COMPETITION APPELLATE TRIBUNAL
NEW DELHI
CORAM
Hon’ble Shri Justice G.S. Singhvi
Chairman
Hon’ble Mr. Rajeev Kher
Member
In the matter of :
Appeal No. 01/2014
[Under Section 53B of the Competition Act, 2002 against the order dated 09.12.2013
passed by the Competition Commission of India in Case Nos. 3,11 and 59 of 2012]
1.

Coal India Limited (CIL)

2.

Mahanadi Coalfields Limited (MCL)

3.

Western Coalfields Limited (WCL)

4.

South Eastern Coalfields Limited

… Appellants

Versus
1.

Competition Commission of India

2.

Maharashtra State Power
Generation Company Limited (MAHAGENCO)

3.

Gujarat State Electricity
Corporation Limited (GSECL)

…Respondents

Appeal Nos. 44-47/2014
[Under Section 53B of the Competition Act, 2002 against the order dated 15.04.2014
passed by the Competition Commission of India in Case Nos. 05, 07, 37 and 44 of
2013]
1.

Coal India Limited

2.

South Eastern Coalfields Limited

3.

Eastern Coalfields Limited

4.

Bharat Coking Coal Limited

5.

Mahanadi Coalfields Limited

6.

Central Coalfields Limited

7.

Western Coalfields Limited

 2

8.

Northern Coalfields Limited

… Appellants

Versus
1.

Competition Commission of India

2.

Madhya Pradesh Power Generating
Corporation Limited

3.

West Bengal Power Development
Corporation Limited

4.

Sponge Iron Manufacturers Association

…Respondents

Appeal No. 49/2014
[Under Section 53B of the Competition Act, 2002 against the order dated 15.04.2014
passed by the Competition Commission of India in Case Nos. 05, 07, 37 and 44 of
2013]

Madhya Pradesh Power
Generating Company Limited,
Block No.6, Shakti Bhawan,
Vidyut Nagar, Rampur, Jabalpur-482008.

… Appellant

Versus
1.

Competition Commission of India
18-20, The Hindustan Times House,
Kasturba Gandhi Marg Connaught Place,
Barakhamba, New Delhi – 110001.

2.

South Eastern Coalfields Limited,
Seepat Road, Bilaspur – 495006 (Chattisgarh)

3.

Coal India Limited,
10, Netaji Subhash Road,
Kolkata – 700 001 (West Bengal)

…Respondents

Appeal No. 70/2014
[Under Section 53B of the Competition Act, 2002 against the order dated 15.04.2014
passed by the Competition Commission of India in Case Nos. 05, 07, 37 and 44 of
2013]

Sponge Iron Manufacturers Association
Having its registered office at
1501, Hemkunt Tower, 98,
Nehru Place, New Delhi – 110 019.
Versus
1.

Competition Commission of India
The Hindustan Times house,
18-20, Kasturba Gandhi Marg,

… Appellant

 3

New Delhi – 110001.
2.

Coal India Limited,
10, Netaji Subhash Road,
Kolkata – 700 001.

3.

Central Coalfields Limited (CCL)
Darbhanga House, Cutchery Road,
Ranchi, Jharkhand – 834 029.

…Respondents

Appeal No.52/2015
[Under Section 53B of the Competition Act, 2002 against the order dated 16.02.2014
passed by the Competition Commission of India in Case No.08/2014]
1.

Coal India Limited,
10, Netaji Subhash Road,
Kolkata – 700 001.

2.

Western Coalfields Limited
Coal Estate, Civil Lines,
Nagpur 440 001, Maharashtra

… Appellants

Versus
1.

Competition Commission of India
Through Its Secretary
The Hindustan Times house,
18-20, Kasturba Gandhi Marg,
New Delhi – 110001.

2.

GHCL Limited,
B-38, Institutional Area,
Sector 1, Noida (Uttar Pradesh)
201 301.

Appearance :

… Respondents

Shri Ramji Srinivasan, Senior Advocate with Shri Harman Singh
Sandhu, Shri Yaman Verma, Shri Toshit Shandilya, Advocates
for the Appellants in Appeal Nos. 01/ 2014, 44-47/2014 and for
the Respondents in Appeal Nos. 49 and 70/2014

Shri Rajshekhar Rao, Advocate with Shri Harman Singh Sandhu,
Shri Yaman Vermaand Ms. Mehrunissa Anand and Shri Toshit
Shandilya, Advocates for Appellants in Appeal Nos. 52 of 2015

Shri Akshat Rehani, Advocate for the Appellant in Appeal No.70
of 2014 and for Respondent No.4 in Appeal No.44-47 of 2014.
Shri Pallav Shishodia, Senior Advocate with Shri Rishad A.
Chowdhury, Advocate for Respondent No. 1 in Appeal Nos. 01,
44-47,49 , 70 of 2014.

 4

Shri Sanjay Sen, Senior Advocate with Shri Matrugupta Mishra,
Advocates for R-2 Maharashtra State Power Generating
Company Ltd. in Appeal No. 01/2014.
Shri Vivek K. Tankha, Senior Advocate assisted by Shri Varun
K. Chopra, Advocate for Respondent No. 2 in Appeal Nos. 44 –
47 of 2014 and for the Appellant in Appeal No. 49/2014

Shri Rishad A. Chowdhury, Advocate for Respondent No.1 in
Appeal No.52 of 2015

Shri Gaurav Mitra and Shri Jayesh Bhairavia, Advocates for
Respondent No. 3 in Appeal No.01/2014.

Shri M.A. Venkata Subramanian, Advocate for Respondent No.
2 in Appeal No. 52/2015

Per Chairman
ORDER

These appeals are being disposed of by one order because the common
question of law which arises for consideration in Appeal Nos.1/2014, 44-47/2014 and
52 of 2014 and with reference to which arguments have been addressed by learned
counsel for the parties is whether the impugned orders are vitiated due to violation of
one of the facets of the principles of natural justice, i.e., one who hears must decide
and in the remaining two appeals, i.e., Appeal Nos.49 and 70 of 2014, the appellants
have prayed for setting aside order dated 15.04.2014, which is also under challenge
in Appeal Nos.44-47/2014.

2.

For deciding the aforesaid question, it will be useful to notice the relevant facts.

Appeal No.01 of 2014 – Coal India Ltd. and others vs. Competition Commission of
India and others
(A)

Maharashtra State Power Generation Company Ltd. (Respondent No. 2 in
Appeal No. 01/2014) filed an information dated 16.01.2012 under Section
19(1)(a) of the Competition Act, 2002 (for short, ‘the Act’), which was
registered as Case No. 3 of 2012 alleging abuse of dominant position by

 5

Mahanadi Coalfields Ltd. and Coal India Ltd. and made the following
substantive prayers :
a.

initiate an investigation on the abuse of dominant position
by MCL & CIL on the basis of the facts and grounds stated
in the petition;

b.

declare that MCL has abused its “dominant position” as a
producer and supplier of coal and as a result of such
abuse has caused loss and injury to MAHAGENCO;

c.

restrain MCL from abusing its dominant position
particularly in relation to (a) short supply of coal and (b)
failure to supply agreed grade of coal;

d.

direct CIL/ MCL to allow MAHAGENCO to conduct and
participate in joint sampling of coat at the loading and
unloading directly or by appointing a reputed expert –
agency;

e.

impose penalty as may be appropriate keeping in view the
wilful and deliberate abuse of dominant position by MCL;

f.

direct that the proposed CSA being Annexure M herewith
be modified upon detailed negotiation between the
parties, inter aila, to cover issues specified in paragraph N
above;

g.

direct independent investigation of the consistent failure of
grade by MCL and the existence of infrastructure to
support supply of sized coal of the agreed grade;

h.

direct the Opposite Parties to function in a manner as may
be specified by the Hon’ble Commission in order to ensure
freedom of trade carried on by the participants in the
market and to protect the interest of the consumers.”

 6

(B)

After five days, Maharashtra State Power Generation Company Ltd. filed
another information under Section 19(1)(a), which came to be registered as
Case No.11 of 2012 making allegations of abuse of dominant position against
Western Coal Ltd. and Coal India Ltd. and prayed as under :
“a.

initiate an investigation on the abuse of dominant position
by WCL & CIL on the basis of the facts and grounds stated
in this information.

b.

declare that WCL has abused its “abuse of dominant
position” as a producer and supplier of coal and as a result
of

such abuse, has caused loss and injury to

MAHAGENCO;
c.

restrain WCL from abusing its dominant position
particularly in relation to denial of independent sampling
and analysis of coal by using Augus Sampling for
collection of coals and (b) crushing and washing of coal.

d.

Direct WCL and CIL to implement the following :
(i)

install adequate number of Augur Sampling
Machines to ensure that the collection and
sampling is adequately mechanised;

(ii)

install adequate number of crushers to ensure that
the coal is crushed to the size of 250 mm as
required under the FSA;

(iii)

setup adequate capacity for washing coal at the
earliest;

d.

impose penalty as may be appropriate keeping in view the
wilful and deliberate abuse of dominant position by WCL;

e.

direct that FSA being Annexure D herewith be modified to
the extent and in the manner specified in paragraph N
above;

 7

f.

direction for the appointment of an independent agency of
international repute for conducting joint sampling at the
loading and unloading point, and also to formulate an
entire process of sampling by exercise of its statutory
power under the Act;

g.

direct the Opposite Parties to function in a manner as may
be specified by the Hon’ble Commission in order to ensure
freedom of trade carried on by the participants in the
market and to protect the interest of the consumers
including suggest such amendments/ modifications or
may be necessary in the existing Fuel Supply Agreement
and other agreements regulating supply of coal.”

(C)

Gujarat State Electricity Corporation Ltd. (Respondent No. 3 in Appeal No. 1
of 2014) filed an information dated 12.09.2012 under Section 19(1)(a), which
was registered as Case No.59 of 2012, with the allegation that Coal India Ltd.
and its three subsidiaries, namely, Mahanadi Coalfields Ltd., Western
Coalfields Ltd. and South Eastern Coalfields Ltd. have abused their position
and acted in contravention of Section 4(2) of the Act and prayed as under :
“a.

Initiate an investigation on the abuse of dominant position
by Opposite Party No.1 & 2 on the basis of the facts,
circumstances and grounds stated in this information.

b.

Declare that Opposite Party No.1 & 2 have abused its
“dominant position” as a producer and supplier of coal and
as a result of such abuse, has caused loss and injury to
Informant;

c.

Restrain Opposite Party No.1 from abusing its dominant
position particularly (i) in relation to denial of independent
sampling and analysis of coal by using Augus Sampling

 8

(AMS) for collection of coals and (ii) crushing and washing
of coal.
d.

Direct Opposite Parties to implement the following :
(i)

Install adequate number of Augur Sampling
Machines (AMS) to ensure that the collection and
sampling is adequately mechanized;

(ii)

To carry out the collection of sampling and analysis
of the supplied coat jointly at unloading end.

(iii)

Install adequate number of crushers to ensure that
the coal is crushed to the size of 250 mm as
required under the FSA;

(iv)

setup adequate capacity for working coal at the
earliest;

d.

Impose penalty as may be appropriate keeping in view the
wilful and deliberate abuse of dominant position by
Opposite Party No.1;

e.

direct that FSA be modified to the extent and in the
manner specified herein above;

f.

direction for the appointment of an independent agency of
international repute for conducting joint sampling at the
loading and unloading point, and also to formulate an
entire process of sampling by exercise of its statutory
power under the Act;

g.

direct the Opposite Parties to function in a manner as may
be specified by the Hon’ble Commission in order to ensure
freedom of trade carried on by the participants in the
market and to protect the interest of the consumers
including suggest such amendments/ modifications or

 9

may be necessary in the existing Fuel Supply Agreement
and other agreements regulating supply of coal.”

(D)

The Commission considered the allegations contained in the three
informations and felt prima-facie satisfied that the same require investigation.
Accordingly, orders dated 24.01.2012, 06.03.2012 and 04.12.2012 were
passed under Section 26(1) of the Act and the Director General (DG) was
directed to conduct an investigation into the matter. In the last order, i.e, order
dated 04.12.2012, the Commission also directed the DG to club all the matters
for the purpose of investigation.

(E)

The DG issued notices to the appellants under Section 41(2) read with Section
36(2) of the Act and called upon them to file their response to the allegations
made in the informations and also produce the specified documents. The
appellants filed their replies and produced the required documents. The DG
also issues summons to several persons and recorded their statements. After
completing the investigation, the DG submitted report dated 08.02.2013 with
the following findings/ conclusions :
“10.1 The investigation in this case has shown that in the
relevant market of production and supply of non-coking coal in
India CIL and its subsidiaries are in a dominant position under
section 4 read with section 19(4) of the Act.

10.2

It has been found that the terms and conditions of FSA

has been drafted by the Ops unilaterally and there is no
consultation process with the other parties either at the time of
drafting of the FSA or at the time of modifications.

The

amendments are made only when there is pressure from the
MoC or MoP. The conduct of the Ops in this regard has been

 10

found to be independent of the market forces and it has been
able to affect the consumers and market in its favour.

10.3

The analysis of the terms and conditions of FSA have

shown that the Ops have violated the section 4(2)(a)(i) by
imposing unfair or discriminatory conditions in the relevant
market. The following terms and conditions have been found to
be unfair or discriminatory.
(i)

The sampling and testing procedure in clause 5.7
(4.7 for old PPs) FSA are found to be unfair and
discriminatory.

(ii)

Provisions in clause 5.2 of FSA relating to charging
the transportation and other expenses from the
buyers on supply of ungraded coal have been
found to be unfair.

(iii)

The Ops have been found to impose unfair and
discriminatory conditions regarding putting capping
on compensation for stones in clause 4.6.3(e) of
the FSA for new Power Producers.

(iv)

The provisions relating to review and termination of
the agreement in clause 2.5 to 2.6 of the FSA have
been found to be unfair and discriminatory.

(v)

The provisions relating to waiver of sellers
Condition precedents in clause 2.8.3 have been
found to be unfair.

(vi)

Discriminatory provisions for new PPs by removing
the provisions for review of grade in case of
consisting grade slippage for 3 months. Later on
during

the

pendency of

investigation

these

 11

provisions have been re-inserted in clause 5.5 of
the FSA.
(vii)

Incorporating the conditions in force majeure
clause which are not normally treated as force
majeure in clause 17.1 of FSA for new Power
producers have been found to be unfair and
discriminatory.

These conditions have been

modified during the pendency of investigation.
10.4

The allegations regarding short supply and restricting the

production has not been found to be in violation of the provisions
of Competition Act. The OP has been able justify its conduct on
account of quantity relating constraints in the market. Similarly
no case of unfair or discriminatory pricing has been found against
the OP.
10.5

It may be mentioned that CIL has modified some of the

provisions which are found to be of unfair or discriminatory in
nature, during the course of investigation.

However, such

modifications during the course of investigation proceedings do
not dilute the default of CIL in imposing discriminatory condition
in the supply of coal. These unfair and discriminatory terms and
conditions are a result of absence of the competitive process in
the relevant market.
10.6

The investigation has thus concluded that the Ops have

violated the provisions of section 4(2)(a)(i) of the Act, by imposing
unfair or discriminatory provisions in the relevant market. The
conduct of OPs has been found to be exploitative against the
consumers. The investigation has shown that lack of competition
in the market has resulted in imposition of unfair terms and
condition in sale of the coal in India.

The dependency of

 12

consumers in the relevant market on the Ops have been found
to be exploited by the Ops by framing the terms and conditions
relating to quality of coal, its testing and consequences of failure
on quality to the advantage of seller.”

(F)

The Commission considered the investigation report and directed that copies
thereof be made available to the parties to enable them to file their objections/
suggestions.

The appellants availed that opportunity and filed detailed

objections to contest the findings recorded by the DG on the issue of
contravention of Section 4(2)(a)(i) of the Act. Thereafter, the Commission
comprising the Chairperson, Mr. Ashok Chawla and three Members namely –
Dr. Geeta Gouri, Mr. Justice (Retd.) S.N. Dhingra and Mr. S.L. Bunker heard
the arguments on 16th and 17th July, 2013. However, the final order was
passed on 09.12.2013 by the Commission comprising the Chairperson, Mr.
Ashok Chawla and five Members namely – Dr. Geeta Gouri, Mr. Anurag Goel,
Mr. M.L. Tayal, Mr. Justice (Retd.) S.N. Dhingra and Mr. S.L. Bunker (Mr.
Anurag Goel and Mr. M.L. Tayal were not party to the hearing held on 16 th and
17th July, 2013) whereby penalty @ 3% of the average turnover of last three
years total amounting to Rs.1773.05 crores was imposed on Coal India
Limited. The relevant portions of order dated 09.12.2013 are reproduced
below :
“250. In view of the above discussion, the Commission is of
considered opinion that CIL through its subsidiaries operates
independently

of

market

forces

and

enjoys

undisputed

dominance in the relevant market of production and supply of
non-coking coal in India. The Commission also holds the
opposite parties to be in contravention of the provisions of section
4(2)(a)(i) of the Act for imposing unfair/ discriminatory conditions
and indulging in unfair/ discriminatory conduct in the matter of

 13

supply of non-coking coal to power producers, as detailed in the
order.

251.

Rawlsian

principles for

justice

postulate

equitable

enforcement of contracts, where the rights and obligations of the
parties are balanced and do not favour one party to the contract.
However, there cannot be a watertight compartment in which
fairness of all contracts in the world can be defined or listed. The
unequal nature of the contract with CIL exercising its market
power in setting the terms and conditions has been outlined in
the order. The ‘unfairness’ emanates from the fact that CIL is in
a position to influence the terms and conditions of the contract
and has inclined them in its favour, and there has been an
attempt to formulate the contract with unequal non-benign effect
on the buyer.
“252. The Commission holds that CIL in abuse of its dominance
did not try to evolve/ draft/ finalize the terms and conditions of
FSAs through a mutual bilateral process and the same were
sought to be imposed upon the buyers without seeking, much
less considering, the inputs of the power producers.

253.

In sum, the Commission agrees with the findings returned

by the DG and holds the following specific instances qua terms
and conduct of the opposite parties emanating therefrom, as
detailed and elaborated above, to be in contravention of the
provisions of section 4(2)(a)(i) of the Act:
(i)

Clauses relating to the sampling and testing procedure.

(ii)

Clauses relating to charging the transportation and other

expenses from the buyers on supply of ungraded coal and the
clauses relating to DDQ.

 14

(iii)

Clauses relating to capping on compensation for supply of

stones for new power producers.
(iv)

Clauses relating to review and termination provisions of

the agreement.
(v)

Discrimination between existing and new power producers

with respect to review of grade.
(vi)

Clauses relating to force majeure for new power

producers.

254.

In view of the findings recorded by the Commission, it is

ordered as under:
(i)

The opposite parties are directed to cease and desist from

indulging in the conduct which has been found to be in
contravention of the provisions of the Act.
(ii)

The fuel supply agreements are ordered to be modified in

light of the observations and findings recorded in the present
order. For effecting these modifications in the agreements, CIL is
further directed to consult all the stakeholders. CIL is also
directed to ensure parity between old and new power producers
as well as between private and PSU power producers, as far as
practicable. Though varying needs of different classes of
producers may require different treatment, yet to pass muster the
embargo placed by section 4 of the Act, the differentiation or
classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from
others left out of the group, and the differentia must have a
rational nexus with the object sought to be achieved by such
classification.

 15

(iii)

CIL is further directed to incorporate suitable modifications

in the fuel supply agreements to provide for a fair and joint
sampling and testing procedure.
(iii)

CIL may also consider and examine the feasibility of

sampling at the unloading-end in consultation with power
producers besides adopting international best practices. CIL may
also hasten the process of installing Augur Sampling Machines
and washeries to help improve the coal supplied.

255.

The Commission, for the reasons recorded below, finds

the present case fit for imposition of penalty. In terms of the
provisions contained in section 27(b) of the Act, the Commission
may impose such penalty upon the contravening parties, as it
may deem fit which shall be not more than ten per cent 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.

256.

It is evident that the legislature has conferred wide

discretion upon the Commission in the matter of imposition of
penalty as can be noticed from the phraseology employed in the
provision noted above.

257.

It may be noted that the twin objectives behind imposition

of penalties are: to impose penalties on infringing undertakings
which reflect the seriousness of the infringement; and to ensure
that the threat of penalties will deter both the infringing
undertakings and other undertakings that may be considering
anti-competitive activities from engaging in them.

 16

258.

The imposition of penalty would depend upon the

mitigating and aggravating circumstances of the case.

259.

From the submissions made by CIL, it appears that CIL

does not enjoy complete commercial freedom in deciding the
customers to whom it should supply coal. It may be noted that
SLC (LT) comprising representatives of the Ministry of Coal, CEA
and the Ministry of Power collectively decide the linkages for
each power utility. Similarly, it seems that CIL does not enjoy
complete commercial freedom in the quantity of coal it should
supply, which is based on the norms laid down by the Ministry of
Power/ CEA. Furthermore, price of coal is decided by CIL
keeping in mind larger public interest including the directives of
the Hon'ble Supreme Court of India given in Ashoka Smokeless
case. Lastly, it would be pertinent to note that conduct of CIL is
affected and constrained by directions received from various
stakeholders including the Ministry of Power, the Ministry of Coal,
the CEA, the Planning Commission, NTPC etc., all of whom exert
influence and are involved in making decisions that impact
various aspects of CIL's business. Hence, the Commission is not
oblivious of the regulated environment in which CIL operates.

260.

All such factors were considered by the Commission while

determining dominance in the present case. The Commission
opined that notwithstanding the overarching policy and regulatory
environment, CIL has sufficient flexibility and functional
independence in carrying out its commercial and contractual
affairs. Such factors, however, were not found to detract from CIL
and its subsidiaries operating independently of market forces and
enjoying undisputed dominance in the relevant market.

 17

261.

However, as noted above, while considering the

quantification of penalty, the contention of CIL that its behaviour
is constrained by various factors, including countervailing power
exercised by above noted stakeholders including the Presidential
Directive, significant social costs and obligations, its inability to
choose its customers and quantum of coal to be supplied to these
customers, pressures faced to roll back price increases etc.,
cannot be altogether ignored.

262.

In this regard, the Commission notes the key policy

change introduced by Government of India in effecting shift in
grading and pricing of coal. From the submissions of the opposite
parties, it is apparent that the Ministry of Coal, through its letter
dated 18.10.2011, directed CIL to take necessary steps in
relation to changing from the UHV system of grading/ pricing coal
to the GCV system. This direction was in accordance with the
recommendations given in the Integrated Energy Policy (IEP).
Further, the letter by the Ministry of Coal was followed by a
notification to this effect passed on 30.12.2011, bringing into
effect the new system from January 2012. As a result of this
policy change, CIL moved from UHV system to the GCV method
of grading and pricing coal. From this, it is obvious that this
change was brought about through the direction of Government
of India and not by CIL on its own motion. CIL has merely
implemented the change by amending the FSAs and the price
circulars.

263.

The Commission has also noted the changes effected by

CIL during the course of the investigation and pendency of
proceedings in FSAs on certain aspects as mentioned in earlier

 18

part of the order. However, it is made clear that nothing stated in
this order shall tantamount to an expression of opinion on the
changes so effected and the same are left open to be examined
in an appropriate case, if required.

264.

On the issue of penalty, the Commission notes that the

entire impugned conduct in the present proceedings emanate out
of drafting and finalization of FSAs by CIL Board and, as such,
CIL is the fountain head of this entire anti-competitive conduct.
The Commission further notes that although subsidiaries of CIL
have no major role in the drafting and finalization of model FSA
and the same is done by CIL Board, they are also liable for
contravention as they have contributed to and responsible for the
violation by implementing the abusive clauses of FSA without any
demur or reservation. Thus, for the purposes of imposition of
penalty, the Commission deems it appropriate to proceed against
CIL by taking into consideration its consolidated accounts.

265.

The

Commission

has

bestowed

its

thoughtful

consideration on the issue of quantum of penalty. It cannot be
disputed that CIL during pendency of investigations modified
some clauses of the FSAs as noted earlier in the order.

266.

Considering the totality of facts and circumstances of the

present case as discussed above, the Commission decides to
impose penalty on CIL by taking into consideration its
consolidated accounts at the rate of 3% of the average turnover
of the last three years. The total amount of penalty is worked out
as follows:
S.No.

Name

Turnover
for 2009-

Turnover
for 2010-

Turnover
for 2011-

Average
Turnover
for Three

@3% of
average
turnover

 19

1.

267.

CIL

10 (in
Crores)

11 (in
Crores)

12 (in
Crores)

Years (in
Crores)

(in
Crores)

52,252.09

55,101.42

69,952.33

59101.94

1773.05

The directions contained in para 254 above, must be

complied within a period of 30 days from the date of receipt of
this order. The opposite parties are also directed to file an
undertaking to this effect within the said period.

268.

The Commission further directs CIL to deposit the penalty

amount within 60 days of receipt of this order.”

Appeal Nos.44 to 47 of 2014 – Coal India Ltd. and 7 others vs. Competition
Commission of India and 3 others

(A)

These appeals are directed against order dated 15.04.2014 passed by the
Commission in Case Nos. 05 and 07 of 2013 in Madhya Pradesh Pradesh
Power Generating Company Limited vs. South Eastern Coalfields Ltd. and
Coal India Ltd.’; Case No.37 of 2013, West Bengal Power Development
Corporation Ltd. vs. Coal India Ltd and others and Case No.44 of 2013,
Sponge Iron Manufacturers Association vs. Coal India Ltd. and others. In the
first two cases, the informations were filed by Madhya Pradesh Power
Generating Company Ltd. against South Eastern Coalfields Ltd. and Coal
India Ltd. alleging abuse of dominant position in the matter of supply of coal.
Case No.37 of 2013 was registered on the basis of information filed by West
Bengal Power Development Corporation Ltd. against Coal India Ltd., Eastern
Coalfields Ltd., Bharat Coking Coal Ltd. and Mahanadi Coalfields Ltd. The
main allegation levelled in that information was that by taking advantage of
their dominant position, the four entities had compelled the informant to enter
into FSAs, which were one sided and were violative of Section 4(2)(a) of the
Act. The third case being Case No.44 of 2013 was registered on the basis of

 20

information filed by Sponge Iron Manufacturers Association against Coal India
Ltd., Central Coalfields Ltd., Eastern Coalfields Ltd., Western Coalfields Ltd.,
South Eastern Coalfields Ltd., Northern Coalfields Ltd. and Mahanadi
Coalfields Ltd. with the allegations that Coal India Ltd. and its subsidiaries
have indulged in various anti-competitive practices and that the conditions of
FSAs and MoUs were one sided and were clearly violative of Section 4 of the
Act.

(B)

The Commission passed an order dated 21.03.2013 under Section 26(1) of
the Act in Case Nos.5 and 7 of 2013 and directed the DG to cause an
investigation to be made into the matter. Similar orders dated 05.03.2013 and
23.07.2013 were passed in Cases Nos. 37 of 2013 and 44 of 2013 respectively
and the DG was directed to get the matter investigated. In its order dated
23.07.2013, the Commission also directed the DG to club all the cases for the
purpose of investigation.

(C)

The DG conducted investigation and submitted report dated 23.12.2013. He
determined the relevant product market as ‘market for supply of non-coking
coal to the consumers including the thermal power producers and sponge iron
manufacturers’.

He also opined that whole of India was the relevant

geographic market. The DG then examined whether Coal India Limited and
its subsidiaries were in a dominant position and returned an affirmative finding
on that issue. After analysing the terms of FSAs, the DG held that by imposing
unfair and discriminatory conditions on the purchasers, Coal India Ltd. and its
subsidiaries had acted in contravention of Section 4(2)(a)(i) of the Act. The
findings and conclusions recorded by the DG are extracted below :
“(i) CIL by virtue of its dominance and on account of lack of
competitive process in the relevant market has not tried to
evolve/draft/finalize the terms and conditions of FSA by way of
mutual or bilateral process. The FSA was drafted by CIL for all

 21

the consumers according to its own priorities and convenience
without giving consideration to the interest of all the stakeholders.

(ii) The terms and conditions relating to review of declared grade
are found to be discriminatory. There is no provision for nonpower sector for review of grade and the terms and conditions in
this regard are discriminatory in nature.
(iii) The investigation revealed that the procedure for sampling
and analysis of quality of coal in FSA on one side does not
obligate the seller to provide for the best and fair sampling
methods and on the other side it also dilutes the consequences
of poor quality supply. The opposite parties have also
discriminated between consumers on the issue of sampling and
analysis of coal without any satisfactory reason and hence
opposite parties are found to be imposing discriminatory terms
and conditions.
(iv) The provisions in FSA relating to oversized coal and stones
are found to be unfair as the opposite parties are not obligated to
ensure the quality of coal supplied to its buyer. Further in the
event of supply of oversized coal or stones the provisions relating
to compensation are also found to be unfair and discriminatory.

(v) The terms and conditions of MoU which are meant for the new
consumers are found to be tilted in favour of the coal companies
and indicate exploitative conduct of the opposite parties. The
conduct of the opposite parties regarding MoU is found to be
unfair in violation of the provisions of section 4(2)(a)(i) of the Act.
(vi) The clauses relating to compensation for short supply and
performance incentive are found to be unfair to the extent that

 22

while calculating the Delivered Quantity (DQ) for this purpose the
ungraded coal and stones are included in DQ i.e. Actual
Delivered Quantity and therefore, the terms and conditions of
FSA in this regard are found to be in contravention of the section
4(2)(a)(i) of the Act.”

(D)

The report of the DG was considered by the Commission in its ordinary
meeting held on 10.01.2014 and it was decided to supply copies thereof to
Coal India Limited and others to enable them to file replies/ objections. On
receipt of the order passed by the Commission, Coal India Ltd. and its
subsidiaries filed detailed replies to controvert the findings and conclusions
recorded by the DG on various issues including the alleged abuse of dominant
position by them in the matter of supply of coal.

(E)

Thereafter, the Commission comprising its Chairman, Mr. Ashok Chawla and
three Members namely – Mr. Anurag Goel, Mr. M.L. Tayal and Mr. S.L. Bunker
participated in the hearing held on 19.02.2014. However, final order dated
15.04.2014 was passed by the Commission comprising Mr. Ashok Chawla and
four members including Dr. Geeta Gouri, who was not a part of the
combination which had heard the arguments of the parties. In paragraphs 62
and 63 of the final order, the Commission relied upon order dated 09.12.2013
passed in Cases Nos. 3, 11 and 59 of 2012 and approved the finding recorded
by the DG that the relevant market is ‘supply of non-coking coal to the sponge
iron manufacturers in India’. The Commission then considered whether the
opposite parties are dominant in the relevant market and abused their position
and recorded an affirmative conclusion by placing reliance on order dated
09.12.2013 passed in Case Nos.3, 11 and 59 of 2012. All this is evident from
paragraphs 62, 63 and 73 to 77 of order dated 15.04.2014, which are extracted
below :

 23

“62.

It may be pointed out that the issue of determination of

relevant market in the almost similar set of factual matrix arose
before the Commission in Case Nos. 03, 11 & 59 of 2012 wherein
similar pleas including the suggestion to take the relevant
geographic market as global, were advanced by the opposite
parties. All such pleas were considered in detail by the
Commission in its common order passed on 09.12.2013 deciding
those set of informations. As such, it is not necessary to revisit
the same herein again in this order.

63.

Accordingly, in light of the order passed by the

Commission in M/s Maharashtra State Power Generation
Company Ltd. etc. v. M/s Mahanadi Coalfields Ltd. & Ors. etc. in
Case Nos. 03, 11 & 59 of 2012 decided on 09.12.2013, it is held
that in respect of Case Nos. 05, 07 and 37 of 2013 where the
consumers of non-coking coal are thermal power producers,
‘supply of non-coking coal to the thermal power producers in
India’ is the relevant market. Further, it may be noted that the DG
has categorically returned a finding of lack of demand side
substitutability of the product under consideration by sponge iron
manufacturers as well. Accordingly and in light of the discussion
noted above, the Commission is of opinion that in respect of Case
No. 44 of 2013 where the consumers (members of the
association) of non-coking coal are sponge iron manufacturers,
‘supply of non-coking coal to the sponge iron manufacturers in
India’ is the relevant market.
73.

In the present case, the allegations relating to abuse of

dominant position by the opposite parties essentially centre
around the terms and condition of FSAs as well as the conduct

 24

arising therefrom, which are stated to contain unfair and
discriminatory conditions.
74. At the outset, it may be pointed out that most of the instances
of abuse by the opposite parties stand covered by the order of
the Commission passed in M/s Maharashtra State Power
Generation Company Ltd. etc. v. M/s Mahanadi Coalfields Ltd. &
Ors. etc. in Case Nos. 03, 11 & 59 of 2012 decided on
09.12.2013. Further, it may be pointed out that in the present
case, informations have been filed against CIL and all seven of
its production subsidiaries (SECL, ECL, BCCL, MCL, CCL, WCL,
NCL) whereas in the previous case informations were directed
against CIL and its three production subsidiaries viz. MCL, WCL
and SECL.

75.

Now, a seriatim analysis of the allegations made in the

informations in light of the conclusions of the DG may be
undertaken.

76.

To begin with, it may be noted that in the present batch of

informations, it has been found by the DG that CIL by virtue of its
dominance and on account of lack of competitive process in the
relevant market has not tried to finalize the terms and conditions
of FSA by way of bilateral process. Further, it was noted by the
DG that the FSAs were drafted by CIL for all the consumers
according to its own priorities and convenience without giving
consideration to the interest of all the stakeholders.

77.

In this regard, it may be pointed out that in the previous

cases, the Commission has already held that CIL in abuse of its
dominance did not try to evolve/ draft/ finalize the terms and
conditions of FSAs through a mutual bilateral process and the

 25

same were sought to be imposed upon the buyers without
seeking, much less considering, the inputs of the power
producers.”

(F)

The operative portion of the final order passed by the Commission reads as
under :
“113. In view of the above discussion, the Commission is of
considered opinion that CIL through its subsidiaries operates
independently

of

market

forces

and

enjoys

undisputed

dominance in the relevant markets of supply of non-coking coal
to the thermal power producers and sponge iron manufacturers
in India. The Commission also holds the opposite parties to be in
contravention of the provisions of section 4(2)(a)(i) of the Act for
imposing unfair/ discriminatory conditions and indulging in unfair/
discriminatory conduct in the matter of supply of non-coking coal,
as detailed in the order.
ORDER
114.

In view of the findings recorded by the Commission, it is

ordered as under:
(i) The opposite parties are directed to cease and desist from
indulging in the conduct which has been found to be in
contravention of the provisions of the Act, as detailed in this
order.
(ii) The fuel supply agreements are ordered to be modified in light
of the observations and findings recorded in the present order.
For effecting these modifications in the agreements, CIL is further
directed to consult all the stakeholders including the informants
herein.

 26

115.

The above directions must be complied within a period of

60 days from the date of receipt of this order. The opposite
parties are also directed to file an undertaking to this effect within
the said period.

116.

It is, however, made clear that the above direction shall

not be applicable qua the clauses and conduct which were also
subject matter of order passed by the Commission in Case Nos.
03, 11 and 59 of 2012. It may be pointed out that the opposite
parties preferred an appeal before the Appellate Tribunal being
Appeal No. 01 of 2014 wherein the Hon’ble Tribunal ordered
status quo vide its order dated 13.01.2014 which has been
continued from time to time. In these circumstances, the
directions relatable to the clauses and conduct which were also
subject matter of order passed by the Commission in earlier case
would abide by the further orders of the Hon’ble Tribunal.
117.

In view of the directions contained in this order, no further

or other orders are required to be passed in the application of
SIMA seeking interim relief in Case No. 44 of 2013 and the same
stands disposed of accordingly.
118.

Before concluding, it is made clear that in the facts and

circumstances of the present case, the Commission refrains from
imposing any penalty upon the opposite parties as a penalty of
Rs.1773.05 Crores was already imposed upon them in the
previous batch of informations with respect to the substantially
similar conduct. It is not the case of the informants that the
opposite parties have indulged in the abusive conduct post the
passing of the order by the Commission in the earlier cases.
119. It is ordered accordingly.
120. The Secretary is directed to inform the parties accordingly.”

 27

Appeal No.52 of 2015 – Coal India Ltd. and another vs. Competition Commission of
India and another.

(A)

This case arises out of an information filed by GHCL Ltd. against Coal India
Ltd. and its subsidiary namely, Western Coalfields Ltd. under Section 19(1) of
the Act with the allegation of abuse of dominant positon. The same was
registered as Case No.8 of 2014. The Commission felt prima-facie satisfied
that the allegations contained in the information require an investigation.
Accordingly, order dated 11.03.2014 was passed and the DG was directed to
conduct an investigation.

(B)

The DG issued notices to Coal India Ltd. and Western Coalfields Ltd. under
Section 41(2) read with Section 36(2) requiring them to submit their response
and documents in the context of the allegations contained in the information.
Coal India Ltd. filed reply dated 27.05.2014 and Western Coalfields Ltd. filed
reply dated 02.06.2014. Both of them denied the allegations of abuse of
dominant positon. The DG then adverted to the relevant facts, the order
passed by the Commission under Section 26(1) by taking into cognizance of
similar allegations contained in the informations filed by Maharashtra State
Power Generation Company Ltd and Gujarat State Electricity Corporation Ltd.
(Case Nos.3, 11, and 59 of 2012) and determined the relevant market as was
done in previous cases. The next issue considered by the DG was whether
Coal India Ltd. and its subsidiary are in a dominant position in the relevant
market and returned an affirmative finding against the appellants. For this
purpose, the DG relied upon order dated 09.12.2013 passed by the
Commission in Case Nos.3, 11 and 59 of 2012, as is evident from paragraph
5.7 of the Investigation report dated 19.09.2014.

(C)

After completing the investigation, the DG submitted his report with the
following conclusions :

 28

“7.1

The relevant market in this case has been determined as

“production and supply of non-coking coal to thermal power producers
including the Captive Power Plants in India”. It is further found that OPs
are in a dominant position under Section 4 read with Section 19(4) of
the Act.
7.2

It is held that the terms and conditions of LOA, FSA and MOU

have been drafted by the OPs unilaterally and there is no consultation
process with the customers/ other parties either at the time of drafting
of the FSA or at the time of modifications. The conduct of the OPs in
this regard has been found to be independent of the market forces and
in the process it has been able to affect the consumers and market in
its favour.
7.3

The dependency of consumers on OPs are their ability to act

independent of market forces allowed the OPs to decide the one sided
terms and conditions of LOA, FSA and MOU without any obligations
cast on the OPs in the agreements. It is held, therefore, that the
conditions imposed by OP in the LOA, FSA and MOU are unfair and in
violation of the provisions of Section 4(2)(a)(i) of the Act.
7.4

The investigation has further revealed that the OPs have

imposed unfair and discriminatory conditions by reducing the quantity
of supply and also reducing the trigger level for penalty for short
delivery. The clauses of MOU relating to reduction in quantity, trigger
level for penalty and DDQ are found to be unfair. It is, therefore, held
that the conditions imposed in MOU are in violation of provisions of
Section 4(2)(a)(i) of the Act.
7.5

The conduct of WCL by issuing letter dated 12/09/2012 to the

Informant for extending the Commitment Guarantee or to face
consequence of encashment, even when there was delay in execution

 29

of FSA on account of OPs failure only, has been found to be exploitative
and in violation of the provisions of Section 4(2)(a)(i) of the Act.
7.6

The provisions in FSA relating to Security deposit have been

found to be discriminatory. It is observed that in few cases the Security
Deposit is refunded to the consumers while in the case of the Informant
the amount of SD was further increased. It shows differential treatment
against the informant without any justification.
7.7

The provisions relating to quality, sampling & analysis, grading,

Over size coal and compensation of stones have been found to be
lacking in the FSA for small and medium quantity buyers like the
informant. The conduct of OPs are therefore, found to be unfair and
discriminatory in violation of the provisions of Section 4(2)(a)(i) of the
Act.
7.8

The investigation has thus concluded that the OPs have violated

the provisions of Section 4(2)(a)(i) of the Act, by imposing unfair and
discriminatory provisions in the relevant market. The conduct of OPs
has been found to be exploitative against the consumers.”

(D)

The Commission considered the investigation report and directed that copies
thereof be supplied to the parties to enable them to file their objections/
suggestions.

Coal India Ltd. and Western Coalfields Ltd. filed detailed

objections to contest the findings recorded by the DG.

Thereafter, the

Commission comprising the Chairperson, Mr. Ashok Chawla and two
members namely, Mr. Sudhir Mital and Mr. U.C. Nahata heard the parties on
25.11.2014. However, in the final order passed on 16.02.2015, two members
namely Mr. S.L. Bunker and Mr. Augustine Peter, who were not party to the
hearing held on 25.11.2014, joined the Chairperson and the other two
members. In paragraph 117 of the final order, the Commission referred to the
order passed by it in Case Nos.3, 11 and 59 of 2012 and also took cognizance
of order dated 13.01.2014 passed by the Tribunal in Appeal No. 01 of 2014

 30

and observed that the directions relatable to the clauses and conduct of Coal
India Ltd. and its subsidiaries would be subject to the decision of the Tribunal.
For the sake of reference, paragraphs 115 to 118 of order dated 16.02.2015
passed by the Commission are reproduced below :
“115. In view of the above discussion, the Commission is of
considered opinion that CIL and its subsidiaries operate
independent of market forces and enjoy undisputed dominance
in the relevant market. The Commission also holds the Opposite
Parties to be in contravention of the provisions of section
4(2)(a)(i) of the Act, as detailed in the order.
ORDER
116.

In view of the findings recorded by the Commission, it is

ordered as under :
(i)

The Opposite Parties are directed to cease and desist

from indulging in the conduct which has been found to be in
contravention of the provisions of the Act, as detailed in this
order; and
(ii)

The Opposite Parties are further ordered to take remedial

steps in light of the observations and findings recorded in the
present order within a period of 60 days from the receipt of this
order.

117.

It is, however, made clear that the above direction shall

not be applicable qua the clauses and conduct which were also
subject matter of order passed by the Commission in Case Nos.
03, 11 and 59 of 2012. It may be pointed out that the Opposite
Parties preferred an appeal before the Appellate Tribunal being
Appeal No. 01 of 2014 wherein the Hon’ble Tribunal ordered
status quo vide its order dated 13.01.2014 which has been

 31

continued from time to time. In these circumstances, the
directions relatable to the clauses and conduct which were also
subject matter of order passed by the Commission in earlier case
would be subject to the decision of COMPAT.

118. Before concluding, it is made clear that in the facts and
circumstances of the present case, the Commission refrains from
imposing any penalty upon the Opposite Parties as a penalty of
Rs. 1773.05 Crores was already imposed upon them in the
previous batch of informations with respect to inter alia similar
issues.”

Appeal 49 of 2014 – Madhya Pradesh Power Generating Company Ltd. vs.
Competition Commission of India and 2 others.

(A)

Madhya Pradesh Power Generating Company Ltd. has filed this appeal
against order dated 15.04.2014 passed by the Commission, which is subjectmatter of challenge in Appeals Nos. 44-47 of 2014.

The appellant has

questioned the order of the Commission only to the extent of non-consideration
of its challenge to various clauses and schedule of the Coal Supply Agreement
(CSA) and prayed as under :
“a

Direct Respondent Nos. 2 & 3 to limit supply to ‘G3 to G5 Band’
coal not more than 20% and in place supply ‘G6 to G12 Band’
coal.

b.

Direct Respondent No. 2 & 3 to furnish information qua total
production of higher grade i.e. A&B grade (G3 to G5 band from
1-1-2012 onwards) coal and its distribution thereof since 2007-08
till date; to the Appellant and other consumers.

 32

c.

Direct Respondent No. 2 & 3 to furnish information qua total
production of lower than A&B grade coal and its distribution since
2007-08 till date to the Appellant and other consumers.

d.

Direct the Respondent No. 1 to further investigate on abuse of
dominant position by Respondent No. 2 & 3 qua supply of
excessive higher grade i.e. G3 to G5 Band of coal on the basis of
the facts, circumstances and grounds stated in this Appeal;

e.

Declare that Respondent No. 2 & 3 have abused its “dominant
position” as a producer and supplier of coal by unfair and
discriminatory supply of higher grade i.e. G3 to G5 Band of coal
to the Appellant and as a result of such abuse, has caused loss
and injury to the Appellant;

f.

Impose penalty as ay be appropriate keeping in view the willful
and deliberate abuse of dominant position by Respondent No. 2
& 3;

Appeal No.70 of 2014 – Sponge Iron Manufacturers Association vs. Competition
Commission of India and another.
(A)

This appeal is directed against order dated 15.04.2014 passed by the
Commission in Case Nos.5, 7, 37 and 44 of 2013, which is also under
challenge in Appeal Nos.44-47 of 2014. The appellant has prayed that the
findings recorded by the Commission on the following issues be quashed :
“a)

Diversion of coal to E-auction.

b)

Excessive pricing by the Respondent.

c)

Differential pricing adopted by the Respondent No.2 to 8.

d)

Excessive pricing by the Respondent No.5.

e)

Discriminatory behaviour of the Respondent No.2 and 8 and
unwarranted classification of consumers of the same class.

 33

f)

Discriminatory provision and practice pertaining to differential
trigger level for different consumers on penalties for short supply
be set aside.”

The appellant has also prayed that Respondent No.2 to 8 be directed
to comply with the provisions envisioned in the NCDP, FSAs and the
regulations of Central Government.

3.

The arguments in these appeals were initially heard between May and August

2015. On the first date, i.e., 01.05.2015, the Tribunal heard the arguments of Shri
Gopal Subramaniam and Shri Ramji Srinivasan, Senior Advocates appearing for the
appellants and recorded a detailed order, the relevant portions of which are extracted
below :
“At the threshold of hearing, Shri Gopal Subramaniam and Shri
Ramji Srinivasan, learned Senior Counsel appearing for appellants
invited the Tribunal’s attention to the statements contained in
paragraphs 460 and 461 of the paper book of Appeal No. 01/2014 and
argued that the impugned order is liable to be set aside only on the
ground of violation of the rules of natural justice. Both Shri
Subramaniam and Shri Srinivasan pointed out that arguments on the
complaint made by the respondents were heard by the Commission
comprising Chairperson and three members but the order under
challenge has been passed by the Commission comprising six persons
including Chairperson and it has been erroneously recorded that all of
them had heard the arguments. Learned counsel argued that in
exercise of its adjudicatory functions under the Competition Act 2002,
the Commission acts as quasi judiciary body and it is bound by the rules
of natural justice. They also referred to Section 36(1) of the Act in
support of this argument.

 34

Shri Pallav Shishodia, learned Senior Counsel appearing for the
Competition Commission of India made a request for an adjournment
for two weeks to enable him to go through the original records of the
Commission and also to enable his colleagues to seek instructions from
the competent authority.
Shri Gopal Subramanium and Shri Ramji Srinivasan and other
learned counsel appearing for the appellants say that they do not have
any objection.
The request made by Shri Shishodia is accepted and the case is
adjourned to 22.05.2015 for further arguments. To be shown as the first
case.
While adjourning the case I deem it appropriate to take
cognizance of the judgements of the Supreme Court in Gullapalli
Nageswara Rao and others Versus Andhra Pradesh State Road
Transport Corporation and anr., AIR 1959 SC 308 and Union of India
Versus Shiv Raj and others (2014) 6SCC 564 . The ratio of these
judgements is that one who hears must decide and violation of this rule
will make the final order non-est.”

4.

On the next date, i.e., 22.05.2015, the case was adjourned at the request of

Shri Pallav Shishodia, Senior Counsel appearing for the Commission. Thereafter,
Smt. Smita Jhingran, Secretary of the Commission filed affidavit dated 15.07.2015
along with copy of interim order dated 17th May, 2013 passed by the Tribunal in
Appeal No.105 of 2012 with I.A. Nos.224 and 270 of 2012 – Lafarge India Limited vs.
Competition Commission of India and others, order dated 24th January, 2012 passed
by the Commission under Section 26(1) of the Act in Case No.03 of 2012
Maharashtra State Power Generation Company Limited vs. Mahanadi Coalfield
Limited and another, order dated 06.03.2012 passed by the Commission in Case
No.03 of 2012 dismissing an application filed by the informant under Section 33 of

 35

the Act and minutes of the ordinary meetings of the Commission held on 21.03.2012,
01.05.2012,

05.07.2012,

29.08.2012,

06.11.2012,

01.01.2013,

31.01.2013,

28.02.2013,

07.03.2013,

17.04.2013,

23.04.2013,

15.05.2013,

16.07.2013,

17.07.2013, 13.08.2013, 11.09.2013, 09.10.2013 and 14.11.2013.

In reply Mr.

Snehatosh Majumder filed affidavit dated 28.07.2015 on behalf of Coal India Ltd.
5.

On 14.09.2015, Shri Sanjay Sen, learned Senior Counsel appearing for

Maharashtra State Power Generation Company Ltd. made his submissions. In the
midst of hearing, it was felt that the parties should make an endeavour to amicably
resolve the outstanding issues. Thereupon, learned counsel for the parties sought
instructions from their respective clients and stated that they are willing to sit across
the table and discuss the remaining issues. The discussions between the parties
continued for quite some time and the appeals were adjourned from time to time to
enable them to explore the possibility of a settlement. However, even after detailed
deliberations, no settlement could be reached between the parties. On 15 th February,
2016, the Tribunal perused the Minutes of the Meetings held on 04.01.2016 and
19.01.2016 and passed the following order :

“The appellants have filed a compilation of the Minutes of the
Meetings held on 4thJanuary, 2016 and 19thJanuary, 2016.
After going through the Minutes, the Tribunal enquired from Shri
Ramji Srinivasan, learned Senior Counsel for the appellants as to how
paragraph viii came tobe incorporated in the Minutes of the meeting
held on 19thJanuary, 2016, because areference in that paragraph has
been made to some telephonic discussion held on 28thJanuary, 2016.
In reply, Shri Ramji Srinivasan placed before the Tribunal a copy
of letter dated3rdFebruary, 2016 sent by the General Manager (S&M),
Coal India Limited to the AGM (FM), NTPC Limited. A perusal of that
letter shows that the parties have not been able to amicably resolve the
controversy relating to sampling at unloading end.

 36

The letter made available by Shri Ramji Srinivasan is taken on
record. The same be inserted in the volume containing the Minutes of
the two meetings.
Keeping in view of the fact that the arguments have been partly
heard with long intervals, it is considered appropriate that the case shall
be re-heard. It shall no longer be treated as part heard and be listed
before the regular Bench. Learned counsel for the parties say that the
matter may be taken up on 18th April, 2016. Ordered accordingly.”

6.

Shri Ramji Srinivasan, learned Senior Counsel appearing for the appellant in

Appeal No.01 of 2014, which is directed against order dated 09.12.2013 passed by
the Commission in Case Nos.3, 11 and 59 of 2012 argued that the impugned order
is liable to be set-aside on the ground of violation of the principles of natural justice
because arguments were heard on 16th and 17th July, 2013 by one combination of
the Commission comprising the Chairperson Shri Ashok Chawla and three members,
namely, Dr. Geeta Gouri, Shri S.L. Bunker and Shri Justice (Retd.) S.L. Dhingra, but
the final order was passed by another combination comprising the Chairperson Shri
Ashok Chawla and five members, namely, Dr. Geeta Gouri, Shri Anurag Goel, Shri
M.L. Tayal, Shri Justice (Retd.) S.L. Dhingra and Shri S.L. Bunker. Shri Ramji
Srinivasan also pointed out that the arguments in Case Nos.5, 7, 37 and 44 of 2013,
which were decided on 15.04.2014 were heard on 19th February, 2014 by the
Commission comprising the Chairperson, Shri Ashok Chawla and three members
namely – Shri Anurag Goel, Shri M.L. Tayal and Shri S.L. Bunker, but the final order
was passed on 15.04.2014 by the Commission comprising the Chairperson, Shri
Ashok Chawla and four members namely – Dr. Geeta Gouri, Shri Anurag Goel, Shri
M.L. Tayal and Shri S.L. Bunker despite the fact that Dr. Geeta Gouri did not have
the benefit of hearing arguments of the counsel for the parties. Shri Rajshekhar Rao,
learned counsel appearing for the appellant in Appeal No.52 of 2015 made similar
submission and pointed out that the arguments in Case No.8 of 2014 were heard on

 37

25th November, 2014 by the Commission comprising the Chairperson, Shri Ashok
Chawla and two members, namely, Shri Sudhir Mital and Shri U.C. Nahata, but the
final order was passed by another combination of the Commission comprising the
Chairperson, Shri Ashok Chawla and four members namely – Shri S.L. Bunker, Shri
Sudhir Mital, Augustine Peter and Shri U.C. Nahata.

7.

Shri Ramji Srinivasan and Shri Rajshekhar Rao emphasised that those who

were not present at the hearings held on 16th and 17th July, 2013 in Case Nos.3, 11
and 59 of 2012, 19.02.2014 in Case No.5, 7, 37 and 44 and 25.11.2014 in Case No.8
of 2014 had no inkling about the arguments advanced by the Advocate representing
to the parties and yet they mechanically signed the orders, which has serious adverse
implication on the rights of the appellants and their rights have been seriously
prejudiced on account of flagrant violation of the principles of natural justice. In
support of their arguments Shri Ramji Srinivasan and Shri Rajshekhar Rao relied
upon order dated 11.12.2015 passed by the Tribunal in Appeal No.105 of 2012
Lafarge India Ltd. vs. Competition Commission of India and another and connected
matters.

8.

As regards interim order dated 17.05.2013 passed by the Tribunal in Appeal

No.105/2012 and connected matters on which reliance has been placed in the
affidavit filed by the Secretary of the Commission, Shri Ramji Srinivasan submitted
that the same has lost its significance in view of the final order passed on 11.12.2015
more so because at that stage the attention of the Tribunal was not drawn to the
judgments of the Supreme Court in State of Orissa Vs. Dr. (Miss) Binapani Dei and
others - AIR 1967 SC 1269, A. Kraipak Vs. Union of India and others (1969) 2 SCC
262, Sayeedur Rehman Vs. State of Bihar (1973) 3 SCC 333, Mohinder Singh Gill
Vs. Chief Election Commissioner (1978) 1 SCC 405, Mahipal Singh Tomar Vs. State
of Uttar Pradesh (2013) 16 SCC 771.

9.

Shri Pallav Shishodia, Senior Counsel appearing for the Commission invoked

the principle of institutional continuity and argued that the impugned order should not

 38

be quashed on the ground of violation of principles of natural justice because some
member/ members who was/ were not present at the hearing held with reference to
the particular case/cases was/ were present in the hearing held qua other case or
cases and no prejudice was caused to the appellants due to the absence of any
particular member on a particular day. Shri Shishodia pointed out that even though
Shri Anurag Goel and Shri M.L. Tayal were not present at the hearing held on 16 th
and 17th July, 2013 in Case Nos.3, 11, 59 of 2012 registered on the basis of the
informations filed by Maharashtra State Power Generation Company Ltd. and Gujarat
State Electricity Corporation Ltd., they had the benefit of hearing similar arguments
made on 19th February, 2014 in Case Nos.5, 7, 37 and 44 of 2013 registered on the
basis of informations filed by Madhya Pradesh Power Generating Company Ltd. and
Sponge Iron Manufacturers Association respectively. Shri Shishodia further pointed
out that even though Dr. Geet Gouri was not a party to the hearing held on 19 th
February, 2014 in Case Nos.5, 7, 37 and 44 of 2013, she was a part of the
combination which heard the arguments on 16 th and 17th July, 2013 in Case Nos.3,
11 and 59 of 2012. As regards the absence of Shri S.L. Bunker and Shri Augustine
Peter at the hearing held on 25th November, 2014 in connection with Case No.8 of
2014 registered on the basis of information filed by GHCL Ltd., Shri Shishodia pointed
out that Shri Bunker was present at the hearings held on 16th and 17th July, 2013 in
connection with Case Nos.3, 11 and 59 of 2012 and on 19 th February, 2014 in
connection with Case Nos.5, 7, 37 and 44 of 2013 and Shri Augustine Peter was
present in the hearing held on 27.10.2014 in connection with another case out of
which Appeal No.81 of 2014 has been filed. Shri Shishodia emphasised that in each
case the Commission has independently recorded findings on the issue of abuse of
dominant position by Coal India Ltd. and its subsidiaries and, therefore, reference to
the findings recorded in order dated 09.12.2013 passed in Case Nos.3, 11 and 59 of
2012 in other cases should be treated as inconsequential. In the end, Shri Shishodia
submitted that if the Tribunal is not inclined to accept his argument based on the
principle of institutional continuity and is inclined to set-aside the impugned order by

 39

applying the ratio of order dated 11.12.2015 passed in Appeal No.105 of 2015 and
connected matters, then it may be made clear that no opinion is being expressed by
the Tribunal on the merits of the case and Coal India should be restrained from
withdrawing the concessions already made before the Commission.

10.

Shri Sanjay Sen and Shri Vivek Tankha, Senior Advocates appearing for the

respondent in Appeal Nos.1 and 44-47 of 2014 respectively, fairly stated that the
issue raised in these appeals about violation of the principles of natural justice is
identical to the one considered by the Tribunal in Appeal No.105 of 2012 and
connected matters, but submitted that if the Tribunal is inclined to set-aside the
impugned order and remit the case to the Commission for re-consideration, then a
time bound direction may be given for final disposal of the cases.

11.

We have given thoughtful consideration to the arguments of the learned

counsel for the parties and carefully scrutinised the record. We have also gone
through the order dated 11.12.2015 passed in Appeal No.105 of 2012 and connected
matters and affidavits filed by the parties during the course of hearing.

12.

The question whether a person, who is a member of an adjudicatory body and

has not heard the parties, can adjudicate upon their rights and/or pass an order
adversely affecting either party is no longer res-integra and must be answered in
negative in view of the judgements of the Supreme Court. That question was first
considered in Gullapalli Nageswar Rao Vs. Andhra Pradesh State Road Transport
Corporation and another, AIR 1959 SC 1376. The facts of that case were that the
second and third ground on which the appellant has questioned the impugned order
can be taken up simultaneously. The appellants were carrying on motor transport
business for several years in Krishna District in the State of Andhra Pradesh, Shri
Guru Pershad, styled as the General Manager of the State Transport Undertaking of
the Andhra Pradesh Road Transport, published a scheme for nationalization of motor
transport in the said State from the date to be notified by the State Government.
Objections to the said proposed scheme were invited by the State Government, and

 40

the appellants among others, filed their objects. On December 26, 1957, the
Secretary in charge of the Transport Department gave a person hearing to the
objectors and heard the representations made on behalf of the State Transport
undertaking. The entire material gathered by him was placed before the Chief Minister
of the State in charge of transport who made the order approving the scheme. The
approved scheme was published in the Andhra Pradesh Gazette dated January 9,
1958, and it was directed to come into force with effect from January 10, 1958.
Thereafter the Andhra Pradesh Road Transport Corporation, which was formed
under the provisions of the Road Transport Corporation Act, 1950, took over the
Undertaking and proceeded to implement the scheme under a phased programme.
The appellant moved the Supreme Court under Article 32 of the Constitution for
quashing the said scheme on various grounds. The Court rejected most of the
objections raised by the appellants except in regard to two pertaining to the hearing
given by the Secretary in charge of the Transport department which resulted in the
quashing of the order of the Government approving the scheme and directing it to
forbear from taking over any of the routes on which the appellants were engaged in
transport business. After the said order, notices were issued by the Government to
all the objectors informing them that a personal hearing would be given by the Chief
Minister on December 9, 1958, and they were further informed that they were at
liberty to file further objections before November 30, 1958. The Chief Minister heard
the representatives of the objectors and the Corporation and passed order dated
December 19, 1958, rejecting the objections filed and approving the scheme as
originally published. The order approving the scheme was duly published by the
Government in the official gazette on December 22, 1958. On December 23, 1958,
the Corporation applied to the Road Transport Authority for the issue of permits for
plying stage carriages and for eliminating the permits granted to the private bus
operators. On December 24, 1958, the said Authority passed orders rendering the
permits of the appellants ineffective from December 24, 1958, and also issuing
permits to the Corporation in respect of the routes previously operated by the

 41

appellants. The said orders were communicated to the appellants on December 24,
1958, and they were also directed to stop plying their buses from December 25, 1958,
in their respective routes. The appellants, who were aggrieved by the orders of the
Government as well by the order of the Regional Transport Authority filed petitions in
the High Court under Art. 226 of the Constitution for quashing the same. The High
Court negated the appellant’s plea that the impugned order was vitiated due to
violation of the principles of natural justice. In appeal the Supreme Court reversed the
order of the High Court and held :
“…. In the case of quasi-judicial proceedings, the authority
empowered to decide the dispute between opposing parties
must be one without bias towards one side or other in the
dispute. It is also a matter of fundamental importance that a
person interest in one party or the other should not, even
formally, take part in the proceedings though in fact he does
not influence the mind of the person, who finally decides the
case. This is one the principle that justice should not only be
done, but should manifestly and undoubtedly be seen to be
done. The hearing given by the Secretary, Transport
Department, certainly offends the said principle of natural
justice and the proceedings and the hearing given, in violation
of that principle, are bad.

The second objection is that while the Act and the rules
framed thereunder impose a duty on the State Government to
give a personal hearing, the procedure prescribed by the
Rules imposes a duty on the Secretary to hear and the Chief
Minister to decide. This divided responsibility is destructive of
the concept of judicial hearing. Such a procedures defeats the
object of personal hearing. Personal hearing enables the
authority concerned to watch the demeanour of the witnesses

 42

and clear-up his doubts during the course of the arguments,
and the party appearing to persuade the authority by
reasoned argued to accept his point of view. If one person
hears and another decides, then personal hearing becomes
an empty formality. We therefore hold the said procedure
followed in this case also offends another basic principle of
judicial procedure.”
[Underlining is ours]

13.

The same question was again considered in Rasid Javed Vs. State of U.P.

(2010) 7 SCC 781. The Supreme Court relied upon the earlier judgment in Gullapalli
Nageswara Rao’s case and observed :
“…a person who hears must decide and that divided
responsibility is destructive of the concept of judicial hearing
is too fundamental a proposition to be doubted.”

14.

In Swadeshi Cotton Mills Vs. Union of India (1981) 1 SCC 664, the Supreme

Court took cognizance of the fact that the opportunity to file objections and adduce
evidence as also opportunity of personal hearing was given by one officer and the
final order was passed by another officer and held :
“In the present case, admittedly, the entire material had
been collected by the predecessor of the DA; he had allowed
the interested parties and/or their representatives to present
the relevant information before him in terms of Rule 6(6) but
the final findings in the form of an order were recorded by the
successor DA, who had no occasion to hear the appellants
herein. In our opinion, the final order passed by the new DA
offends the basic principle of natural justice. Thus, the
impugned notification having been issued on the basis of the

 43

final findings of the DA, who failed to follow the principles of
natural

justice,

cannot

be

sustained. It

is

quashed

accordingly.”

15.

In Union of India Vs. Shiv Raj – (2014) 6 SCC 564, a three-Judge Bench of

the Supreme Court relied upon the principle laid down in Gullapalli Nageswara Rao
Vs. Andhra Pradesh State Road Transport Corporation (supra), Rasid Javed Vs.
State of U.P. (supra), Automotive Tyre Manufacturers Association Vs. Designated
Authority and others (2011) 2 SCC 258 and observed :
“In view of the above, the law on the issue can be
summarized to the effect that the very person/officer, who
accords the hearing to the objector must also submit the
report/take decision on the objection and in case his
successor decides the case without giving a fresh hearing,
the order would stand vitiated having been passed in
violation of the principles of natural justice.”

16.

In Appeal No.105 of 2012 Lafarge India Ltd. Vs. Competition Commission of

India and connected matters, this Tribunal considered the question whether the
Chairperson of the Commission, who did not hear the arguments of the counsel for
the parties, could join other Members in passing the final order whereby the
appellants were held to have contravened Section 3(3)(a) and 3(3)(b) read with
Section 3(1) of the Act and total penalty of Rs. 6,316.59 Crores was imposed under
Section 27. After taking cognisance of the factual matrix of the cases, the findings
recorded in the investigation report, the order passed by the Commission and noticing
the rival contentions, the Tribunal referred to the Statement of Objects and Reasons
contained in the Bill introduced in Parliament on the recommendation of High Level
Committee constituted by the Central Government and analysed the provisions
contained in the Act and the Regulations and made the following observations :

 44

“44.

An analysis of the provisions noticed hereinabove

gives a clear indication of the nature of powers and functions
exercisable by the Commission and the Director General. The
inquiry envisaged by Section 19(1) into any alleged
contravention of Section 3(1) or Section 4(1) can be initiated
by the Commission either on its own motion or on receipt of
any information from any person, consumer or their
association or trade association or a reference made by the
Central or State Government or a statutory authority. After the
information or reference received in the office of the
Commission

is

scrutinized

by the

Secretary of

the

Commission and if the same is found to be fulfilling all the
requirements of the Regulation 14, then the same is placed
before the Commission for consideration whether a prima
facie case has been made out for investigation. In terms of
Regulation 17, the Commission can hold preliminary
conference for that purpose. The Commission can invite the
information provider and such other person, as may be
considered necessary for the preliminary conference. Section
26(1) read with Regulation 18 provides that if the Commission
forms an opinion that there exists a prima facie case, then it
is required to issue direction to the Director General to cause
an investigation to be made into the matter. The detailed
procedure for conducting investigation is contained in Section
41 read with Section 36 and Regulations 20, 21, 35, 41, 42
and 45. In terms of Regulation 41, the Director General can
determine the manner in which the evidence may be adduced.
In the proceedings before him in terms of Regulation 41(2),
the Director General can admit evidence taken in the form of

 45

verifiable transcripts of tape recordings, unedited versions of
video recording, electronic mail, telephone records including
authenticated mobile telephone records, written signed
unsworn statements of individuals or signed responses to
written questionnaires or interviews or comments or opinions
or analyses of experts based upon market surveys or
economic studies or other authoritative texts or otherwise, as
material evidence; admit on record every document
purporting to be a certificate, certified copy or other document,
which is by law declared to be admissible as evidence of any
particular fact provided it is duly certified by a gazetted officer
of the Central Government or by a State Government or a
statutory authority, as the case may be or a Magistrate or a
Notary appointed under the Notaries Act, 1952 or the
Secretary of the Commission; admit
the entries in the books of account, including those
maintained in an electronic form, regularly kept in the course
of business, including entries in any public or other official
book, register or record or an electronic record, made by a
public servant in the discharge of his official duty, or by any
other person in performance of a duty specially enjoined by
the law of the country in which such book, register or record
or an electronic record is kept, as documentary evidence;
admit the opinion of any person acquainted with the
handwriting of the person by whom a document is supposed
to have been written or signed, as relevant fact to prove the
handwriting of the person by whom the document was written
or signed; admit the opinion of the handwriting experts or the
experts in identifying finger impressions or the persons

 46

specially skilled in interpretation of foreign law or of science or
art; take notice of the facts of which notice can be taken by a
court of law under Section 57 of the Indian Evidence Act,
1872; accept the facts, which parties to the proceedings admit
or agree in writing as proved; presume that any document
purporting to be a certified copy of any record of any authority,
court or government of any country not forming part of India
as genuine and accurate, if the document purports to be
certified in any
manner which is certified by any representative of the National
Government of such country including certification by the
Embassy or the High Commission of that country in India and
admit such documents including electronic records in
evidence as may be considered relevant and material for the
proceedings. Clause (3) of Regulation 41 makes Sections
22A, 47A, 65B, 67A, 73A, 81A, 85A 85B, 85C, 88A, 89 and
90A of the Evidence Act applicable for the purpose of
investigation by the Director General, subject, of course, to
clause (2) of Regulation.
45.

In terms of clause (4), the Director General can call for

the parties to lead evidence by way of affidavit or lead oral
evidence in the matter. In terms of clause (5), the Director
General can give an opportunity to the other party or parties
to cross-examine the person giving the evidence. Clause (6)
empowers the Director General to entrust the task of
recording evidence to any officer or person designated for the
said purpose. Regulation 42 provides that the Director
General can, for sufficient reasons, order that any particular
fact or facts may be supported by an affidavit. Various clauses

 47

of this Regulation prescribe the mode and manner in which
the affidavit required to be filed under clause (1) is to be
prepared. On completion of investigation, the Director
General is required to submit his report to the Commission.
Clause (4) of Regulation 20 provides that the report shall
contain his findings on each of the allegations made in the
information or reference, as the case may be, together with all
evidences or documents or statements or analyses collected
during the investigation. Proviso to this clause empowers the
Director General to grant partial or total confidentiality to the
commercially sensitive information and documents.
46.

Once the report of the Director General is received, the

Commission is required to act in accordance with the
procedure enshrined in sub-sections (4) to (8) of Section 26,
which provide for forwarding a copy of the record to the parties
concerned including the Central or the State Government or
the statutory body, as the case may be, sub-sections (5) and
(6) of Section 26 deal with the situation in which the report of
the

Director General recommends that there

is no

contravention of the provisions of the Act. In that event, the
Commission is required to invite objections or suggestions
from the Central Government or the State Government or the
statutory authority or parties concerned, as the case may be.
If after considering the objections/suggestions filed in terms of
sub-section

(5),

the

Commission

agrees

with

the

recommendations of the Director General, then it is required
to close the matter and pass orders, which may be
communicated to the Central or State Government or
statutory authority or the concerned parties. If after

 48

considering the objections/suggestions referred to in subsection (5), the Commission forms an opinion that the further
investigation is to be made, or cause further inquiry to be
made in the matter or itself proceed with further inquiry in
accordance with the provisions of the Act [Regulation 26(7)].
If the report of the Director General recommends that there is
contravention of any of the provisions of the Act and the
Commission forms the view that further inquiry is called for
then it shall inquire into such contravention in accordance with
the provisions of the Act [Regulation 26(8)]. Regulations 21 to
27 and Regulations 41 to 44 contain the procedure for
conducting inquiry by the Commission. Under Regulation 35,
the Commission can make a reference to any statutory
authority for opinion under Section 21A. Regulation 35
empowers the Commission to grant confidentiality in certain
situations. Regulation 43 empowers the Commission to take
additional evidence. Regulation 46 postulates representation
of the parties by their representatives before the Commission.
Regulation 52 empowers the Commission to invite experts of
eminence to assist the Commission in discharging of its
functions under the Act. Section 36(2) lays down that the
Commission shall have, for the purposes of discharging its
functions under the Act, the same powers as are vested in a
Civil Court under the Code of Civil Procedure, 1908 in respect
of the matters relating to summoning and enforcing the
attendance of any person and examining him on oath;
requiring the discovery and production of documents;
receiving evidence on affidavit; issuing commissions for the
examination of witnesses or documents and requisitioning

 49

any public record or document or copy of such record or
document from any office. Under Section 36(3), the
Commission is empowered to call upon experts, from the
fields of economics, commerce and accountancy. Under
Section 36(4), the Commission can issue direction to any
person to produce books of accounts or other documents in
his custody or under the control before the Director General
and to furnish to him or Secretary of the Commission such
other information as may be in his possession in relation to
trade carried on by such person as may be required for the
purposes of the Act. At the end of this exercise, the
Commission can pass appropriate orders under Section 27
including an order for imposing penalty in cases involving
contravention of Section 3 and/or Section 4. By virtue of
Section 41(2), Director General is entitled to exercise the
powers conferred upon the Commission under Section 36(2).
Section 42(2) provides for imposition of fine for contravention
of orders or directions issued under Section 27, 28, 31, 32,
33, 42A and 43A. The quantum of fine may extend to rupees
one lakh per day, subject to a maximum of rupees ten crores.
If any person fails to comply with the orders or directions
issued by the Commission or fails to pay the fine imposed
under Section 42(2), then he can be punished with
imprisonment for a term which may extend to three year of
with fine upto rupees twenty five crores or with both, as the
Chief Judicial Magistrate may determine. Section 42A
postulates award of compensation for contravention of
decision or order of the Commission issued under Section 27,
28, 31, 32 and 33 or any condition or restriction subject to

 50

which any approval, sanction, direction or exemption has
been granted or for delay in carrying out such orders or
directions. Section 43 provides for imposition of fine for noncompliance of direction by the Commission under Section
36(2) and (4) or by the Director General under Section 41(2).
The amount of fine may extend to rupees one lakh per day
during the period of continuance of such failure subject to a
maximum of rupees one crore.

Section 43A provides for

imposition of penalty for non-furnishing of information under
Section 6(2). The extent of such penalty may be upto 10% of
the total turnover or the assets of the wrong doer, whichever
is higher. Section 44 provides for imposition of penalty for
making a false statement or omission to furnish material
information in combination case. Section 45 contains a
general provisions for imposition of fine upto rupees one crore
for making false statement or omission to state any material
fact knowing it to be a material or willful alteration,
suppression or destruction of any document, which is required
to be furnished.

47.

From what we have mentioned above, it is clear that

the procedure required to be followed by the Director General
for conducting investigation and by the Commission as a
prelude to the passing of orders/issue directions under
Section 27 and/or the various provisions contained in
Chapter-VI of the Act and corresponding regulations is akin to
the procedure required to be followed by the Civil Court for
deciding a suit except that the Director General and the
Commission are not bound by the technicalities of the
procedure contained in the Code of Civil Procedure, 1908 and

 51

rules embodied in the Evidence Act except to the extent
indicated in the Act.

48.

The above survey of various provisions of the Act and

the Regulations shows that even while amending the Act by
Act 39 of 2007 and Act 39 of 2009, Parliament consciously
decided to retain provisions relating to adjudicatory functions
of the Commission in their full vigour and the mere fact that by
virtue of substituted Section 22, the business of the
Commission is required to be transacted in its meetings and
the

business

would

necessarily

include

exercise

of

adjudicatory functions/powers, cannot lead to an inference
that while deciding the allegations contained in the information
filed or reference made under Section 19(1)(a) and passing
orders under Sections 27, 33, 39, 42, 42A, 43, 43A, 44 and
45, the Commission exercises purely administrative power or
discharge administrative functions or that while passing
orders under those sections and also under Section 28, which
can have far-reaching impact on the rights of the parties, the
Commission

is not required to act as per the accepted

standard of fairness and render just decision after complying
with the principles of natural justice as expounded by the
Courts across the globe including the Supreme Court of India.
Rather, on the basis of case law developed in this country, it
must be held that like any other adjudicatory body, the
Commission is bound to comply with various facets of the
principles of natural justice and its proceedings confirm to the
objective standard of fairness.”
(Emphasis supplied)

 52

17.

In support of its conclusion that the Commission is bound to comply with

various facets of the principles of natural justice, the Tribunal relied upon and
extensively quoted from the judgments of the Supreme Court in State of Orissa Vs.
Dr.(Miss) Binapani Dei and others (supra), A.K. Kraipak Vs. Union of India and others
(supra), Sayeedur Rehman vs. State of Bihar (supra), Menka Gandhi Vs. Union of
India (1978) 1 SCC 248, Mohindir Singh Gill Vs. Chief Election Commissioner (supra),
Manohar Vs. State of Maharashtra and another (2012) 13 SCC 14, Institute of
Chartered Accountant of India Vs. L.K. Ratna (1986) 4 SCC 537, BCCI vs. Cricket
Association of Bihar (MANU/SCOR/00491/2015) decided on 22.01.2015.

18.

The Tribunal then referred to the judgment in Gullapalli Nageswara Rao and

Others Versus Andhra Pradesh State Road Transport Corporation and another
(supra) and similar other judgements to which reference has been made hereinabove,
and observed :
“It is beyond the comprehension of even a lay person that one
who has not heard the parties (in person or through their
advocate or authorized representative), could join the
decision making process and pass final order. How could a
person (in this case Chairperson of the Commission), who did
not have the opportunity to hear the arguments of the
Advocates for the parties (for three days), who included
eminent lawyers like S/Shri Ashok Deasi, K.K. Venugopal,
AnantHaksar, Parag Tripathi, Ramji Srinivasan, AspiChinoy
and O.P. Dua could decide the matter. How could he know
the nature and contents of the arguments made by the
Advocates representing the parties. For anybody, who has not
heard the Advocates for the parties, it will be nothing more
than a wild guess as to what they may have argued. The
learned counsel may have pointed out several infirmities in

 53

the procedure adopted by the Jt. Director General in
conducting the investigation and the conclusion recorded by
him. They might have pointed out that the report of the Jt.
Director General is contrary to the record or is otherwise
laconic in several respects. They might have argued that the
Jt. Director General did not take into consideration the
relevant material or considered the irrelevant material. For us,
it is not possible to imagine as to what the learned counsel
representing the parties might have argued. It is a matter of
mystery that without having any idea about the arguments
advanced by the Advocates representing the parties, which
lasted for three days, the Chairperson of the Commission
could become party to the final order, which resulted in
imposition of penalty of over Rs.6100 crores. It must be
remembered that the rule of law is an important corner stone
of our democratic setup and principles of natural justice are
required to be followed in each and every case where an order
adversely affecting a person is passed, except when the
application of the particular facet of natural justice or all of
them are excluded by legislation and it is nobody’s case that
2002 Act has expressly excluded the applicability of the
principles of natural justice. Rather, Section 36(1) mandates
that in the discharge of its functions, the Commission shall be
guided by the principles of natural justice. In other words, the
principles of natural justice have been statutorily engrafted in
the scheme of the Act and the Commission is bound to comply
with the same in the exercise of its adjudicatory functions.”
[Emphasis supplied]

 54

19.

In paragraph 71 of the order passed in Appeal No. 105 of 2012 and other

connected matters, the Tribunal noted the submission made by Shri Pallav Shishodia,
learned senior counsel for the Commission that the participation of Chairperson in
the final order was a trivial and insignificant irregularity which ought to be ignored in
view of Section 15 of the Act and rejected the same by making the following
observations :
“72.

Though appears attractive, the submissions of Shri

Shishodia lack merit and deserve to be rejected.

The

significance of the hearing by the decision-maker has been
aptly highlighted in the celebrated judgement of the Supreme
Court in Gullapalli Nageswara Rao’s case (supra) in the
following words :
“…This divided responsibility is destructive of
the concept of judicial hearing. Such a procedure
defeats the object of personal hearing. Personal
hearing enables the authority concerned to watch the
demeanour of the witnesses and clear-up his doubts
during the course of the arguments, and the party
appearing to persuade the authority by reasoned
argument to accept his point of view. If one person
hears and another decides, then personal hearing
becomes an empty formality.”

In Rasid Javed’s case (supra), this rule was reiterated in the
following words:
“A person who hears must decide and that divided
responsibility is destructive of the concept of judicial
hearing. Such a procedure defeats the object of

 55

personal hearing is to fundamental proposition to be
doubted.

The same view was has been reiterated in Automative Tyre
Manufacturers Association Vs. Designated Authority and
Others (supra) and Union of India vs. Shiv Raj and others
(supra).

73.

Although no concrete evidence can possibly be

produced by any person other than the Members of the
Commission as to what extent the Chairperson influenced
their views on the merits of the case but there can be no doubt
that his presence in the decision-making process must have
had telling effect.

Even

though,

while

discharging

adjudicatory functions of the Commission, all Members enjoy
coordinate position vis-à-vis Chairperson, there can be no
denying that the latter, who is over-all In-charge of the
Commission plays a pivotal role in the functioning of the body
including orders passed by it on the basis of investigation
conducted by the Director General.

His influence on the

decision-making process is subtle and it is not possible to
accept the argument that the Chairperson had not influenced
the final verdict.

None of the Members, who heard the

arguments on 21st, 22nd and 23rd February, 2012, has filed
affidavit to swear that the decision to penalize the appellants
was taken without being influenced by the view of the
Chairperson or that he was a mute spectator in the meetings
held for discussing the final verdict. Even if, such an affidavit
was filed, the same would have been discarded in view of the
observations made by the Supreme Court in A.K. Kraipak’s

 56

case (supra). In that case, all the members of the selection
board have separately filed affidavits to swear that
Naqishbund, who was also a member of the Selection Board
had not influenced their decision. While refusing to rely upon
those affidavits, the Supreme Court observed :
“In a group deliberations, each member of the
group is bound to influence the others, more so, if the
member

concerned

is

a

person

with

special

knowledge. His bias is likely to operate in a subtle
manner. It is no wonder that the other members of the
selection board are unaware of the extent to which his
opinion influenced their conclusions. We are unable to
accept the contention that in adjudging the suitability of
the candidates the members of the board did not have
any mutual discussion. It is not as if the records spoke
of themselves. We are unable to accept the contention
that in adjudging the suitability of the candidates the
members of the board did not have any mutual
discussion.”

74.

At the cost of repetition, we deem it appropriate to

observe that even though he was not present during the
hearing held on 21st, 22nd and 23rd February, 2012, the
Chairperson not only participated in the decision-making
process but also initialled each page of the final order, which,
as mentioned above, is strongly indicative of the fact that he
had authored the impugned order.

It is true that the

Chairperson had taken part in some other meetings held for
considering whether a prima facie case is made out for

 57

investigation and for dealing with the applications filed by the
parties or even by the Jt. DG for extension of time, but he did
not participate in the most crucial meetings held on 21st, 22nd
and 23rd February, 2012 when the arguments of the
advocates representing the parties were heard. We may also
observe that if the Chairperson had participated in all the
meetings including those in which the arguments of the
learned counsel for the parties were heard, then he would not
have passed two orders, one containing public version and
other containing confidential version ignoring the earlier
detailed order passed on 29.11.2011 substantially diluting two
earlier orders whereby the prayer of ACC Ltd., Ambuja
Cement Ltd. and Ultratech Cement Limited for grant of
confidentiality to pricing data was accepted and another order
passed on 02.12.2011 refusing to grant confidentiality to
certain information/ documents furnished by Ambuja Cement
Limited along with its objections. How could the Chairperson
and other Members of the Commission be oblivious of the
detailed order passed on the issue of confidentiality of the
pricing data and record two orders on the same date (public
version and confidential version). It is, therefore, reasonable
to conclude that the final order was passed without thorough
examination of the record of the Director General, the
submissions made by the parties and the interlocutory orders
passed by the Commission.”

20.

The Tribunal also rejected no-prejudice theory advanced by the learned senior

counsel for the Commission, relied upon the judgement of the Supreme Court in S.L.

 58

Kapoor Vs. Jagmohan and others- AIR 1981 SC 136 and made the following
observations :
“95.

In our view, the prejudice caused to the appellants is

writ large on the face of the record. As mentioned above, the
Chairperson did not have the opportunity of hearing the
arguments of the advocates for the parties, which lasted for
three days i.e. 21st , 22nd and 23rd February, 2012 and yet he
became party to the decision. Obviously, he did not know what
are the nature and contents of the arguments of the seven
Senior Advocates and other advocates, who appeared for the
parties. The minutes of the meetings recorded on those dates
do not show that the remaining six Members had recorded the
arguments advanced by the learned advocates, as was done
by the officer who heard the arguments in Ossein and
Gelatine Manufacturers’ Association of India Vs. Modi Alkalies
and

Chemicals

Limited

and

Another

(supra).

The

Chairperson’s participation in the decision-making process
had salutary effect on the final verdict. As held by the
Supreme Court in A.K. Kraipak’s case, the views of the
Chairperson must have influenced other six Members. His
views must have operated in a subtle manner and as
mentioned in the earlier part of the order, he appears to have
authored both the versions (public and confidential) of order
dated 20.06.2012.

96.

In S.L. Kapoor Vs. Jagmohan and Others – [AIR 1981

SC 136], a three-Judge Bench of the Supreme Court
examined the question whether violation of principles of
natural justice can be overlooked by accepting the spacious

 59

arguments that no prejudice has been caused to the affected
person. The facts of that case were that New Delhi Municipal
Committee, which consisted of nine non-official and four exofficio members with one year’s tenure was superseded
before the expiry of the term.

The supersession was

unsuccessfully challenged before the Delhi High Court. The
Full Bench of the High Court upheld the plea of the writ
petitioners that it was necessary for the Government to hear
the Committee before an order could be made under Section
238(1) of the Punjab Municipal Act, 1911 as applicable to
Delhi but declined to quash the impugned notification on the
ground that undisputed facts spoke for themselves and no
purpose would have been served by giving formal notice to
the Committee and no prejudice can be said to have been
caused by failure to observe the natural justice.
The Supreme Court repelled the argument of the
Attorney General that the rules of natural justice were not
applicable

in

such

matter

by

making

the

following

observations :
“The old distinction between a judicial act and
an administrative act has withered away and we have
been liberated from the psittacine incantation of
`administrative action'. Now, from the time of the
decision of this Court in State of Orissa v. Dr. (Miss)
Binapani Devi & Ors. "even an administrative order
which involves civil consequences.... must be made
consistently with the rules of natural justice". What are
civil consequences? The question was posed and
answered by this Court in Mohinder Singh Gill & Anr.

 60

v. The Chief Election Commissioner, New Delhi & Ors.
Krishna Iyer J., speaking for the Constitution Bench
said (at p. 308-309):
"But what is a civil consequence, let us
ask ourselves, by passing verbal booby-traps?
`Civil

consequence'

undoubtedly

cover

infraction of not merely property or personal
rights but of civil liberties, material deprivations
and

non-pecuniary

damages.

In

its

comprehensive connotation, everything that
affects a citizen in his civil life inflicts a civil
consequence".

The learned Judge then proceeded to quote
from Black's Legal Dictionary and to consider the
interest of a candidate at a Parliamentary election. He
finally said:

"The appellant has a right to have the
election conducted not according to humour or
hubris but according to law and justice. And so
natural justice cannot be stumped out on this
score. In the region of public law locus standi
and person aggrieved, right and interest have a
broader import".

In Schmidt and Another v. Secretary of State for
Home Affairs Lord Denning M.R., observed : "The
speeches in Ridge v. Baldwin [1964] AC 40, show that
an administrative body may, in a proper case, be
bound to give a person who is affected by their decision

 61

an opportunity of making representations. It all
depends on whether he has some right or interest or, I
would add, some legitimate expectation, of which it
would not be fair to deprive him". It was held in that
case that a foreign alien had no right to enter the
country except by leave, but, if he was given leave to
come for a limited period and his permit was sought to
be revoked before the expiry of the time limit, he ought
to be given an opportunity of making representation, for
he had a legitimate expectation of being allowed to stay
for the permitted time.

In Alfred Thangarajah Durayappah v. W. J.
Fernando & Ors. the Municipal Council of Jaffna was
dissolved and superseded by the Governor-General on
the ground that it appeared to him that the Council was
not competent to perform the duties imposed upon it.
The Mayor sought to question the dissolution and
supersession of the Council in the Supreme Court of
Ceylon, on the ground that there was a failure to
observe the principles of natural justice. One of the
questions which arose for consideration was whether,
as a matter of interpretation, natural justice was not
excluded from action under Sec. 277 of the Municipal
Ordinance under which provision the dissolution and
supersession had been made. The argument was that
words such as "where it appears to ......." or "if it
appears

to

the

satisfaction

of

......."

or

"if

the.........considers it expedient that ............." or "if the
.........is satisfied that ........." stood by themselves

 62

without other words or circumstances or qualifications,
a duty to act judicially was excluded, and so, was
natural justice. The argument was accepted by the
Supreme Court of Ceylon but the Privy Council
disagreed with the approach. They observed that there
were three matters which should always be borne in
mind when considering whether the principle Audi
Alteram Partem should be applied or not. The three
matters were:
"first, what is the nature of the property,
the office held, status enjoyed or services to be
performed by the complainant of injustice.
Secondly, in what circumstances or upon what
occasions is the person claiming to be entitled
to exercise the measure of control entitled to
intervene. Thirdly, when a right to intervene is
proved, what sanctions in fact is the latter
entitled to impose upon the other. It is only upon
a consideration of all these matters that the
question of the application of the principle can
properly be determined".

The Privy Council then proceeded to examine
the facts of the case upon those considerations and
said:
`As to the first matter it cannot be doubted that
the Council of Jaffna was by statute a public
corporation entrusted like all other municipal
councils with the administration of a large area
and the discharge of important duties. No one

 63

would consider that its activities should be lightly
interfered with ............ The legislature has
enacted

a

statute

setting

up

municipal

authorities with a considerable measure of
independence from the central government
within defined local areas and fields of
government. No Minister should have the right
to dissolve such an authority without allowing it
the right to be heard upon that matter unless the
statute is so clear that it is plain it has no right of
self defence. Upon the second matter it is clear
that the Minister can dissolve the council on one
of the three grounds : that it (a) is not competent
to perform any duty or duties imposed upon it
(for brevity their Lordships will refer to this head
as incompetency); or

(b)

persistently

makes

default

in

the

performance of any duty or duties imposed upon
it; or (c) persistently refuses or neglects to
comply with any provision of law.....It seems
clear to their Lordships that it is a most serious
charge to allege that the council, entrusted with
these very important duties, persistently makes
default in the performance of any duty or duties
imposed upon it. No authority is required to
support the view that in such circumstances it is
plain and obvious that the principle audi alteram
partem must apply.

 64

Equally it is clear that if a council is alleged
persistently to refuse or neglect to comply with
a provision of law it must be entitled (as a matter
of the most elementary justice) to be heard in its
defence. Again this proposition requires no
authority to support it. If, therefore, it is clear that
in two of the three-cases, the Minister must act
judicially, then it seems to their Lordships,
looking at the section as a whole, that it is not
possible to single out for different treatment the
third case, namely, incompetence...... The third
matter can be dealt with quite shortly. The
sanction which the Minister can impose and
indeed, if he is satisfied of the necessary
premise, must impose upon the erring council is
as complete as could be imagined; it involves
the dissolution of the council and therefore the
confiscation of all its properties. It was at one
moment faintly argued that the council was a
trustee and that it was not therefore being
deprived of any of its property but this argument
(soon abandoned) depended upon a complete
misconception of the law of corporations.....For
the purposes of the application of the principle it
seems to their Lordships that this must apply
equally to a statutory body having statutory
powers, authorities and duties just as it does to
an individual. Accordingly on this ground too the
Minister should have observed the principle.

 65

For these reasons their Lordships have no
doubt that in the circumstances of this case the Minister
should have observed the principle audi alteram
partem: Sugathadasa v. Jayasinghe [1958] 59 N.L.R.
(457) was wrongly decided".

Another contention urged on behalf of the respondent
was that no useful purpose would have been served by giving
opportunity to the members of the Committee because the
allegations which constituted the foundation of the decision to
terminate their tenure were correct and the members had
failed to offer any plausible explanation for the same. While
dealing with the question, the Supreme Court observed :
“Linked with this question is the question
whether the failure to observe natural justice does at all
matter if the observance of natural justice would have
made no difference, the admitted or indisputable facts
speaking for themselves. Where on the admitted or
indisputable facts only one conclusion is possible and
under the law only one penalty is permissible, the Court
may not issue its writ to compel the observance of
natural justice, not because it approves the non
observance of natural justice but because Courts do
not issue futile writs. But it will be a pernicious principle
to apply in other situations where conclusions are
controversial, however, slightly, and penalties are
discretionary.
In Ridge v. Baldwin & Ors, one of the arguments
was that even if the appellant had been heard by the

 66

watch committee nothing that he could have said could
have made any difference. The House of Lords
observed (at p. 68):
"It may be convenient at this point to deal
with an argument that, even if as a general rule
a watch committee must hear a constable in his
own defence before dismissing him, this case
was so clear that nothing that the appellant
could have said could have made any
difference. It is at least very doubtful whether
that could be accepted as an excuse. But, even
if it could, the respondents would, in my view,
fail on the facts. It may well be that no
reasonable body of men could have reinstated
the appellant. But as between the other two
courses open to the watch committee the case
is not so clear. Certainly on the facts, as we
know

them,

reasonably

the
have

watch
decided

committee
to

forfeit

could
the

appellant's pension rights, but I could not hold
that they would have acted wrongly or wholly
unreasonably if they had in the exercise of their
discretion decided to take a more lenient
course".
Megarry J. discussed the question in John v. Rees &
Ors. He said (at p. 402):
"It may be that there are some who would
decry the importance which the courts attach to
the observance of the rules of natural justice.

 67

'When something is obvious', they may say,
'why force everybody to go through the tiresome
waste of time involved in faming charges and
giving an opportunity to be heard? The result is
obvious from the start'. Those who take this view
do not, I think, do themselves justice. As
everybody who has anything to do with the law
well knows, the path of the law is strewn with
examples of open and shut cases which,
somehow, were not; of unanswerable charges
which, in the event, were completely answered;
of

inexplicable

explained;

of

conduct
fixed

which
and

was

fully

unalterable

determinations that, by discussion, suffered a
change. Nor are those with any knowledge of
human nature who pause to think for a moment
likely

to

underestimate

the

feelings

of

resentment of those who find that a decision
against them has been made without their being
afforded any opportunity to influence the course
of events".
In Annamunthodo v. Oilfields Workers' Trade Union,
Lord Denning, in his speech said (at p. 625):
"Counsel for the respondent union did
suggest that a man could not complain of a
failure of natural justice unless he could show
that he had been prejudiced by it. Their
Lordships cannot accept this suggestion. If a
domestic tribunal fails to act in accordance with

 68

natural justice, the person affected by their
decision can always seek redress in the courts.
It is a prejudice to any man to be denied justice".
In Margarita Fuentes et al., v. Tobert L. Shevin, it was
said (at p. 574):
"But even assuming that the appellants
had fallen behind in their instalment payments,
and that they had no other valid defenses, that
is immaterial here. The right to be heard does
not depend upon an advance showing that one
will surely prevail at the hearing. 'To one who
protest against the taking of his property without
due process of law, it is no answer to say that in
his particular case due process of law would
have led to the same result because he had no
adequate defense upon the merits'".

In Chintepalli Agency Taluk Arrack Sales Cooperative
Society Ltd., etc. v. Secretary (Food & Agriculture)
Govt. of Andhra Pradesh etc., there was a noncompliance

with

sec.

77(2)

of

the Cooperative

Societies Act which provided that no order prejudicial
to any person shall be passed unless such person had
been

given

an

opportunity

of

making

his

representation. The argument was that since the facts
were clear the non-compliance did not matter. It was
also said that the appellant had of his own motion made
some representation in the matter. This Court rejected
the arguments observing (at p. 567, 569-570):

 69

"It is submitted that the Government did
not afford any opportunity to the appellant for
making representation before it. The High Court
rejected this plea on the ground that from a
perusal of the voluntary applications filed by the
appellant it was clear that the appellant had any
how met with the points urged by the
respondents in their revision petition before the
Government. We are, however, unable to
accept the view of the High Court as correct".
"As mentioned earlier in the judgment the
Government
communicating

did
to

not
the

give

any

notice

appellant

about

entertainment of the application in revision
preferred by the respondents. Even though the
appellant had filed some representations in
respect of the matter, it would not absolve the
Government from giving notice to the appellant
to make the representation against the claim of
the respondents. The minimal requirement
under section 77(2) is a notice informing the
opponent about the application and affording
him an opportunity to make his representation
against whatever has been alleged in his
petition. It is true that a personal hearing is not
obligatory but the minimal requirement of the
principles of natural justice which are ingrained
in section 77(2) is that the party whose rights
are going to be affected and against whom

 70

some

allegations

are

made

and

some

prejudicial orders are claimed should have a
written notice of the proceedings from the
authority disclosing grounds of complaint or
other objection preferably by furnishing a copy
of the petition on which action is contemplated
in

order

that

a

proper

and

effective

representation may be made. This minimal
requirement can on no account be dispensed
with by relying upon the principle of absence of
prejudice or imputation of certain knowledge to
the party against whom action is sought for.

It is admitted that no notice whatever had been
given by the Government to the appellant. There is,
therefore, clear violation of section 77(2) which is a
mandatory provision. We do not agree with the High
Court that this provision can by-passed by resort to
delving into correspondence between the appellant
and the Government. Such non-compliance with a
mandatory provision gives rise to unnecessary
litigation which must be avoided at all costs".
The observations of this Court in Chintapalli
Agency Taluk Arrack Sales Cooperative Society v.
Secretary (Supra) are clearly against the submissions
of the learned Attorney General.

The matter has also been treated as an
application of the general principle that justice should
not only be done but should be seen to be done.

 71

Jackson's Natural Justice (1980 Edn.) contains a very
interesting discussion of the subject. He says:
"The distinction between justice being done and
being seen to be done has been emphasised in
many cases.”

The requirement that justice should be seen to
be done may be regarded as a general principle which
in some cases can be satisfied only by the observance
of the rules of natural justice or as itself forming one of
those rules. Both explanations of the significance of the
maxim are found in Lord Widgery C.J's judgment in R.
V. Home Secretary, Ex. P. Hosenball (1977) 1 W.L.R.
766, 772, whereafter saying that "the principles of
natural justice are those fundamental rules, the breach
of which will prevent justice from being seen to be
done" he went on to describe the maxim as "one of the
rules generally accepted in the bundle of the rules
making up natural justice".
It is the recognition of the importance of the
requirement that justice is seen to be done that justifies
the giving of a remedy to a litigant even when it may be
claimed that a decision alleged to be vitiated by a
breach of natural justice would still have been reached
had a fair hearing been given by an impartial tribunal.
The maxim is applicable precisely when the Court is
concerned not with a case of actual injustice but with
the appearance of injustice, or possible injustice. In
Altco Ltd. v. Sutherland (1971) 2 Lloyd's Rep. 515
Donaldson J said that the court, in deciding whether to

 72

interfere where an arbitrator had not given a party a full
hearing was not concerned with whether a further
hearing would produce a different or the same result. It
was important that the parties should not only be given
justice, but, as reasonable men, know that they had
justice or "to use the time hallowed phrase" that justice
should not only be done but be seen to be done. In R.
V. Thames Magistrates Court, ex.p. Polemis (1974)1
W.L.R. 1371, the applicant obtained an order of
certiorari to quash his conviction by a stipendiary
magistrate on the ground that he had not had sufficient
time to prepare his defence. The Divisional Court
rejected the argument that, in its discretion, it ought to
refuse relief because the applicant had no defence to
the charge.
"It is again absolutely basic to our system
that justice must not only be done but must
manifestly be seen to be done. If justice was so
clearly not seen to be done, as on the afternoon
in question here, it seems to me that it is no
answer to the applicant to say: 'Well, even if the
case had been properly conducted, the result
would have been the same'. That is mixing up
doing justice with seeing that justice is done (per
Lord Widgery C.J. at p. 1375)".
In our view the principles of natural justice know
of no exclusionary rule dependent on whether it would
have made any difference if natural justice had been
observed. The non-observance of natural justice is

 73

itself prejudice to any man and proof of prejudice
independently of proof of denial of natural justice is
unnecessary. It will comes from a person who has
denied justice that the person who has been denied
justice is not prejudiced. As we said earlier where on
the admitted or indisputable facts only one conclusion
is possible and under the law only one penalty is
permissible, the Court may not issue its writ to compel
the observance of natural justice, not because it is not
necessary to observe natural justice but because
Courts do not issue futile writs. We do not agree with
the contrary view taken by the Delhi High Court in the
judgment under appeal.”
[Emphasis supplied]

21.

The argument of Shri Shishodia that the participation of Shri Anurag Goel and

Shri M.L. Tayal in deciding Case Nos. 3, 11 and 59 of 2012, that of Dr. Geeta Gouri
in deciding Cases Nos. 5, 7, 37 and 44 of 2012 and of Shri S.L. Bunker and Shri
Augustine Peter in deciding Case No. 8 of 2014 despite the fact that they had not
heard the arguments of the advocates/representatives of the parties should not be
treated as having the effect of vitiating the orders under challenge because they had
the benefit of hearing the parties in other similar cases, sounds attractive but on a
closer scrutiny, we do not find any substance in it. At the cost of repetition, we would
like to mention that Shri Anurag Goel and Shri M.L. Tayal did not hear the arguments
on 16th and 17th July, 2013 in Cases Nos. 3, 11, 59 of 2012. Though, they were party
to the hearing held on 19.02.2014 in Cases Nos. 5, 7, 37 and 44 of 2013 but that
hearing cannot be relied upon to justify their becoming party in order dated
09.12.2013 passed in Cases Nos. 3, 11 and 59 of 2012. Neither Shri Anurag Goel
nor Shri M.L. Tayal has filed affidavit to the effect that even though they had not heard

 74

the arguments of the parties on 16th and 17th July, 2013, they had deliberated upon
the matter with other Members, who shared the arguments made by the
advocates/representatives of the parties on the two dates, personally examined the
entire record and were in agreement that the Chairperson and three other Members
who had heard the arguments of the parties on two dates. None of those, who was
party to the hearing held on 16th and 17th July, 2013 has filed affidavit to the effect
that during the hearing, they had noted the arguments made on behalf of the
informant and the opposite parties and shared the same with Shri Anurag Goel and
Shri M.L. Tayal or that they had met on the particular date/dates to deliberate upon
the matter, scrutinised the records, considered the arguments of the parties and both
Shri Anurag Goel and Shri M.L. Tayal agreed with their opinion that Coal India Limited
and its subsidiaries have acted in contravention of Sections 3(3)(a) and 3(3)(b) read
with Section 3(1) of the Act and they should be visited with penalty to the tune of
Rs.1773.05 crores.

Dr. Geeta Gouri did not take part in the hearing held on

19.02.2014 in Cases Nos. 5, 7, 37 and 44 of 2013 and, as such, she did not have the
benefit of hearing the arguments made by the counsel for the parties and yet she
joined the Chairperson and other Members in deciding those cases. Neither Dr.
Geeta Gouri has filed affidavit asserting therein that she had agreed with the
Chairperson and other Members that Coal India Limited and its subsidiaries should
be held guilty of acting in contravention of Sections 3(3)(a) and 3(3)(b) read with
Section 3(1) of the Act because she remembered the arguments made by the parties
on 16th and 17th July, 2013 in Cases Nos. 3, 11 and 59 of 2012. The participation of
Shri S.L. Bunker and Shri Augustine Peter in deciding of Case No. 8 of 2014 was
likewise faulty. They too have not filed affidavits to the effect that the Chairperson
and two Members who had heard the arguments on 25.11.2014 had discussed the
matter with them, shared the arguments made by the parties and that after
independently going through the record including written submissions filed by the
parties, they agreed with the Chairperson and two Members that the Coal India
Limited and its subsidiaries have acted in contravention of Sections 3(3)(a) and

 75

3(3)(b) read with Section 3(1) of the Act. Shri S.L. Bunker has also not filed an
affidavit that he had maintained the note of arguments heard on 16 th and 17th July,
2013 and 19.02.2014 in the related cases and, therefore, notwithstanding the fact
that he did not get the benefit of hearing the arguments of the parties on 25.11.2014,
he had no difficulty in recording his concurrence with the views of the Chairperson
and other Members.

It will be rather naïve to presume that Dr. Geeta Gouri

remembered the arguments heard on 16th and 17th July, 2013 and, therefore, she had
no difficulty in becoming a party to the order passed on 19.02.2014 in Cases Nos. 5,
7, 37 and 44 of 2012. The same will be true qua Shri S.L. Bunker who did not hear
the arguments on 25.11.2014 in Case No. 8 of 2014.

22.

In her affidavit dated 15.07.2015, the Secretary of the Commission has placed

reliance on interim order dated 15.05.2013 passed by the Tribunal in Appeal No. 105
of 2012 and connected matters. In that regard, it is sufficient to observe that the
considerations which may have weighed with any adjudicatory body, while deciding
the interlocutory applications are substantially different than the factors required to be
analysed and considered at the time of final decision of the case and, as already
mentioned above, while deciding interlocutory applications in Appeal No. 105 of 2012
and other connected matters, the Tribunal did not have the benefit of considering the
ratio of the judgements of the Supreme Court which were relied upon in the final order
passed on 09.12.2015. The Secretary of the Commission has also tried to project
the Commission as an expert inquisitorial body, which primarily deals with the
economic issues and have no judicially manageable standards. The statements
made in that regard are liable to be rejected because the same are based on total
misunderstanding of the scheme of the Act and the Regulations, in particular, the
provisions of Section 16 of the Act, which envisages appointment of a Director
General for the purpose of assisting the Commission in conducting inquiry into
contravention of the provisions of the Act, Section 18 which enumerates the duties of
the Commission which are in consonance with the preamble of the Act, Section 19
which provides for inquiry by the Commission into any alleged contravention of the

 76

provisions of sub-section (1) of Section 3 or sub-section (1) of Section 4. Subsections (3) to (7) of the Section 19 specify the factors which the Commission is bound
to take into consideration while determining whether an agreement has appreciable
adverse effect on competition or whether an enterprise enjoys dominant position
under Section 4, whether a market constitutes relevant market, what is relevant
geographic market and the relevant product market, Section 20 which provides for
inquiry into combination by the Commission, Section 26 which lays down the
procedure for conduct of inquiry under Section 19, Section 27 which empowers the
Commission to pass different orders where it comes to the conclusion that any
agreement referred to in Section 3 or action of an enterprise in a dominant position is
contrary to Section 3 or 4, Section 28 which confers power upon the Commission to
direct division of an enterprise enjoying dominant position to ensure that such
enterprise does not abuse that position, Section 29 which lays down the procedure
for combination, Section 31 which enumerates the orders which can be passed in
certain combinations, Section 33 which empowers the Commission to issue interim
orders, Section 36 which enables the Commission to regulate its own procedure and
exercise powers of the Civil Court in matters relating to summoning and enforcing of
attendance of any person and examining him on oath; requiring the discovery and
production of documents; receiving evidence on affidavit; issuing commissions for
examination of witnesses or documents and requisitioning of any public record or
document or copy of such record or document from any office, Section 38 which
empowers the Commission to rectify any mistake apparent on the record, Section 41
which specifies the role of the Director General in investigation on contraventions,
Chapter VI (Section 42 to 48) which provide for imposition for penalty and taking of
other punitive actions including prosecution of those who failed to comply with the
orders or directions of the Commission issued under Sections 27, 28, 31, 32, 33, 42A
and 43A and corresponding provisions contained in Regulations 20, 21, 22, 24, 25,
26, 27, 29, 30, 31, 32, 39, 41, 42, 43, 44, 45, 46 and 48. All these provisions
unmistakably show that while performing its duties to eliminate practices having

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adverse effect on competition, to promote and sustain competition, to protect the
interest of consumers and ensures freedom of trade carried on by other participants
in markets in India, the Commission performs an important function as an adjudicator
of the rights of the parties. The very fact that Parliament has in its wisdom conferred
powers upon the Commission and the Director General which are vested in the
regular civil courts and enacted several provisions making compliance of the
principles of natural justice mandatory is sufficient to demolish the argument which is
implicit in the statement contained in paragraph 22 of the affidavit of the Secretary.
To put it differently, it is wholly misconceived to say that the Commission essentially
functions as an executive/administrative body and is not required to adhere to the
principles of natural justice and fairness. It has been repeatedly held by the Supreme
Court that the functions performed by the bodies like the Commission which are
clothed with the power to decide the rights of the parties or pass order adversely
affecting a person are quasi-judicial in nature and are bound to comply with different
facets of the principles of natural justice. Therefore, even if we were to agree with
the Secretary that the Commission is not a quasi-judicial body in traditional sense
inasmuch as the Act has entrusted it with multifarious functions but the suggestive
submission made in her affidavit that the Commission can ignore the fundamentals
of the principles of natural justice and fairness deserves nothing but rejection.

23.

Majority of the judgements to which reference has been made in Part IV of the

affidavit of the Secretary of the Commission have already been dealt with in Appeal
No. 105 of 2012. Even if some judgements have not been referred to in order dated
11.12.2015, that cannot justify a re-consideration of a well-considered decision
rendered by the Tribunal.

24.

Although, in Appeal Nos. 49 of 2014, Madhya Pradesh Power Generating

Company Limited Vs. Competition Commission of India and others and Appeal No.70
of 2014 Sponge Iron Manufacturers’ Association Vs. Competition Commission of
India and others, order dated 15.04.2014 has been challenged on different grounds,

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in view of the conclusion reached by us that the said order is vitiated due to violation
of the principles of natural justice, the same will have to be set aside in its entirety
and the appellants in these two cases shall be free to advance their arguments afresh
before the Commission.

25.

In the result, the appeals are allowed. The impugned orders are set aside and

the matters be remitted to the Commission for deciding the issues arising out of the
informations filed by Maharashtra State Power Generation Company Limited, Gujarat
State Electricity Corporation Limited, Madhya Pradesh Power Generating
Corporation Limited, West Bengal Power Development Corporation Limited, Sponge
Iron Manufacturers Association and GHCL Ltd. afresh.

26.

We hope and trust that the Commission will make an endeavour to hear the

parties and pass appropriate orders as early as possible not later than 2 months of
the receipt of this order.

27.

It is made clear that neither of the parties shall be entitled to adduce any

additional evidence before the Commission nor the Coal India Ltd. and its subsidiaries
shall be allowed to withdraw the amendments / modifications made in the fuel supply
agreements or concessions granted during the pendency of the cases before the
Commission.

[G.S. Singhvi]
Chairman

[Rajeev Kher]
Member
17th May, 2016