COAL INDIA LIMITED AND ANR versus COMPETITION COMMISSION OF INDIA AND ANR on 15 June 2023

[2023] 7 S.C.R. 827

COAL INDIA LIMITED AND ANR.

v.

COMPETITION COMMISSION OF INDIA AND ANR.

(Civil Appeal No.2845 of 2017)

JUNE 15, 2023

[K. M. JOSEPH, B. V. NAGARATHNA AND AHSANUDDIN

AMANULLAH, JJ.]

Competition Law: Competition Act, 2002 – ss. 2(h), 19(4)(g)and 28 – “Enterprise” – Applicability of the Act – CompetitionAppellate Tribunal affirmed the findings recorded by the CompetitionCommission of India on various facets of abuse of dominant positionagainst the Coal India Limited and its subsidiary company – Whetherthe Competition Act, 2002 applies to the appellants or not – Held:The appellants are Government Companies – They were created totake the place of the Central Government in the matter of supervisingcontrol and managing the affairs of the mines – The “Sovereignfunction” of the Government has been excluded from the ambit ofs.2(h) – Carrying on business in mining, cannot be described as asovereign function – Hence, the appellant is a person within themeaning of s.2(h) , therefore comes under the preview of“enterprise” – The appellants being State, have a duty to keepuppermost, in their minds, the goal in Art.39(b) – There is nothingin the definition which excludes a State monopoly which is even setup to achieve the goals in Art.39(b) – When Parliament enacts laws,it is deemed to be aware of all the existing laws – Parliament wasaware of the Nationalisation Act – Therefore the express referencein s.19(4)(g) of the Act to monopolies created under Statutes asalso Government Companies and Public Sector Units for determiningexistence of dominant position indicates the intention of Parliamentto bring State Monopolies, Government Companies and PublicSector units within the purview of the Act – No reason to hold thata State Monopoly being run through the medium of a GovernmentCompany, even for attaining the goals in the Directive Principles,will go outside the purview of the Act – As a matter of fact there maybe forums other than the CCI whereunder redress may be soughtagainst action of the appellants – But that by itself cannot result indenial of access to a party complaining of contravention of a law

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Awhich is otherwise applicable – The appellants cannot resist theimposition of standards of fairness and the duty to avoiddiscriminatory practices when a specialized forum has been createdby Parliament under the Act – No merit in the contention of theappellants that the Act will not apply to the appellants for the reasonthat the appellants are governed by the Nationalisation Act andBthat Nationalisation Act cannot be reconciled with the CompetitionAct – The Coal Mines (Nationalisation) Act, 1973 – ss. 5, 11, 28and 32 – Constitution of India – Art. 39 (b).

Competition Act, 2002 – s.28 – The Coal Mines(Nationalisation) Act, 1973 – s.32 – Conflict between s.28 of theCCompetition Act, and s.32 of the Coal Mines (Nationalisation) Act– Under s.32 of the Nationalisation Act, the mining companiescannot be wound up – This stands in contrast to s.28 of the Actwhich empowers the CCI to divide enterprises abusing dominantposition including adjustment of contracts, formation of windingDup of enterprises among other things – Held: Parliament hasauthored both the Act – There is no question of lack of legislativecompetence – The words of s.28 of the Competition Act do not admitof reading down the same – If s.28 of the Competition Act is evokedand a direction is given to order division, it would be inconsistentwith the provisions of the Coal Mines (Nationalisation) Act – It isEmade apparent by way of abundant caution in s.28(1), that all thatthe CCI could order would be notwithstanding anything containedin any other law for the time being in force – Parliament hasintended, in order to ensure the proper implementation of the Act,confer power to order division of an enterprise enjoying dominantFpower – This would include the appellants as well.

Conclusion

Competition Act, 2002: ss. 2(r), 2(s), 2(t), 3, 4, 19 – AntiCompetitive Agreements – Abuse of Dominant Position – HistoricalBackground of the Act – Scheme and Provisions of the Act –Discussed.GCompetition Act, 2002: ss. 18, 26, 27, 33, 36 and 41 –Competition Commission of India – Director General – Power andDuties – Discussed.

The Coal Mines (Nationalisation) Act, 1973 – ss. 3, 4, 5 and11 –Preamble and Object – Discussed.H

Word and Phrases: Constitution of India – Art.39 (b) –“Common Good” – The expression ‘common good’ in Art.39(b) in aBenthamite sense involves achieving the highest good of themaximum number of people – The meaning of the words ‘commongood’ may depend upon the times, the felt necessities, the directionthat the Nation wishes to take in the future, the socio-economiccondition of the different classes, the legal and Fundamental Rightsand also the Directive Principles themselves.

Report/Recommendation – Competition policy – RaghavanCommittee Report – Discussed.

Posting the appeal for being dealt on merits, the Court HELD:1. The Law-Giver has taken care to expresslyinclude even Departments of the Government separately withinthe ambit of the word ‘enterprise’. Things could not be moreclear. The only activity of the Government, which has beenexcluded from the scope of Section 2(h) of the Competition Actand therefore, the definition of the word ‘enterprise’ is any activityrelatable to the sovereign functions of the Government. Sovereignfunctions would include, undoubtedly, all activities carried on bythe Departments of the Central Government, dealing with atomicenergy, currency, defense and space. The first appellant is not aDepartment 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 onGovernment 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 monopolywhich is even set up to achieve the goals in Article 39(b) of theConstitution. [Paras 80 and 81][868-G-H; 869-A-D]

2. The CCI is bound to take into consideration the factorswhich have been indicated. Section 19(4) in fact, empowers theCCI to have regard to “all” or “any” of the factors to arrive atthe finding that an enterprise enjoys a dominant position or not.Does not this mean that even a single factor being “any” factormay form the foundation to find whether an enterprise enjoysdominance? In a given case the answer would be in the affirmative.Closer home in the facts, this Court finds that Section 19(4)(g)

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Adeclares that “monopoly” or “dominant position”, whetheracquired as a result of the Statute or by virtue of being aGovernment Company or a Public Sector Undertaking orotherwise, is to be a relevant factor. This is a clear indication thatfar from excluding governmental bodies like a governmentcompany, a public sector undertaking or a body under a StatuteBfrom the purview of the Act, the lawgiver has evinced its intentionto include government companies, public sector companies andbodies acquired under a Statute within the ambit of the Act. Now,this Court proceeds on the basis that the appellant is a monopoly.Further that it is a government company within the meaning ofCSection 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 essentiallyas being in the league of a dominant position. [Para 86][870-F-H;871-A-B]

D3. Dealing with what would indeed constitute abuse ofdominant position as declared imperatively in Section 4(2), if onetakes Section 4(2)(a), it forbids imposing of unfair ordiscriminatory condition in purchase or sale of goods and serviceseither directly or indirectly. It further likewise forbids animposition of an unfair or discriminatory price in purchase or saleEincluding a predatory price of goods or service. The explanationindicates that discriminatory conditions or prices, which may beadopted to meet competition, is not within the scope of themischief. Next, under Section 4(2)(b), the Law-Giver hasproclaimed that there will be abuse of a dominant position by an Fenterprise or group if it limits or restricts production of goods orprovision of services or market therefor. [Para 92][873-G-H]

4. Parliament was aware of the Nationalisation Act. Onemust also take into consideration the fact that coal stood removedfrom the list of essential commodities under the EssentialGCommodities Act in February, 2007. The express reference inSection 19(4)(g) of the Act to monopolies created under Statutesas also Government Companies and Public Sector Units fordetermining existence of dominant position, undoubtedly,indicates the intention of Parliament to bring State Monopolies,Government Companies and Public Sector units within theH

purview of the Act. The Raghavan Committee Report providesan invaluable input. [Para 97][877-C-D]

5. It is true that the actions of the appellants can bechallenged in proceedings in judicial review as contended by theappellants. Equally, the appellants are justified in pointing out asa matter of fact that there may be forums other than the CCIsuch as the Controller of Coal whereunder redress may be soughtagainst action of the appellants. But that by itself, cannot resultin denial of access to a party complaining of contravention of alaw which is otherwise applicable. It must also be rememberedthat action can also be taken by the CCI suo motu. Such is thewidth of the power vouchsafed for the authority under the Act.[Para 119][883-F-H]

6. It is clarified that it will be open to the appellant as theState monopoly to take up all contentions to demonstrate thatthere is no abuse of the dominant position. Be it differential pricingor a decision to limit or restrict production, if it is part of nationalpolicy or based on Presidential Directives and the appellant raisessuch a contention after bonafide following the Directives or policythemselves, it may be a matter, which the CCI would have toconsider 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 DirectivePrinciples. The Act cannot result in transforming the appellantsinto mere profit-making engines or require of them to be obliviousto their obligations under the Constitution. But that cannot equallymean that they can act with caprice, or unfairly or treat otherwisesimilarly situated persons or things with discrimination. Thematter must be considered on its own merits both in the appealas in all the transferred cases. In judicial review the appellantswould be held to the standard of fairness as also the duty not todiscriminate. The appellants cannot resist the imposition ofstandards of fairness and the duty to avoid discriminatory practiceswhen a specialized forum has been created by Parliament underthe Act where also apart from the CCI being an expert body, itcan seek and receive valuable inputs from experts and what ismore, the matter is preceded by the report of Director Generalof Investigation. [Para 120][884-A-E]

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A7. Section 54 of the Act gives power to the CentralGovernment to exempt from the application of the Act or anyprovision and for any period, which is specified in the Notification.The ground for exemption can be security of the State or evenpublic interest. It is not as if the appellants, if there was a genuinecase made out for being taken outside the purview of the Act inBpublic interest, the Government would be powerless. [Para124][886-C-D]

8. There is no merit in the contention of the appellants thatthe Act will not apply to the appellants for the reason that theappellants are governed by the Nationalisation Act and thatCNationalisation Act cannot be reconciled with the Act. This issubject to the appellants having all the rights to defend theiractions under the law. [Para 125][886-D-E]

Tara Prasad Singh and Others v. Union of India andOthers 1980 (4) SCC 179 : [1980] 3 SCR 1042 andDState of Karnataka and Another v. Shri RanganathaReddy and Another (1977) 4 SCC 471 : [1978] 1 SCR641- relied on.

In Re Gujarat Assembly Election matter (2002) 8 SCC237 : [2002] 3 Suppl. SCR 366; Election CommissionEof India v. Ashok Kumar and Others (2000) 8 SCC 216: [2000] 3 Suppl. SCR 34; Ashoka Smokeless Coal India(P) Ltd. and Others v. Union of India and Others (2007)2 SCC 640 : [2006] Suppl. SCR 954; Sanjeev CokeMfg. Co. v. Bharat Coking Coal Ltd. and Another (1983)1 SCC 147 : [1983] 1 SCR 1000; Kasturi Lal LakshmiFReddy and Others v. State of Jammu and Kashmir andAnother (1980) 4 SCC 1 : [1980] 3 SCR 1338;Employees Provident Fund Commissioner v. OfficialLiquidator of Esskay Pharmaceuticals Limited (2011)10 SCC 727 : [2011] 15 SCR 336; Sanwarmal Kejriwalv. Vishwa Coop. Housing Society Ltd. and Others (1990)G2 SCC 288 : [1990] 1 SCR 862; New Delhi MunicipalCouncil v. State of Punjab & others (1997) 7 SCC 339: [1996] 10 Suppl. SCR 472; Waman Rao and Othersv. Union of India and Others (1981) 2 SCC 362 : [1981]2 SCR 1; I.R Coelho (dead) by LRs v. State of T.N. (2007)H2 SCC 1 : [2007] 1 SCR 706; Khoday Distilleries Ltd.

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COAL INDIA LIMITED v. COMPETITION COMMISSIONOF INDIA

v. State of Karnataka & others (1995) 1 SCC 574 :[1994] 4 Suppl. SCR 477; Parag Ice & Oil Mills &another v. Union of India (1978) 3 SCC 459 : [1978] 3SCR 293; Ajaib Singh v. Sirhind Coop. Marketing-cum-Processing Service Society Ltd. and another (1999) 6SCC 82 : [1999] 2 SCR 505; Bangalore Water Supply& Sewerage Board v. A. Rajappa (1978) 2 SCC 213 :[1978] 3 SCR 207; N. Nagendra Rao & Co. v. State ofA.P. (1994) 6 SCC 205 : [1994] 3 Suppl. SCR 144;Chairman, Railway Board and others v. Chandrima Das(Mrs.) and others (2000) 2 SCC 465 : [2000] 1 SCR480; Agricultural Produce Market Committee v. AshokHarikuni and another (2000) 8 SCC 61 : [2000] 3Suppl. SCR 379; Hasan Murtza v. State of Haryana(2002) 3 SCC 1; Sanwarmal Kejriwal v. Vishwa Coop.Housing Society Ltd. and Others (1990) 2 SCC 288 :[1990] 1 SCR 862; State of Tamil Nadu and Others v.L. Abu Kavur Bai and Others (1984) 1 SCC 515 : [1984]1 SCR 725 and Samatha v. State of A.P. and others(1997) 8 SCC 191 : [1997] 2 Suppl. SCR 305 – referred A

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Case Law Reference

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[2023] 7 S.C.R.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.2845DOf 2017.

From the Judgment and Order dated 09.12.2016 of the CompetitionAppellate Tribunal at New Delhi in Appeal No.80 of 2014.

With

EContempt Petition (C) No.896 of 2018 In C.A. No.2845 Of 2017And T.C. (C) Nos.19, 20, 16-18, 21 Of 2023

N. Venkataraman, A.S.G., K K Venugopal, Maninder Singh, RanjitKumar, Birendra Saraf, Sr. Advs., Ms. Sheena Taqui, Ms. Akansha Saini,Mrs. Bina Gupta, Harman Sandhu, Ms. Shally Bhasin, Yaman Verma,FChaitanya Safaya, Prateek Gupta, Ms. Raveena Lalit, Abhishek Hazari,Ms. Sanjana L.B., S. S. Shroff, Ajay Nandalike, Achyuth Ajithkumar,Talha Abdul Rahman, Rishad Ahmed Chowdhury, Ms. Anuja Mishra, V.Chandrashekara Bharathi, Ms. Shruti Shiv Kumar, Ms. Shruthi ShivKumar, Ms. Amritha Chandramouli, Rahul Vijayakumar, Sakya SinghaChaudhuri, Ms. Radhika Gupta, Amit Gautam, Matrugupta Mishra, Ms.GIshita Thakur, Ms. Ritika Singhal, Ms. Divya Roy, Prabhat Kaushik,M.A. Venkata Subramanian, Nagarkatti Kartik Uday, M/s. D.S.K. Legal,G. Saikumar, Samir Malik, Ms. Nikita Choukse, Akash Lamba, Advs.for the appearing parties.

The Judgment of the Court was delivered by

K. M. JOSEPH, J.

1. The Civil Appeal is directed against the Order passed by theCompetition Appellate Tribunal, New Delhi(hereinafter referred to as‘Tribunal’), by which Order, the Tribunal affirmed the findings andconclusion recorded by the CompetitionCommission of India (hereinafterreferred to as ‘CCI’) on various facets of abuse of dominant position.The abuse of dominant position was ascribed to the appellants. Theappeal was dismissed.

2. The second respondent had provided information to the CCIwhich the CCI proceeded to consider and it found the abuse of dominantposition by the appellants.

3. The appellants have filed Interlocutory Application, viz., I.A.No. 66587 of 2017 being an application seeking permission to takeadditional grounds. Parties exchanged pleadings in the interlocutoryapplication.We have allowed the application seeking permission to urgethe new grounds.

4. When the matter came up on 16.09.2022 before a Bench oftwo learned Judges, the Court felt that since modification of order dated03.08.2017 was sought, it would be appropriate that these matters areheard by a Bench of three learned Judges. It is, accordingly, that thematter 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 statuteand what is more important, geared and duty bound to achieve the objectsdeclared in Article 39(b) of the Constitution of India and the secondappellant,Western Coalfields Limited, a subsidiary company of the firstappellantcannot be bound by the Competition Act, 2002 (hereinafterreferred to as the ‘Act’). In other words, having regard to the veryobject and purpose for which it was brought into being and the lawsurrounding such a body, applying the Act would produce such anomalousresults as would stultify the sublime goal enshrined in Article 39(b) asalso the statute under which CIL witnessed its birth. Since it was foundthat there were proceedings pendingbefore the Commission/Tribunalwherein a similar question would directly arise,transfer petitionswerefiled to call for such proceedings to this Court. It is hence, that the A

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ATransfer petitions which we are dealing with came to be allowed. This ishowever, on the understanding that the Court would not go into the meritsof the individual cases but would confine itself to ruling on the questionof law raised by the appellants, viz., the applicability of the Act to them.

6. We have heard Shri K.K. Venugopal, learned Senior Counsel,Bably assisted by Shri Yaman Verma, learned Counsel. Shri ManinderSingh, learned Senior Counsel, also appears on behalf of the appellant.Also, we have heard Shri N.Venkataraman, learned Additional SolicitorGeneral, 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 transferredCcases.

SUBMISSIONS OF THE APPELLANTS/APPLICANTS

7. Shri K. K. Venugopal, learned Senior Counsel, would submitthat the coal mines operated by the appellants pursuant to the provisionsDof the Coal Mines (Nationalization) Act, 1973 (hereinafter referred to asthe ‘Nationalisation Act’) would be wholly outside the purview of theAct. This is for the reason that the very purpose and policy underlyingthe Nationalization Act, was to monopolise the operation of the coalmines and coal mining in the hands of the Central Government and itsagencies such as the appellants. It is not an ordinary monopoly. It is aEmonopoly created by the Nationalization Act; it is, having regard to theneed to immunize it from challenge, that it was accorded protection ofArticle 31B of the Constitution of India; it has been inserted in the NinthSchedule to the Constitution; Article 39(b) of the Constitution of Indiatakes it out of the category of ordinary monopoly; this is for the reasonFthat the State has been charged with the duty to bear in mind the principlesof ‘common good’ being secured by the ‘distribution of scarce resources’;coal, with which mineral we are concerned with, is, indeed, a mineral ofthe highest importance in the economic life of the nation; its equitabledistribution in the manner so as to secure the common good which is thedirective contained in Article 39(b) led to the creation of a statutorilyGmandated monopoly; when such is the thrust of the Nationalisation Act,then, it is wholly inconceivable that the Act would still be applicable tothe appellants. It is pointed out, with reference to the NationalisationAct, that the superintendence of the mines vests with the CentralGovernment or with a corporate body or the company, which it mayHcreate. The first appellant is the holding company and there are subsidiary companies under it. This is contemplated under the Nationalisation Act.The mantle of operating the monopoly therefore, fell on the appellants.The appellants are State within the meaning of Article 12 of theConstitution. Theycontinue to be charged with the duty to be guided bythe Directive Principles contained in Article 39(b). Learned SeniorCounsel would point out that the Act does not deal with a company likethe appellant. In other words, while there may be indication in Section19(4)(g) of the Act that the fact that a body is a monopoly under thestatute may indicate the presence of dominant position, there is a subtledistinction. Unlike an ordinary monopoly, a corporate body like theappellant represents a case of a monopoly with the added and uniquefeature that it is an ‘Article 39(b)’ monopoly.Such a monopoly is outsidethe purview of the Act. Reliance is placed on decisions of this Court toemphasize the point that the Nationalization Act was enacted with aview to give effect to the provision of Article 39(b) (See AshokaSmokeless Coal India (P) Ltd. and Others v. Union of India andOthers1 following Sanjeev Coke Mfg. Co. v. Bharat Coking CoalLtd. and Another2).

8. Learned Senior Counsel drew our attention to Sections 3 and11 of the Nationalisation Act to contend that general superintendence,direction, control and management of the affairs and business of a coalmine,inter alia, as contained in Nationalisation Act, must be given thewidest interpretation. In this regard, reliance is placed by appellants onJudgments interpreting similar words in Article 324 of the Constitution(See In Re Gujarat Assembly Election matter3and ElectionCommission of India v. Ashok Kumar and Others4). Our attention isdrawn also to Article 31C of the Constitution for the proposition that alaw which gives effect to Article 39(b) or 39(c) cannot be impugned onthe 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 actionis inconsistent or runs counter to the Directive Principles, it may,primafacie, be brushed with the tarnish of it being unreasonable.(SeeKasturiLal Lakshmi Reddy and Others v. State of Jammu and Kashmir andAnother5).It is further pointed out by the appellants that on a conspectus 1 (2007) 2 SCC 640

2 (1983) 1 SCC 147

3 (2002) 8 SCC 237

4 (2000) 8 SCC 216

5 (1980) 4 SCC 1

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Aof the Nationalisation Act and on placing it side-by-side with the provisionsof the Act, the divergence and the consequent anomalous results ofbringing the appellant under the Act, would clearly emerge. Our attentionis drawn to the long title of the Act. It is pointed out that the object of theAct is to ensure freedom of trade. This is contrasted with a long title ofthe Nationalisation Act which indicates that the Law-Giver intended toBvest ownership and control of the coal mines in the State so that the saidresource is so distributed as to best serve the common good. It iscontended that CIL does not operate in the commercial sphere. Greatemphasis is laid on the fact that out of 462 mines operated by CIL, 345have suffered losses amounting to Rs.9,878 Crores in the year 2012-C2013. As part of its constitutional responsibility, it engages 51 per cent ofits manpower which is about 1,80,726 persons in such mines. Despitethe fact that these underground mines only contribute 9 per cent to itstotal coal production, it is emphasized that the appellants are not free asa private player to lay off its employees.

D9. Section 4(2)(a) of the Act prohibits unfair and discriminatoryprice 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 ofcoal,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 maybe inconsistent with market principles.

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10. Under the Nationalisation Act as much as under Article 39(b),the appellants may have to follow differential pricing mechanism toencourage captive coal production. Applying the Act would adverselyaffect pursing such a differential pricing mechanism. This again woulddefeat the object underlying the Nationalization Act.F

11. Next, the point of contrast consists of Section 4(2)(b) declaringit to be an abuse of the dominant position where an enterprise limits orrestricts production of goods, provision of services or market. The impactofthe provisions would have on policy decisions taken by the Ministry ofCoal to encourage certain industries through a coal supply and pricingGmechanism is emphasized. As an illustration, it is pointed out that theMinistry of Coal takes action to encourage growth in backward areasby allocating more coal supply. If such policy or actions thereunder areto be tested on the anvil of Section 4(2)(b) of the Act, it may not passmuster. This again would undermine the object of the NationalisationHAct and what is more, the wholesome principle enshrined in Article 39(b).

Section 3 of the Nationalisation Act, it is next pointed out, vests theownership of the coal mines in the Central Government. However, underSection 19 the CCI is obliged to take into consideration the monopolyposition whether controlled by the Government or not, as a factor todetermine the dominant position.

12. Next, it is contended that Section 27(a) of the Act, clothes theCCI with the power to order the cessation of abuse. This would beinconsistent with the appellants pursuing welfare policy in relation topricing and distribution of coal.Under Section 32 of the NationalisationAct, the mining companies cannot be wound up. This stands in contrastto Section 28 of the Act which empowers the CCI to divide enterprisesabusing dominant position including adjustment of contracts, formationof winding up of enterprises among other things.

13. Next, it is pointed out that Section 28 of the NationalisationAct declares that the provisions of the said Act would prevailnotwithstanding anything inconsistent therewith contained in any otherlaw in force, inter alia. (Reliance is placed on the Judgments of thisCourt in Employees Provident Fund Commissioner v. OfficialLiquidatorof Esskay Pharmaceuticals Limited6 as also SanwarmalKejriwal v. Vishwa Coop. Housing Society Ltd. and Others7). Section60 of the Act, which declares that the provisions of the Act shall haveeffect notwithstanding anything inconsistent therewith contained in anyother law for the time being in force, may not assist the second respondentor the CCI in the stand that a Nationalisation Act must make way for theoperation of the Act on its own terms.It is contended that the appellantseven if they constituted a monopoly, they cannot act independently ofPresidential Directives, which are binding on them. The policy framedby the Central Government must be mandatorily followed. This bringsabout an inevitable clash between the actions of the appellant with therequirements which are stipulated in the Act. The appellants are not tobe driven by a profit motive. The appellants are the extended arms ofthe welfare State. The activities of the appellantsare not any ordinarycommercial activities. They must not be so perceived when a complaintof abuse of dominant position is considered under Section 4 of the Act.The mines in question were cost plus mines operated by the appellantsto ensure more availability of coal. They may lose their viability if theyare operated at notified prices.

6 (2011) 10 SCC 727

7 (1990) 2 SCC 288

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A14. Shri K. K. Venugopal, learned Senior Counsel, would submitthat the actions of the appellants are susceptible to judicial review inproceedings under Article 226 or even Article 32. It is, infact, pointedout there are other forums such as the Coal Controller wherein complaintsof the nature, viz., quality of coal as for illustration could be ventilated.Subjecting the appellants to the provisions of the Act is wholly unjustified.BSUBMISSIONS OF THE RESPONDENTS

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15. Per contra, the learned Additional Solicitor General on behalfof the CCI,stoutly contended that the Act, indeed, applies inspite of thenon-obstante clause contained in Section 28 of the Nationalisation Act.CHe would point out that the object of the Act is to bring out a paradigmshift in the economic policy of the nation. There is no conflict betweenthe Nationalisation Act and the Act inkeeping with the changing timesand the imperative need to ensure the best economic interest of theNation. The Act was born after great deal of contemplation. A Committeeknown as the Raghavan Committee, a high-level Committee, went intoDthe issue relating to State monopoly as well. A perusal of the said Reportwould indicate that it was realized that the operation of the Statemonopolies did not conduce to secure the best interest of the Nation.The State monopoly could not be allowed to operate in a state ofinefficiency. It had to set its house in order and pull up its socks. It wasEspecifically contemplated that such State monopolies must fall in lineand operate in the midst of forces of competition. He would point outthat the Court should keep in mind that an examination of the merits ofthe case would clearly indicate that the attempt of the appellants is towriggle out of the situation when its actions have been found to be violativeof the Act and the fine questions which have been raised do not actuallyFeven arise on the defense actually set up before the CCI. He poses thequestion as to whether the appellants could justify the supply ofsubstandard goods and justify it on the high pedestal of a Constitutionalgoal being imperiled if the same is questioned under the Act.

16. He would point out that there is no challenge mounted to theGvires of the Act. There is no scope for reading down the law in theabsence of the challenge. He also relied upon the Judgment of this Courtin the New Delhi Municipal Council v. State of Punjab &others8 tocontend that when the instrumentality of the State proceeds to enter the8 (1997) 7 SCC 339H

commercial field and is carrying on a business activity, it cannot claimimmunity from the laws of the land. Though the said case was deliveredin the context of Article 286, he would submit that the principle is apposite.

17. It is submitted that the Act provides for a detailed procedurewhere information is received or it acts suo motu.Invariably,it calls for areport by the investigation wing. The Constitution of the CCI is sufficientsafeguard as it is composed of people who are experts in various branchesof knowledge. Complaints such as abuse of dominant position are goneinto at great length, full opportunity is given to the persons concerned toplace their objections. It is only when a clear case of abuse of dominantposition, inter alia, is found established, that the CCI acts. He wouldcontend that the appellant is a government company within the meaningof Section 617 of the erstwhile Companies Act. He would point out thatit is not the law that such an entity can claim that its acts are placedbeyond the pale of scrutiny by reason of the fact that the law underwhich they operate has been placed in the Ninth Schedule. He wouldpoint out that there are three filters provided in the Act insofar asinformation relating to abuse of dominant position is concerned. In thefirst place, an entity must answer the description of an enterprise ascontained in Section 2(h) of the Act. Once the said hurdle is crossed, theCCI must ascertain whether the enterprise occupies a dominant position.This is a matter which is covered in Section 19(4) of the Act. There areseveral factors which are indicated. The rear is brought up by theresiduary clause, viz., Section 19(4)(m) which provides for any otherfactor which the Commission may consider relevant for the enquiry.Thisis the second filter. In other words, it is not the abuse by any entitybut it must be abuse by an enterprise. Next, the enterprise must enjoy adominant position. As to what is a dominant position, has been detailed inthe second explanation to Section 4(2) of the Act. Thus, the Commissionis governed by pre-determined and objective criteria to arrive at a findingas to whether an enterprise occupies the dominant position both withreference to the explanation provided in Section 4(2) as also the factorswhich have been elaborately laid down in Section 19(4). It is after thesecond filter is passed, that CCI must pass on to actually find whetherthere is abuse of its dominant position. Section 4(2) appears to providefor what shall be abuse of dominant position. This being the scheme ofthe Act, he contends that there may be no merit in the attempt of theappellants to extricate themselves from a well thought out law providedby the same Law-Giver.

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A18. He would point out that initially coal was an essentialcommodity under the Essential Commodities Act, 1955. When this Courtdelivered the Judgment relied upon by the appellants as well, viz., AshokaSmokeless Coal India (P) Ltd. and Others v. Union of India andOthers9, coal was an essential commodity. The Court proceeded on thesaid basis as well. However, in February, 2007, coal ceased to be anBessential commodity. Next, it is pointed out that the Nationalisation Actitself, which is projected as the sheet anchor of the appellants entirecase was itself taken out from the Ninth Schedule in the year 2017. TheNationalisation Act itself stands repealed. Therefore, he would point outthat the Court is being invited to pronounce on the basis of the ‘hallowed’Cposition that the Nationalisation Act occupied,which itself is no longerthe case. (We must notice here that even in his opening submissions ShriK. K. Venugopal, learned Senior Counsel, pointed out these developments.However, it is his contention that the contracts with which this Court isconcerned all arose during the period of time when the NationalisationAct continued to grace the Ninth Schedule.)D19. Shri N. Venkataraman would point out again that the Courtmay not lose sight of the fact that while thefirst appellant was fullyowned bythe Central Government in terms of its shareholding, after 2010,following disinvestment, the Government shareholding has declined tonearly 67 per cent. The balance of the shareholding is in private hands.EReliance is placed on the Judgment of this Court in Waman Rao andOthers v. Union of India and Others10. Considerable support is soughtto be drawn from the I.R Coelho (dead) by LRs v. State of T.N.11 forthe proposition that the immunity,laws enjoyed on their insertion in theNinth Schedule and the laws, which may be placedin the Ninth Schedule, Fstands considerably diluted. It is pointed out further with reference toJudgment 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 in13Parag Ice& Oil Mills &anotherv. Union of India,it is pointed outthat unlike the law which may be protected under Article 31C, an orderGpassed under the law may not be entitled to the same immunity. He 9 (2007) 2 SCC 64010 (1981) 2 SCC 36211 (2007) 2 SCC 112 (1995) 1 SCC 574H13 (1978) 3 SCC 459

would caution the Court against adjudicating matters which may at bestarise in the abstract. Questions must be answered when they arise onfacts.

20. He would contend that the Court may place an interpretationas would advance the object of the law, which in this case, is to bringabout a transformation in the economy for the greater good of thecommon 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 secondrespondent, would point out that concept of common good so heavilyrelied upon by the appellant, found in Article 39(b), must be interpretedas meaning the interest of the common man or the citizens. 80 per centof the coal is supplied by CIL to power companies. Second respondentis a power company. The second respondent it is pointed out in factsupplies power generated using coal to distribution companies(represented, in fact, before us incidentally by the Maharashtra StateAgency), who, in turn, would finally supply power to the end consumer.The continual supply of coal and prompt performance of the contractsand the reasonableness of the rates and quality of coal, in other words,according to the second respondent, are related to the very commongood, which is emphasized by the appellants. He would further point outthat 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 (hereinafterreferred to as MRTP Act),which stood repealed by the Act, may beborne in mind. In the said Act, Section 3 clearly declared that, unless itwas otherwise notified, the MRTP Act would not apply to GovernmentAgencies, as indicated therein. There is no such provision in the Act. Hedrew our attention to Section 21A of the MRTP Act. Drawing inspirationfrom the preamble to the Act, he emphasizes that the center stage ofattention in the Act is occupied by the consumer. Common good in otherwords, must be associated with the good of the consumer. He drew ourattention to Section 54 of the Act which provides for power to exempt.He pointed out two notifications granting exemptions which were in favourof rural regional banks. If the appellants legitimately wished to be takenout of the purview of the Act, Section 54 holds the key and there is a 14 (1999) 6 SCC 82

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Alawful way. As long as there is no exemption, the Act applies to theappellants. He would further contest the case of the appellants that theappellants were running at a loss as a result of a number of mines runningat a loss.He would purport to provide figures to demonstrate that theappellants have been making huge sums by way of profits andwhat ismore, making it over to the Government of India by way of dividend.BThis is besides highlighting the dilution of the shareholding of theGovernment of India.He would point out that there can be no claim bythe appellants that it is carrying on of any sovereign functions. In thisregard, he drew our attention to the following decisions. BangaloreWater Supply & Sewerage Board v. A. Rajappa15 (See paragraphs-C163 and 168), N. Nagendra Rao & Co. v. State of A.P.16 (Seeparagraphs-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 andanother18(See paragraphs-21 and 32).

D23. Shri M. Mishra, learned Counsel appearing on behalf of oneof the parties in the Transferred Cases would support the respondents inthe Appeal. He would point out that in fact, he appears for the MaharashtraPower Generation company. He would submit that the Court may bearin mind that it is not as if the complaint against the appellants is beingvoiced only by private players like the second respondent in the Appeal.EThe acts and omissions of the appellants is being objected to even bypublic sector units such as his client. He would point out that under theElectricity Act, 2003, the price of power is regulated by the Commissionunder the said Act. The return on investment is highly regulated. Coalconstitutes 60-70 per cent of the costs. The price of coal has a bearingon both the Consumer Price Index as also the Wholesale Price Index.FHe would submit that the report of the Director General under the Actbrings out the facts. Regarding the contention of the appellants that WritCourts can go into the question,it is pointed out that the cases may involvefacts, which are best dealt with by a Body like the CCI. He drew ourattention to the Judgment of this Court in Hasan Murtza v. State ofHaryana19 and also Employees Provident Fund Commissioner v.G20Official Liquidator.Similar contention in support of the CCI and the15 (1978) 2 SCC 21316 (1994)6 SCC 20517 (2000) 2 SCC 46518 (2000) 8 SCC 6119 (2002) 3 SCC 1H20 (2011) 10 SCC 727

second respondent has been voiced by the other respondents in theTransferred Cases.

24. In response to the submissions, Shri K.K Venugopal wouldpoint out that it is not the case of the appellants that the appellant isimmune from all laws. He would further point out that the deletion of theNationalisation Act from the Ninth Schedule may not affect his contentionsas the contracts in question relate to the period when the NationalisationAct was very much in the 9[th] Schedule. He would submit that as held inAshoka Smokeless Coal India (P) Ltd. and Others v. Union of Indiaand Others21,it is not as if the actions of the appellants are immunefrom judicial review under Article 14. He would reiterate that an affectedparty could seek redress in other forums. He would emphasize againthat the Act and even the Raghavan Committee Report does not refer tothe species of public sector company which are geared to achieve thecommon good under Article 39(b) and whose operation was immunizedfrom challenge by their insertion in the 9[th] Schedule at the relevant pointof time. The words in Article 39(b) “so distributed” is a continuingcommand to the State even after the Nationalisation Act was passed.Thisis by way of countering the argument that with the NationalisationActall was done and it was aone-time affair.In other words, the commandof Article 39(b) is that the State shall bear in mind the common goodand, therefore, coal even if it is taken out of the Essential CommoditiesAct, remains a material resource of the country, which must be distributedto achieve common good. He reiterates his contention in this regard. Hedrew our attention to the distinction between an ordinary monopoly anda State Monopoly, which is covered by Article 39(b). They are not birdsof the same feather, it is pointed out. In fact, Shri Yaman Verma, learnedCounsel ably supplemented by pointing to the constraints under whichthe appellants are bound to operate. He points out to the new coal policyand the Presidential Directives. He would then point out that even if theAct were found to be applicable, the Court may clarify that the appellantscould claim justification of their actions by relying on criteria, which theyare bound to follow. We must, here at this juncture, record that when wequeried Shri K. K. Venugopal, learned SeniorCounsel, as to whether hewas claiming that the appellants were carrying on activities, which canbe described as sovereign functions, the answer was clear and forthright,namely, that he was not having such a case.

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A25. When the aspect about the Presidential Directives and thepolicy of the Government was pointed out to the learned AdditionalSolicitor General, N. Venkataraman, he would ask the question as towhat 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 raisedand the relevant facts. He would exhort the Court that bearing in mindBthe paramount need to allow the Act to succeed in its operation, theCourt may not allow the appellants to wriggle out of the well thought outprovisions of the Act which law will subserve the highest public interest.He would submit that if a defenseis set up that bonafide adherence toPresidential Directives is being made under the Act, it would be a matterCwhich may have to engage the CCI.

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ANALYSIS

26. As we have noticed the question, we are called upon to decideis whether the Act applies to the appellants or not. It is necessary thatwe tread carefully so that we skirt an incursion into the merits, whichDcan be undertaken only when theAppeal is heard on merits.

27. Before we pass on to the Act, it may be necessary to look atthe law, which it repealed. The MRTP Act was enacted in the year1969. It was intended to deal with monopolistic and restrictive tradepractices as the very long title suggests. It held sway till the Act repealedEit in the year 2002. However, the Act itself was actually brought intoforce in the year 2009. What is relevant is to notice some of the provisionsof 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 definitionFitself 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 todeal with concepts like associated persons, interconnected undertakingsand finally, the word ‘undertaking’.Sans the three explanations, the wordG‘undertaking’ was contained in Section 2(v) and it read:

“2(v) “undertaking” means an enterprise which is, or has been, oris proposed to be, engaged in the production, storage, supply,distribution, acquisition or control of articles or goods, or theprovisions of services, of any kind, either directly or through oneor more of its units or divisions, whether such unit or division is H

located at the same place where the undertaking is located or at adifferent place or at different places.

Explanation I.—In this clause,—

(a) “article” includes a new article and ”service” includes a newservice; (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 anyservice.

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 othersecurities of any other body corporate shall be deemed to be anundertaking.

Explanation III.—For the removal of doubts, it is hereby declaredthat an investment company shall be deemed, for the purposes ofthis Act, to be an undertaking;”

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 CentralGovernment, by notification, otherwise directs, this Act shall notapply to—

(a) any undertaking owned or controlled by a Governmentcompany, (b) any undertaking owned or controlled by a Government,

(c) any undertaking owned or controlled by a corporation (notbeing a company) established by or under any Central, Provincialor State Act, (d) any trade union or other association of workmen or employeesformed for their own reasonable protection as such workmen oremployees, A

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(e) any undertaking engaged in an industry, the management ofwhich has been taken over by any person or body of persons inpursuance of any authorisation made by the Central Governmentunder any law for the time being in force, A

(f) any undertaking owned by a co-operative society formed andBregistered under any Central, Provincial or State Act relating toco-operative societies, (g) any financial institution.

Explanation.—In determining, for the purpose of clause (c),whether or not any undertaking is owned or controlled by aCcorporation, the shares held by financial institutions shall not betaken into account.”

30. In other words, inter alia, the provisions of the said Act did notapply to an undertaking owned or controlled by a government companyor any undertaking owned or controlled by a corporation (not being aDcompany established by or under a central, provisional or State Act)unless it was expressly made applicable by a notification. It also did notapply to any undertaking, the management of which was taken over byany person or body of persons in pursuance of any authorization madeby the Central Government under any law enforced for the time being inEforce [Clause (e)]. Conspicuous by its absence, is any such provision inthe Act.

31. The CollieryControl Order came to be passed in the year1945 under the Rules. It is the said Order,which came to be continuedunder the Essential Commodities Act. The Coal Controller controlledFthe quality and quantity as noticed in Ashoka Smokeless Coal India(P) Ltd. and Others22.Considering its vital importance, it became theonly mineral which was nationalized in terms of the CokingCoal MinesNationalization Act, 1972 and the Coal Mines Nationalisation Act 1973.The Colliery Control Order 1945 was repealed and replaced by theColliery Collar Control Order 2000 w.e.f. 01.01.2000.G

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 22Ashoka Smokeless Coal India (P) Ltd. and Others v. Union of India and OthersH(2007) 2 SCC 640

in the Schedule with a view to re-organising and reconstructingsuch coal mines so as to ensure the rational, co-ordinated andscientific development and utilisation of coal resources consistentwith the growing requirements of the country, in order that theownership and control of such resources are vested in the Stateand 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 inrelation to the coal mines specified in the Schedule shall standtransferred to, and shall vest absolutely in, the Central Governmentfree 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 CoalMines (Nationalisation) Amendment Act, 1976 (67 of 1976),—

(a) no person, other than—

(i) the Central Government or a Government, company or acorporation owned, managed or controlled by the CentralGovernment, or

(ii) a person to whom a sub-lease, referred to in the proviso toclause (c), has been granted by any such Government, companyor 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, bynotification, specify, shall carry on coal mining operation, in India,in any form; (b) excepting the mining leases granted before suchcommencement in favour of the Government, company orcorporation, referred to in clause (a), and any sub-lease grantedby any such Government, company or corporation, all other mining ABC

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leases and sub-leases in force immediately before suchcommencement, shall, in so far as they relate to the winning ormining of coal, stand terminated; A

(c) no lease for winning or mining coal shall be granted in favourof any person other than the Government, company or corporation,referred to in clause (a):

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Provided that the Government, company or corporation to whoma lease for winning or mining coal has been granted may grant asub-lease to any person in any area on such terms and conditionsas may be specified in the instrument granting the sub-lease, ifthe Government, company or corporation is satisfied that—

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(i) the reserves of coal in the area are in isolated small pockets orare not sufficient for scientific and economical development in aco-ordinated and integrated manner, and

(ii) the coal produced by the sub-lessee will not be required to beDtransported by rail.”

35. Under Section 4, the Central Government was to become thelessee of the State Government when vesting took place under Section3. Section 5 read as follows:

“5. Power of Central Government to direct vesting of rights in aGovernment company.—

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(1) Notwithstanding anything contained in sections 3 and 4, theCentral Government may, if it is satisfied that a Governmentcompany is willing to comply, or has complied, with such termsand conditions as that Government may think fit to impose, direct,by an order in writing, that the right, title and interest of an ownerin relation to a coal mine referred to in section 3, shall, instead ofcontinuing to vest in the Central Government, vest in theGovernment company either on the date of publication of thedirection or on such earlier or later date (not being a date earlierthan the appointed day), as may be specified in the direction.

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(2) Where the right, title and interest of an owner in relation to acoal mine vest in a Government company under sub-section (1),the Government company shall, on and from the date of suchvesting, be deemed to have become the lessee in relation to such H

coal mine as if a mining lease in relation to the coal mine had beengranted to the Government company and the period of such leaseshall be the entire period for which such lease could have beengranted under the Mineral Concession Rules; and all the rightsand liabilities of the Central Government in relation to such coalmine shall, on and from the date of such vesting, be deemed tohave become the rights and liabilities, respectively, of theGovernment company.

(3) The provisions of sub-section (2) of section 4 shall apply to alease which vests in a Government company as they apply to alease vested in the Central Government and references therein tothe “Central Government” shall be construed as references tothe Government company.”

36. Section 11 is significant for the purpose of the case. It read:

“11. Management, etc., of coal mines.—(1) The generalsuperintendence, direction, control and management of the affairsand business of a coal mine, the right, title and interest of an ownerin relation to which have vested in the Central Government undersection 3, shall,— (a) in the case of a coal mine in relation towhich a direction has been made by the Central Government undersub-section (1) of section 5, vest in the Government companyspecified in such direction, or (b) in the case of a coal mine inrelation to which no such direction has been made by the CentralGovernment, vest in one or more Custodians appointed by theCentral Government under sub-section (2),and thereupon theGovernment company so specified or the Custodian so appointed,as the case may be, shall be entitled to exercise all such powersand do all such things as the owner of the coal mine is authorisedto exercise and do. (2) The Central Government may appoint anindividual or a Government company as the Custodian of a coalmine in relation to which no direction has been made by it undersub-section (1) of section 5.”

37. Suffice it for the purpose of this case that we notice nextSection 28:

“28. Effect of this Act on other laws.- The provisions of this Actshall have effect notwithstanding anything inconsistent therewithcontained in any other law for the time being in force or in any AB

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instrument having effect by virtue of any law other than this Act,or in any decree or order of any court, tribunal or other authority.”

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38. Finally, we notice Section 32. It read as follows:

“32. No proceeding for the winding up of a mining company, theright title and interest in relation to the coal mine owned by whichBhave vested with Central Government called a governmentcompany under this Act or for the appointment of a receiver inrespect of the business of the company, shall lie in any Courtexcept with the consent of the Central Government.”

39. The Nationalisation Act came to be inserted in the NinthSchedule to the Constitution. It remained in the Ninth Schedule till it isremoved therefrom in the year 2017.

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40. Article 31B of the Constitution of India reads as under:

“31B. Validation of certain Acts and Regulations Without prejudiceDto the generality of the provisions contained in Article 31A, noneof the Acts and Regulations specified in the Ninth Schedule norany of the provisions thereof shall be deemed to be void, or everto have become void, on the ground that such Act, Regulation orprovision is inconsistent with, or takes away or abridges any ofthe rights conferred by, any provisions of this Part, andEnotwithstanding any judgment, decree or order of any court ortribunal to the contrary, each of the said Acts and Regulationsshall, subject to the power of any competent Legislature to repealor amend it, continue in force.”

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41. Article 31C of the Constitution of India reads:

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“31C. Saving of laws giving effect to certain directive principlesNotwithstanding anything contained in Article 13, no law givingeffect to the policy of the State towards securing all or any of theprinciples laid down in Part IV shall be deemed to be void on theground that it is inconsistent with, or takes away or abridges anyof the rights conferred by Article 14 or Article 19 and no lawcontaining a declaration that it is for giving effect to such policyshall be called in question in any court on the ground that it doesnot give effect to such policy: Provided that where such law ismade by the Legislature of a State, the provisions of this Articleshall not apply thereto unless such law, having been reserved for G

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the consideration of the President, has received his assent Rightto Constitutional Remedies.”

42. The working of the MRTP Act was found to be inadequateparticularly in the context of changes which happened not only in thecountry but also on a larger scale.

43. A high-level Committee known as Raghavan Committee delvedinto the issues. It is, inter alia, stated in the Report as follows: “the objectof competition policy is to promote efficiency and maximize welfare. Inthis context, the appropriate definition of welfare is the sum of consumersurplus and producer’s surplus and also includes any taxes collected bythe Government.”(See paragraph-2.1.1)

We notice the following observations as well:

“2.1.1 Competition policy is defined as “those Governmentmeasures that directly affect the behaviour of enterprises and thestructure of industry” (Khemani, R.S. and Mark A. Dutz, 1996).The objective of competition policy is to promote efficiency andmaximize welfare. In this context the appropriate definition ofwelfare is the sum of consumers’ surplus and producers’ surplusand also includes any taxes collected by the Government.1[1] Itis well known that in the presence of competition, welfaremaximization is synonymous with allocative efficiency. Taxes aregenerally welfare-reducing.”

44. After referring to the reforms initiated in 1991 and dealingwith public sector, it is stated as follows:

“2.6.4 Public sector

In 1991, Government abolished the monopoly of the public sectorindustries except those where security and strategic concerns stilldominated. These include arms and ammunition and allied defenceequipment, atomic energy and nuclear minerals and railwaytransport. Major industries including iron and steel, heavy electricalequipment, aircraft, air transport, shipbuilding, telecommunicationequipment and electric power are now open for private sectorinvestments. A large number of loss-making public enterpriseswere referred to the Board for Industrial and FinancialReconstruction (BIFR). Essentially two different types of reformswere envisaged: greater autonomy for public sector enterprisesand greater private sector ownership.”

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A45. We may next notice paragraph-2.8.5:

“2.8.5 Public Sector To a large extent, the imperative forprivatisation of the public sector has arisen from fiscalconsiderations. From the point of view of economic efficiencyand competition policy, it is important that the public sector doesBnot enjoy monopoly power and is subject to market disciplinesthrough competition. Most of the sectors where the public sectoroperates have in recent years been opened up to entry by privatesector firms. However, as we have noted earlier, the public sectoris given preferential treatment in Government procurement. Weare of the view that the public sector should be exposed toCcompetition 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:

“3.4.5 State Monopolies Policy State monopolies are not only aDreality but are regarded by many countries as inevitableinstruments of public growth and public interest. While ideologymay have played some role in spurring the growth of Statemonopolies, much of this increase can be attributed to the pragmaticresponse to the prevailing milieu, which is frequently an outcomeof the historical past in different countries. A view shared by manyEis that State monopolies and public enterprises in India have playeda vital role in its developing process, have engineered growth incritical core areas and have performed social obligations.Nonetheless, there is also a recognition, consequent on the adversefinancial results and the resultant pumping of budgetary oxygenFfrom the Government treasury to those enterprises, that there isnot only scope for their reformation but also for structural andoperational improvements. This recognition has led to the trendtowards privatising some of them. This is also a part of the generalprocess of liberalisation and deregulation. Privatisation involvesnot only divestiture and sale of Government assets but also a gradualGdecline in the interventionist role played by them.

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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 beabused because of Government patronage and support.

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B. Because of the said patronage, State monopolies may adoptpolicies which tantamount to restrictive trade practices. Forexample, preference to public sector units in tenders and bids,insistence on using public sector services for reimbursement fromGovernment (travelling allowance for Government officials).

C. State monopolies suffer from the schemes of administeredprices, contrary to the spirit of Competition Policy.”

47. In paragraph-3.4.7, it is, inter alia, stated that in the interestsof the consumer the State Monopolies and Public Enterprises need to becompetitive in production of goods and service delivery. Thereafter, it isstated:

“3.4.7 It is well accepted that competition is a key to improvingthe performance of State monopolies and public enterprises. Theoft-noted inefficiency of Government enterprises stems from theirisolation from effective competition (Aharoni, Yair, 1986). In theinterest of the consumers, State monopolies and public enterprisesneed to be competitive in the production and service delivery.While Government should reserve the right to grant statutorymonopoly status to select public enterprises in the broad nationalinterest, it is desirable for the Government to always keep in mindthat de-regulation of statutory monopolies and privatisation arelikely to engender competition that would be healthy for the marketand consumers.”

48. In the summary contained in paragraph-3.5.2, we only noticethe following:

“3.5.2 Summary

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6. Government should divest its shares and assets in Statemonopolies and public enterprises and privatise them in all sectorsother than those subserving defence and security needs andsovereign functions. All State monopolies and public enterpriseswill be under the surveillance of Competition Policy to preventmonopolistic, restrictive and unfair trade practices on their part.”

49. Under the head, the Contours of Competition Policy, inparagraphs-4.2.2 and 4.2.4, we notice the following:

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A“4.2.2 Scope

State Monopolies and Government Procurement. In a number ofcountries, Government enterprises are excluded from the purviewof the Competition Law. With the exception of Government entitiesengaged in sovereign functions, there is no valid justification forBsuch exclusion and all other Government enterprises should bewithin the ambit of the law.

4.2.4 By the same logic, Government enterprises and departmentsengaged in any sovereign function (like defence, law and order,currency functions) may not be subjected to the rigours ofCCompetition Law.”

(Emphasis supplied)

50. In paragraph-4.4.7, we notice the following:

“4.4.7. Before assessing whether an undertaking is dominant, it isDimportant, as in the case of horizontal agreement, to determine what therelevant market is. There are two dimensions to this – the product marketand the geographical market. On the demand side, the relevant productmarket 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, withEtheir existing facilities, switch to the production of such substitute goods.The geographical boundaries of the relevant market can be similarlydefined. Geographic dimension involves identification of the geographicalarea within which competition takes place. Relevant geographic marketscould be local, national, international or occasionally even global, dependingFupon the facts in each case. Some factors relevant to geographicdimension are consumption and shipment patterns, transportation costs,perishability and existence of barriers to the shipment of products betweenadjoining geographic areas. For example, in view of the high transportationcosts in cement, the relevant geographical market may be the regionclose to the manufacturing facility.”G51. In the summary, we may notice paragraph-4.8.8, it is statedas follows:

“4.8.8. Summary

1. The State Monopolies, Government procurement and foreignHcompanies 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 theirautonomy and privileges for regulating the standard and quality ofthe profession and not to limit competition.

3. If quality and safety standards for goods and services aredesigned to prevent market access, such practices will constituteabuse of dominance/exclusionary practices.

4. Certain anti-competitive practices should be presumed to beillegal. Blatant price, quantity, bid and territory sharing agreementsand cartels should be presumed to be illegal.

5. Abuse of dominance rather than dominance needs to be frownedupon for which relevant market will be an important factor.

6. Predatory pricing will be treated as an abuse, only if it is indulgedin by a dominant undertaking.

7. Exclusionary practices which create a barrier to new entrantsor force existing competitors out of the market will attract theCompetition Law.

8. Mergers beyond a threshold limit in terms of assets will requirepre-notification. If no reasoned order, prohibiting the merger isreceived within 90 days it should be deemed to have been approved.In adjudicating a merger, potential efficiency losses from themerger should be weighed against potential gains.”

52. It is following the said Report, that in the year 2002, the Actcame to be enacted. The Preamble to the Act reads:

“An Act to provide, keeping in view of the economic developmentof the country, for the establishment of a Commission to preventpractices having adverse effect on competition, to promote andsustain competition in markets, to protect the interests ofconsumers and to ensure freedom of trade carried on by otherparticipants in markets, in India, and for matters connectedtherewith or incidental thereto.”

53. We notice the scheme of the Act by taking note of the followingprovisions.

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A54. Section 2(h) defines the word ‘enterprise’:

“2(h) “enterprise” means a person or a department of theGovernment, who or which is, or has been, engaged in any activity,relating to the production, storage, supply, distribution, acquisitionor control of articles or goods, or the provision of services, of anyBkind, or in investment, or in the business of acquiring, holding,underwriting or dealing with shares, debentures or other securitiesof any other body corporate, either directly or through one ormore of its units or divisions or subsidiaries, whether such unit ordivision or subsidiary is located at the same place where theenterprise is located or at a different place or at different places,Cbut does not include any activity of the Government relatable tothe sovereign functions of the Government including all activitiescarried on by the departments of the Central Government dealingwith atomic energy, currency, defence and space.

Explanation.-For the purposes of this clause,—D (a) “activity” includes profession or occupation; (b) “article” includes a new article and “service” includes a newservice;

(c) “unit” or “division”, in relation to an enterprise, includesE (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 anyservice;”

F55. 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;G(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—H

COAL INDIA LIMITED v. COMPETITION COMMISSIONOF INDIA [K. M. JOSEPH, J.]

(i) an individual;

(ii) a Hindu undivided family;

(iii) a company;

(iv) a firm;

(v) an association of persons or a body of individuals, whetherincorporated or not, in India or outside India;

(vi) any corporation established by or under any Central, State orProvincial Act or a Government company as defined in section617 of the Companies Act, 1956 (1 of 1956);

(vii) any body corporate incorporated by or under the laws of acountry outside India;

(viii) a co-operative society registered under any law relating toco-operative societies;

(ix) a local authority;

(x) every artificial juridical person, not falling within any of thepreceding sub-clauses;”

57. The words ‘relevant market’, ‘relevant geographical market’,‘relevant product market’, are all separately defined:

“2(r) “relevant market” means the market which may bedetermined by the commission with reference to the relevantproduct market or the relevant geographic market or withreference to both the markets; 2(s) “relevant geographic market” means a market comprisingthe area in which the conditions of competition for supply of goodsor provision of services or demand of goods or services aredistinctly homogenous and can be distinguished from the conditionsprevailing in the neighbouring areas; 2(t) “relevant product market” means a market comprising allthose products or services which are regarded as interchangeableor substitutable by the consumer, by reason of characteristics ofthe products or services, their prices and intended use;”

58. Section 3 prohibits anti-competitive agreements. They aredeclared void.

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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:

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“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.—- B

(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 goodsor service.

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Explanation.— For the purposes of this clause, the unfair ordiscriminatory condition in purchase or sale of goods or servicereferred to in sub-clause (i) and unfair or discriminatory price inpurchase or sale of goods (including predatory price) or servicereferred to in sub-clause (ii) shall not include such discriminatorycondition or price which may be adopted to meet the competition;or D

(b) limits or restricts— (i) production of goods or provision ofservices or market therefor; or (ii) technical or scientificdevelopment relating to goods or services to the prejudice ofEconsumers; or

(c) indulges in practice or practices resulting in denial of marketaccess in any manner; or (d) makes conclusion of contracts subject to acceptance by otherparties of supplementary obligations which, by their nature orFaccording to commercial usage, have no connection with the subjectof 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—

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(a) “dominant position” means a position of strength, enjoyed byan enterprise, in the relevant market, in India, which enables itto—

(i) operate independently of competitive forces prevailing in therelevant market; or H

(ii) affect its competitors or consumers or the relevant market inits favour.

(b) “predatory price” means the sale of goods or provision ofservices, at a. price which is below the cost, as may be determinedby 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-competitiveagreements and also abuse of dominant position. It also regulatescombinations as explained in Section 6. Chapter 3 deals with theestablishment of the CCI. Section 9 provides that the Selection Committeefor appointment of Members of the CCI, including Chairperson, willinclude 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 sixother 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 personof ability, integrity and standing and who has special knowledgeof, and such professional experience of not less than fifteen yearsin, international trade, economics, business, commerce, law,finance, accountancy, management, industry, public affairs orcompetition matters, including competition law and policy, whichin the opinion of the Central Government, may be useful to theCommission.”

63. Section 17 reads as follows:

“17. (1) The Commission may appoint a Secretary and suchofficers and other employees as it considers necessary for theefficient performance of its functions under this Act.

(2) The salaries and allowances payable to and other terms andconditions of service of the Secretary and officers and otheremployees of the Commission and the number of such officersand other employees shall be such as may be prescribed.

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A(3) The Commission may engage, in accordance with the procedurespecified by regulations, such number of experts and professionalsof integrity and outstanding ability, who have special knowledgeof, and experience in, economics, law, business or such otherdisciplines related to competition, as it deems necessary to assistthe Commission in the discharge of its functions under this Act.”B

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64. The duties of the CCI are spelt out in Section 18. It reads asfollows:

“18. Subject to the provisions of this Act, it shall be the duty of theCommission to eliminate practices having adverse effect onCcompetition, promote and sustain competition, protect the interestsof consumers and ensure freedom of trade carried on by otherparticipants, in markets in India: Provided that the Commissionmay, for the purpose of discharging its duties or performing itsfunctions under this Act, enter into any memorandum orarrangement with the prior approval of the Central Government,Dwith any agency of any foreign country.”

65. The aforesaid provisions indicate the width of the power lodgedwith CCI to bring about the sweeping changes in the economy. Section19 empowers the Commission to make inquiries into agreements whichare anti-competitive within the meaning of Section 3. More importantly,ESection 19(4) deals with inquiring into the question as to whether anenterprise enjoys a dominant position.

66. Being a crucial provision, we notice the same.

“19(4) The Commission shall, while inquiring whether an enterpriseFenjoys a dominant position or not under section 4, have due regardto 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;G(d) economic power of the enterprise including commercialadvantages over competitors; (e) vertical integration of the enterprises or sale or service networkof such enterprises; H(f) dependence of consumers on the enterprise; (g) monopoly or dominant position whether acquired as a result ofany statute or by virtue of being a Government company or apublic 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 ofsubstitutable 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 economicdevelopment, by the enterprise enjoying a dominant position havingor likely to have an appreciable adverse effect on competition; (m) any other factor which the Commission may consider relevantfor the inquiry.”

67. Section 19(5) declares that for determining whether the marketconstitutes a relevant market for the purpose of the Act,the CCI shallhave due regard to the relevant geographic market and relevant productmarket.

68. Section 19(6) deals with the factors which are relevant fordetermining the relevant geographic market.

69. Section 19(7) deals with matters which are relevant fordetermining the relevant product market.

70. Section 27 provides for orders which the CCI may pass afterinquiring into agreement or abuse of dominant position:

“27. Where after inquiry the Commission finds that any agreementreferred to in section 3 or action of an enterprise in a dominantposition, is in contravention of section 3 or section 4, as the casemay be, it may pass all or any of the following orders, namely:—

(a) direct any enterprise or association of enterprises or person orassociation of persons, as the case may be, involved in suchagreement, or abuse of dominant position, to discontinue and notto re-enter such agreement or discontinue such abuse of dominantposition, as the case may be; A

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(b) impose such penalty, as it may deem fit which shall be notmore than ten percent of the average of the turnover for the lastthree preceding financial years, upon each of such person orenterprises which are parties to such agreements or abuse:

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Provided that in case any agreement referred to in section 3 hasbeen entered into by a cartel, the Commission may impose uponeach producer, seller, distributor, trader or service provider includedin that cartel, a penalty of up to three times of its profit for eachyear of the continuance of such agreement or ten percent. of itsturnover for each year of the continuance of such agreement,whichever is higher.

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(c) Omitted by Competition (Amendment) Act, 2007

(d) direct that the agreements shall stand modified to the extentand in the manner as may be specified in the order by theCommission; D

(e) direct the enterprises concerned to abide by such other ordersas 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 deemEfit.

Provided that while passing orders under this section, if theCommission comes to a finding, that an enterprise in contraventionto section 3 or section 4 of the Act is a member of a group asdefined in clause (b) of the Explanation to section 5 of the Act,Fand other members of such a group are also responsible for, orhave 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 enterpriseenjoying dominant position.G

72. The CCI is given power to pass interim orders in Section 33.The CCI can regulate its procedure as provided in Section 36. Section41 provides for the duty of the Director General. He is to assist the CCIby investigating into any controversies. Penalties are contemplated underthe Act. An appeal is provided to the Tribunal and Section 53T providesH

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, bynotification, exempt from the application of this Act, or anyprovision thereof, and for such period as it may specify in suchnotification—

(a) any class of enterprises if such exemption is necessary in theinterest of security of the State or public interest; (b) any practice or agreement arising out of and in accordancewith any obligation assumed by India under any treaty, agreementor convention with any other country or countries;

(c) any enterprise which performs a sovereign function on behalfof the Central Government or a State Government:

Provided that in case an enterprise is engaged in any activityincluding the activity relatable to the sovereign functions of theGovernment, the Central Government may grant exemption onlyin respect of activity relatable to the sovereign functions.”

73. Section 60 reads as follows:

“60. The provisions of this Act shall have effect notwithstandinganything inconsistent therewith contained in any other law for thetime being in force.”

74. We must proceed on the basis that there is no challenge to theAct. This means that we must take the Act as it is and place aninterpretation on it as would be most suitable in accordance with well-established principles. In other words, this is not a case where the Courthas 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 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, whichwere the subject matter of the Act, stood vested with the CentralGovernment. The first appellant is a Government Company, which cameinto being, as contemplated under Section 5 of the Nationalisation Act.The appellant-Company operates the mines. It is tasked with the power A

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Aand the duty to distribute coal. This attracts the Directive Principleenshrined in Article 39(b). The said Directive Principle contemplatesthat the ‘State’ should direct its policy towards securing that the ownershipand control of the ‘material resources’ are so ‘distributed’ so as to‘subserve the common good’. The argument of the appellants is partlybased on the dictate of Article 31(B), which, together with the NinthBSchedule, the insertion in which Schedule, immunizes laws from beinginvalidated on the ground that they take away or abridge FundamentalRights. The Nationalisation Act was inserted in the Ninth Schedule on10[th] August, 1975. We are not, in this case, called upon to sit in Judgmentover the insertion of the Nationalisation Act on the basis that it is violativeCof the basic structure of the Constitution in terms of what has been laiddown in I.R. Coelho (supra). We proceed on the basis, therefore, thatthe 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 tothe policy of the State towards securing the principles enshrined in Article39(b).D76. Here we are not dealing with a plea to overturn theNationalisation Act on the score that it is violative of any of theFundamental Rights. The Nationalisation Act was enacted to vest in theCentral Government, the rights of the lessees in the coal mines so thatthey could be operated so as to ensure the rational, coordinated andEscientific development and utilization of the coal resources consistentwith the growing requirements of the country. The Preamble clearlyindicates that the Law-Giver had in mind the goal in Article 39(b), viz.,acquiring ownership over coal mines so that coal mined from the minescould be so distributed so that common good was best subserved. TheFStatement of Objects and Reasons of Act 67 of 1976, by which theNationalisation Act was amended, indicated that after the nationalisationtook place, persons holding mining leases took to unauthorized miningand in a most reckless and unscientific manner. This was noted to bewithout bearing in mind considerations of conservation, safety and the welfare of the workers. A valuable national asset was being destroyed.GThere were safety concerns. Large profits were being reaped but bypaying very low wages to the workers. All privately held coal leaseswere brought under the umbrella of the Nationalisation Act except thoseheld by privately owned steel companies. The Nationalisation Act cameto be again amended by Act 22 of 1978. Thereafter, again it was amendedHby 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 leasingfor mining coal by any private party, was prohibited.

77. Section 11 of the Nationalisation Act contemplates that thegeneral superintendence, direction, control and management of the affairsand business of a coal mine, where the right of an owner, stood vested inthe Central Government under Section 3, would stand vested in theGovernment Company specified in terms of the direction made by theCentral Government under Section 5. The first appellant is a GovernmentCompany, which was wholly owned by the Central Government andwas the Company contemplated under Section 5 and, therefore, thegeneral superintendence, direction, control and management of all themines, ownership of which stood vested in the Central Government,vested with the first appellant. The first appellant is the holding Companyand there are subsidiary companies. Reliance is placed on the Judgmentof this Court rendered in the context of Article 324 of the Constitution. Itis true that the said Article, which deals with the powers of the ElectionCommission of India, employs the words general superintendence,direction and control of, inter alia, for the conduct of all elections toParliament and the State Legislatures, apart from elections to the Officeof the President and the Vice-President. It is, undoubtedly, true that thisCourt has held that the words ‘superintendence, direction and control’,are words of the widest import. It is subject to limitations, flowing fromconstitutional provisions, binding laws and directions, which may be issuedby the Courts.It is true that the Election Commission of India has beenclothed with the plenary jurisdiction. We must, no doubt, not lose sight ofthe fact that Article 324 deals with one of the most important ConstitutionalFunctionaries. The importance of holding free and fair elections, cannotbe understated. Even, according to the appellants, the appellants arebound to act in accordance with Presidential Directives and the extantpolicy in the superintendence, control and management of the affairs ofthe nationalized mines. It may not be appropriate to describe the power,therefore, as fully akin to the powers that vests with the ElectionCommission of India under Article 324. However, we do agree thatsubject to such directives and policy considerations, there is a largemeasure of power with 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 arenot impervious to the operation of laws, which would otherwise apply.

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78. Exception, however, is taken by the appellants to theapplicability of the Act. This objection is founded upon the inconsistenciesand consequent anomalous results, which would arise from the Act beingapplied to the appellants. We have already captured the various perceivedinconsistencies in paragraphs-10-12.

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B79. Before we proceed to deal with the grievances of the appellants,we must undertake a survey of the Act to ascertain, whether the Act, inany manner, advances the case of the appellants. The Act has beenmade in the year 2002 and it was not a pre-existing Statute. When theNational 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. AnC‘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 inSection 2(l) as including a company, a corporation established by or underany Central, State or Provincial or a Government Company, as definedin Section 617 of the Companies Act, 1956. We need not probe further.DThe appellant is a Government Company within the meaning of Section617 of the Companies Act, 1956. Therefore, the appellant is a personwithin 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 artificialperson, the appropriate word is ‘which’. Therefore, the first appellant isa person, which is or has been engaged in any activity. The activity mustErelate to the production, storage, supply, distribution, acquisition or controlof 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 ofSection 2(h). The word ‘goods’ has been defined in Section 2(i) to meanFgoods, as defined in Sale of Goods Act, 1930 and includes productsmanufactured, processed or mined. There cannot be the slightest amountof doubt that the appellant is a person, which is engaged in activity relatingto production, storage, supply, distribution and control of goods, as definedin the Act. It may also be within the ambit of Section 2(h) in regard toservices it may provide, having regard to the wide words used in SectionG2(h).

80. It is noteworthy that the Law-Giver has taken care to expresslyinclude even Departments of the Government separately within the ambitof the word ‘enterprise’. Things could not be more clear. The only activityof the Government, which has been excluded from the scope of SectionH

2(h) and therefore, the definition of the word ‘enterprise’ is any activityrelatable to the sovereign functions of the Government. Sovereignfunctions would include, undoubtedly, all activities carried on by theDepartments 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, asto whether the appellants are carrying on any sovereign functions, bothShri K.K. Venugopal and Shri Yaman Verma, would contend that theyare not carrying on any sovereign functions. This relieves the Court ofundertaking a discussion, which, even otherwise, may be unnecessary,having regard to the nature of the function. The first appellant is not aDepartment of the Government. It is a Government Company. In fact,what is excluded from the definition of the expression ‘enterprise’, is aGovernment Department carrying on Government functions. Carryingon business in mining, cannot, by any stretch of imagination, be describedas a sovereign function.There is nothing in the definition which excludesa State monopoly which is even set up to achieve the goals in Article39(b) of the Constitution.

82. As mentioned earlier, the Act aims at tabooing anti-competitiveagreements and thereby promoting competition. It also prohibits abuseof dominant position. What is prohibited is, however, abuse of dominantposition by an enterprise or a group. A group has been defined in thecontext of Section 5 which deals with regulation of combination. Wefind that the appellant answers the description of an enterprise as defined.

83. When it comes to Section3, dealing with anti-competitiveagreements, it encompasses a prohibition of such agreements by notmerely enterprises or association of enterprises but by any person orassociation of persons.

84. Dealing with abuse of dominant position being the theme ofthe lis, Section 4(1) declares that no enterprise or group shall abuse ‘its’dominant position. What is dominant position? The second explanationin Section 4(2) defines that dominant position for the purposes of Section4 to be ‘a position of strength enjoyed by an enterprise in the relevantmarket in India’. Relevant market has been defined in Section 2(r) tomean “the market which may be determined by the CCI with referenceto the relevant product market or the relevant geographic market orwith reference to both the markets”. The words, relevant product market A

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Ahas been defined in Section 2(t) as meaning “a market comprising all ofthose products or services which are regarded as interchangeable orsubstitutable by the consumer, by reason of characteristics of its productsor services, their prices and intended use”.Section 2(s) defines ‘relevantgeographic market’, as meaning “a market comprising the area in whichthe conditions of competition for supply of goods or provision of servicesBor demand of goods or services are distinctly homogenous and can bedistinguished from the conditions prevailing in the neighbouring areas”.Thus, the lawgiver has provided for a position of strength enjoyed by anenterprise not in the vacuum. It is not based on any subjective criteria.The question of dominant position must stand answered with referenceCto carefully thought-out objective norms, as aforesaid. Continuing withthe definition of the words‘dominant position’, it means a position ofstrength enjoyed by the enterprise in the relevant market which in turninvolves adverting to the relevant geographic market or relevant productmarket or both as defined and it should enable the enterprise to enjoy theposition of strength to operate independently of competitive forcesDprevailing in the relevant market. Another test to find out whether theenterprise enjoys a dominant position is to find out the said position withreference to its ability to “affect its competitors or consumer or therelevant market in its favour”.

85. The Act further expatiates and dwells on the method to findEout dominant position. Section 19(4) enumerates the factors to beconsidered. We have referred to Section 19(4)in paragraph-66.

86. The CCI is bound to take into consideration the factors whichhave been indicated. Section 19(4) in fact, empowers the CCI to haveregard to “all” or “any” of the factors to arrive at the finding that anFenterprise enjoys a dominant position or not. Does not this mean thateven a single factor being “any” factor may form the foundation to findwhether an enterprise enjoys dominance? We would think that in a givencase the answer would be in the affirmative. Closer home in the factswe find that Section 19(4)(g) declares that “monopoly” or “dominantGposition”, whether acquired as a result of the Statute or by virtue ofbeing a Government Company or a Public Sector Undertaking orotherwise,is to be a relevant factor. We will at once notice that this is aclear indication that far from excluding governmental bodies like agovernment company, a public sector undertaking or a body under aStatute from the purview of the Act, the lawgiver has evinced its intention H

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to include government companies, public sector companies and bodiesacquired under a Statute within the ambit of the Act. Now, we proceedon the basis that the appellant is a monopoly. Further that it is agovernment company within the meaning of Section 5 of theNationalisation Act. The interplay of Sections 3, 5 and 11 of theNationalisation Act has the said inevitable effect. A monopoly positionunder Section 19 (4)(g) is treated essentially as being in the league of adominant position.

87. But does the inquiry end on an enterprise answering thedescription of a monopoly or having a dominant position pertinent toSection 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 factorswhether expressly culled out or forming part of the inexhaustibly largeresiduary clause, viz., Section 19(4)(m), may be projected to contendthat, in reality, despite its appearance, it is wholly but deceptive. In otherwords, the CCI may be invited to have a cumulative view of all thefactors which are relevant in a given case. In fact, the learned AdditionalSolicitor General fairly states that the factors may be read as cumulative.

88. Apposite in the facts is Section 19(4)(k). It requires the CCIto factor in social obligations and social cause. Equally, we may noticeSection 19(4)(l). It declares the relative advantage by way of contributionto economic development having or likely to have an appreciable effecton competition to be a relevant factor. What we have deliberately omittedand 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) isonly one of the factors. We do not intend to elaborate further on thescope and impact of the other factors. It would all depend upon the factsof the individual case. Equally, we may only indicate, that, in particular,countervailing buying power would be a relevant factor. Section 26provides for the procedure for holding the inquiry employing the methodsdeclared in Section 19(4) to find the presence or absence of dominantposition. Section 26 contemplates the CCI acting on:

a. Reference by the Central Government or a State Governmentor a statutory authority.

b. Information given under Section 19 of the Act.

c. On its own motion.

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A89. Section 26 contemplates that, in such conditions, if the CCIforms an opinion that a prima facie case exists, then, it should direct theDirector General to cause an investigation into the matter. Under Section26(2), the CCI may close the matter, if it finds that there exists no primafacie case. The Director General is obliged to submit a report on hisfindings. The CCI is to forward the report to the parties. The DirectorBGeneral may recommend that there is no contravention of the Act. Insuch an eventuality, the CCI is obliged to invite objections or suggestionson the said report. The CCI may thereafter decide to close the matterafter considering the objections or it may order further investigation orfurther inquiry by the Director General. The CCI may itself proceedCwith the further inquiry. Under Section 26(8), if the recommendation bythe Director General points to contravention of any of the provisions ofthe Act, and the CCI is of the opinion that further inquiry is to be held, itmust hold an inquiry. Section 27 speaks about the orders that may bepassed in the case of anti-competitive agreements and abuse of dominantposition. The orders which may be passed include a direction to discontinueDabuse of dominant position as found in the case of abuse of dominantposition. The CCI may impose penalty as provided therein. It can directmodification of the agreement. It can also direct the enterprise to abideby the orders that the CCI may pass. It has a residuary power to passany other order as is deemed fit. Section 28, no doubt, contemplates aEdivision. Section 31 deals with orders that may be passed on certaincombinations. Chapter V deals with the duty of the Director General.The Director General is provided with powers available to the CCI underSection 36(2). We may notice in this regard that the CCI under Section36 is to be guided by Principles of Natural Justice and subject to theprovisions of the Act and any of the Rules made by the CentralFGovernment, the CCI is to have powers to regulate its own procedure.Section 36(2) confers powers vested in a civil Court in regard to certainmatters on the CCI. Section 36(3) is significant. It reads:

“The Commission may call upon such experts, from the fields ofeconomics, commerce, accountancy, international trade or fromGany other discipline as it deems necessary, to assist the Commissionin the conduct of any inquiry by it.”

90. We have already noticed that the CCI itself is to consist ofpersons of ability, integrity and standing who have special knowledge ofand such professional experience of not less than 15 years in internationalH

trade, economics, business, commerce, law, finance, accountancy,management, industry, public affairs or competition matters includingcompetition law and policy. We notice this for the reason that both thecomposition of the CCI and it being enabled to call for inputs from expertswould go a long way in assuring the Court that the decision-makingprocess would be meticulous, fair and informed. There is alsoa provisionfor an appealto the Tribunal and further appeal to the Supreme Court.

91. As contended by the learned Additional Solicitor General inthe matter of proceeding under Section 4 read with Section 19 of theAct, in the matter of abuse of dominant position, there are three stages.There must be an enterprise as defined or a group as provided underSection 5.Once it is so found, then, it must be inquired as to whether thesaid enterprise or group enjoys a dominant position. We have explainedhow this is to be found with the aid of Sections 19(4) and the secondexplanation to Section 4. After it is found that there is an enterprise orgroup which enjoys a dominant position, the matter progresses to thethird stage. At this stage, the CCI would have to inquire in an appropriatecase as to whether there is abuse of dominant position by the enterpriseor group. The third stage is embraced by Section 4 (2) of the Act. UnderSection 4(2), the law giver has declared certain acts or omissions toconstitute abuse of dominant position. We have already extracted theprovision. While on Section 4, we posed the question as to whetherSection 4(2), which declares that there shall be an abuse of dominantposition, 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 questionmay not be gone into in the facts of this case. We agree with his request.

92. Dealing with what would indeed constitute abuse of dominantposition as declared imperatively in Section 4(2), if we take Section 4(2)(a),it forbids imposing of unfair or discriminatory condition in purchase orsale of goods and services either directly or indirectly. It further likewiseforbids an imposition of an unfair or discriminatory price in purchase orsale including a predatory price of goods or service. The explanationindicates that discriminatory conditions or prices, which may be adoptedto meet competition, is not within the scope of the mischief. Next, underSection 4(2)(b), the Law-Giver has proclaimed that there will be abuse AB

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Aof a dominant position by an enterprise or group if it limits or restrictsproduction of goods or provision of services or market therefor.

93. The appellants are Government Companies. They were broughtinto being in the context of Sections 3 and 5 of the Nationalisation Act.Undoubtedly, they were created to take the place of the CentralBGovernment in the matter of supervising control and managing the affairsof the mines. Still further, and, more importantly, the Nationalisation Actitself was intended to achieve the goals in Article 39(b) of the Constitution.This means that the Nationalisation Act contemplated coal to be a materialresource 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 manageCand supervise the mines was vested with thefirstappellant company andits subsidiaries. The ambit of the power is unquestionably wide. Weproceed on the basis that the appellants cannot be oblivious to its duty tobear in mind the sublime goal in the Directive Principle,viz., “distribution”,so as to subserve the ‘common good’. We agree further that the

Dexpression State for the purpose of Part IV of the Constitution is to beunderstood with reference to its meaning in Article 12 contained in PartIII having regard to Article 36 of the Constitution. The appellants mayqualify as State for the purpose of Chapter IV if it fulfills the requirementof State under Article 12. We bear in mind in this regard the argument ofthe appellants that a remedy is open to a party against the appellant inEproceedings under Article 226 or Article 32 of the Constitution. Thus,the appellants also, even if the appellants areGovernment Companiesbut being State,have a duty to keep uppermost, in their minds, the goal inArticle 39(b).The argument runs that it would require countenancing anirreconcilable conflict between such a duty and the mandate of SectionF4 (2) of the Act. To be more specific, the contention goes that the appellantswould have to follow the policy of the Government of India in regard tocoal, be it in the matter of pricing or any other matter. There may benecessity to resort to differential pricing so as to encourage captive coalproduction. 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 theGappellant company which is the product of the Nationalisation Act, amonopoly under the same and obliged to observe the mandate of Article39(b) achieve its undoubted goal or perform its unquestionable duty underlaw. The answer of the respondents is that questions are being raised inthe abstract. The Act overrides all laws to the extent of their inconsistencyHwith the Act. It is also contended that as far as the question relating to compliance with Presidential Directives is concerned, if there is a bonafide adherence to Presidential Directives, it may pass muster. In fact,Shri Matrugupta Mishra, learned Counsel, would point out that it is hiscomplaint that the appellant is not even following the PresidentialDirectives. The respondents would point out that questions are beingraised in the air without there being foundation on facts. Next, coming tothe placing of restrictions or limits on the production of a mineral likecoal, there may be Doctrines like Public Trust and IntergenerationalEquity.

94. The State and its agencies may have to put a cap on productionof vital resources if they are not inexhaustible. A question may be raisedif 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 ofSection 4(2)(b) of the Act? Appellants also contended that as State, thedictate of common good contained in Article 39(b) may require of it topromote the interest of backward areas. The question posed is would itbe brushed with the paint of unfairness or discrimination which isanathema to the Act.

95. We have already noticed the report of the RaghavanCommittee. We have also perused the scheme of the Act. We haveculled out the consequences,which flow from the Nationalisation Act.The economic condition of the country at the time of its independence in1947 stands in stark contrast to its condition at varying points of timethereafter.In the initial stages, for understandable reasons, particularly,bearing in mind the need for the State to be the prime mover of theeconomy, huge investments by the State had to be made. Public sectorunits became the arm for the State to realize its economic goal, which, atthe earlier point of time, was to consist of building up the requisiteinfrastructure. The public sector units fulfilled more roles than one. Notonly were the units to produce goods but they were also burdened withthe goal of providing employment. The economic policy of the State hada distinct socialist flavour. No doubt, under the Five-YearPlans, whatwas contemplated was, a mixed economy. The economy was highlyregulated. Out of sheer necessity, perhaps, taxation had to be maintainedat high levels. From being a toddler, the economy slowly grew. As thelife of the nation progressed, the aspirations of its people, not unnaturally,also expanded. The economic life of a nation can never be perceived inisolation. No nation can remain unaffected by the changes inthestate of AB

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Athe world economy. Policies, which are suitable at a given point of time,arenot cast in stone. Each generation of people have the right as also theduty to revisit economic policies which found favour with the past. Thepresent cannot put posterity in chains. Equally, the past cannot hold thepresent hostage to ideas which would then degenerate intowhat wasonce original and suitable into dogma which no longer can serve theBpeople.

96. The expression ‘common good’ in Article 39(b) in a Benthamitesense involves achieving the highest good of the maximum number ofpeople.The meaning of the words ‘common good’ may depend upon thetimes, the felt necessities, the direction that the Nation wishes to take inCthe future, the socio-economic condition of the different classes, thelegal and Fundamental Rights and also the Directive Principlesthemselves. As far as the time dictated content of common good goes, itsimply means that ‘economics’ itself not being bound in chains,but it is adynamic concept.The attainment of common good would be dependentDon the appreciation and understanding of a generation as to how economiccommon good is best achieved. The debate between the advantagesand disadvantages of pursuing the policy of State intervention in economicpolicy which emasculates private enterprise and competition has almostreached its end. The advantages of a fearlessly competitive economyhave been realized by the Nation. There is a backdrop to it. In the yearE1991, the Nation was in a manner of speaking compelled to revisit itseconomic policy having regard to the precarious condition of its foreignexchange reserves. The permit raj, which involved acute regulation ofeconomic activity by the State with all its attendant evils, cried out forreforms. A slew of highly liberal reforms in 1991 set the stage for theFNation to make a paradigm shift. As discussed in the RaghavanCommittee Report, things moved further in the direction of attainingfaster economic growth. The Act is a measure which is intended toachieve the same. The role which was envisaged for the public sectorcompany could not permit them to outlive their utility or abuse their unique position. Disinvestment done in a proper manner was perceived as aGsolution. However, sans disinvestment, State Monopolies,Public SectorCompanies and Government Companies were expected to imbibe thenew economic philosophy. The novel idea, which permeates the Act,would stand frustrated, in fact, if State monopolies, GovernmentCompanies and Public Sector Units are left free to contravene the Act.HNow 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 bestknows the needs of its people, felt that the time was ripe for ushering inthe wholesome idea of fair competition. Can it be said that free competitionas envisaged under the Act which involves avoidance of anti-competitiveagreements, abuse of dominant position and regulation of combinationsare against the common good? As to how common good is best servedis best understood by the representatives of the people in the democraticform of Government. We must bear in mind the wholesome principlethat when Parliament enacts laws, it is deemed to be aware of all theexisting 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 awareof the Nationalisation Act. We must also take into consideration the factthat coal stood removed from the list of essential commodities under theEssential Commodities Act in February, 2007. The express reference inSection 19(4)(g) of the Act to monopolies created under Statutes as alsoGovernment Companies and Public Sector Units for determining existenceof dominant position, undoubtedly, indicates the intention of Parliamentto bring State Monopolies, Government Companies and Public Sectorunits within the purview of the Act. The Raghavan Committee Reportprovides an invaluable input.

98. We may bear in mind that Government Departments are alsoexpressly covered within the expression ‘enterprise’ under the Act. Nodoubt, Departments discharging sovereign functions are excluded butsave those Government departments which are excluded,the GovernmentDepartments being State, are equally obliged to bear in mind the DirectivePrinciples. The radical nature of the law contained in the Act has madea perceptible departure from the erstwhile law contained in the MRTPAct. We have noticed Section 3 of the MRTP Act, which sought toprotect Government entities, as provided therein, from the reach of theMRTP Act. The fact that Government Departments, which follow policiesof the Government, are expected to comply with the Act, has a deepimpact on the contentions of the appellant that they are outside of thepurview of the Act. It would involve elevating the appellants to a statusabove that of a Government Department to approve of the argumentthat Article 39(b), would allow the appellantsto resist action under theAct,when it does not allow the Government Department, under which,in fact, the appellants operate to do so.

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A99. What actually Article 31B and Article 31C purport to providefor is constitutional immunity for the laws covered by the same fromchallenge on the ground that they fall foul of the Fundamental Rights asprovided therein. In other words, the Courts cannot invalidate the lawscovered by the said Articles. We may agree with the appellants thatapart from providing protection to the laws, the Directive Principles wouldBcontinue to govern ‘State’, which would include its instrumentalities,having regard to Article 12 read with Article 36. Here, we may noticeone aspect. Even where State and its instrumentalities are obliged tofollow the Directive Principles, it cannot, in their actions, act in an unfairor discriminatory fashion. Even the appellants agree that judicial review,Cunder Article 226, is permissible.

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100. It is the appellants’ contention that Section 60 of the Act maynot avail the respondents to contend that the Nationalisation Act wouldpale into insignificance and irrelevance when it cannot square with theprovisions of the Act. Section 28 of the Nationalisation Act, on the otherDhand, is set up to counter the argument. What is more, decisions of thisCourt in Employees Provident Fund Commissioner v. OfficialLiquidatorof Esskay Pharmaceuticals Limited23 and SanwarmalKejriwal v. Vishwa Coop. Housing Society Ltd. and Others24areenlisted in support. InSanwarmal Kejriwal (supra), the question, whichwas considered was, whether the protection under Section 15A of aErent control law would not be available to a person on whom a fictionalstatus of tenant was conferred. This was as Section 91 of the MaharashtraCooperative Society Act provided for eviction of a person from a flat.The Court harmonized both the Acts by holding that in matters governedby the earlier Rent Act, its provisions would continue to apply.F

101. In Employees Provident Fund Commissioner(supra), thequestion which arose was whether the priority given to the dues payableby an employer under the employees under Section 11A of the EmployeesProvident Fund and Miscellaneous Provisions Act, 1952 was subject toSection 529A of the Companies Act, 1956. Under Section 529A, workers’Gdues and debts due to secured creditors was to be paid in priority to allother debts. This Court held that the EPF Act was a social welfarelegislation. Section 11(2) of the EPF Act declared that any amount dueunder the Act shall be the first charge in priority to all other debts including 23 (2011) 10 SCC 72724 (1990) 2 SCC 288H

debts due to a Bank which was found to be falling under the category ofa secured creditor. It is in the context of the statutes and the objectsought to be achieved that this Court held that a non-obstante clausecontained in the later Act, viz., the Companies Act, 1956, would notprevail. This Court held, in paragraphs-42 and 44, as follows:

“42. The argument of Shri Gaurav Agrawal that the non obstanteclause contained in the subsequent legislation i.e. Section 529-A(1) of the Companies Act should prevail over similar clausecontained in an earlier legislation i.e. Section 11(2) of the EPFAct sounds attractive, but if the two provisions are read in thelight of the objects sought to be achieved by the legislature byenacting the same, it is not possible to agree with the learnedcounsel. As noted earlier, the object of the amendment made inthe EPF Act by Act 40 of 1973 was to treat the dues payable bythe employer as first charge on the assets of the establishmentand to ensure that the same are recovered in priority to otherdebts. As against this, the amendments made in the CompaniesAct in 1985 are intended to create a charge pari passu in favourof the workmen on every security available to the securedcreditors of the company for recovery of their debts. There isnothing in the language of Section 529-A which may give anindication that the legislature wanted to create first charge inrespect 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 specialenactments contain provisions which give an overriding effect tothe provisions contained therein, then the Court is required toconsider the purpose and the policy underlying the two Acts andthe clear intendment conveyed by the language of the relevantprovisions.”

102. Apparently, the Court apart from noticing the objects soughtto be achieved by the enactment took into consideration the fact thatSection 529A of the Companies Act did not give any indication that thelawgiver wanted to create a first charge in respect of the preferredcreditors under the said provision whereas a first charge stood createdunder the EPF Act.

103. In the context of Section 28 of the Nationalisation Act readwith the object of the Act and bearing in mind the scheme of the Act and A

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Athe language employed as it is, we would think that the later enactmentmust prevail. This is subject to what we shall hold hereinafter.

104. We do not think that the appellants have indicated any decisionof this Court which would establish the appellants’ case.

105. In Ashoka Smokeless Coal India (P) Ltd. v. Union ofBIndia25, the Court was concerned with the validity of the decision takenby the first appellant herein to go in for e-auction of coal. It must benoticed 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 thatthe holding of e-auction did not amount to price fixation. In the course ofCits Judgment, the Court, inter alia held:

“106. It may not be correct to say that any action which is not inconsonance with the provisions of Part IV of the Constitutionwould be ultra vires but there cannot be any doubt whatsoeverthat the principles contained therein would form a relevantDconsideration for determining a question in regard to price fixationof an essential commodity. Directive principles of State policyprovide for a guidance to interpretation of fundamental rights of acitizen as also the statutory rights.

109. It may be true that prices are required to be fixed havingEregard to the market forces. Demand and supply is a relevantfactor as regards fixation of the price. In a market governed byfree economy where competition is the buzzword, producers mayfix their own price. It is, however, difficult to give effect to theconstitutional obligations of a State and the principles leading to afree economy at the same time. A level playing field is the keyFfactor for invoking the new economy. Such a level playing fieldcan be achieved when there are a number of suppliers and whenthere are competitors in the market enabling the consumer toexercise choices for the purpose of procurement of goods. If thepolicy of the open market is to be achieved the benefit of theGconsumer 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 inrelation to an essential commodity, has a different role to play.

25 (2007) 2 SCC 640H

Object of such price fixation is to see that the ultimate consumersobtain the essential commodity at a fair price and for achievingthe said purpose the profit margin of the manufacturer/producermay be kept at a bare minimum. The question as to how such fairprice is to be determined strictosensu does not arise in this case,as would appear from the discussions made hereinafter, as herethe Central Government has not fixed any price. It left the matterto the coal companies. The coal companies in taking recourse toe-auction also did not fix a price. They only took recourse to amethodology by which the price of coal became variable. Its onlyobject was to see that maximum possible price of coal is obtained.

… .”

107. We may notice here that the observations were made at thetime when coal was an essential commodity. Coal ceased to be anessential commodity after the date of the Judgment in February, 2007.We are not for a moment holding that coal has ceased to be a vitalnational resource. All that we are observing is that, the basis for theobservations in paragraph-111, stood removed.

108. The Court went on to hold further:

“113. The State or a public sector undertaking plays an importantrole in the society. It is expected of them that they would actfairly and reasonably in all fields; even as a landlord of a tenantedpremises or in any other capacity. (See Baburao ShantaramMore v. Bombay Housing Board [AIR 1954 SC 153 : 1954 SCR572] SCR at p. 577, DwarkadasMarfatia& Sons v. Board ofTrustees of the Port of Bombay [(1989) 3 SCC 293 : (1989) 2SCR 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 heldthat “coal companies are monopolies within the meaning of the provisionsof the Nationalisation Act”.

110. It is again observed in paragraph-118 that the first appellantand 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 alsopoint out that although a reasonable profit may be permissible,profiteering would not be.”

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A112. Finally, we find the following observations to be found inparagraph-193:

“193. However, discussions made hereinbefore should not be takento lay down a law that the Central Government and for that matterthe coal companies cannot change their policy decision. TheyBevidently can; but therefor there should be a public interest ascontradistinguished from a mere profit motive. Any change in thepolicy decision for cogent and valid reasons is acceptable in law;but such a change must take place only when it is necessary, andupon undertaking of an exercise of separating the genuineconsumers of coal from the rest. If the coal companies intend toCtake any measure they may be free to do so. But the same mustsatisfy the requirements of constitutional as also the statutoryschemes; even in relation to an existing scheme e.g. Open SalesSchemes, indisputably the coal companies would be at liberty toformulate the new policy which would meet the changed situation.E-advertisement or e-tender would be welcome but then thereforDa greater transparency should be maintained.

113. The appellants rely upon the judgment of this Court inStateof Tamil Nadu and Others v. L. Abu Kavur Bai and Others26 for theproposition that the scheme of monopoly or nationalisation subservespublicgood. In the said case, the Court was dealing with a case of nationalisationEof transport services. There can be no quarrel with the proposition thatthe purpose of the Nationalisation Act was indeed to subserve the commongood as held in Tara Prasad Singh and Others v. Union of India and27Others. The purpose of the vesting under the Nationalisation Act wasto distribute the resource to subserve the common good. (See paragraph-32)F

114. We may, in fact, notice the concern of the Court about coalbeing not inexhaustible and the need for a wise and planned conservationof the resources being expressed in paragraph-39. No doubt, all this wasat the time when the Nation was confronted with the condition of themines being what it was as brought out in the Statement of Objects.

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115. We agree with the appellants and as held by this Court inState of Karnataka and Another v. Shri Ranganatha Reddy andAnother28 that distribution is a word of wide meaning and it is covered 26 (1984)1 SCC 51527 1980 (4) SCC 179H28 1977 (4) SCC 471

by Article 39(b) of the Constitution. It must be remembered that theCourt had occasion to hold so by way of dealing with the argument thatnationalisation 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 toArticle 39(b) and 39(c) could not be found violative of Article 14. Therecannot be any quarrel. We are, in this case, called upon to deal with thecase based on the actions taken by the appellant, which is a GovernmentCompany based on its powers under the Nationalisation Act, beingchallenged on the anvil of a later law made by Parliament, the validity ofwhich,relevantly is not under challenge.

117. Distribution of coal is intended to subserve common goodholds this Court in Samatha v. State of A.P. and others30. The contentof common good is itself not a static concept. It may take its hue fromthe context and the times in which the matter falls for consideration bythe Court. If Parliament has intended that State monopolies even if it bein the matter of distribution must come under the anvil of the neweconomic regime, it cannot be found flawed by the Court on the groundthat subjecting the State monopoly would detract from the common goodwhich the earlier Nationalisation Act when it was enacted, undoubtedly,succeeded in subserving. We see no reason to hold that a State Monopolybeing run through the medium of a Government Company, even forattaining the goals in the Directive Principles, will go outside the purviewof the Act.

118. We have projected some of the concerns of the appellants inthe matter of the appellants being disabled to put up a justifiable defenseunder Section 4 of the Act.

119. It is true that the actions of the appellants can be challengedin proceedings in judicial review as contended by the appellants. Equally,the appellants are justified in pointing out as a matter of fact that theremay be forums other than the CCI such as the Controller of Coalwhereunder redress may be sought against action of the appellants.Butthat by itself, cannot result in denial of access to a party complaining ofcontravention of a law which is otherwise applicable. It must also beremembered that action can also be taken by the CCI suo motu. Such isthe width of the power vouchsafed for the authority under the Act.

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884SUPREME COURT REPORTS

A120. We would only clarify that it will be open to the appellant asthe State monopoly to take up all contentions to demonstrate that thereis no abuse of the dominant position. Be it differential pricing or a decisionto limit or restrict production, if it is part of national policy or based onPresidential Directives and the appellant raises such a contention afterbonafidefollowing the Directives or policy themselves, it may be a matter,Bwhich the CCI would have to consider in deciding whether there is abuseof dominant position. If the appellants answer the description of State inArticle 36, then there is a continuing duty to pay obeisance to the DirectivePrinciples. The Act cannot result in transforming the appellants into mereprofit-making engines or require of them to be oblivious to their obligationsCunder the Constitution. But that cannot equally mean that they can actwith caprice, or unfairly or treat otherwise similarly situated persons orthings with discrimination.We do not say more as the matter must beconsidered on its own merits both in the appeal as in all the transferredcases. We may only add that in judicial review the appellants would beheld to the standard of fairness as also the duty not to discriminate. TheDappellants cannot resist the imposition of standards of fairness and theduty to avoid discriminatory practices when a specialized forum hasbeen created by Parliament under the Act where also apart from theCCI being an expert body, it can seek and receive valuable inputs fromexperts and what is more, the matter is preceded by the report of DirectorEGeneral of Investigation.CONFLICT BETWEEN SECTION 28 OF THE ACT ANDSECTION 32 OF THE NATIONALISATION ACT

121. Section 28 of the Competition Act, 2002, reads as follows:

F“28 (1) The Commission may, notwithstanding anything containedin any other law for the time being in force, by order in writing,direct division of an enterprise enjoying dominant position to ensurethat such enterprise does not abuse its dominant position. (2) Inparticular, and without prejudice to the generality of the foregoingpowers, the order referred to in sub-section (1) may provide forGall or any of the following matters, namely:— (a) the transfer orvesting of property, rights, liabilities or obligations; (b) the adjustmentof contracts either by discharge or reduction of any liability orobligation or otherwise; (c) the creation, allotment, surrender orcancellation of any shares, stocks or securities; 48(d) [OmittedHby Competition (Amendment) Act, 2007] (e) the formation or winding up of an enterprise or the amendment of the memorandumof association or articles of association or any other instrumentsregulating the business of any enterprise; (f) the extent to which,and the circumstances in which, provisions of the order affectingan enterprise may be altered by the enterprise and the registrationthereof; (g) any other matter which may be necessary to giveeffect to the division of the enterprise. (3) Notwithstanding anythingcontained in any other law for the time being in force or in anycontract or in any memorandum or articles of association, an officerof a company who ceases to hold office as such in consequenceof the division of an enterprise shall not be entitled to claim anycompensation for such cesser.”

122. It is, undoubtedly, true that there has been a vesting of rightsin regard to the mines under the Nationalisation Act. Still further, therehas been a vesting under Section 5 of the Nationalisation Act of therights of the lessee in thefirst appellant. Under Section 11 of theNationalisation 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 toorder division, undoubtedly, it would be inconsistent with the provisionsof the Nationalisation Act.

123. There are certain salient features to be noticed. In the firstplace, there is no challenge to the Act. Secondly, taking the Act as itplainly reads, the power to order division and, what is more, all the thingsenumerated in Section 28(2), are clearly conferred on the CCI. Apartfrom the general non-obstante Clause contained in Section 60 of theAct, a noticeable feature about Section 28 of the Act is that it is madeeven more clear, apparently, by way of abundant caution in Section 28(1),that all that the CCI could order would be notwithstanding anythingcontained in any other law for the time being in force. Parliament hasauthored both the Nationalisation Act as also the Act. There is no questionof lack of legislative competence. We are not called upon to pronounceon the vires of the Act. There is absolutely no scope, at any rate,forreading down the provision even proceeding on the basis that an attemptcan be made even in the absence of the challenge. The words of theprovision do not admit of reading down the same. What follows is,therefore, Parliament has intended, in order to ensure the properimplementation of the Act,confer power to order division of an enterprise AB

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Aenjoying dominant power. This would include the appellants as well. Wemust, no doubt, understand the provision to mean that it is not a power tobe exercised lightly. It is a special power intended to ensure preventionof abuse of dominant position. The generality of the power is revealed inSection 27. We incidentally notice that though there can be abuse ofdominant position by an enterprise and a group, which is sought to beBprohibited, Section 28 speaks about the division of an enterprise. Havingregard to the discussion above, we find no merit in the case sought to bemade for escaping from the net of the Act.

124. Section 54 of the Act gives power to the Central Governmentto exempt from the application of the Act or any provision and for anyCperiod, which is specified in the Notification. The ground for exemptioncan be security of the State or even public interest. It is not as if theappellants, if there was a genuine case made out for being taken outsidethe purview of the Act in public interest, the Government would bepowerless. We say no more.

D125. We would hold that there is no merit in the contention of theappellants that the Act will not apply to the appellantsfor the reason thatthe appellants are governed by the Nationalisation Act and thatNationalisation Act cannot be reconciled with the Act. This is subject tothe appellants having all the rights to defend their actions under the lawEand as indicated hereinbefore. The transferred cases shall be sent backso that they may be dealt with on their own merits. The transferredcases are disposed of.

126. Equally, the Appeal shall be posted for being dealt with on itsown merits. The interlocutory applications seeking interim relief in theFpending Appeal shall be listed in the second week of July, 2023.Thecontempt petition shall stand listed in the second week of July, 2023. TheApplications filed in connection with I.A. No. 66587 of 2017 shall standdisposed of.

GBibhuti Bhushan Bose(Assisted by : Shubhanshu Das, LCRA)

Appeal posted for being dealt on merits.

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