Compat sets aside Rs.1773 crore fine on CIL

The Dollar Business Bureau

The statutory organisation, Competition Appellate Tribunal (Compat), put to one side the Rs.1,773 crore fine imposed on the state-owned coal mining company, Coal India, for unfair business practices and asked Competition Commission of India (CCI) to thinkover the matter again.

The tribunal has also set aside two more orders delivered by the CCI, that was in relation to Coal India, where the regulator did not enforce any fine.

The instructions by CCI have been put down by Compat saying that CCI had not allowed the subject of natural justice when hearing them out.

CCI had found that the state-run miner and its three divisions, Western Coalfields, Mahanadi Coalfields and South Eastern Coalfields, were taking undue advantage of their dominant position in the market. It was found by the Commission that the company was supplying poor-quality coal at high costs while keeping the rights to unilaterally dismiss the contracts with buyers. 

After finding that Coal India was violating fair trade rules with regard to fuel supply agreements, CCI had put a penalty on the firm in December 2013. When Coal India appealed against the order, the Compat had stayed the implementation of CCI’s order in February 2014.

"... 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," the Compat detailed in the 78-page order.

The tribunal also said that the challenged orders to be set aside and the matters referred to the CCI for deciding afresh on the issues that arose due to the information submitted by Madhya Pradesh Power Generating Corporation Ltd (MPPGCL), Maharashtra State Power Generation Company Ltd, West Bengal Power Development Corporation Ltd (WBPDCL), Gujarat State Electricity Corporation Ltd (GSECL) and the Sponge Iron Manufacturers Association (SIMA) and GHCL.

The tribunal said it expects that the CCI would make an attempt to hear the concerned parties and give proper orders as soon as possible, within 2 months after receiving a copy of this order. A fine of Rs.1,773 crore was the first major one by CCI levied on a state-run company.