By Manish Gupta
The Coal Mines (Nationalisation) Act, 1973, is an expropriatory legislation and does not relate to trade and commerce of coal, and thus does not protect Coal India Ltd (CIL) from the competition laws, the counsel for the Competition Commission of India (CCI) said in the Supreme Court on Wednesday.
Addressing the bench of Justices KM Joseph, BV Nagarathna and Ahsanuddin Amanullah, the CCI maintained that the CIL is working with a profit motive and is not serving any “common good” when it has been “unilaterally fixing the terms of Fuel Supply Agreements (FSA) with different power companies.”
“Section 54 of the Competition Act, 2002, provides for exemptions and the government has exercised its power in two cases, but has not exempted Coal India from application of the competition law,” the CCI counsel noted.
The Competition Act, 2002, which replaced the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, reversed the ruling on exemptions from not applicable to all undertakings owned by the government or corporation to applicable to all unless exempted by the government through notification.
It may be noted that CCI had imposed a penalty of 1,773 crore in 2013 on CIL for abusing its dominant position and imposing unfair conditions in FSAs with the power companies for supply of non-coking coal. After the intervention of Competition Appellate Tribunal, the penalty was cut to591 crore.
The CIL then appealed in the Supreme Court arguing that all its coal mines as per the Coal Mines (Nationalisation) Act, 1973, are fully outside the purview of the competition law. It also stated that coal market was influenced by factors beyond its control like government policies and environmental regulations.
“More than the CIL, the power companies are serving common good as tariff for common people is determined by the electricity commission,” the advocate said, adding that coal is no more an essential commodity and that CIL does not do retail sale of coal unlike earlier years when it had depots.
He said that Coal India has been working mainly for profits as it never supplies coal without first asking for the money. It increased its profits four times after the introduction of New Coal Distribution Policy, as it allowed CIL to unilaterally decide the price in FSAs, he said.
The policy states: “100% of the quantity as per the normative requirement of the consumers would be considered for supply of coal, through FSA by CIL at fixed prices to be declared/ notified by CIL.”
The three judges bench directed the respondent to complete its submission by Thursday and said that the court needs to ascertain the definition of enterprise, a dominant enterprise and whether CIL abused its dominant position. Justices Joseph observed that the competition law is important for both private and public enterprises as private players calling the shots can be detrimental to the country.