The National Company Law Appellate Tribunal (NCLAT) has ruled that competition law cannot be invoked to challenge government policy decisions on atomic minerals [Beach Minerals Producers Association v. Government of India].
A coram of Justice (retd) Yogesh Khanna (Judicial Member) and Ajai Das Mehrotra (Technical Member) dismissed an appeal against a 2019 order of the Competition Commission of India (CCI) that had closed a complaint concerning export restrictions on beach sand minerals (BSMs). The Tribunal held,
“Section 2(h) clarifies that ‘enterprise’ does not include any activity of the government relatable to sovereign functions, including all activities carried on by the Central Government dealing with atomic energy.”
The appeal was filed by Beach Mineral Producers Association, a registered society of miners in Tamil Nadu, and Velmurugan, proprietor of Phoenix Agency. The appellants had approached the CCI in 2019 claiming that the Directorate General of Foreign Trade (DGFT) and Indian Rare Earths Limited (IREL) abused their position by restricting exports of BSMs exclusively through IREL, thereby distorting competition.
BSMs - found in coastal states including Tamil Nadu, Kerala, Andhra Pradesh, Odisha and Maharashtra - contain minerals such as ilmenite, rutile, garnet, zircon, sillimanite, leucoxene and monazite. These are widely used in sand blasting, ceramics, refractories, welding flux and atomic energy applications. Liberalisation measures in the late 1990s and 2000s had allowed private participation and foreign investment, leading to a surge in exports.
However, a 2018 DGFT notification brought BSM exports under the State Trading Enterprise mechanism, designating IREL as the sole canalising agent. The appellants contended that this conferred monopoly on IREL in violation of the Competition Act.
In July 2019, the CCI dismissed the complaint, holding that the notification was a matter of government policy. It emphasised that BSMs are classified as “atomic minerals” under the Mines and Minerals (Development and Regulation) Act, 1957 and as “prescribed substances” under the Atomic Energy Act, 1962. Because of their strategic importance in space, defence and nuclear applications, the CCI concluded that the policy decision was outside its jurisdiction.
The NCLAT endorsed this reasoning, observing that the notification did not prevent private entities from trading but required exports to be routed through IREL as per statutory mandates.
“The notification does not stop the appellants from doing business with foreign buyers but only mandates channelisation through Respondent No.3 in view of statutory provisions."
The Tribunal further held that grievances over government policy could not be addressed through competition law proceedings.
“The impugned order does not require interference by this Tribunal. If the appellants wish to challenge the notification, they must seek remedy elsewhere,” it ruled, dismissing the appeal.
The appellants were represented by Advocates Kinngsly Solomon J, Balaji and Rubhavathy.
IREL was represented by Advocates Balaji Subramanium, Aayushi Sharma and Akash Kundu.
CCI was represented by Advocates Soni Singh, Parkhi Singh and Sunaina Dutta.
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