In a significant ruling on Thursday, the Supreme Court of India declared that the Competition Act, 2002 is applicable to the public sector company, Coal India Limited. The judgment, delivered by a bench comprising Justices KM Joseph, BV Nagarathna, and Ahsanuddin Amanullah, rejected Coal India's argument that the Competition Act does not apply to them due to the provisions of the Coal Mines (Nationalisation) Act.
The bench highlighted that Section 54 of the Competition Act grants the power to the Central Government to exempt any entity or provision from the Act, based on considerations such as security of the State or public interest. It emphasized that if Coal India could establish a genuine case for exemption in the interest of the public, the government would have the authority to grant such exemption.
The verdict came in response to a batch of appeals, with Coal India challenging a ruling by the erstwhile Competition Appellate Tribunal (COMPAT) in December 2016. The COMPAT had dismissed Coal India's challenge against an October 2014 order issued by the Competition Commission of India (CCI). The CCI had found Coal India guilty of abusing its dominant position in the production and supply of non-coking coal to thermal producers, violating the Competition Act.
Notably, several entities had filed complaints and provided information to the CCI regarding Coal India's anti-competitive conduct. The Maharashtra-based coal-fired thermal power generation company, Sai Wardha, along with the Maharashtra Generating Company Limited, the Gujarat State Electricity Corporation Limited, the Madhya Pradesh Power Generating Corporation Limited, the West Bengal Power Development Corporation Limited, and the Sponge Iron Manufacturers Association, had raised concerns about Coal India's practices. They alleged that Coal India delayed the execution of fuel sales agreements, imposed discriminatory pricing, and supplied substandard coal without justification.
During the hearings, Coal India argued that its operations, governed by the Coal Mines (Nationalisation) Act, were exempt from the Competition Act. However, the CCI countered this argument, asserting that there was no constitutional challenge to any provision of the Competition Act. The CCI, represented by Additional Solicitor General N Venkataraman, contended that Coal India had unilaterally fixed coal prices and supplied substandard coal to power companies.
The Supreme Court rejected the notion that Coal India possessed powers similar to the Election Commission of India regarding the superintendence over commercial coal operations. It emphasized that as a public sector company, Coal India had a duty to consider the goal of "common good" as mentioned in Article 39 of the Constitution.
The Supreme Court recognized the changing economic landscape since India's independence and emphasized that policies must adapt to new circumstances. It highlighted the need to balance the interests of the present generation without disregarding the welfare of future generations. Additionally, it clarified that Coal India, despite being a government company, had the responsibility to uphold the goal of Article 39(b) in its operations.
The Supreme Court's ruling marks a significant development in the case, with the matter now being remanded back to the Competition Commission of India for a decision on its merits. The court also scheduled the interim relief applications and contempt petitions for listing in July 2023.
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