The Delhi High Court has held that the Indian Railways is an ‘enterprise' and the Competition Commission of India (CCI) is empowered to hear complaints against it for alleged abuse of its dominant position in goods transport sector.
Holding that there is a “commercial angle” to the services rendered by the railways, Justice Vipin Sanghi dismissed the Railway Ministry's plea challenging the CCI jurisdiction to decide cases related to it.
“The petitioner (Ministry of Railways) is also carrying out an activity of running the railways, which has a commercial angle and is capable of being carried out by entities other than the state, as is the case in various other developed countries.
“It is not an inalienable function of the state and the submission of the petitioner that it is not covered by the definition of enterprise has no merit and is rejected,” the court said while dismissing the ministry's plea.
The railways had taken a plea that it was not an “enterprise” as defined under the Competition Act and the CCI lacked jurisdiction to hear a complaint that it was allegedly abusing its dominant position in the trade of goods transport.
The judgement, which broadened the ambit of the panel by bringing Railways' commercial activities under it, came on the plea of the public carrier against a CCI verdict.
The CCI, earlier, had rejected the Railways' plea, allowing a private firm's allegation that the public carrier had “abused its dominant position through its various acts/ conduct, viz, by increasing charges for various services; by not providing access to infrastructure such as rail terminals, etc....”
The private firm, as per public-private-partnership policy of the Railways, had entered into an agreement with the Railways on May 9, 2008 for operating container trains over rail network for domestic as well as for export and import traffic and had also invested Rs 550 crore in its project.
It later approached the CCI alleging that the Railways used its dominant position by imposing unreasonable conditions on it.
The Railways, however, said since the complainant company had a contract with it, the issue of abuse of dominant position should be decided by an arbitrator tribunal as per the agreement between them.
The High Court brushed aside the contention that a tribunal should hear the matter, saying an “arbitral tribunal would neither have the mandate, nor the expertise, to conduct an investigation which may be necessary to decide issues of abuse of dominant position by one of the parties to the contract.”
Agreeing with the competition watchdog, it held the Railways is covered under the definition of ‘enterprise' as running of the railways is not an inalienable function of the State.
The court also said the government had not issued any notification exempting it from the ambit of the Competition Act, regarding the services rendered by the Indian Railways.
“The exemption under the Competition Act could be granted in relation to the activities relatable to sovereign functions of the government, and not in relation to all the activities of such an enterprise.
“Pertinently, there is no notification issued. This clearly shows that the central government does not consider any of the activities of petitioner (Ministry of Railways) as relatable to sovereign functions,” the court said.