Ashoka Smokeless Coal Industries Pvt. LTD. vs Union of India

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2005 Supreme(SC) 1596

2005(8) Supreme 596
Supreme Court of India
(From Jharkhand High Court)
S.B. Sinha & R.V. Raveendran, JJ.
M/s. Ashoka Smokeless Coal Industries Pvt. Ltd. & Ors. —Appellants
versus
Union of India & Ors. —Respondents
Special Leave Petition (C) No. 20471 of 2005
With
SLP (C) No. 20541/2005, SLP(C) No. 20542/2005, SLP(C) No. 21792/2005, SLP(C) No. 22596/2005, SLP(C) No. 23302/2005, SLP(C) No. 23305/2005, SLP(C) No. 23323/2005, SLP (C) No. 23324/2005, SLP (C) No. 23325/2005, SLP (C) No. 23326/2005, SLP(C) No. 23327/2005, SLP (C) No. 23345/2005, SLP (C) No. 23374/2005, SLP(C) No. 24403/2005, SLP(C) No. 24034/2005, T.P.(C) No. 107-118/2005, W.P.(C) No. 67/2005, T.P.(C) No. 73/2005, T.P.(C) No. 510-512/2005, T.P.(C) No. 554-557/2005, T.P.(C) No. 558-559/2005, T.P.(C) No. 470/2005, T.P. (C) No. 471/2005, T.P.(C) No. 474/2005, T.P.(C) No. 477/2005, T.P. (C) No. 484/2005, T.P.(C) No. 480/2005, T.P.(C) No. 479/2005, T.P. (C) No. 478/2005, T.P.(C) No. 486/2005, T.P. (C) No. 503-504/2005, T.P. (C) No. 505-509/2005, T.P.(C) No. 514-515/2005, T.P.(C) No. 516/2005, T.P.(C)No. 517-519/2005, T.P. (C) No. 520/2005, T.P. (C) No. 521-524/2005, T.P. (C) No. 525/2005, T.P. (C) No. 526-528/2005, T.P.(C) No. 533-534/2005, T.P. (C) No. 542-543/2005, T.P. (C) No. 544-545/2005, T.P. (C) No. 546/2005, T.P. (C) No. 535-537/2005, T.P. (C) No. 538/2005, T.P. (C) No. 550-552/2005, T.P. (C) No. 560-561/2005, T.P.(C) No. 672-673/2005, T.P. (C) No. 674/2005, T.P. (C) No. 680-681/2005, T.P.(C) No. 687-690/2005, T.P. (C) No. 492/2005, T.P. (C) No. 493/2005, T.P. (C) No. 494/2005, T.P. (C) No. 495/2005, T.P. (C) No.496/2005, T.P. (C) No. 777-789/2005
Decided on 12-12-2005
Counsel for the Parties :
For the Petitioners : K.K. Venugopal, R.F. Nariman, M.L. Verma, S.K. Dubey, Sr. Advocates, Rana Mukherjee, Rajendra Krishan, Siddharth Gautam, Goodwill Indeevar, Rajesh Singh, Pankaj Singh, Devashish Bharuka, Gouri Karuna Das, Ms. Anu Gupta, Kamal Kant Tripathee, S.D. Sanjay, Dr. Sushil Balwada, Pankaj Bhagat, Anip Sachthey, Shriniwas R. Khalap, Mohit Paul, M.P. Jha, Ram Ekbal Roy, Harshvardhan Jha, S. Muralidhar, Manish S. Verma, Anupam Lal Das, Manish Kr. Saran, Rajendra Krishna, Manish Verma, K.S. Bhati, Advocates.
For the Respondent : Goolam E. Vahanvati, Solicitor General, Soli J. Sorabji, Sr. Advocate, Ajit Kumar Sinha, Advocates.
For the Central Agency : Krishan Mahajan, V.K. Varma, Manish Tiwari, Vivek Sood, P.K. Jain, C.L. Pandey, Dr. Meera Agarwal, R.C. Mishra, Rakesh K. Khanna, Dr. Rashmi Khanna, Shashank Shekhar, Surya Kant, Gaurav Agrawal, Sourav Agrawal, Jhanavi Worah, Mrs. Akila Agrawal, Rajiv Mehta, G. Ramakrishna Prasad, Bharat Sangal, Mohanprasad Meharia, Amit Meharia and B.B. Singh, Advocates.

Headnote:Constitution of India—Article 136 —New scheme for sale of Coal through E-auction to industrial undertakings which had Coal linkage with Coal India Ltd. and its subsidiaries —Industrial concern in the scheme had to pay more for the Coal compared to what they were paying earlier i.e. notified price—Writ petitions challenging the scheme—Interim protection prayed to get Coal at notified prices—Various High Courts passed interim orders, directing undertakings to furnish bank guarantees for difference in prices or to pay cash or to furnish security—SLPs against directions—In the facts and circumstances and keeping in view interest of both sides, petitioners directed to pay 33 1/3% of enhanced price and furnish security for balance 66 2/3% with undertaking—Undertaking from Coal India Ltd. also that if petitioners succeeded, amount paid by them shall be refunded with interest at 12% p.a.
Held : Keeping in mind the interests of both sides and taking note of the facts and circumstances as a whole, we think that it would be appropriate to direct the petitioners to pay a part of the enhanced price while at the same time furnish security for the balance that might become payable in case their challenge to the E-auction scheme is repelled. The rights of the petitioners claiming themselves to be small scale industries can by protected be directing them to furnish security for a major part of the enhanced price and accepting the undertaking given on behalf of Coal India Ltd. and its subsidiaries to refund whatever had been paid in excess with interest thereon in case the petitioners succeed in their challenge to the E-auction system introduced by the Coal Companies. Since there is substance in the argument that mere furnishing of security or bank guarantee would not enable Coal India Ltd. and its subsidiaries to carry on their business which it was necessary to do in the interests of the whole Nation, we feel that a direction to pay at least a part of the enhanced price by the petitioners could be justified in the circumstances. It is pointed out that in respect of some entities, coal was being supplied at the notified price enhanced by 20% thereof and this would be a guide for fixing the percentage of the excess price to the paid by the petitioners. It is pointed out that enhancement of the notified price only by 20% was in respect of very small consumers and in respect of Central and State Agencies and that cannot form the basis for supply of coal to the petitioners herein having a coal linkage with the coal companies. Taking note of the circumstances as a whole we feel that it would be just and proper to direct the petitioner companies/firms, having coal linkage, to pay in addition to the notified price, 33 1/3% of the enhanced price, each time they claim supply of coal to them based on the linkage and by furnishing security for the balance 66 2/3% of the enhanced price with an undertaking filed in this Court that the said part of the price will also be paid within 6 weeks of the decision of this Court in the writ petitions in case the writ petitions are decided against the petitioners. To protect the interest of the petitioners and to ensure that no permanent harm is caused to them we also think it proper to record the undertaking given on behalf of the Coal India Ltd. and its subsidiaries that in case this Court upholds the challenge made by the petitioners and allows the writ petitions filed by them, the enhanced price of 33 1/3% now to be paid by the petitioners will be refunded to the petitioners within 6 weeks of the judgment of this Court with interest thereon at 12% per annum from the date of payment till the date of return to the concerned petitioner. (Paras 7 and 8)

Order

1. These petitions for special leave to appeal are filed by Industrial Undertakings which have coal linkage with Coal India Limited and its subsidiaries. The Coal India Ltd. and its subsidiaries introduced a new scheme for sale of coal through E-auction. This meant that the industrial concerns which had linkage with Coal India Ltd. and its subsidiaries for the supply of coal to them had to pay more for the coal compared to what they were paying earlier or what was known as the notified price. This led to the various Undertakings approaching different High Courts challenging the E-auction scheme and seeking interim protection of their right to get coal at notified prices on the basis of the linkage with Coal India Ltd. and its subsidiaries. The various High Courts entertained the writ petitions and passed interim orders in regard to supply of coal at the price payable, pending the disposal of writ petitions filed by the concerned Undertakings. Some of the High Courts directed the linked Undertakings to furnish bank guarantees for the difference in prices or to pay cash or to furnish security for the difference while seeking supply of coal, based on linkage. Being aggrieved by the directions to furnish bank guarantee or pay the price of coal in cash, these petitions for special leave to appeal have been filed by the petitioners herein taking the stand that they are entitled to have the coal supplied at the notified price instead of the E-auction average price. This Court while entertaining the petitions for special leave to appeal had passed orders as interim measure directing that the coal would be supplied to the petitioners by Coal India Ltd. and its subsidiaries on the basis of linkage at the notified price on the concerned undertaking executing indemnity bonds and in addition, filing an undertaking by the concerned Managing Director or Managing Partner of the Company or the Firm, undertaking to pay the difference, in case the petitions fail. Subsequently, a further order was passed directing the petitioners before this Court to file certificate/statement/chart showing the net worth of their respective undertaking/firm/company as on 30th October, 2005 and also work out the difference in the amount involved by working out the difference between the E-auction and the notified prices.

2. Two conflicting judgments have been passed; one by the Gauhati High Court and another by the M.P. High Court. Whereas the Gauhati High Court held the scheme of selling coal through E-auction as invalid, its validity has been upheld by the M.P. High Court.

3. Meanwhile, petitions for transfer have been filed by Union of India, the respondent in these petitions for special leave, praying that the various writ petitions pending in the various High Courts be withdrawn to this Court to be heard and finally disposed of so that conflicting decisions and protracted litigation could be averted especially considering that the commodity involved is coal and what is involved is its regular supply to those Undertakings which have linkage with the Coal India Ltd. and its subsidiaries. Notices have been ordered on the petitions for transfer and the petitions for special leave to appeal and a connected appeal in this Court are being posted in the month of January for final disposal.

4. Learned Solicitor General and Mr. Soli J. Sorabjee, learned Senior Counsel appearing on behalf of the Coal India Ltd. and its subsidiaries have submitted that some of the companies have not complied with the order of this Court dated 28.10.2005 and in respect of some of the petitioners the certificates/statements/charts filed show that their net worth is not significant and considering the liability that would be incurred to Coal India Ltd. and its subsidiaries by these petitioners if the supply of coal was to be continued at the old or notified price, it was just and necessary to modify the interim order of this Court and provide for payment of money for the coal to be lifted

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