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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.

28. Recently, the Supreme Court in Common Cause v. Union of India, (1999) 6 SCC 667 also quoted with approval its aforesaid view on the issue.

29. From the analysis of case law on the question as to what constitutes „sovereign‟ or „non-sovereign‟ function, it appears that the courts have taken a very narrow view of the term „sovereign function‟ by confining the same to strict constitutional functions of the three wings of the State. Welfare activities, commercial activities and economic adventures have been kept outside the purview of the term „sovereign functions‟.

30. In the premises, it is held that only primary, inalienable and non-delegable functions of a constitutional government should quality for exemption within the meaning of „sovereign functions‟ of the government under section 2(h) of the Competition Act, 2002. Welfare, commercial and economic activities, therefore, are not covered within the meaning of „sovereign functions‟ and the State while discharging such functions is as much amenable to the jurisdiction of competition regulator as any other private entity discharging such functions."

24. I may also refer to the decision of the Supreme Court in Agricultural Produce Market Committee Vs. Ashok Harikuni & Another, (2000) 8 SCC 61. The Supreme Court held that sovereign functions in the new sense may have very wide ramifications, but essentially sovereign functions are primarily inalienable functions which only the State could exercise. In para 32, the Supreme Court held as follows:

"So, sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primary inalienable functions which only State could exercise. Thus, various functions of the State, may be ramifications of `sovereignty' but they all cannot be construed as primary inalienable functions. Broadly it is taxation, eminent domain and police power which covers its field. It may cover its legislative functions, administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon. So, the dichotomy between sovereign and non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body. The one which could be undertaken cannot be sovereign function. In a given case even in subject on which the State has the monopoly may also be non- sovereign in nature. Mere dealing in subject of monopoly of the State would not make any such enterprise sovereign in nature. Absence of profit making or mere quid pro would also not make such enterprise to be outside the ambit of "industry" as also in State of Bombay & Ors. case (Supra)."