Beach Sand Minerals Export Policy Under STE Mechanism Not Amenable To Competition Law: NCLAT Dismissed Appeal Filed By BMPA [Read Order]

The National Company Law Appellate Tribunal(NCLAT), New Delhi Bench, dismissed an appeal filed by the Beach Mineral Producers Association (BMPA) challenging the export policy governing Beach Sand Minerals (BSMs), holding that the State Trading Enterprise (STE) mechanism canalising exports through Indian Rare Earths Ltd. is not amenable to scrutiny under the Competition Act, 2002.

The appellants, Beach Mineral Producers Association are engaged in the beach sand mineral industry, with the Association representing miners and processors in Tamil Nadu and the individual appellant being a trader holding an Importer Exporter Code issued by Directorate General of Foreign Trade (DGFT).

The respondent, DGFT is responsible for formulation and implementation of the Foreign Trade Policy, and Indian Rare Earths Ltd. is a public sector undertaking under the Department of Atomic Energy with mineral processing units across multiple states.

The appellants challenged a notification dated 21.08.2018 issued by DGFT, under which export of BSMs was brought under the State Trading Enterprise (STE) mechanism, designating Indian Rare Earths Ltd. as the canalising agency for exports.

The appellants filed information before the CCI challenging the notification on the ground that it resulted in abuse of dominant position. The CCI found no prima facie case and closed the matter under Section 26(2) of the Competition Act.

Kinngsly Solomon J appeared as counsel for the appellants and Soni Singh represented the respondents.

Yogesh Khanna, Judicial Member and Ajai Das Mehrotra observed that the notification did not prohibit business activities of the appellants but merely required exports to be channelised through a designated agency in view of the strategic nature of BSMs.

The Tribunal held that Section 4 of the Competition Act applies to enterprises and expressly excludes sovereign functions of the Government, including activities relating to atomic energy. The Tribunal emphasised that the impugned notification was a policy decision and any challenge to its validity cannot be adjudicated within the framework of the Competition Act.

Accordingly, the Tribunal dismissed the appeal and held that policy decisions relating to strategic resources are not amenable to scrutiny under competition law.

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