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CASE NO.: Special Leave Petition (civil)  20471 of 2005

PETITIONER: M/s Ashoka Smokeless Coal Industries Pvt. Ltd. & Ors.

RESPONDENT: Union of India & Ors.

DATE OF JUDGMENT: 12/12/2005

BENCH: S.B. SINHA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T 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.  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]

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

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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  by the petitioners on the basis of an undertaking by Coal India Ltd.  and its 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.   

5.              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

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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 commercial risk.  

6.              We 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 linkage.   Learned 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.   

7.              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 circumstances.  

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

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annum from the date of payment till the date of return to the  concerned petitioner.  

9.              There 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.  

10.             So 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.

11.             Let 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 submissions.  

12.             The 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.