Indian Railways fall under CCI`s ambit: HC

Delhi High Court has held that the Indian Railways is an enterprise and CCI is empowered to hear complaints against it.

New Delhi: 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,

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

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.