Jurist India Supreme Court rules country’s largest coal producer must comply with Competition Act

[Dadparvar]

The Supreme Court of India ruled Thursday that Coal India Limited (CIL) must comply with the Competition Act, 2002 despite being a public sector business under Coal Mines (Nationalization) Act, 1973. The court held that CIL was unable to “resist the imposition of standards of fairness and the duty to avoid discriminatory practices” through claiming exemption under the Nationalization Act. In line with that, the court called out CIL for abusing its dominant position in the industry, which is what originally landed the case before the court.

CIL originally appealed to the court after it was found guilty of violating the Competition Act through abusing its dominant position in the production and delivery of non-coking coal to thermal producers. CIL received a directive from the Competition Commission of India to “cease such anti-competitive conduct.” The Competition Appellate Tribunal (COMPAT), in the first round of litigation, remanded the matter for a new judgement, reducing the penalty on CIL from the initial amount of 1733.05 crore to 591.01 crore.

CIL submitted an application to the court arguing that the Competition Act of 2002 would not apply to it because it operated coal mines covered by the Nationalization Act.

The court dismissed CIL’s argument that the act exempted them from the Competition Act’s application. The bench stated:

Section 54 of the [Competition] Act gives power to the Central Government to exempt from the application of the Act or any provision and for any period, which is specified in the Notification. The ground for exemption can be security of the State or even public interest. It is not as if the appellants, if there was a genuine case made out for being taken outside the purview of the Act in public interest, the Government would be powerless. We say no more.

Turning more broadly, the Supreme Court also ruled that a public sector corporation cannot neglect its obligation of serving the “common good”—as mentioned in Article 39 of the Indian Constitution—with regards to fair distribution. The court noted that the “common good” is a dynamic term, which may change depending on the “socio-economic condition” and fundamental legal rights in India at the time.

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