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PETITIONER: GUJARAT AMBUJA CEMENT LTD. & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       21/08/1998

BENCH: S.B. MAJMUDAR, M. JAGANNADHA RAO

ACT:

HEADNOTE:

JUDGMENT:                             WITH C.A. No.  3916/98 @SLP  (C)  No.13097/98),  C.A.Nos.2246/96, 2247 TO 2262/96, 2264/96 to 2267/96, 2385/96, 2439/96 AND                      W.P. (C) No.557/97                       J U D G M E N T S.B. Majmudar, J:      Leave granted in S.L.P. (C) No.13097 of 1998.      In this group of matters, that common judgment rendered by the Division Bench of the High Court of Madhya Pradesh at Jabalpur, dismissing  various writ  petitions filed  by  the writ petitioners  has been brought in challenge. In order to appreciate  the   grievance  of  the  appellants  viz.  writ petitioner who  have filed these appeals on grant of special leave under  Article 136 of the Constitution of India, it is necessary to note a few background facts. BACKGROUND FACTS:      The appellant-writ  petitioners  are  manufacturers  of cement. Their  manufacturing plants are located in different parts of  the country.  For manufacturing  cement, essential raw material  is coal. During the relevant period with which this group of matters is concerned, namely, from 1.1.1989 to 31.3.1996, coal was controlled commodity being treated as an essential commodity’  under the  Essential Commodities  Act, 1955 (hereinafter  referred to  as the  Act’). Prior  to the independence  of   the   country,   there   was   in   force Colliery Control  Orders, 1945,  wherein  as  per  clause  4 thereof, price  for supply  of coal  to  the  consumers  was controlled. The  said  scheme  was  continued  in  force  by Section 16 of the Act. As during the relevant time, coal was a controlled  commodity, its  price was  being monitored and fixed under  the aforesaid  Colliery Control  Order  by  the appropriate authority functioning thereunder. Till December, 1988,  the   price  of  coal  supplies  from  collieries  to different  consumers,   like  the   appellants,   concerning different grades of coal had not posed any difficulty to the consumers of coal. However, according to the appellants, the problem started  after the  letter dated  1st January,  1989 issued under the provisions of the Colliery Control Order as promulgated under  Section 16  of the  Act. By Item no.20 of the notification dated 1st January, 1989, the premium of 10%

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of the price given in Table II of the notification was to be charged by the collieries supplying coal to the consumers in the country in connection with A,B,C & D grades of coal sold to them.  The clauses  3 and 4 of the Colliery Control Order as operative during the relevant period read as under:      "3. The  Central Government may for      the   purposes    of   this   order      prescribe the  classes,  grades  or      sizes  into   which  coal   my   be      categorised and  the specifications      for each  such class, grade or size      of coal.      4. The  central Government  may, by      notification   in    the   official      Gazette, fix  (the  sale  price  at      which, or  the maximum  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 classes,  grades      and sizes of coal; and      (ii) for different collieries."      Item No.20 of the notification dated 1.1.1989, which is impugned in the present proceedings, read as under:      "A premium  of 10%  over and above.      the prices  given in  Table  II  of      this notification  will be  charged      by  coal   companies  on-coals   of      Grades A,B,C  & D supplies from the      collieries listed  in the  Annexure      to this notification."      The grievance of the present appellant-writ petitioners before the  High Court  was that though same quality of coal as comprised  in grades  A,B,C &  D was  being  supplied  by different collieries,  10%  premium  over  price  was  being charged only  by some  of the  collieries as per Item No.20. According to  the writ  petitioners, there  was no choice of colliery from  which  they  had  to  purchase  coal  at  the relevant time  as their  choice was fettered by the decision of the  linkage committee compelling the writ petitioners to purchase   coal    from   a    particular   colliery.   Shri K.K.Venugopal, learned  senior  counsel  appearing  for  the appellant in civil appeal No. 2245 of 1996, which is treated as the  leading appeal, vehemently contended that the cement manufacturing plants  in the  western region  of the country had not  been given linkage by the linkage committee to lift coal from  collieries  situated  nearby  which  were  within reasonable distance,  but they were forced to take coal from collieries situated in Madhya Pradesh wherein the respondent authorities were  requiring the collieries, treating them as premium collieries,  to charge  10% extra  on the  price  of every grade  of coal  supplied to  consumers like  the  writ petitioners. It  was the  contention of the writ petitioners before the High Court in these writ petitions that A,B,C and D grades  of coal produced from any colliery were of similar quality and,  therefore, their  prices had  to  be  similar. Charging of  higher price  in respect of coal purchased from certain  collieries   like  the   premium   collieries   was discriminatory and  violative of  the right guaranteed under Article 14  of  the  Constitution  of  India.  It  was  also contended that  premium was  not a  price and Union of India had no  legal right to impose premium. It was submitted that in fact charging anything over and above the price fixed was an offence  punishable under  the Act. It was also contended

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that while  fixing the price and imposing 10% premium on all these grades  of  coal  manufactured  and  supplied  by  the premium collieries,  relevant material  had not  been  taken into consideration and in an arbitrary manner and relying on an irrelevant consideration, 10% premium was fixed for being charged to  the consumers  of coal supplied by these premium collieries. It  was, therefore, contended that Item No.20 of the impugned  notification ultra  vires the Constitution. It was  also  additionally  contended  that  clause  4  of  the Colliery Control  Order did  not provide  for nor did it lay down any  guidelines, more or less, for the fixation of coal price. It was, therefore, ultra vires.      All these  writ petitions  were heard  in common  by  a Division Bench of the High Court at Jabalpur. The contesting parties produced  material in  support of  their  respective cases. We  are told that the hearing of these writ petitions was spread over a week or so. However, at the final stage of arguments before  the Division  Bench of  the High  Court, a clear stand was taken by learned counsel for the respondents - namely, Union of India, Coal Indian Ltd. - a Govt. Company and South-Eastern  Coal Fields Ltd. - a Govt. company, which were supplying  the disputed quantity and quality of coal to the  consumers  like  the  writ  petitioners  and  the  coal controller who  was functioning  under the  Colliery Control Order -  that the  grievance made  by the petitioners was of academic nature  as it  was open  to the  consumers of  coal concerned to lift coal from any colliery of their choice and it was not compulsory for such a consumer to indent coal for Their  factory  only  from  a  premium  colliery  which  was charging 10% extra price on the quality of the coal supplied to these  consumers. Of  course, the High Court noted in the impugned judgment  that  the  main  grievance  of  the  writ petitioners was  that they  had no  choice  as  far  as  the purchase of  coal was  concerned. It  could not  be disputed that  coal   was  a   controlled  commodity  and  it  was  a monopolised trade in the hands of Government or governmental agencies during  the  relevant  time.  It  was  the  linkage committee which  allotted collieries  to the bulk consumers. It was  this  linkage  committee  which  allotted  racks  of railway wagons  for supplying of coal from collieries to the bulk consumers.  Because of  the monitoring  by the  linkage committee, consumers  of coal like the writ petitioners were compelled to  purchase coal from collieries situated at long distances wherein  unwillingly they  had to  pay  10%  extra premium price  for the  same quality of coal which otherwise could have  been supplied  to them by non-premium collieries situated nearby.  An attempt  was also made on behalf of the respondents before  the High  Court to justify the charge of 10% more  premium on  A,B,C and D grades of coal supplied by these premium  collieries. It  was submitted  that the  coal being of  proper quality  as supplied by premium collieries, charging of  10% more  by way  of price  of  such  coal  was legally justified and was not arbitrary.      These rival  contentions would  have required  the High Court to  closely examine  the challenge  to this  10% extra charge on A,B,C and D grades of coal supplied by the premium collieries but  according to  the  High  Court  it  was  not necessary to  go into  this wider question as it was told by learned senior counsel for the respondents that there was no compulsion for  the writ petitioners to lift coal from these collieries which  were premium collieries and they were free to purchase  coal from  any other  colliery  which  was  not charging 10%  extra price by way of premium. Heavily relying upon the  said submission  of learned senior counsel for the respondents, which,  we are  told, was also the stand of the

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respondents in their counter filed before the High Court, in the impugned common judgment at paragraph 13, the High Court observed as under:      "....in  view  of  the  categorical      statement  made   by  the   learned      counsel for  the respondents, it is      no longer  necessary for  us to  go      into   this    question.   It   was      contended by  the petitioners  that      premium is  not a price and Central      Govt.  has   no  power   to  impose      premium. Various  dictionaries were      referred to  us so as to bring home      the meaning  of the word ’premium’.      And  this   Court’s  interim  order      dated 16.3.1992,  was also  brought      to our  notice. We  would  like  to      make it  clear that since it is not      necessary to  dwell  at  length  on      this  point,   in   view   of   the      statement made  at the  Bar by  the      respondent’s  counsel,   Sri   Nair      contention on  this point as raised      by the  petitioners  are  virtually      rendered pure academics."      Accordingly, the  High Court  without addressing itself to this  moot question which went to the root of the matter, in the  light of  the aforesaid  stand taken  by the learned senior counsel  for the  respondents, disposed  of the  writ petitions, in  terms of  paragraphs 14 and 15, which read as under:      "14.  The  statement  made  by  the      learned counsel  Shri Abhay  Supre,      that Cl.  IV  of  the  notification      provides  unguided   and  arbitrary      power in  the matter of fixation of      price need  not to  be discussed in      detail  as   the  real  controversy      involved in the case, a stand (sic)      relied by the statement made by the      respondents’ counsel at the Bar. In      view of  the foregoing  discussion,      we  are   of  the   view  that   no      interference is  called for  in the      matter of  charging of  premium  of      10%  as   part  of  price  of  coal      produced from certain collieries.      15. The  petitions are,  therefore,      dismissed  with   no  order  as  to      costs."      We may state that in these appeals, further documentary evidence has  been adduced  by both the sides for supporting their respective cases on merits.      Learned  senior   counsel,  Shri  Venugopal  and  other learned advocates  who raised  similar  contentions  in  the companion appeals,  submitted that  even though, prima fair, price fixation may be taken as a legislative function, it is now well settled by a catena of decisions of this Court that when  price   fixation  is   challenged  as   arbitrary  and unreasonable, the  court has  ample jurisdiction  to go into this question  and examine  the impugned price policy on the touchstone of  Article 14  of the  Constitution of India. In this connection,  Shri  Venugopal,  learned  senior  counsel invited our  attention to the observations of the High Court in Paragraph  13 of  the judgment,  wherein it was held that

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"price fixation  is neither  the function  nor forte  of the court. It  is neither concerned with the policy nor with the rate, it  si left  to the  discretion of  the executive". He submitted that  the aforesaid  statement of  law culled  out from the  decisions of  this Court, is a partial enunciation of the  legal principle.  It was  submitted that despite the fact  that   this  pricing   policy  was  in  the  realm  of legislative exercise  if the policy is shown to be violative of Article  14 of the Constitution of India as unreasonable, arbitrary or  involving non-application  of mind to relevant considerations or  based on  irrelevant  considerations,  it could be challenged in court. To that extent, learned senior counsel, Shri  Venugopal is  right. In  fact, in fairness to learned senior  counsel for  the  respondents,  it  must  be stated that  he did  not challenge  the locus  standi of the writ petitioners to mount such a challenge under Article 226 of the  Constitution of  India. But  his submission was that even during  the relevant  time it  was  open  to  the  writ petitioners to  purchase coal  from any  colliery  of  their choice which  was a  non-premium colliery.  The  said  stand taken in  the counter  before the  High Court  and which was reiterated by the learned senior counsel for the respondents before the  High Court and was also reiterated before us. It was  also  contended  that  there  was  nothing  illegal  or unreasonable in  charging 10% more for A,B,C and D grades of coal by  the premium collieries, as according to the learned senior counsel  for the respondents, relevant considerations were kept  in view  by the  pricing authorities in coming to the aforesaid  conclusion  about  charging  10%  more.  Shri Venugopal challenged  the said  stand of  learned counsel or the respondents  by submitting  that because  of the linkage committee’s restrictions, writ petitioners had no choice but to lift coal from respondent no.4 colliery located in Madhya Pradesh, otherwise their manufacturing activities would have come to a grinding halt and, therefore, it was a misnomer to say that  it was  open to  the writ  petitioners to purchase coal from  non-premium collieries  as they liked. He further contended that  for the  purpose of  utilisation of  coal as essential raw  material in  their plant, different grades of coal are  required. Classification  of coal by grade is made according to  the standard  specified by the Indian Standard Specification  depending   upon  the   inherent   ingredient contents of  coal. Before  such gradation  is determined  in respect of  any particular  type of  coal, there is always a testing process. Through such testing process, the gradation of coal  is fixed  and once such a gradation is fixed, there is no,  nor can there be any, question of further testing or relaxing the  classification already  made.  Learned  senior counsel for  the respondents  on the  other hand pointed out that even  on merits  it could not be said that the 10% hike in price for different grades of coal supplied by Respondent no.4 colliery  viz. the  premium colliery  was  in  any  way irrational as  the coal  supplied by  the said  colliery  as compared to  non-premium collieries had a better quality, as it had greater lasting, fuel heat value and consequently the said 10%  premium charged  by the premium colliery could not be said  to be  violative of  guarantee of Article 14 of the Constitution of  India.  It  was  submitted  that  the  writ petitioners themselves  paid this  10% extra charge  on  the coal lifted  by them  during the  period from  1.1.1989 till 1991 when  they filed  the writ petitions in the High Court. It is also submitted that from 1st April, 1996, coal has not remained a  controlled commodity  and it is easily available as raw  material in  the open  market and  consequently, the grievance made  by the  writ petitioners  has become more or

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less academic  and is confined only to the aforesaid limited period from  1.1.1989 to  31.3.1996 or  up to  31.8.1996  as submitted by  the learned  senior counsel Shri Venugopal for the appellant-writ petitioners.      In our  view, the  aforesaid  rival  contentions  would squarely pose  the main question whether the charging of 105 premium over  the price  given in  Table II  to the impugned notification can  be  treated  to  be  so  unreasonable  and arbitrary as to fall foul on the touchstone of Article 14 of the  Constitution  of  India.  For  deciding  the  aforesaid question, evidence  was led by the contesting parties before the High Court and more voluminous evidence is led before us by  the   contesting  parties  in  these  appeals.  However, unfortunately, the  High Court  in the impugned judgment has not thought  it fit  to address itself to this moot question presumably because  of the  stand as taken by learned senior counsel for the respondents on the basis of counter filed in the High  Court on  their behalf  that the  grievance of the writ petitioners was academic as it was free for them not to purchase coal  from these  premium collieries  by paying 105 more and they could well purchase coal from other collieries which were  supplying requisite  coal  to  them  at  cheaper rates. It  is this  stand which,  as we  have noted earlier, appealed to  the  High  Court  for  disposing  of  the  writ petitions  without   going  into   the  main   question   in controversy between  the parties  as aforesaid.  it is  true that the  stand of the respondents before the High Court was that it  was not  compulsory for  the  writ  petitioners  to purchase coal  from premium collieries. it is also true that the same  stand is  reiterated before  us by  learned senior counsel for  the respondents.  But the real grievance of the writ petitioners  which unfortunately  remained unnoticed by the High Court is that during the relevant period with which we  are   concerned  in  the  present  proceedings,  from  a practical point  of view,  it was  almost impossible for the writ petitioners  to lift  the coal  from any other colliery except from  these premium  collieries on account of various problems faced  by  the  writ  petitioner  manufacturers  of cement  as  tried  to  be  high-lighted  before  us  in  the additional affidavit filed on behalf of the writ petitioners in Civil  Appeal No.2245 of 1996 at pages 265 to 268. It was contended before us in the light of the aforesaid grievances categorised in the said additional affidavit that during the relevant time  production, distribution and sale of coal was a monopoly  of the  Union of  India and  that this power was conferred under  the Colliery  Control Order  of  1945.  The quotas of coal were allotted by Central Government under the said Order to the consumers of coal. The bulk transportation of coal  was also  under the control of Union of India in as much as  the same could only be done through railways as the railways are  the monopoly  of the Union of India. The price at which  the coal  had to  be sold was fixed by the Central Government in  the said  Order of 1945. The quantity of coal allotted to  bulk of consumers like the writ petitioners was admittedly being  controlled by the linkage committee of the Central Government  since the  last number of years. Because of the  direction of the linkage committee the coal allotted to the  writ petitioners  had to be lifted from the colliery assigned to  it by  the said committee. Therefore, there was no choice  left to  the writ  petitioners in connection with lifting  of  coal  from  the  colliery  concerned.  It  was, therefore, submitted  that it would not be correct to assume as done  by the  High Court  that the  grievance of the writ petitioners was imaginary or of academic nature.      Having given  our anxious  consideration to  the  rival

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contentions, we  have reached  the conclusion  that the High Court simply  assumed that  the main  grievance of  the writ petitioners against  105 hike in price by way of premium was only of  academic nature.  The High  Court had also not gone into the  question whether  the said  grievance  was  really academic in  view of  the difficulties tried to be projected by the  writ petitioners  in that  connection and which were highlighted before  us by the aforesaid additional affidavit of the  appellants in the leading appeal. Similar grievances were voiced  before us  by  learned  counsel  of  the  other appellants whose writ petitions were also disposed of by the common judgment.  Therefore, it  was for  the High  Court to consider whether  the grievance  of the writ petitioners had become really  academic in  nature and  if  it  was  not  of academic nature,  then the  question regarding the merits of the pricing  policy in  the light  of  the  limited  inquiry which was  required to  be undertaken  on the  touchstone of Article 14  of the constitution of India had to be gone into by the  High Court  on a  consideration  of  the  voluminous evidence produced  before it  by the  respective parties  in support of their rival contentions.      Consequently, without  expressing any  opinion  on  the merits of  the controversy  between the  parties, we deem it fit to  set aside  the impugned  common judgment and restore all the  writ petitions filed by the writ petitioners before the High Court in their original numbers for decision of the High Court  on  merits.  The  High  Court  is  requested  to consider the question whether the impugned premium of 10% as charged by  the respondents from the writ petitioners is, in any way,  violative of  guarantee under  Article 14  of  the Constitution of  India and  also to  go  into  the  question whether the  said grievance  of  the  writ  petitioners  was really academic  in nature or was a subsisting one requiring adjudication by  the court. All these questions will have to be considered by the High Court in the remanded proceedings. We would  also request  the High  Court to  decide all these questions including  the main controversy on merits, even if after hearing  the parties concerned, the High Court is once again inclined  to take  the view  that the grievance of the petitioners was  of academic  nature. In  that case the High Court  may   examine  the   said  main   grievance  in   the alternative. This  request is  made to the High Court in the case  its   decision  on   the  academic   nature  of   writ petitioner’s  grievance  gets  upset  in  the  hierarchy  of proceedings.      In the  result, the  appeals are  allowed,  the  common judgment and orders of the High Court are set aside. All the writ petitions  are restored  to the files of the High Court with a  request to  proceed with the same in accordance with law and  in the  light of observations made herein. Whatever evidence was  led by  the respective  parties in  support of their cases  in the  High Court  in these writ petitions and whatever further  evidence and  material may  be led  by the respective parties  in  the  remanded  proceedings  will  of course be  examined by  the High Court. It will also be open to contesting  parties to  produce the  material adduced  in these appeals for the consideration of the High Court in the remanded proceedings.  We may  also make  it clear  that all legally permissible  contentions  will  be  open  for  being canvassed  by   the  respective   contesting   parties   for consideration of  the High  Court. As  the writ petitions of 1991 are  being restored  to the files of the High Court, we request the High Court to make it convenient to decide these writ petitions  at the  earliest, preferably within a period of six  months from  the receipt  of the copy of this order.

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The registry  of this  court is directed to communicate this order to  the Registrar of the High Court for bringing it to the notice  of the  Hon’ble Chief  Justice of the High Court for doing the needful. Before parting  with these  appeals, we  may mention that at the SLP  stage in  these group of matters, ad interim relief was  given   which  was  confirmed  pending  these  appeals. Identical interim  orders in  these group of appeals read as under:      "The respondents are injuncted from      stopping the  delivery of  coal  to      the petitioners  on the ground that      the amount  of premium  claimed  by      the  respondents   for  the  period      subsequent to  1st March, 1992, has      not been  paid.  It  is  also  made      clear that  in the event, under the      terms   of   the   statement,   the      petitioners   choose    any   other      colliery where  premium is payable,      such premium shall be paid."      while granting special leave to appeal on 18th January, 1996, a  bench of  the two  learned Judges  of  this  Court, passed further  interim orders  in connection  with security deposits furnished  by the writ petitioner-appellants to the following effect:      "It is  pointed out  that  although      counsel   on    behalf    of    the      respondents was present in Court on      31st May,  1993 when interim orders      were passed,  the respondents  have      contended that  they  received  the      interim orders  only on  3rd  June,      1993 and,  in  the  meantime,  have      adjusted the  deposits made  by the      appellants  against   demands   for      premium,  which   is  the  subject-      matter  of   the  appeals.   Having      regard to  the fact that counsel on      behalf  of   the  respondents   was      present on  31st May, 1993 when the      interim  order   was  issued,  this      stand of  the respondents  does not      appear  to   be  justified  and  no      supplies to  the appellants  can be      held  up  upon  that  basis.  Until      further order, the deposits made by      the appellants  in  their  entirety      shall continue  to  be  treated  as      deposits."      The aforesaid interim orders have continued through out to operate  in the  present group  of matters till date. We, therefore, deem  it fit  to direct  that  the  said  interim reliefs in the aforesaid terms will continue to operate till the final  disposal of  the remanded  writ petitions  by the High Court and will abide by the ultimate decisions rendered by the  High Court in the said writ petitions. It is obvious that while disposing off the writ petitions finally, it will be  open  to  the  High  Court  to  pass  appropriate  final directions as it may deem fit and proper in the light of its decisions in  the writ  petitions. The  appeals are  allowed accordingly. There  is no order as to costs in the facts and circumstances of the case.      W.P. (C) No.557 of 1993:      The above  writ petition has been moved directly before

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us under  Article  32  of  the  Constitution  of  India  for declaring the impugned clause of the said notification dated 30th December, 1988 as ultra vires  to the extent it imposed premium on  coal of the collieries listed in the Annexure to the said  notification.  As  we  are  remanding  other  writ petitions, as  indicated earlier,  to  the  High  Court  for disposal on  merits, we reserve liberty to the petitioner of this writ  petition to  file a  fresh  writ  petition  under Article 226  of the  Constitution of  India before  the High Court within  six weeks from today. If such writ petition is filed within  the aforesaid  period, it will be clubbed with the remanded  writ petitions and will be decided by the High Court along with them as the questions involved therein will be common  to all  of them including the writ petition to be filed by writ petitioner M/s H.M.P. Cements pursuant to this order. The  interim reliefs, given in W.P.(C) No.557/93 will also continue to operate till the final disposal of the writ petitions if  filed by  the petitioner  as per present order and will  abide by the ultimate decision rendered therein by the High Court.      The writ petition is disposal of accordingly subject to the aforesaid  liberty given  to the  petitioner and without going into  the merits of the contentions raised in the writ petition and keeping them open for consideration of the High Court in  the  writ  petition  that  may  be  filed  by  the petitioner.