Document Fragment View
Fragment Information
Showing contexts for: sovereign function in Uttarakhand Agricultural Produce ... vs Competition Commission Of India And ... on 17 October, 2017Matching Fragments
LPA 674/2017 & C.M. 37420-21/2017
1. The Uttrakhand Agricultural Produce Marketing Board impugnes an order of the learned Single Judge rejecting its writ petition, challenging an order of the Competition Commission of India (CCI) made under Section 26(1) of The Competition Act, 2002 (hereinafter referred to as „the Act‟) expressing prima facie opinion that the Board had restricted production by Indian Made Foreign Liquor (IMFL), resulting in denial of marketing access and thus, provisions of Section 4(2) of the Act were attracted. The CCI required the Director General to investigate into the matter and to report to it. The Single Judge was of the opinion that the order made under Section 26 of the Act was not adjudicated and merely an administrative one, in aid of investigation and that it did not entail any adverse consequences. The impugned judgment relied upon the Supreme Court's decision in Competition Commission of India vs. Steel Authority of India Ltd. & anr. (2010) 10 SCC 744 and also distinguished the decision in Agricultural Produce Market Committee Vs. Ashok Harikuni & anr.(2000) 8 SCC 61. The Single Judge repelled the contention that the liquor business conducted by the State was part of its sovereign functions and in doing so, he restricted the observations in Ashok Harikuni (supra) to the effect that even though the appellants were performing a function entrusted by the State, they were not discharging a sovereign function. The learned Single Judge further noticed the judgment in Union of India v. Competition Commission of India & ors (2012) 187 DLT 697 where the Railways was held to be amenable to the jurisdiction of the Competition Commission. Thereafter, the Single Judge delineated the functions of the CCI, in the context of arguments that the policy impugned before the Commissioner was upheld by the Uttarakhand High Court with the following observations:-
18. Section 2(h) of the Act defines the expression „enterprise‟ in the following manner:
"2(h) "enterprise" means a person or a department of the Government who or which is, or has been, engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of its units or divisions or subsidiaries, whether such unit or division or subsidiary is located at the same place where the enterprise is located or at a different place or at different places, but does not include any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of the Central Government dealing with atomic energy, currency, defence and space."
20. The Commission has taken note of Section 54 of the Act, which provides that the Central Government may, by notification, exempt from the application of the Act, or any provision thereof, and for such period as it may specify in such notification, inter alia, "any enterprise which performs a sovereign function on behalf of the Central Government or a State Government" (See Section 54(c)). Pertinently, no notification has been issued by the Central Government in relation to the services rendered by the Indian Railways. Even in relation to an enterprise which is engaged in activity, including an activity relatable to the sovereign function of the Government, the Central Government may grant exemption only in respect of activity relatable to sovereign functions. Therefore, an enterprise may perform some sovereign functions, while other functions performed by it, and the activities undertaken by it, may not refer to sovereign functions. The exemption under Section 54 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 under Section 54 either under Clause (c), or under the proviso. This clearly shows that the Central Government does not consider any of the activities of the petitioner as relatable to sovereign functions.
2. Learned Counsel urged that the Uttrakhand Government procurment guidelines made by it and the rules formulated subsequently, were the result of a cabinet decision and that constitute a sovereign function. He urged that the Board was not a free agent with respect to procurement of brands of liquor, which was owned by agents before the Commission. He also urged that the Commission's order, virtually reopened the issue that was concluded by the Uttrakhand High Court.
3. This Court during the hearing observed that it is always open to the appellant, especially the Board to state its position in the course of the investigation proceedings initiated under Section 26(1) of the Act and that this liberty is nowhere curtailed by the Single Judge's order or for that matter the order of the Commission itself. This liberty is reserved. This Court is of the opinion that there is no infirmity in the observations and findings returned by the learned Single Judge. The judgment in Competition Commission of India vs. Steel Authority (Supra) states that an order under Section 26(1) of the Act is an administrative one and does not in any manner result in adverse consequences or determine the rights and obligations of the parties. The State of Uttarakhand formulated a policy and it is fashioned in such a manner that State officials, vested with exclusive powers of taking decisions to dictate as to what brands of liquor are to be procured and distributed to retailers and sold to the consumers. These functions cannot per se be called a sovereign function. The observations of the learned Single Judge with respect to what constituted a sovereign function by relying upon the judgment in Banglore Water Supply and Sewerage Board v. A. Rajappa & ors. 1978 AIR 548 and Ashok Harikuni (Supra), are apt. When the State or its agency, who are vested with exclusive rights or monopoly rights, conducts trade or business, per se such activity cannot fall within the description of or cannot be characterized as sovereign functions. It is only when activities, such as printing of notes, minting, production of other national security related services, articles or goods etc. are involved and are sought to be regulated, would it be an issue as to whether such trade or business are sovereign functions of the Government or State entity. In this regard, The Competition Act, 2002 itself guides the discussion when it defines enterprise. It includes all manner of activities but does not include "any activity of the Government relatable to the sovereign functions of the Government including all activities carried on by the departments of Central Government dealing with atomic energy, currency, defence and space". The general explanation of sovereign functions, which to an extent amplifies with reference to the four excluded categories are discerned from those.