The Supreme Court on Thursday ruled that Coal India Limited (CIL) can be tried for “abuse of dominant position” and monopoly practices by the Competition Commission of India (CCI). The court ruled a central PSU such as CIL enjoys no immunity, as it does not discharge any sovereign function.

A three-judge bench of Justice K.M. Joseph, Justice B.V. Nagarathna and Justice Ahsanuddin Amanullah rejected an appeal filed by CIL against an order passed by the Competition Appellate Tribunal, New Delhi.

The tribunal had affirmed the findings and conclusion of the Competition Commission of India on the abuse of dominant position.

The CCI had made its observations while dealing with complaints by some private coal companies accusing the PSU of abusing its dominant position in the fixation of prices and supply of coal.

The apex court turned down the argument of CIL that it was not bound by Competition Act, 2002, but rather enjoyed immunity from such legislation as stipulated by Article 39(b) of the Constitution and the Coal Mines Nationalisation (Amendment) Act, 1976.

“The only activity of the Government, which has been excluded from the scope of Section 2(h) (Competition Act) and therefore, the definition of the word ‘enterprise’ is any activity relatable to the sovereign functions of the government. Sovereign functions would include, undoubtedly, all activities carried on by the Departments of the Central Government, dealing with atomic energy, currency, defence and space.

The first appellant is not a Department of the Government. It is a Government Company. What is excluded from the definition of the expression ‘enterprise’, is a Government Department carrying on Government functions. Carrying on business in mining, cannot, by any stretch of the imagination, be described as a sovereign function..,” Justice K. M. Joseph, who authored the 105-page judgment, observed.

The bench rejected the arguments advanced by CIL through former attorney general K. K. Venugopal that the Coal Mines Nationalisation (Amendment) Act, 1976, was enacted to protect the interests of the State in the interest of the national economy and Article 39(B).