COAL INDIA LIMITED AND ANR. v. COMPETITION COMMISSION OF INDIA AND ANR.

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OF INDIA [K. M. JOSEPH, J.]

to include government companies, public sector companies and bodies acquired under a Statute within the ambit of the Act. Now, we proceed on the basis that the appellant is a monopoly. Further that it is a government company within the meaning of Section 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 essentially as being in the league of a dominant position.

87Copy pinpoint87. But does the inquiry end on an enterprise answering the description of a monopoly or having a dominant position pertinent to Section 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 factors whether expressly culled out or forming part of the inexhaustibly large residuary clause, viz., Section 19(4)(m), may be projected to contend that, in reality, despite its appearance, it is wholly but deceptive. In other words, the CCI may be invited to have a cumulative view of all the factors which are relevant in a given case. In fact, the learned Additional D Solicitor General fairly states that the factors may be read as cumulative.

88Copy pinpoint88. Apposite in the facts is Section 19(4)(k). It requires the CCI to factor in social obligations and social cause. Equally, we may notice Section 19(4)(l). It declares the relative advantage by way of contribution to economic development having or likely to have an appreciable effect on competition to be a relevant factor. What we have deliberately omitted and 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) is only one of the factors. We do not intend to elaborate further on the scope and impact of the other factors. It would all depend upon the facts of the individual case. Equally, we may only indicate, that, in particular, countervailing buying power would be a relevant factor. Section 26 provides for the procedure for holding the inquiry employing the methods declared in Section 19(4) to find the presence or absence of dominant position. Section 26 contemplates the CCI acting on: G a. Reference by the Central Government or a State Government or a statutory authority. b. Information given under Section 19 of the Act. c. On its own motion. H

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89Copy pinpoint89. Section 26 contemplates that, in such conditions, if the CCI forms an opinion that a prima facie case exists, then, it should direct the Director General to cause an investigation into the matter. Under Section 26(2), the CCI may close the matter, if it finds that there exists no prima facie case. The Director General is obliged to submit a report on his findings. The CCI is to forward the report to the parties. The Director B General may recommend that there is no contravention of the Act. In such an eventuality, the CCI is obliged to invite objections or suggestions on the said report. The CCI may thereafter decide to close the matter after considering the objections or it may order further investigation or further inquiry by the Director General. The CCI may itself proceed with the further inquiry. Under Section 26(8), if the recommendation by the Director General points to contravention of any of the provisions of the Act, and the CCI is of the opinion that further inquiry is to be held, it must hold an inquiry. Section 27 speaks about the orders that may be passed in the case of anti-competitive agreements and abuse of dominant position. The orders which may be passed include a direction to discontinue abuse of dominant position as found in the case of abuse of dominant position. The CCI may impose penalty as provided therein. It can direct modification of the agreement. It can also direct the enterprise to abide by the orders that the CCI may pass. It has a residuary power to pass any other order as is deemed fit. Section 28, no doubt, contemplates a E division. Section 31 deals with orders that may be passed on certain combinations. Chapter V deals with the duty of the Director General. The Director General is provided with powers available to the CCI under Section 36(2). We may notice in this regard that the CCI under Section 36 is to be guided by Principles of Natural Justice and subject to the provisions of the Act and any of the Rules made by the Central F Government, the CCI is to have powers to regulate its own procedure. Section 36(2) confers powers vested in a civil Court in regard to certain matters on the CCI. Section 36(3) is significant. It reads: “The Commission may call upon such experts, from the fields of economics, commerce, accountancy, international trade or from G any other discipline as it deems necessary, to assist the Commission in the conduct of any inquiry by it.”

90Copy pinpoint90. We have already noticed that the CCI itself is to consist of persons of ability, integrity and standing who have special knowledge of and such professional experience of not less than 15 years in international H

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

91Copy pinpoint91. As contended by the learned Additional Solicitor General in the matter of proceeding under Section 4 read with Section 19 of the Act, in the matter of abuse of dominant position, there are three stages. There must be an enterprise as defined or a group as provided under Section 5.Once it is so found, then, it must be inquired as to whether the said enterprise or group enjoys a dominant position. We have explained how this is to be found with the aid of Sections 19(4) and the second explanation to Section 4. After it is found that there is an enterprise or group which enjoys a dominant position, the matter progresses to the third stage. At this stage, the CCI would have to inquire in an appropriate case as to whether there is abuse of dominant position by the enterprise or group. The third stage is embraced by Section 4 (2) of the Act. Under Section 4(2), the law giver has declared certain acts or omissions to constitute abuse of dominant position. We have already extracted the provision. While on Section 4, we posed the question as to whether Section 4(2), which declares that there shall be an abuse of dominant position, 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 question may not be gone into in the facts of this case. We agree with his request.

92Copy pinpoint92. Dealing with what would indeed constitute abuse of dominant position as declared imperatively in Section 4(2), if we take Section 4(2)(a), it forbids imposing of unfair or discriminatory condition in purchase or sale of goods and services either directly or indirectly. It further likewise forbids an imposition of an unfair or discriminatory price in purchase or sale including a predatory price of goods or service. The explanation indicates that discriminatory conditions or prices, which may be adopted to meet competition, is not within the scope of the mischief. Next, under Section 4(2)(b), the Law-Giver has proclaimed that there will be abuse H

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A of a dominant position by an enterprise or group if it limits or restricts production of goods or provision of services or market therefor.

93Copy pinpoint93. The appellants are Government Companies. They were brought into being in the context of Sections 3 and 5 of the Nationalisation Act. Undoubtedly, they were created to take the place of the Central B Government in the matter of supervising control and managing the affairs of the mines. Still further, and, more importantly, the Nationalisation Act itself was intended to achieve the goals in Article 39(b) of the Constitution. This means that the Nationalisation Act contemplated coal to be a material resource 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 manage and supervise the mines was vested with thefirstappellant company and its subsidiaries. The ambit of the power is unquestionably wide. We proceed on the basis that the appellants cannot be oblivious to its duty to bear in mind the sublime goal in the Directive Principle,viz., “distribution”, so as to subserve the ‘common good’. We agree further that the expression State for the purpose of Part IV of the Constitution is to be understood with reference to its meaning in Article 12 contained in Part III having regard to Article 36 of the Constitution. The appellants may qualify as State for the purpose of Chapter IV if it fulfills the requirement of State under Article 12. We bear in mind in this regard the argument of the appellants that a remedy is open to a party against the appellant in proceedings under Article 226 or Article 32 of the Constitution. Thus, the appellants also, even if the appellants areGovernment Companies but being State,have a duty to keep uppermost, in their minds, the goal in Article 39(b).The argument runs that it would require countenancing an irreconcilable conflict between such a duty and the mandate of Section F 4 (2) of the Act. To be more specific, the contention goes that the appellants would have to follow the policy of the Government of India in regard to coal, be it in the matter of pricing or any other matter. There may be necessity to resort to differential pricing so as to encourage captive coal production. 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 the appellant company which is the product of the Nationalisation Act, a monopoly under the same and obliged to observe the mandate of Article 39(b) achieve its undoubted goal or perform its unquestionable duty under law. The answer of the respondents is that questions are being raised in the abstract. The Act overrides all laws to the extent of their inconsistency with the Act. It is also contended that as far as the question relating to

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compliance with Presidential Directives is concerned, if there is a bona fide adherence to Presidential Directives, it may pass muster. In fact, Shri Matrugupta Mishra, learned Counsel, would point out that it is his complaint that the appellant is not even following the Presidential Directives. The respondents would point out that questions are being raised in the air without there being foundation on facts. Next, coming to the placing of restrictions or limits on the production of a mineral like coal, there may be Doctrines like Public Trust and Intergenerational Equity.

94Copy pinpoint94. The State and its agencies may have to put a cap on production of vital resources if they are not inexhaustible. A question may be raised if a bona fide decision is taken by the appellants that ‘slaughter mining’ C which leaves little for the future must be avoided, would it fall foul of Section 4(2)(b) of the Act? Appellants also contended that as State, the dictate of common good contained in Article 39(b) may require of it to promote the interest of backward areas. The question posed is would it be brushed with the paint of unfairness or discrimination which is D anathema to the Act.

95Copy pinpoint95. We have already noticed the report of the Raghavan Committee. We have also perused the scheme of the Act. We have culled out the consequences,which flow from the Nationalisation Act. The economic condition of the country at the time of its independence in E 1947 stands in stark contrast to its condition at varying points of time thereafter.In the initial stages, for understandable reasons, particularly, bearing in mind the need for the State to be the prime mover of the economy, huge investments by the State had to be made. Public sector units became the arm for the State to realize its economic goal, which, at the earlier point of time, was to consist of building up the requisite infrastructure. The public sector units fulfilled more roles than one. Not only were the units to produce goods but they were also burdened with the goal of providing employment. The economic policy of the State had a distinct socialist flavour. No doubt, under the Five-YearPlans, what was contemplated was, a mixed economy. The economy was highly regulated. Out of sheer necessity, perhaps, taxation had to be maintained at high levels. From being a toddler, the economy slowly grew. As the life of the nation progressed, the aspirations of its people, not unnaturally, also expanded. The economic life of a nation can never be perceived in isolation. No nation can remain unaffected by the changes inthestate of H

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A the world economy. Policies, which are suitable at a given point of time,are not cast in stone. Each generation of people have the right as also the duty to revisit economic policies which found favour with the past. The present cannot put posterity in chains. Equally, the past cannot hold the present hostage to ideas which would then degenerate intowhat was once original and suitable into dogma which no longer can serve the people.

96Copy pinpoint96. The expression ‘common good’ in Article 39(b) in a Benthamite sense involves achieving the highest good of the maximum number of people.The meaning of the words ‘common good’ may depend upon the times, the felt necessities, the direction that the Nation wishes to take in the future, the socio-economic condition of the different classes, the legal and Fundamental Rights and also the Directive Principles themselves. As far as the time dictated content of common good goes, it simply means that ‘economics’ itself not being bound in chains,but it is a dynamic concept.The attainment of common good would be dependent on the appreciation and understanding of a generation as to how economic common good is best achieved. The debate between the advantages and disadvantages of pursuing the policy of State intervention in economic policy which emasculates private enterprise and competition has almost reached its end. The advantages of a fearlessly competitive economy have been realized by the Nation. There is a backdrop to it. In the year E 1991, the Nation was in a manner of speaking compelled to revisit its economic policy having regard to the precarious condition of its foreign exchange reserves. The permit raj, which involved acute regulation of economic activity by the State with all its attendant evils, cried out for reforms. A slew of highly liberal reforms in 1991 set the stage for the F Nation to make a paradigm shift. As discussed in the Raghavan Committee Report, things moved further in the direction of attaining faster economic growth. The Act is a measure which is intended to achieve the same. The role which was envisaged for the public sector company could not permit them to outlive their utility or abuse their unique position. Disinvestment done in a proper manner was perceived as a G solution. However, sans disinvestment, State Monopolies,Public Sector Companies and Government Companies were expected to imbibe the new economic philosophy. The novel idea, which permeates the Act, would stand frustrated, in fact, if State monopolies, Government Companies and Public Sector Units are left free to contravene the Act. H Now that the Nation was more than 50 years old after it became a

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Republic and it no longer was the infant it was, Parliament which best knows the needs of its people, felt that the time was ripe for ushering in the wholesome idea of fair competition. Can it be said that free competition as envisaged under the Act which involves avoidance of anti-competitive agreements, abuse of dominant position and regulation of combinations are against the common good? As to how common good is best served is best understood by the representatives of the people in the democratic form of Government. We must bear in mind the wholesome principle that when Parliament enacts laws, it is deemed to be aware of all the existing laws. Properly construed and operated fairly, the ‘Act’ would, in other words,harmonise with common good. being its goal as well.

97Copy pinpoint97. Therefore, we proceed on the basis that Parliament was aware of the Nationalisation Act. We must also take into consideration the fact that coal stood removed from the list of essential commodities under the Essential Commodities Act in February, 2007. The express reference in Section 19(4)(g) of the Act to monopolies created under Statutes as also Government Companies and Public Sector Units for determining existence of dominant position, undoubtedly, indicates the intention of Parliament to bring State Monopolies, Government Companies and Public Sector units within the purview of the Act. The Raghavan Committee Report provides an invaluable input.

98Copy pinpoint98. We may bear in mind that Government Departments are also expressly covered within the expression ‘enterprise’ under the Act. No doubt, Departments discharging sovereign functions are excluded but save those Government departments which are excluded,the Government Departments being State, are equally obliged to bear in mind the Directive Principles. The radical nature of the law contained in the Act has made a perceptible departure from the erstwhile law contained in the MRTP F Act. We have noticed Section 3 of the MRTP Act, which sought to protect Government entities, as provided therein, from the reach of the MRTP Act. The fact that Government Departments, which follow policies of the Government, are expected to comply with the Act, has a deep impact on the contentions of the appellant that they are outside of the G purview of the Act. It would involve elevating the appellants to a status above that of a Government Department to approve of the argument that Article 39(b), would allow the appellantsto resist action under the Act,when it does not allow the Government Department, under which, in fact, the appellants operate to do so. H

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99Copy pinpoint99. What actually Article 31B and Article 31C purport to provide for is constitutional immunity for the laws covered by the same from challenge on the ground that they fall foul of the Fundamental Rights as provided therein. In other words, the Courts cannot invalidate the laws covered by the said Articles. We may agree with the appellants that apart from providing protection to the laws, the Directive Principles would continue to govern ‘State’, which would include its instrumentalities, having regard to Article 12 read with Article 36. Here, we may notice one aspect. Even where State and its instrumentalities are obliged to follow the Directive Principles, it cannot, in their actions, act in an unfair or discriminatory fashion. Even the appellants agree that judicial review, under Article 226, is permissible.

100Copy pinpoint100. It is the appellants’ contention that Section 60 of the Act may not avail the respondents to contend that the Nationalisation Act would pale into insignificance and irrelevance when it cannot square with the provisions of the Act. Section 28 of the Nationalisation Act, on the other hand, is set up to counter the argument. What is more, decisions of this Court in Employees Provident Fund Commissioner v. Official Liquidatorof Esskay Pharmaceuticals Limited 23 and Sanwarmal Kejriwal v. Vishwa Coop. Housing Society Ltd. and Others 24are enlisted in support. In Sanwarmal Kejriwal (supra), the question, which was considered was, whether the protection under Section 15A of a E rent control law would not be available to a person on whom a fictional status of tenant was conferred. This was as Section 91 of the Maharashtra Cooperative Society Act provided for eviction of a person from a flat. The Court harmonized both the Acts by holding that in matters governed by the earlier Rent Act, its provisions would continue to apply.

101Copy pinpoint101. In Employees Provident Fund Commissioner (supra), the question which arose was whether the priority given to the dues payable by an employer under the employees under Section 11A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 was subject to Section 529A of the Companies Act, 1956. Under Section 529A, workers’ G dues and debts due to secured creditors was to be paid in priority to all other debts. This Court held that the EPF Act was a social welfare legislation. Section 11(2) of the EPF Act declared that any amount due under the Act shall be the first charge in priority to all other debts including 23 (2011) 10 SCC 727 24 (1990) 2 SCC 288 H

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debts due to a Bank which was found to be falling under the category of A a secured creditor. It is in the context of the statutes and the object sought to be achieved that this Court held that a non-obstante clause contained in the later Act, viz., the Companies Act, 1956, would not prevail. This Court held, in paragraphs-42 and 44, as follows: “42. The argument of Shri Gaurav Agrawal that the non obstante clause contained in the subsequent legislation i.e. Section 529- A(1) of the Companies Act should prevail over similar clause contained in an earlier legislation i.e. Section 11(2) of the EPF Act sounds attractive, but if the two provisions are read in the light of the objects sought to be achieved by the legislature by enacting the same, it is not possible to agree with the learned counsel. As noted earlier, the object of the amendment made in the EPF Act by Act 40 of 1973 was to treat the dues payable by the employer as first charge on the assets of the establishment and to ensure that the same are recovered in priority to other debts. As against this, the amendments made in the Companies D Act in 1985 are intended to create a charge pari passu in favour of the workmen on every security available to the secured creditors of the company for recovery of their debts. There is nothing in the language of Section 529-A which may give an indication that the legislature wanted to create first charge in respect of the workmen’s dues, as defined in Sections 529(3)(b) E and 529-A and debts due to the secured creditors.

44. Another rule of interpretation of statutes is that if two special enactments contain provisions which give an overriding effect to the provisions contained therein, then the Court is required to consider the purpose and the policy underlying the two Acts and the clear intendment conveyed by the language of the relevant provisions.”

102Copy pinpoint102. Apparently, the Court apart from noticing the objects sought to be achieved by the enactment took into consideration the fact that Section 529A of the Companies Act did not give any indication that the lawgiver wanted to create a first charge in respect of the preferred creditors under the said provision whereas a first charge stood created under the EPF Act.

103Copy pinpoint103. In the context of Section 28 of the Nationalisation Act read with the object of the Act and bearing in mind the scheme of the Act and H

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

104Copy pinpoint104. We do not think that the appellants have indicated any decision of this Court which would establish the appellants’ case.

105Copy pinpoint105. In Ashoka Smokeless Coal India (P) Ltd. v. Union of B India25, the Court was concerned with the validity of the decision taken by the first appellant herein to go in for e-auction of coal. It must be noticed 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 that the holding of e-auction did not amount to price fixation. In the course of its Judgment, the Court, inter alia held: “106. It may not be correct to say that any action which is not in consonance with the provisions of Part IV of the Constitution would be ultra vires but there cannot be any doubt whatsoever that the principles contained therein would form a relevant consideration for determining a question in regard to price fixation of an essential commodity. Directive principles of State policy provide for a guidance to interpretation of fundamental rights of a citizen as also the statutory rights.

109. It may be true that prices are required to be fixed having regard to the market forces. Demand and supply is a relevant factor as regards fixation of the price. In a market governed by free economy where competition is the buzzword, producers may fix their own price. It is, however, difficult to give effect to the constitutional obligations of a State and the principles leading to a free economy at the same time. A level playing field is the key factor for invoking the new economy. Such a level playing field can be achieved when there are a number of suppliers and when there are competitors in the market enabling the consumer to exercise choices for the purpose of procurement of goods. If the policy of the open market is to be achieved the benefit of the consumer must be kept uppermost in mind by the State.”

106Copy pinpoint106. In paragraph-111, the Court, inter alia, held as follows: “111. The State when it exercises its power of price fixation in relation to an essential commodity, has a different role to play. 25 (2007) 2 SCC 640 H

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Object of such price fixation is to see that the ultimate consumers obtain the essential commodity at a fair price and for achieving the said purpose the profit margin of the manufacturer/producer may be kept at a bare minimum. The question as to how such fair price is to be determined strictosensu does not arise in this case, as would appear from the discussions made hereinafter, as here the Central Government has not fixed any price. It left the matter to the coal companies. The coal companies in taking recourse to e-auction also did not fix a price. They only took recourse to a methodology by which the price of coal became variable. Its only object was to see that maximum possible price of coal is obtained. … .” C

107Copy pinpoint107. We may notice here that the observations were made at the time when coal was an essential commodity. Coal ceased to be an essential commodity after the date of the Judgment in February, 2007. We are not for a moment holding that coal has ceased to be a vital national resource. All that we are observing is that, the basis for the observations in paragraph-111, stood removed. D

108Copy pinpoint108. The Court went on to hold further: “113. The State or a public sector undertaking plays an important role in the society. It is expected of them that they would act fairly and reasonably in all fields; even as a landlord of a tenanted premises or in any other capacity. (See Baburao Shantaram E More v. Bombay Housing Board [AIR 1954 SC 153 : 1954 SCR 572] SCR at p. 577, DwarkadasMarfatia& Sons v. Board of Trustees of the Port of Bombay [(1989) 3 SCC 293 : (1989) 2 SCR 751] SCR at pp. 760, 762 and Pathumma v. State of Kerala [(1978) 2 SCC 1 : (1978) 2 SCR 537] SCR at p. 545.)” F

109Copy pinpoint109. Still further, we find that in paragraph-115, it has been held that “coal companies are monopolies within the meaning of the provisions of the Nationalisation Act”.

110Copy pinpoint110. It is again observed in paragraph-118 that the first appellant and its subsidiary company enjoyed the monopoly of production, G distribution and sale thereof.

111Copy pinpoint111. We may further notice that in paragraph-167, this Court held: “167. In fact the decisions of this Court on price fixation also point out that although a reasonable profit may be permissible, profiteering would not be.” H

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112Copy pinpoint112. Finally, we find the following observations to be found in paragraph-193: “193. However, discussions made hereinbefore should not be taken to lay down a law that the Central Government and for that matter the coal companies cannot change their policy decision. They B evidently can; but therefor there should be a public interest as contradistinguished from a mere profit motive. Any change in the policy decision for cogent and valid reasons is acceptable in law; but such a change must take place only when it is necessary, and upon undertaking of an exercise of separating the genuine consumers of coal from the rest. If the coal companies intend to C take any measure they may be free to do so. But the same must satisfy the requirements of constitutional as also the statutory schemes; even in relation to an existing scheme e.g. Open Sales Schemes, indisputably the coal companies would be at liberty to formulate the new policy which would meet the changed situation. E-advertisement or e-tender would be welcome but then therefor D a greater transparency should be maintained.

113Copy pinpoint113. The appellants rely upon the judgment of this Court in State of Tamil Nadu and Others v. L. Abu Kavur Bai and Others26 for the proposition that the scheme of monopoly or nationalisation subservespublic good. In the said case, the Court was dealing with a case of nationalisation E of transport services. There can be no quarrel with the proposition that the purpose of the Nationalisation Act was indeed to subserve the common good as held in Tara Prasad Singh and Others v. Union of India and Others27. The purpose of the vesting under the Nationalisation Act was to distribute the resource to subserve the common good. (See paragraph- 32) F

114Copy pinpoint114. We may, in fact, notice the concern of the Court about coal being not inexhaustible and the need for a wise and planned conservation of the resources being expressed in paragraph-39. No doubt, all this was at the time when the Nation was confronted with the condition of the mines being what it was as brought out in the Statement of Objects. G

115Copy pinpoint115. We agree with the appellants and as held by this Court in State of Karnataka and Another v. Shri Ranganatha Reddy and Another28 that distribution is a word of wide meaning and it is covered 26 (1984)1 SCC 515 27 1980 (4) SCC 179 H 28 1977 (4) SCC 471

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by Article 39(b) of the Constitution. It must be remembered that the A Court had occasion to hold so by way of dealing with the argument that nationalisation did not have a nexus with the word distribution.

116Copy pinpoint116. The Judgment of this Court in Waman Rao and Others v. Union of India and Others29 holds that laws passed to give effect to Article 39(b) and 39(c) could not be found violative of Article 14. There B cannot be any quarrel. We are, in this case, called upon to deal with the case based on the actions taken by the appellant, which is a Government Company based on its powers under the Nationalisation Act, being challenged on the anvil of a later law made by Parliament, the validity of which,relevantly is not under challenge. C

117Copy pinpoint117. Distribution of coal is intended to subserve common good holds this Court in Samatha v. State of A.P. and others30. The content of common good is itself not a static concept. It may take its hue from the context and the times in which the matter falls for consideration by the Court. If Parliament has intended that State monopolies even if it be in the matter of distribution must come under the anvil of the new economic regime, it cannot be found flawed by the Court on the ground that subjecting the State monopoly would detract from the common good which the earlier Nationalisation Act when it was enacted, undoubtedly, succeeded in subserving. We see no reason to hold that a State Monopoly being run through the medium of a Government Company, even for attaining the goals in the Directive Principles, will go outside the purview of the Act.

118Copy pinpoint118. We have projected some of the concerns of the appellants in the matter of the appellants being disabled to put up a justifiable defense under Section 4 of the Act. F

119Copy pinpoint119. It is true that the actions of the appellants can be challenged in proceedings in judicial review as contended by the appellants. Equally, the appellants are justified in pointing out as a matter of fact that there may be forums other than the CCI such as the Controller of Coal whereunder redress may be sought against action of the appellants.But G that by itself, cannot result in denial of access to a party complaining of contravention of a law which is otherwise applicable. It must also be remembered that action can also be taken by the CCI suo motu. Such is the width of the power vouchsafed for the authority under the Act. 29 (1981) 2 SCC 362 30 (1997) 8 SCC 191 H

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120Copy pinpoint120. We would only clarify that it will be open to the appellant as the State monopoly to take up all contentions to demonstrate that there is no abuse of the dominant position. Be it differential pricing or a decision to limit or restrict production, if it is part of national policy or based on Presidential Directives and the appellant raises such a contention after bonafidefollowing the Directives or policy themselves, it may be a matter, which the CCI would have to consider 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 Directive Principles. The Act cannot result in transforming the appellants into mere profit-making engines or require of them to be oblivious to their obligations under the Constitution. But that cannot equally mean that they can act with caprice, or unfairly or treat otherwise similarly situated persons or things with discrimination.We do not say more as the matter must be considered on its own merits both in the appeal as in all the transferred cases. We may only add that in judicial review the appellants would be held to the standard of fairness as also the duty not to discriminate. The D appellants cannot resist the imposition of standards of fairness and the duty to avoid discriminatory practices when a specialized 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 E General of Investigation. CONFLICT BETWEEN SECTION 28 OF THE ACT AND SECTION 32 OF THE NATIONALISATION ACT

121Copy pinpoint121. Section 28 of the Competition Act, 2002, reads as follows:

F “28 (1) The Commission may, notwithstanding anything contained in any other law for the time being in force, by order in writing, direct division of an enterprise enjoying dominant position to ensure that such enterprise does not abuse its dominant position. (2) In particular, and without prejudice to the generality of the foregoing powers, the order referred to in sub-section (1) may provide for G all or any of the following matters, namely:— (a) the transfer or vesting of property, rights, liabilities or obligations; (b) the adjustment of contracts either by discharge or reduction of any liability or obligation or otherwise; (c) the creation, allotment, surrender or cancellation of any shares, stocks or securities; 48(d) [Omitted H by Competition (Amendment) Act, 2007] (e) the formation or

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winding up of an enterprise or the amendment of the memorandum of association or articles of association or any other instruments regulating the business of any enterprise; (f) the extent to which, and the circumstances in which, provisions of the order affecting an enterprise may be altered by the enterprise and the registration thereof; (g) any other matter which may be necessary to give effect to the division of the enterprise. (3) Notwithstanding anything contained in any other law for the time being in force or in any contract or in any memorandum or articles of association, an officer of a company who ceases to hold office as such in consequence of the division of an enterprise shall not be entitled to claim any compensation for such cesser.” C

122Copy pinpoint122. It is, undoubtedly, true that there has been a vesting of rights in regard to the mines under the Nationalisation Act. Still further, there has been a vesting under Section 5 of the Nationalisation Act of the rights of the lessee in thefirst appellant. Under Section 11 of the Nationalisation 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 to order division, undoubtedly, it would be inconsistent with the provisions of the Nationalisation Act.

123Copy pinpoint123. There are certain salient features to be noticed. In the first place, there is no challenge to the Act. Secondly, taking the Act as it plainly reads, the power to order division and, what is more, all the things enumerated in Section 28(2), are clearly conferred on the CCI. Apart from the general non-obstante Clause contained in Section 60 of the Act, a noticeable feature about Section 28 of the Act is that it is made even more clear, apparently, by way of abundant caution in Section 28(1), F that all that the CCI could order would be notwithstanding anything contained in any other law for the time being in force. Parliament has authored both the Nationalisation Act as also the Act. There is no question of lack of legislative competence. We are not called upon to pronounce on the vires of the Act. There is absolutely no scope, at any rate, G forreading down the provision even proceeding on the basis that an attempt can be made even in the absence of the challenge. The words of the provision do not admit of reading down the same. What follows is, therefore, Parliament has intended, in order to ensure the proper implementation of the Act,confer power to order division of an enterprise H

p. 886 Copy page pinpoint

A enjoying dominant power. This would include the appellants as well. We must, no doubt, understand the provision to mean that it is not a power to be exercised lightly. It is a special power intended to ensure prevention of abuse of dominant position. The generality of the power is revealed in Section 27. We incidentally notice that though there can be abuse of dominant position by an enterprise and a group, which is sought to be prohibited, Section 28 speaks about the division of an enterprise. Having regard to the discussion above, we find no merit in the case sought to be made for escaping from the net of the Act.

124Copy pinpoint124. Section 54 of the 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.

125Copy pinpoint125. We would hold that there is no merit in the contention of the appellants that the Act will not apply to the appellantsfor the reason that the appellants are governed by the Nationalisation Act and that Nationalisation Act cannot be reconciled with the Act. This 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 so that they may be dealt with on their own merits. The transferred cases are disposed of.

126Copy pinpoint126. Equally, the Appeal shall be posted for being dealt with on its own merits. The interlocutory applications seeking interim relief in the pending Appeal shall be listed in the second week of July, 2023.The contempt petition shall stand listed in the second week of July, 2023. The Applications filed in connection with I.A. No. 66587 of 2017 shall stand disposed of.

G Bibhuti Bhushan Bose Appeal posted for being dealt on merits. (Assisted by : Shubhanshu Das, LCRA)