CIL vs CCI: SC says Coal India cannot seek exemption from Competition Act because it’s a PSU

New Delhi: Delivering a landmark judgment that will impact all public sector undertakings (PSUs) in India, the Supreme Court said on Thursday that Coal India Limited (CIL) cannot seek an exemption from competition laws (Competition Act, 2002) because it is a PSU formed under the Coal Mines (Nationalisation) Act, 1973. “The appellants cannot resist the imposition of standards of fairness and the duty to avoid discriminatory practices when a specialised forum has been created by Parliament under the Act where also apart from the CCI being an expert body, it can seek and receive valuable inputs from experts and what is more, the matter is preceded by the report of Director General of Investigation,” said the SC in its judgment.

“We would hold that there is no merit in the contention of the appellants that the Act will not apply to the appellants for the reason that the appellants are governed by the Nationalisation Act and that Nationalisation Act cannot be reconciled with the Act,” the top court observed. As a result of this judgment, all PSUs will now come under the ambit of the Competition Act.

SC asks CCI to assess anti-competition cases against Coal India on merit

The SC also transferred the cases forwarded to it back to the CCI, asking the body to make a decision on the basis of merits of the case. “This (the judgment) is subject to the appellants having all the rights to defend their actions under the law and as indicated hereinbefore. The transferred cases shall be sent back (to the CCI) so that they may be dealt with on their own merits. The transferred cases are disposed of,” said the apex court.

“Equally, the appeal shall be posted for being dealt with on its own merits. The interlocutory applications seeking interim relief in the pending shall be listed in the second week of July 2023. The contempt petitions shall be listed in July 2023,” the court added.

Coal India vs CCI

The judgment was delivered by a bench of Justice KM Joseph and BV Nagarathna. It was hearing petitions filed by Coal India in which the state-run coal miner had contended that it operates coal mines under the Nationalisation Act and is duty-bound to achieve the objects declared in Article 39(b) of the Constitution of India for the common good. Therefore, the PSU had contended that it should be allowed to operate outside the purview of the Competition Act.

Coal India had filed an appeal against the order pronounced by the Competition Appellate Tribunal (COMPAT) in December 2016. The case dates back to 2013 when the CCI had held that Coal India was in a dominant position in the coal market and abused its position. The CCI had also imposed a penalty of Rs 1,773.05 crore on Coal India for introducing unfair/discriminatory conditions in Fuel Supply Agreements (FSAs) with consumers of non-coking coal — power producers. But after the intervention of the COMPAT, the penalty was reduced to Rs 591 crore.

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