub-section
(1) may provide for all or any of the following
matters, namely:— (a) the transfer or vesting
of property, rights, liabilities or
obligations; (b) the adjustment of contracts
either by discharge or reduction of any
liability or obligation or otherwise; (c) the
creation, allotment, surrender or cancellation
of any shares, stocks or securities; 48(d)
[Omitted by Competition (Amendment) Act, 2007]
(e) the formation or winding up of an
enterprise or the amendment of the memorandum
of association or articles of association or
any other instruments regulating the business
of any enterprise; (f) the extent to which, and
the circumstances in which, provisions of the
order affecting an enterprise may be altered
by the enterprise and the registration thereof;
(g) any other matter which may be necessary to
give effect to the division of the enterprise.
(3) Notwithstanding anything contained in any
other law for the time being in force or in
any contract or in any memorandum or articles
of association, an officer of a company who
ceases to hold office as such in consequence
of the division of an enterprise shall not be
entitled to claim any compensation for such
cesser.”
122. It is, undoubtedly, true that there has been a
vesting of rights in regard to the mines under the
Nationalisation Act. Still further, there has been a
102
vesting under Section 5 of the Nationalisation Act of
the rights of the lessee in the first appellant. Under
Section 11 of the Nationalisation Act, the power of
general superintendence, direction, control and
management of the vested minds, vest in the first
appellant-Company. If Section 28 of the Act is evoked
and a direction is given to order division,
undoubtedly, it would be inconsistent with the
provisions of the Nationalisation Act.
123. There are certain salient features to be noticed.
In the first place, there is no challenge to the Act.
Secondly, taking the Act as it plainly reads, the power
to order division and, what is more, all the things
enumerated in Section 28(2), are clearly conferred on
the CCI. Apart from the general non-obstante Clause
contained in Section 60 of the Act, a noticeable feature
about Section 28 of the Act is that it is made even
more clear, apparently, by way of abundant caution in
Section 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 authored
both the Nationalisation Act as also the Act. There is
103
no question of lack of legislative competence. We are
not called upon to pronounce on the vires of the Act.
There is absolutely no scope, at any rate, for reading
down the provision even proceeding on the basis that an
attempt can be made even in the absence of the
challenge. The words of the provision do not admit of
reading down the same. What follows is, therefore,
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. We must, no doubt,
understand the provision to mean that it is not a power
to be exercised lightly. It is a special power intended
to ensure prevention of abuse of dominant position. The
generality of the power is revealed in Section 27. We
incidentally notice that though there can be abuse of
dominant position by an enterprise and a group, which
is sought to be prohibited, Section 28 speaks about the
division of an enterprise. Having regard to the
discussion above, we find no merit in the case sought
to be made for escaping from the net of the Act.
104
124. 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.
We say no more.
125. We would hold that 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 and as indicated
hereinbefore. The transferred cases shall be sent back
so that they may be dealt with on their own merits.
The transferred cases are disposed of.
126. Equally, the Appeal shall be posted for being dealt
with on its own merits. The interlocutory applications
seeking interim relief in the pending Appeal shall be
105
listed in the second week of July, 2023. The contempt
petition shall stand listed in the second week of July,
2023. The Applications filed in connection with I.A.
No. 66587 of 2017 shall stand disposed of.
………………………………………………………, J.
[ K.M. JOSEPH ]
………………………………………………………, J.
[ B. V. NAGARATHNA ]
………………………………………………………, J.
[ AHSANUDDIN AMANULLAH ]
New Delhi;
June 15, 2023