On June 15, 2023, the SC dismissed the appeal filed by Coal India Limited (‘CIL’) and Western Coalfields Limited (‘WCL’) (collectively, ‘Appellants’) against the order of the Competition Appellate Tribunal (‘COMPAT’) that upheld the findings of the CCI for abuse of dominance against CIL. ^[1]

Appellant’s Submissions: The Appellants challenged the order of the COMPAT (and as a result, the order of the CCI) primarily based on the ground that they cannot be subject to the CCI’s jurisdiction. The principal contention of CIL was that it was a monopoly created by a statute (i.e., Coal Mines (Nationalization) Act, 1973 (‘Coal Mines Act’)) and its purpose was to achieve the objectives laid down under Article 39(b)^[2] of the Constitution of India, 1950 (‘Constitution’), while WCL contended that it cannot be bound by the Competition Act, given that applying the Competition Act would be detrimental towards achieving their goal under Article 39(b) of the Constitution. The Appellants argued that the purpose of the Coal Mines Act was to monopolise the coal mines and the process of coal mining – because of which, they lay outside the purview of the Competition Act.

SC’s Findings: The SC observed that the Appellants fell under the purview of ‘enterprise’ within the meaning of Section 2(h) of the Competition Act and are engaged in activity relating to production, storage, supply, distribution, and control of goods. The SC further observed that the Appellants are not performing a sovereign function and are therefore not excluded from the definition of ‘enterprise’ under Section 2(h) of the Competition Act.

The SC also took into consideration the language of Section 19(4)(g) of the Competition Act. The provision clearly indicates the legislative intent to bind a government company under the purview of the Competition Act. It further observed that the Coal Mines Act intends to achieve the goals in Article 39(b) of the Constitution of India, 1950 and contemplates coal to be a material resource to serve the common good. The SC noted that the Parliament was aware of the Coal Mines Act when it enacted the Competition Act.

The SC observed that legislative intent ensures the proper implementation of the Competition Act which confers power on the CCI under Section 28 of the Competition Act to direct the division of an enterprise enjoying a dominant position – including the Appellants in this case.

Accordingly, the SC observed that there is no merit in the contention of the Appellants that the Competition Act is not applicable to them. Thus, the SC rejected the appeal and directed the matter to be heard and considered on merits.

^[1]       Coal India Limited & Anr v. Competition Commission of India & Anr. Civil Appeal No. 2845 of 2017.

^[2]       The directive principle of state policy that ensures that the distribution of ownership and control of material resources is for the common good.