Relief for Coal India as NCLAT stays two competition commission orders

The National Company Law Appellate Tribunal (NCLAT) has stayed rulings by the Competition Commission of India (CCI) that Coal India (CIL) had abused its dominant position in framing fuel supply agreements with Gujarat Heavy Chemicals and Madhya Pradesh Power Generating Company.

The CCI had in May ordered CIL to rework the fuel supply agreements, which had an empowering clause reserving the right to unilaterally terminate the agreements without any scope of review by any independent agency.  

The complaints had alleged coal meant to be supplied under the fuel supply agreements was being sold in e-auctions at a premium. Further, CIL was accused of providing sub-standard coal.

The CCI observed there was no scope for the other parties to negotiate with CIL when it reduced supplies to 50 per cent of the annual contracted quantity and lowered the short supply penalty trigger from 50 per cent to 25 per cent.

The CCI had in March imposed a penalty of Rs 1,773.05 crore on CIL in a similar case filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation. The amount was reduced to Rs 600 crore by the then appellate body, the Competition Appellate Tribunal (CAT).

On a fresh appeal by CIL, the NCLAT stayed this ruling as well. This case has been clubbed with the other two for further hearing on whether the CCI’s order should be quashed.