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CASE NO.: Appeal (civil)  6310 of 1998

PETITIONER: The Chief of Marketing (Marketing Division), Coal India Ltd. & Anr.

RESPONDENT: Mewat Chemicals & Tiny S.S.I. Coal Pulverising Unit & Ors.

DATE OF JUDGMENT: 26/03/2004

BENCH: S. N. Variava & H. K. Sema.

JUDGMENT: J U D G M E N T

S. N. VARIAVA, J.

       This Appeal is against the Judgment of the Calcutta High Court  dated 20th March, 1998.

       Briefly stated the facts are as follows: In pursuance of the power under Section 3 of the Essential  Commodities Act, 1955 the Colliery Control Order was framed.  Under  Clause 12A of the Colliery Control Order the Central Government could  by Notification specify the authorities competent to allot quota of coal  to any person or class of persons.    Clause 12A further provides that  every such authority shall allot coal subject to such instructions as the  Central Government may issue from time to time.    On 25th June, 1992 the Central Government issued a Notification  specifying the Coal Controller as the competent authority to allot coal.   On 5th January, 1995 a Circular was issued by the Central Government  specifying that Coal India Ltd. would give coal clearances/linkages to  the new applicants up to 5,000 tones per month and applications for  more than 5,000 tones per month were to be decided by the Ministry  of Coal.  This Circular also specified that no allocation of coal could be  made to private cookeries from any mines that are linked to  washeries.             It appears that the Respondents had made applications for  allotment of coal and had also applied for linkages.  As their  applications were not decided they filed Writ Petitions which were  disposed off by an Order dated 25th September, 1995. The Coal  Controller was directed to consider the representations of the  Respondents within 6 weeks.  On 8th January, 1996 the Joint Secretary  (Coal), New Delhi sent a fax message to the Coal Collector setting out  that the Order of the High Court had not been complied with.   It was  pointed out that the Coal Controller was not vested with the power to  give linkages, but that he could allot quota of coal.  The Coal Controller  was requested to intimate the latest position.           Thereafter on 23rd April, 1996 a Circular was issued by the then  Director, Ministry of Coal, wherein it was specified that all grades of  coal which were governed by notified prices should only be allotted to  power sector.  It was specified that other consumers of coal had to be  given coals of grades for which the prices have been decontrolled.     This Circular also withdrew allotment of coal of D grade and below to  small scale industries and Vriquetting units.   On 21st June, 1996 the Coal  Controller passed the following  Order: "Having heard at length to all the present Parties and  gone through this Office Order dated 17th October ’95 &  27th November ’95 as well as Ministry of Coal, Government  of India’s directive vide Ministry of Coal letter No.  23028/18/95-CPD dated 9th November ’95 in the matter in

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pursuance of the Order of the Hon’ble High Court at  Calcutta and the Inspection Report submitted by Coal India  Ltd., vide their letter No. CIL/C4B/48912/599-601 dated  30.3.96/3.4.96 in respect of all the petitioner Units, I, in  exercise of the provision under Clause - 12A of the Colliery  Control Order, 1945, do hereby grant linkage/quota of coal  in quantities of 500 M.T. D, E & F Grade Steam/ROM Coal  per month (6000 M.T. per annum) from the sources of  Northern Coalfields Limited and 480 M.T. D, E & F Grade  Steam/ROM Coal per month (5,760 M.T. per annum)  from  the sources of Eastern Coalfields Limited by road/rail from  the date of issuance of this Order with the details noted  below:

Name of the     Allocation of      Quantity     Source with Petitioner Tiny/        Quota of coal     per annum     mode of SSI Units               per month in     with grade  transportation situated in the         quantity &                               Distt. of               grade of Gurgaon (Haryana) -----------------       --------------- -----------     --------------

1.Suraj Coal            500 m.te.D.E&F  6,000 m.te.             N.C.L.    Chemicals            Grade Steam/                         ROM Coal  &                   &                     &                         480 M.te.D,E&F  5,760 m.te.             E.C.L.                         Grade Steam/                             ROM coal

2. Soni Coal     Chemicals                   "                       "               "

3. Anand Coal           "                       "               "     Plaster Industries

4. Jain Chemicals               "                       "               "

5. Jawala Coal     Chemicals                   "                       "               "

6. Harneja Coal         "                       "               "    Chemicals

7. Hariyana Chemicals   "                       "               "

8. Mewat Chemicals      "                       "               "

9. Goel Chemicals               "                       "               "

       Quota of the coal shall be despatched by Northern  Coalfields Ltd./Eastern Coalfields Ltd. to the above noted  Tiny/SSI Units either by road/rail as per the convenience of  the Units."    On 30th July, 1996 the Joint Secretary, Ministry of Coal issued an Order  that the Coal Controller was not authorized to grant any long term  linkages and that allotment of coal by the Coal Controller had to be  subject to such instructions that the Central Government may issue  from time to time.  It was held that the above mentioned Order of the  Coal Controller being contrary to the instructions issued by the Central  Government no action was to be taken to supply coal as per that order  till a final decision was taken by the Central Government.

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       The Respondents then filed a Writ Petition challenging the  validity of the Order dated 30th July, 1996.  That Writ Petition came to  be allowed by an Order dated 11th September, 1997.   The Appeal of  the Appellants has been dismissed by the impugned Judgment dated  20th March, 1998.   It has been held that the Coal Controller was  competent to grant linkages and that in any case he being a  competent authority the Central Government could not sit in review  over the order passed by the Coal Controller.  It has also been held  that the allotment to the Respondents has to be governed by the  position prevailing on the date they made their applications.  It was  held that as they had made their applications prior to the issuance of  Circular dated 23rd April, 1996 the restrictions laid down in that circular  could not be applied whilst considering the applications of the  Respondents.          On behalf of the Appellants the submission has been that under  the Colliery Control Order the control of the Central Government is all  pervasive. It was submitted that the Coal Controller was bound to  comply with the instructions of the Central Government. It was  submitted that the Coal Controller had no power to grant linkages  contrary to the instructions issued by the Central Government.           On the other hand, on behalf of the Respondents, the submission  has been that the Coal Controller is an independent authority under  the Colliery Control Order. It was submitted  that he has powers equal  to those of the Central Government.  It was submitted that the Coal  Controller had power to make allotment, not only by virtue of order of  the Central Government dated 25th June, 1992, but also under the  provisions of the Colliery Control Order.  It was submitted that the  Coal Controller being an authority equal to the Central Government,  the Central Government could not sit in Appeal or Review over the  order of the Coal Controller. It was submitted that the Coal Controller  could grant linkage.         In order to consider the rival submissions one must look at the  relevant provisions of the Colliery Control Order.  It must be  remembered that the Colliery Control Order is passed under the  Essential Commodities Act.  The purpose being that the production,  sale and distribution of certain commodities, which are considered to  be essential, should be controlled by the Central Government.  The  relevant provisions of the Colliery Control Order read as follows: "2.     In this Order, unless there is anything repugnant in  the subject or context -

(1)     ’Coal’ includes anthracite, bituminous coal,  lignite, peat and any other form of  carbonaceous matter sold or marketed as coal  and also coke.

(1)(a) ’Coal Controller’ means the person appointed  by the Central Government to hold the post of  Coal Controller and include the Joint Coal  Controller and Deputy Coal Controller.

               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

3.      The Central Government may for the purpose of this  Order prescribe the classes, grades, sizes into which  coal may be categorized and the specifications for  each such class, grade or size of coal.

3A(1) The coal of any seam or section of a seam occurring  in colliery shall be categorized into grades or sizes  under this order by the Owner, Agent or Manager of  the colliery, in accordance with the standards laid  down by the Coal controller.  Initially, a provisional  grade on the basis of seam sample shall be fixed.  As

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soon as may be thereafter, such Owner, Agent or  Manager shall cause wagon samples to be drawn.   On the basis of the wagon samples drawn on at least  three different days, the final grade of seam or  seams of a particular colliery shall be fixed by such  Owner, Agent or Manager.

(2)     the final grade fixed for a seam or section of a seam  may be altered by the Owner, Agent or Manager  from time to time on the basis of analysis of wagon  samples, if such Owner, Agent or Manager is  satisfied that the grade, so fixed, could not be  maintained.

(2A)    ’The Coal Controller’ may draw the samples from  underground, stock, wagons, trucks, conveyor or any  other mode of transport at any reasonable time for  the purpose of checking the grade as declared by the  Owner, Agent or Manager of the colliery.

(2B)    The Owner, Agent or Manager of the colliery will  provide all reasonable facilities for drawing samples  as mentioned in sub-clause (2A).

(2C)    If on physical verification, the grade does not  conform to the grade as declared by the Owner,  Agent or Manager of the colliery or if the Coal  Controller has reasons to believe that the grades of  coal, as declared by the Owner, Agent or Manager of  the colliery, is not correct or the grades declared by  the Owner, Agent or Manager of the colliery are not  sustainable, he may determine the grade as obtained  by physical verification and direct the Owner, Agent  or Manager of the colliery to revise the grade to be  effective from a date as directed by the Coal  Controller.

(2D)    The grade, so determined by the Coal Controller  either as a settlement of a dispute or as a result of  such verification, shall be final and binding.

(2E)    Coal Controller may issue such directives as deemed  fit for the purpose of declaration and maintainance of  grades of seem(s) or section of a seam mined in a  colliery.   

(2F)    If it comes to the knowledge of the Coal Controller  that any colliery declared the grade of any seam of  which there is no valid permission for opening under  clause 14, the Coal Controller may withdraw the  grade of the seam.

(3)     If the production or despatch of coal from a seam or  section of a seam has stopped for a continuous period  of 6 months for any reason whatsoever, the grade  fixed for the seam or section of the seam shall stand  withdrawn.  The Owner, Agent or Manager of the  colliery shall notify such withdrawal of grades in the  manner as prescribed by the Coal Controller.

(4)     The Coal Controller shall lay down the standards and  methods of sampling and analysis of coal which  alone shall be sued in declaration of grades or sizes  of coal.

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(5)     If any disputes arises out of the declaration of grades  and sizes of coal, the same shall be referred to the   Coal Controller whose decision shall be binding on  the Owner, Agent or Manager of the colliery.  A  memorandum of reference to the Coal Controller  regarding such dispute shall be accompanied by such  fees not exceeding Rs. 100/- and in such manner as  may be notified by the Coal Controller from time to  time in the Official Gazette.

4.(1)   The Central Government may by notification in the  official Gazette, fix the sale price at which, or the  maximum or the minimum sale price or both, subject  to which coal may be sold by colliery owners and any  such notification may fix different prices -

i) for different grades and sizes of coal and  ii) for different collieries.   (2)     Nothing contained in sub-clause(1) shall effect the  sale of coking coal and such grades of non-coking  coal for which no price has been fixed by the Central  Government under this Order.

4A.(1) The Central Government may having regard to all  the relevant factors, including the geological and  mining conditions of and the mining technology  employed in the collieries by the colliery owner, as  well as the estimated cost of production of coal and  coke produced by such colliery owner, fix by  notification in the official Gazette, the retention price  in respect of each class, grade or size of coal and  coke produced and sold by such colliery owner.        (2)  Nothing contained in sub-clause (1) shall effect the  retention price of coking coal and such grades of  non-coking coal for which no retention price has  been fixed by the Central Government under this  Order.

4B.(1) The Central Government may specify any person or  authority including a Government Company who  shall maintain an account to be called the ’Coal Price  Regulation Account.’

               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

8.      The Central Government may from time to time,  issue such direction as it thinks fit to any colliery  owner regulating the disposal of his stocks of coal or  of the expected output of coal in the colliery during  any period including direction as to the class, grade,  size and quantity of coal which may be disposed of  and person       or class or description of persons to  whom coal shall or shall not be disposed of, the  order of priority to be observed in such disposal and  the stacking of coal on Government account.

               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

9.      Notwithstanding any contract to the contrary every  colliery to whom a direction is given under clause 8:-

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i)      shall dispose of coal in accordance therewith;

ii)     shall not dispose of coal in contravention  thereof.

10.(1) Where a colliery owner has coal available for  disposal not covered by the directions issued under  clause 8 or where wagons are not available for  despatch in accordance with those directions, the  colliery owner may, with the general or special  permission of the Central Government, stack such  coal in Government account.

  (2) Where any coal is stacked on Government account  under sub-clause (1) or otherwise, there shall be  paid to the colliery owner, in addition to the price  payable for the coal, a sum for stacking at such rates  as may be determined by general or special order of  the Central Government.  

10A(1) The Coal Controller with the Government of India  may, by order in writing, direct, that any coal  despatched by any colliery owner, or a person acting  on behalf of a colliery owner, to any person, which is  in transit, shall subject to such terms and conditions,  if any, as the said Coal Controller deems fit, be  diverted and delivered to another person specified in  the order.

               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

11.     The Central Government may issue such directions  as it thinks fit to any colliery owner prohibiting or  limiting the mining or production of any grade of coal  and the colliery owner shall comply with the  directions.

12.     No colliery or group of collieries which is or may  hereafter be worked as a single mining concern shall  be sub-divided and worked in separate parts except  with the previous permission of the Central  Government, may at the time of granting permission  or subsequently give to the owner or owners  concerned.

12A.    the Central government may, by notification in the  official Gazette, specify the authorities competent to  allot quota of coal to any person or class of persons  and every such authority shall allot such quota  subject to such instructions as the Central  Government may issue from time to time.

12F.    The Central Government may, for the purpose of  securing compliance with the provisions of clause  12E, specify from time to time the Officers to whom  applications for permission to transport coal may be  made by colliery owners, middleman or persons to  whom coal is allotted, the periods within which and  the form in which, such applications may be made,  the particulars to be entered therein and any other  matters incidental thereto.  The functions of the  Central Government under Clause 12F shall also be  exerciseable by the Officers so specified.

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               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

15.     The functions of the Central Government under  clauses 8, 10, 11, 12, 12A, 12B, 12C, 12D, 12E, 12F,  13 and 14 shall be exerciseable also by the Coal  Controller with the Government of India, the Deputy  Coal  Controller (Distribution), the Deputy Coal  Controller (Production) and the Joint Deputy Coal  Controller (Distribution).

               xxx                     xxx                     xxx                 xxx                     xxx                     xxx

17.     Every colliery owner, every person to whom coal is  allotted under this Order and every other person  engaged in the business of production, supply and  distribution of or trade and commerce in coal, to  whom any order or direction is issued under any  powers conferred by or under this Order shall comply  with such order or direction."

The above provisions show that certain functions have been  specifically given to the Coal Controller.  However the control of the  Central Government is all pervasive.   Clause 12A also makes it clear  that it is the Central Government who has to specify who is the  authority authorized to allot coal.  That authority is subject to the  instructions issued by the Central Government from time to time.   Undoubtedly, under Clause 15 the Coal Controller may also exercise  the powers which could be exercised by the Central Government under  the clauses mentioned therein.  However, such a power is merely a  delegated power.  The Coal Controller is not an authority equal to the  Central Government.  Only the Central Government can decide policy  matters in respect of questions of production, distribution and sale of  coal.             Both sides relied upon the authority of this Court in the case of  Coal India Ltd. vs. Continental Transport and Construction Corporation  reported in (1997) 9 SCC 258.  In this case, the Coal Controller had  issued a direction under Clause 8, to transfer an allotment of coal from  one colliery to another.  The direction of the Coal Controller was  challenged.  No question arose whether the Coal Controller was bound  by directions of the Central Government.  The question whether the  Coal Controller would give linkage was not considered at all.  This  Court considered the powers of the Coal Controller, under the Coal  Control Order,  to give directions. It was held that the Colliery Control  Order assigned an important role to the Coal Controller.  It was held  that it was open to the Coal Controller, under Clause 8, to give  directions regulating disposal of stocks of coal by any colliery owner  and that such directions may be as to class, grade, size and quantity  of coal which may be disposed of.   It was held that certain powers  conferred on the Central Government could also be exercised by the  Coal Controller.   We are unable to accept the submission on behalf of  the Respondents that this authority lays down that the Coal Controller  is an authority equal to that of the Central Government.  In our view,  this authority merely states that the Coal Controller also has various  powers vested in him under the Colliery Control Order and that he  could also exercise certain powers given to the Central Government.   But this authority nowhere lays down that the Coal Controller can  ignore instructions issued by the Central Government. On the contrary   in paragraph 11 of this Judgment it has been held that a perusal of the  provisions of Colliery Control Order shows that the control of the  Central Government over the various activities involving production,  supply and distribution of coal is all pervasive.

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       It could not be denied that the Government had set up a  Linkages Committee which looked into the question of linkages and  gave linkages.  It could not be denied that the Coal Controller was  aware that there was a Linkage Committee. The Circular dated 5th  January, 1995 specified that linkages could only be given by Coal India  Ltd. (upto 5000 tonnes per month) and/or by the Ministry.  This  Circular was binding on the Coal Controller.  The order of the Coal Controller dated 21st June, 1996 shows  that it has been passed in pursuance of the powers given to him by  the Central Government under Clause 12A of the Colliery Control  Order.  Clause 12A clearly stipulates that such an authority is bound  by the instructions issued by the Central Government from time to  time.  The Circular dated 5th January, 1995 is an instruction which is  binding on the Coal Controller under Clause 12A..  The Coal Controller  being bound by such a Circular could not have given linkages in the  manner he purported to do by his Order dated 25th June, 1996.         Even otherwise, we see no substance in the submission that the  Order dated 30th July, 1996 passed by the Joint Secretary, Ministry of  Coal amounted to review of the order of the Coal Controller.  Under  Clause 12A any order passed by the Coal Controller is subject to  instructions issued by the Central Government from time to time.    These instructions may be prior instructions or they may be  subsequent instructions.  Thus, for example, the Coal Controller may  make an allotment which is within his power. Subsequently the Central  Government takes a policy decision that that coal is required for some  other purpose. The Central Government can always issue a subsequent  instructions overriding the order of the Coal Controller.   Such a  subsequent order would not be a review.  It is the Central Government  exercising power to issue instructions from time to time.  Such a  power is categorically provided for in Clause 12A of the Colliery Control  Order.   The High Court was therefore clearly in error in holding that  the Order dated 30th July, 1996 amounted to a review.         In our view, the High court was also in error in concluding that  the position prevailing on the date of the application must apply.  It is  settled law that there is no vested right when a person makes an  application.   The position prevailing at the time the allotment is to  apply.  Before the allotment was made the Circular dated 5th January,  1995 had already been issued.  The Coal Controller whilst allotting was  bound to take note of that Circular. The Joint Secretary by his fax  dated 8th January, 1996 had brought it to the notice of the Coal  Controller.  Thereafter guidelines had also been issued on 23rd April,  1996.  The Coal Controller was bound to take note of those guidelines  also.   We are unable to understand the reasoning given by the High  Court that those guidelines had been issued by a Director and thus  could not be said to be guidelines issued by the Central Government.   These guidelines have been issued by the Ministry of Coal.   Merely  because they are forwarded not by a Joint Secretary but by a Director  would not mean that they are not binding on the  Coal Controller.   If  there was any doubt as to whether they had been issued by the  Central Government, the Coal Controller should have asked for  clarification from the Central Government.         In the above view, we find ourselves unable to sustain the Order  of the single Judge or the Division Bench.  They are accordingly set  aside.  The Writ Petitions filed by the Respondents stand dismissed.         It is submitted that the Appellants had deposited monies with  ECL in June 1998.  It is submitted that those monies are still lying with  ECL.  It is submitted that ECL should now deliver the coal. It was very  fairly stated by Mr. Salve that ECL would deliver D grade coal subject  to the requirements of power sector and subject to availability of D  grade coal.         It was further submitted that monies have also been deposited  with NCL and against those monies coal should be supplied.  However,  those monies were deposited pending this Appeal. They were  deposited knowing fully well that if the Appeal is decided against the  Respondents they would not be allotted coal from NCL.  As the order of

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the Coal Controller has been set aside the Respondents have no right  to receive coal from NCL.   Therefore, they are not entitled to any coal  from NCL.  Thus NCL is directed to return the monies to the  Respondents within 15 days from today.         The Appeal stands disposed of accordingly. There will be no  order as to costs.