TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 707
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....Mr. Ranjit Kumar, Sr. Adv., Ms. Sheena Taqvi, Adv., Ms. Akansha Saini, Adv., Mrs. Bina Gupta, AOR, Mr. Nagarkatti Kartik Uday, AOR, Mr. G. Saikumar, Adv., Mr. Samir Malik, Adv., Ms. Nikita Choukse, Adv., Mr. Akash Lamba, Adv., Ms. Ekssha, Adv., MS. D.S.K. Legal, AOR JUDGMENT K.M. JOSEPH, J. 1. The Civil Appeal is directed against the Order passed by the Competition Appellate Tribunal, New Delhi (hereinafter referred to as 'Tribunal'), by which Order, the Tribunal affirmed the findings and conclusion recorded by the Competition Commission of India (hereinafter referred to as 'CCI') on various facets of abuse of dominant position. The abuse of dominant position was ascribed to the appellants. The appeal was dismissed. 2. The second respondent had provided information to the CCI which the CCI proceeded to consider and it found the abuse of dominant position by the appellants. 3. The appellants have filed Interlocutory Application, viz., I.A. No. 66587 of 2017 being an application seeking permission to take additional grounds. Parties exchanged pleadings in the interlocutory application. We have allowed the application seeking permission to urge the new grounds. 4. When the matte....
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....nafter referred to as the 'Nationalisation Act') would be wholly outside the purview of the Act. This is for the reason that the very purpose and policy underlying the Nationalization Act, was to monopolise the operation of the coal mines and coal mining in the hands of the Central Government and its agencies such as the appellants. It is not an ordinary monopoly. It is a monopoly created by the Nationalization Act; it is, having regard to the need to immunize it from challenge, that it was accorded protection of Article 31B of the Constitution of India; it has been inserted in the Ninth Schedule to the Constitution; Article 39(b) of the Constitution of India takes it out of the category of ordinary monopoly; this is for the reason that the State has been charged with the duty to bear in mind the principles of 'common good' being secured by the 'distribution of scarce resources'; coal, with which mineral we are concerned with, is, indeed, a mineral of the highest importance in the economic life of the nation; its equitable distribution in the manner so as to secure the common good which is the directive contained in Article 39(b) led to the creation of a statutorily mandated monopo....
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....ent with Articles 14 and 19 of the Constitution. Such a law is to be treated as reasonable. On the other hand, if an action is inconsistent or runs counter to the Directive Principles, it may, prima facie, be brushed with the tarnish of it being unreasonable. (See Kasturi Lal Lakshmi Reddy and Others v. State of Jammu and Kashmir and Another (1980) 4 SCC 1). It is further pointed out by the appellants that on a conspectus of the Nationalisation Act and on placing it side-by-side with the provisions of the Act, the divergence and the consequent anomalous results of bringing the appellant under the Act, would clearly emerge. Our attention is drawn to the long title of the Act. It is pointed out that the object of the Act is to ensure freedom of trade. This is contrasted with a long title of the Nationalisation Act which indicates that the Law-Giver intended to vest ownership and control of the coal mines in the State so that the said resource is so distributed as to best serve the common good. It is contended that CIL does not operate in the commercial sphere. Great emphasis is laid on the fact that out of 462 mines operated by CIL, 345 have suffered losses amounting to Rs.9,878 Cror....
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....to pricing and distribution of coal. Under Section 32 of the Nationalisation Act, the mining companies cannot be wound up. This stands in contrast to Section 28 of the Act which empowers the CCI to divide enterprises abusing dominant position including adjustment of contracts, formation of winding up of enterprises among other things. 13. Next, it is pointed out that Section 28 of the Nationalisation Act declares that the provisions of the said Act would prevail notwithstanding anything inconsistent therewith contained in any other law in force, inter alia. (Reliance is placed on the Judgments of this Court in Employees Provident Fund Commissioner v. Official Liquidator of Esskay Pharmaceuticals Limited (2011) 10 SCC 727 as also Sanwarmal Kejriwal v. Vishwa Coop. Housing Society Ltd. and Others (1990) 2 SCC 288). Section 60 of the Act, which declares that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, may not assist the second respondent or the CCI in the stand that a Nationalisation Act must make way for the operation of the Act on its own terms. It is contended that the appellant....
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....ition. He would point out that the Court should keep in mind that an examination of the merits of the case would clearly indicate that the attempt of the appellants is to wriggle out of the situation when its actions have been found to be violative of the Act and the fine questions which have been raised do not actually even arise on the defense actually set up before the CCI. He poses the question as to whether the appellants could justify the supply of substandard goods and justify it on the high pedestal of a Constitutional goal being imperiled if the same is questioned under the Act. 16. He would point out that there is no challenge mounted to the vires of the Act. There is no scope for reading down the law in the absence of the challenge. He also relied upon the Judgment of this Court in the New Delhi Municipal Council v. State of Punjab & others 1997) 7 SCC 339 to contend that when the instrumentality of the State proceeds to enter the commercial field and is carrying on a business activity, it cannot claim immunity from the laws of the land. Though the said case was delivered in the context of Article 286, he would submit that the principle is apposite. 17. It is submitted....
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....merit in the attempt of the appellants to extricate themselves from a well thought out law provided by the same Law-Giver. 18. He would point out that initially coal was an essential commodity under the Essential Commodities Act, 1955. When this Court delivered the Judgment relied upon by the appellants as well, viz., Ashoka Smokeless Coal India (P) Ltd. and Others v. Union of India and Others (2007) 2 SCC 640, coal was an essential commodity. The Court proceeded on the said basis as well. However, in February, 2007, coal ceased to be an essential commodity. Next, it is pointed out that the Nationalisation Act itself, which is projected as the sheet anchor of the appellants entire case was itself taken out from the Ninth Schedule in the year 2017. The Nationalisation Act itself stands repealed. Therefore, he would point out that the Court is being invited to pronounce on the basis of the 'hallowed' position that the Nationalisation Act occupied, which itself is no longer the case. (We must notice here that even in his opening submissions Shri K. K. Venugopal, learned Senior Counsel, pointed out these developments. However, it is his contention that the contracts with which this Co....
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....Agency), who, in turn, would finally supply power to the end consumer. The continual supply of coal and prompt performance of the contracts and the reasonableness of the rates and quality of coal, in other words, according to the second respondent, are related to the very common good, which is emphasized by the appellants. He would further point out that the Nationalisation Act was an expropriatory legislation. 22. Next, he would point out that the predecessor enactment, viz., the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as MRTP Act), which stood repealed by the Act, may be borne in mind. In the said Act, Section 3 clearly declared that, unless it was otherwise notified, the MRTP Act would not apply to Government Agencies, as indicated therein. There is no such provision in the Act. He drew our attention to Section 21A of the MRTP Act. Drawing inspiration from the preamble to the Act, he emphasizes that the center stage of attention in the Act is occupied by the consumer. Common good in other words, must be associated with the good of the consumer. He drew our attention to Section 54 of the Act which provides for power to exempt. He pointed out....
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....olve facts, which are best dealt with by a Body like the CCI. He drew our attention to the Judgment of this Court in Hasan Murtza v. State of Haryana (2002) 3 SCC 1 and also Employees Provident Fund Commissioner v. Official Liquidator (2011) 10 SCC 727. Similar contention in support of the CCI and the second respondent has been voiced by the other respondents in the Transferred Cases. 24. In response to the submissions, Shri K.K Venugopal would point out that it is not the case of the appellants that the appellant is immune from all laws. He would further point out that the deletion of the Nationalisation Act from the Ninth Schedule may not affect his contentions as the contracts in question relate to the period when the Nationalisation Act was very much in the 9th Schedule. He would submit that as held in Ashoka Smokeless Coal India (P) Ltd. and Others v. Union of India and Others (2007) 2 SCC 640, it is not as if the actions of the appellants are immune from judicial review under Article 14. He would reiterate that an affected party could seek redress in other forums. He would emphasize again that the Act and even the Raghavan Committee Report does not refer to the species of pu....
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....idential Directives is being made under the Act, it would be a matter which may have to engage the CCI. ANALYSIS 26. As we have noticed the question, we are called upon to decide is whether the Act applies to the appellants or not. It is necessary that we tread carefully so that we skirt an incursion into the merits, which can be undertaken only when the Appeal is heard on merits. 27. Before we pass on to the Act, it may be necessary to look at the law, which it repealed. The MRTP Act was enacted in the year 1969. It was intended to deal with monopolistic and restrictive trade practices as the very long title suggests. It held sway till the Act repealed it in the year 2002. However, the Act itself was actually brought into force in the year 2009. What is relevant is to notice some of the provisions of the MRTP Act. 28. Section 2(d) of the Act, as substituted by Act 30 of 1982, provided for definition of the words 'dominant undertaking'. The definition itself appears to be fairly convoluted. The word 'goods' was, indeed, defined as goods as defined in the Sale of Goods Act, 1930, and pertinently, it included products mined in India, inter alia. The MRTP Act went on to deal with ....
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.... time being in force, (f) any undertaking owned by a co-operative society formed and registered under any Central, Provincial or State Act relating to co-operative societies, (g) any financial institution. Explanation.-In determining, for the purpose of clause (c), whether or not any undertaking is owned or controlled by a corporation, the shares held by financial institutions shall not be taken into account." 30. In other words, inter alia, the provisions of the said Act did not apply to an undertaking owned or controlled by a government company or any undertaking owned or controlled by a corporation (not being a company established by or under a central, provisional or State Act) unless it was expressly made applicable by a notification. It also did not apply to any undertaking, the management of which was taken over by any person or body of persons in pursuance of any authorization made by the Central Government under any law enforced for the time being in force [Clause (e)]. Conspicuous by its absence, is any such provision in the Act. 31. The Colliery Control Order came to be passed in the year 1945 under the Rules. It is the said Order, which came to be continued unde....
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....ation, specify, shall carry on coal mining operation, in India, in any form; (b) excepting the mining leases granted before such commencement in favour of the Government, company or corporation, referred to in clause (a), and any sub-lease granted by any such Government, company or corporation, all other mining leases and sub-leases in force immediately before such commencement, shall, in so far as they relate to the winning or mining of coal, stand terminated; (c) no lease for winning or mining coal shall be granted in favour of any person other than the Government, company or corporation, referred to in clause (a): Provided that the Government, company or corporation to whom a lease for winning or mining coal has been granted may grant a sub-lease to any person in any area on such terms and conditions as may be specified in the instrument granting the sub-lease, if the Government, company or corporation is satisfied that- (i) the reserves of coal in the area are in isolated small pockets or are not sufficient for scientific and economical development in a co-ordinated and integrated manner, and (ii) the coal produced by the sub-lessee will not be required to be transp....
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....ection 5, vest in the Government company specified in such direction, or (b) in the case of a coal mine in relation to which no such direction has been made by the Central Government, vest in one or more Custodians appointed by the Central Government under sub-section (2), and thereupon the Government company so specified or the Custodian so appointed, as the case may be, shall be entitled to exercise all such powers and do all such things as the owner of the coal mine is authorised to exercise and do. (2) The Central Government may appoint an individual or a Government company as the Custodian of a coal mine in relation to which no direction has been made by it under sub-section (1) of section 5." 37. Suffice it for the purpose of this case that we notice next Section 28: "28. Effect of this Act on other laws.- The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act, or in any decree or order of any court, tribunal or other authority." 38. Finally, we notice Section 32. It read as follows: "32. No proceeding f....
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.... stated in the Report as follows: "the object of competition policy is to promote efficiency and maximize welfare. In this context, the appropriate definition of welfare is the sum of consumer surplus and producer's surplus and also includes any taxes collected by the Government."(See paragraph-2.1.1) We notice the following observations as well: "2.1.1 Competition policy is defined as "those Government measures that directly affect the behaviour of enterprises and the structure of industry" (Khemani, R.S. and Mark A. Dutz, 1996). The objective of competition policy is to promote efficiency and maximize welfare. In this context the appropriate definition of welfare is the sum of consumers' surplus and producers' surplus and also includes any taxes collected by the Government.1[1] It is well known that in the presence of competition, welfare maximization is synonymous with allocative efficiency. Taxes are generally welfare-reducing." 44. After referring to the reforms initiated in 1991 and dealing with public sector, it is stated as follows: "2.6.4 Public sector In 1991, Government abolished the monopoly of the public sector industries except those where security and....
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....recognition has led to the trend towards privatising some of them. This is also a part of the general process of liberalisation and deregulation. Privatisation involves not only divestiture and sale of Government assets but also a gradual decline in the interventionist role played by them. 3.4.6 State monopolies may lead to certain harmful effects, anti-thetical to the scheme of a modern Competition Policy. They are : A. The dominant power enjoyed by State monopolies may be abused because of Government patronage and support. B. Because of the said patronage, State monopolies may adopt policies which tantamount to restrictive trade practices. For example, preference to public sector units in tenders and bids, insistence on using public sector services for reimbursement from Government (travelling allowance for Government officials). C. State monopolies suffer from the schemes of administered prices, contrary to the spirit of Competition Policy." 47. In paragraph-3.4.7, it is, inter alia, stated that in the interests of the consumer the State Monopolies and Public Enterprises need to be competitive in production of goods and service delivery. Thereafter, it is stated: "3.4....
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....tion were to increase. From the supply side, this would include all producers who could, with their existing facilities, switch to the production of such substitute goods. The geographical boundaries of the relevant market can be similarly defined. Geographic dimension involves identification of the geographical area within which competition takes place. Relevant geographic markets could be local, national, international or occasionally even global, depending upon the facts in each case. Some factors relevant to geographic dimension are consumption and shipment patterns, transportation costs, perishability and existence of barriers to the shipment of products between adjoining geographic areas. For example, in view of the high transportation costs in cement, the relevant geographical market may be the region close to the manufacturing facility." 51. In the summary, we may notice paragraph-4.8.8, it is stated as follows: "4.8.8. Summary 1. The State Monopolies, Government procurement and foreign companies should be subject to the Competition Law. The Law should cover all consumers who purchase goods or services, regardless of the purpose for which the purchase is made. 2. Bod....
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....er such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space. Explanation.-For the purposes of this clause,- (a) "activity" includes profession or occupation; (b) "article" includes a new article and "service" includes a new service; (c) "unit" or "division", in relation to an enterprise, includes (i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods; (ii) any branch or office established for the provision of any service;" 55. Section 2(i) defines the word 'goods': "2(i) "goods" means goods as defined in the Sale of Goods Act, 1930 (8 of 1930) and includes- (A) products manufactured, processed or mined; (B) debentures, stocks and shares after allotment; (C) in relation to goods supplied, distributed or controlled in India, goods imported into India;" 56. Sec....
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.... price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory condition or price which may be adopted to meet the competition; or (b) limits or restricts- (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or (c) indulges in practice or practices resulting in denial of market access in any manner; or (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market. Explanation.-For the purposes of this section, the expression- (a) "dominant position" means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to- (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its f....
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....ies of the CCI are spelt out in Section 18. It reads as follows: "18. Subject to the provisions of this Act, it shall be the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade carried on by other participants, in markets in India: Provided that the Commission may, for the purpose of discharging its duties or performing its functions under this Act, enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country." 65. The aforesaid provisions indicate the width of the power lodged with CCI to bring about the sweeping changes in the economy. Section 19 empowers the Commission to make inquiries into agreements which are anti-competitive within the meaning of Section 3. More importantly, Section 19(4) deals with inquiring into the question as to whether an enterprise enjoys a dominant position. 66. Being a crucial provision, we notice the same. "19(4) The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or a....
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....ten percent of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse: Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten percent. of its turnover for each year of the continuance of such agreement, whichever is higher. (c) Omitted by Competition (Amendment) Act, 2007 (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any; (f) Omitted by Competition (Amendment) Act, 2007 (g) pass such other order or issue such directions as it may deem fit. Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contraventio....
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.... same than the very lis over it. It forms an important raw material in the production of vital final products. Also, it forms a kind of fuel, which drives power plants. A monopoly, undoubtedly, stood created by the Nationalisation Act. The mines, which were the subject matter of the Act, stood vested with the Central Government. The first appellant is a Government Company, which came into being, as contemplated under Section 5 of the Nationalisation Act. The appellant-Company operates the mines. It is tasked with the power and the duty to distribute coal. This attracts the Directive Principle enshrined in Article 39(b). The said Directive Principle contemplates that the 'State' should direct its policy towards securing that the ownership and control of the 'material resources' are so 'distributed' so as to 'subserve the common good'. The argument of the appellants is partly based on the dictate of Article 31(B), which, together with the Ninth Schedule, the insertion in which Schedule, immunizes laws from being invalidated on the ground that they take away or abridge Fundamental Rights. The Nationalisation Act was inserted in the Ninth Schedule on 10th August, 1975. We are not, in t....
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....right of an owner, stood vested in the Central Government under Section 3, would stand vested in the Government Company specified in terms of the direction made by the Central Government under Section 5. The first appellant is a Government Company, which was wholly owned by the Central Government and was the Company contemplated under Section 5 and, therefore, the general superintendence, direction, control and management of all the mines, ownership of which stood vested in the Central Government, vested with the first appellant. The first appellant is the holding Company and there are subsidiary companies. Reliance is placed on the Judgment of this Court rendered in the context of Article 324 of the Constitution. It is true that the said Article, which deals with the powers of the Election Commission of India, employs the words general superintendence, direction and control of, inter alia, for the conduct of all elections to Parliament and the State Legislatures, apart from elections to the Office of the President and the Vice-President. It is, undoubtedly, true that this Court has held that the words 'superintendence, direction and control', are words of the widest import. It is ....
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.... appellant is a person within the meaning of Section 2(h). The next limb of Section 2(h) contemplates that the person is one, 'who' or 'which is'. Being an artificial person, the appropriate word is 'which'. Therefore, the first appellant is a person, which is or has been engaged in any activity. The activity must relate to the production, storage, supply, distribution, acquisition or control of articles or goods. There can be an enterprise under Section 2(h) equally, if the activity relates to the provision of services of any kind, inter alia. We need not deal with the wide width of the other part of Section 2(h). The word 'goods' has been defined in Section 2(i) to mean goods, as defined in Sale of Goods Act, 1930 and includes products manufactured, processed or mined. There cannot be the slightest amount of doubt that the appellant is a person, which is engaged in activity relating to production, storage, supply, distribution and control of goods, as defined in the Act. It may also be within the ambit of Section 2(h) in regard to services it may provide, having regard to the wide words used in Section 2(h). 80. It is noteworthy that the Law-Giver has taken care to expressly inc....
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....ant market in India'. Relevant market has been defined in Section 2(r) to mean "the market which may be determined by the CCI with reference to the relevant product market or the relevant geographic market or with reference to both the markets". The words, relevant product market has been defined in Section 2(t) as meaning "a market comprising all of those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of its products or services, their prices and intended use". Section 2(s) defines 'relevant geographic market', as meaning "a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas". Thus, the lawgiver has provided for a position of strength enjoyed by an enterprise not in the vacuum. It is not based on any subjective criteria. The question of dominant position must stand answered with reference to carefully thought-out objective norms, as aforesaid. Continuing with the definition of the words 'dominant position', it m....
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....n 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 Solicitor General fairly states that the factors may be read as cumulative. 88. 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 i....
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....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 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 any other discipline as it deems necessary, to assist the Commission in the conduct of any inquiry by it." 90. 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 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, f....
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....up if it limits or restricts production of goods or provision of services or market therefor. 93. 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 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 the first appellant 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 ....
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....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 anathema to the Act. 95. 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 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 w....
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....991 set the stage for the 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 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. Now that the Nation was more than 50 years old after it became a 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 combination....
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....ey 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. 100. 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 Liquidator of Esskay Pharmaceuticals Limited (2011) 10 SCC 727 and Sanwarmal Kejriwal v. Vishwa Coop. Housing Society Ltd....
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....s 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) 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." 102. 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. 103. 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 the language employed as it is, we would think that the....
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....ving 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 stricto sensu 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. ... ." 107. 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. 108. 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....
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....urpose of the Nationalisation Act was indeed to subserve the common good as held in Tara Prasad Singh and Others v. Union of India and Others 1980 (4) SCC 179. The purpose of the vesting under the Nationalisation Act was to distribute the resource to subserve the common good. (See paragraph-32) 114. 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. 115. We agree with the appellants and as held by this Court in State of Karnataka and Another v. Shri Ranganatha Reddy and Another 1977 (4) SCC 471 that distribution is a word of wide meaning and it is covered by Article 39(b) of the Constitution. It must be remembered that the Court had occasion to hold so by way of dealing with the argument that nationalisation did not have a nexus with the word distribution. 116. The Judgment of this Court in Waman Rao and Others v. Union of India and Others (1981) 2 SCC 362 holds that laws passed to give effec....
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....rectives and the appellant raises such a contention after bonafide following 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 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 rec....
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....sions of the Nationalisation Act. 123. 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), 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, for reading 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 p....