Ashoka Smokeless Coal Industries Pvt. Ltd. & Ors Vs. Union of India &
Ors  INSC 690 (12 December 2005)
SINHA & P.K. BALASUBRAMANYAN
O R D E R
[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.
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.
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.
474/2005, T.P. (C) No. 477/2005, T.P. (C) No. 484/2005, T.P.
480/2005, T.P. (C) No. 479/2005, T.P. (C) No. 478/2005, T.P.
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.
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.
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.
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.
680-681/2005, T.P. (C) No. 687-690/2005, T.P. (C) No.
T.P. (C) No. 493/2005, T.P. (C) No. 494/2005, T.P. (C) No.
T.P. (C) No. 496/2005, T.P. (C) No. 777-789/2005]
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
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.
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
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
by the petitioners on the basis of an undertaking by Coal India Ltd.
subsidiaries to refund the amount over and above the notified price paid by the
petitioners in case this Court accepts the challenge of the petitioners to the
new scheme introduced by Coal India Ltd. and directs that continued supply
should be made to the petitioners on the basis of the original notified price.
Mr. Soli J. Sorabjee, learned Senior Counsel reminded the Court that Coal India
Ltd. and its subsidiaries cannot run their business on securities or bank
guarantees and in the interests of all concerned, it would be just and proper
to direct the petitioners to make payment of a part of the amount claimed in
excess by Coal India Ltd. and its subsidiaries and to furnish security for the
balance, with an undertaking to pay the money if and when the writ petitions
filed by the petitioners are decided against them. He and learned Solicitor
General submitted that the Coal Companies are prepared to give an undertaking
to this Court that they would refund the amount to the petitioners with
interest on the amount as fixed by this Court in case the petitioners
ultimately succeed in their challenge.
Messers K.K. Venugopal, M.L. Verma, Rohington Nariman, learned Senior counsel
and host of other counsel appearing for the petitioners resist the prayer by
pointing out that the interim order was passed after hearing both sides and
there was no justification in varying or modifying the same. Learned counsel
submit that the statements as directed by this Court on 28.10.2005 had been
filed by the various Undertakings and it would not be correct to say that the
order had not been complied with. It was also not correct to say that the net
worth of the companies was not enough and by supplying coal without collecting
the difference, Coal India Ltd. and its subsidiaries would be running a great
have given our anxious thought to the rival submissions. Most of the High Courts
have passed orders directing the furnishing of bank guarantee and some of the
High Courts have passed orders directing the furnishing of security for the
difference in prices before claiming the supply of coal based on the coal
counsel for the petitioners pointed out that as the price of the commodity is
paid in advance, substantial amounts belonging to the petitioners herein remain
in the hands of Coal India Ltd. and its subsidiaries to be adjusted against the
price payable by the petitioners for the coal to be lifted and there was no
risk involved in continuing to supply coal to the petitioners on the basis of
the individual coal linkage. It is pointed out on behalf of the Coal India Ltd.
that the amount paid is to be adjusted towards the supply of coal to be made
and it gets dwindled every time when a supply is made and that would be
inadequate security or protection to Coal India Ltd. and its subsidiaries.
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 be protected by 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
8. 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 be 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.
is a complaint on behalf of the petitioners that coal was not being supplied in
spite of interim orders passed by this Court earlier. Of course, this
submission is disputed by counsel for the respondents. All the same, we think
it appropriate to direct that on the concerned petitioner paying the notified
price plus 33 1/3% of the enhanced price as per the E-auction and furnishing
security for the balance 66 2/3% of the enhanced E-auction price, and filing
the undertaking in this Court within four weeks from today, the coal as per the
linkage will be supplied to the concerned petitioner within a period of 3 weeks
from the date of such payment. It is clarified that there will be no obligation
on the part of the Coal India Ltd. and its subsidiaries to supply the coal as
per this interim order in the case of those who have not complied with the
order for payment of 33 1/3% of the difference in price in addition to the
notified price and for furnishing of security for the balance 66 2/3% of the
enhanced price, and filing the undertaking in this Court to pay the entire amount
if they do not succeed in their challenge. It is directed that this interim
order will enure until these writ petitions are finally heard and disposed of
by this Court.
far as transfer petitions filed by Coal India Limited and its subsidiaries are
concerned, the same having not been opposed, are allowed. All the writ
petitions pending before different High Courts as stated in the respective
transfer applications shall stand withdrawn to this Court. The records of the
High Court be summoned through special messenger at the cost of the Coal India
Limited, which may be deposited within one week from date. It is clarified that
the present interim order will govern the transferred cases also.
all the ready Transferred cases and other Special Leave Petitions including
Special Leave Petition (Civil) No. 23034 of 2005 and Civil Appeal No. 2972 of
2005 be posted for final disposal on 10.01.2006 at the top of the list. The
learned counsel appearing for the parties agreed that detailed written
submissions would be filed on or before 09.01.2006. It is stated at the Bar
that each side would take about three hours in completing their oral
learned counsel for the parties agree that no prayer for adjournment will be
made and the cases of those who would make such a prayer, may be disposed of
only on the basis of the written submissions.