NCLAT Sets Aside CCI Order Clearing Chettinad Coal Terminal Of Abuse Of Dominance

The National Company Law Appellate Tribunal (NCLAT) at New Delhi on Thursday set aside a 2021 order of the Competition Commission of India (CCI) that had cleared Chettinad International Coal Terminal Private Limited of abusing its dominant position, holding that the regulator went wrong in defining the relevant geographic market.

A bench of Judicial Member Justice Mohammad Faiz Alam Khan and Technical Member Naresh Salecha said the CCI expanded the market without properly accounting for how coal is actually moved and consumed by thermal power producers.

The tribunal observed, “We are constrained to observe that the CCI has not taken into consideration various other factors factored into by the DG in its supplementary investigation report, including the detailed hinterland analysis divided into captive and contestable hinterland and the aspect of transportation cost.”

The dispute relates to coal imports for thermal power plants located around Gumidipoondi near Chennai. These plants earlier depended on Chennai Port, but that option closed in 2011 after the Madras High Court ordered a halt to coal handling there due to pollution concerns.

With Chennai Port no longer available, the power producers shifted to nearby Kamarajar Port, where Chettinad operates the only common user coal terminal. The other coal berths at the port are captive facilities and are not open to outside users.

The Tamil Nadu Power Producers Association told the tribunal that this shift left its members with no practical alternative. It alleged that Chettinad raised handling charges and also required importers to pay additional “coordination and liaisoning” charges through third-party firms linked to the Chettinad group.

According to the association, these payments were compulsory and were structured in a way that reduced the revenue shared with the port authority.

In its final order dated April 9, 2021, the CCI closed the case after defining the relevant market broadly to include Krishnapatnam Port, located about 176 kilometers away.

With that wider definition, Chettinad's market share appeared smaller, and the CCI concluded that it did not hold a dominant position. The association challenged this, pointing out that the Director General's supplementary investigation had taken a different view and had treated Krishnapatnam as economically unviable for power producers located near Chennai.

The tribunal agreed with that assessment. It noted that coal is a low value, high volume commodity and that transport costs matter. The bench said users like power producers would naturally turn to the nearest port because it is cheaper and more workable.

“Normally, users of port consumer like Appellant in this case would prefer the nearer port which is cost effective, providing same or similar standard of service,” the tribunal observed.

It also accepted the DG's finding that Krishnapatnam Port had a distinct hinterland and could not be treated as a substitute for Kamarajar Port for these users.

Once Krishnapatnam was excluded, the tribunal said Chettinad remained the only common user coal terminal available. “Since, the CICTPL is an only player, it automatically become dominant as stipulated under Section 2(r) of the Act,” the bench said.

On the issue of third-party charges, the tribunal noted that both the DG and the CCI had accepted that these charges were mandatory in nature. It agreed with the DG's finding that the entities collecting the charges were controlled by the Chettinad group and that importers were compelled to pay them to access the terminal. The tribunal concluded that such conduct, once dominance was established, “tantamount to abuse of its dominant position by the CICTPL.”

The appellate tribunal set aside the CCI's April 9, 2021, order and sent the matter back to the Commission for a fresh decision in accordance with law. The parties have been directed to appear before the CCI on February 9, 2026.