Full Judgment
It appears that the respondents filed a writ petition before the Trial Court inter alia praying for the following reliefs :
a) A declaratory order to the following effect: i) Letter dated 17.10.06 is bad and illegal. ii) The writ petitioners are entitled to take delivery of Grade-E ROM (-250 M) Old Stock as per their allotment letter dated 21.07.06.
b) A writ in the nature of Mandamus do issue directing the respondents to cancel, rescind and quash the letter dated 17.10.06.
c) A writ in the nature of Mandamus do issue directing the respondents to give delivery of Grade-E ROM (-250 MM) Old Stock to the writ petitioners as per their allotment letter dated 21.07.06. Or Alternatively directing the respondents to give refund the coal value for 2000 MT of Grade E ROM (-250mm) Old Stock in respect of the writ petitioner No.1 with interest, coal value for 100 MT of Grade-E ROM (-250mm) Old Stock in respect of the writ petitioner No.2 with interest.
d) A writ in the nature of Certiorari do issue directing the respondents to transmit and certify the records relating to this matter before this Honble Court so that conscionable justice may be rendered to the writ petitioners.
e) Rule NISI in terms of prayers above and to make such rule absolute.
f) An injunction do issue directing the respondents not to give any effect or further effect to the letter dated 17.10.06 in respect of each of the writ petitioners.
g) Ad interim orders in terms of prayers.
h) Such further and/or other order or orders as to this Honble Court may deem fit and proper.
The respondents filed such writ petition being aggrieved by the letter dated 17th October, 2006 whereby Coal India Limited informed the writ petitioners that since the writ petitioners did not lift coal against the allotment given by the Colliery, the Area will take its course of action as per terms and conditions of E-marketing in ECL.
It has been pointed out before the Trial Court that the E-auction which was conducted by the appellant has already been struck down by the Supreme Court in Ashoka Smokeless Coal India (P) Ltd. and Ors. -vs.- Union of India and Ors. reported in (2007) 2 SCC 640. The facts of the case as pleaded before the Trial Court is that the first writ petitioner Deepak Fuel Private Limited had participated in the Eauction of coal held by Eastern Coalfields Limited and became the successful bidder for 2000 MT of Grade-E ROM coal (Old Stock) from Bermuri Open Cast Project of Mugma area in Jharkhand.
The writ petitioner after becoming the successful bidder duly deposited the earnest money of Rs.2 lakhs for the said 2000 MT of coal. The second writ petitioner Gayatri Coal Supply Company, a partnership firm, also participated in the same E-auction and deposited a sum of Rs.10,000/- by way of earnest money being a successful bidder. It appears that even after becoming the successful bidders the writ petitioners did not lift and/or take delivery of coal since the coals were of inferior quality, as has been pleaded before the Trial Court.
In the circumstances, letter dated 17th October, 2006 was issued by the Appellant to the respondents. The Trial Court on the basis of the decision as qouted above held that the Supreme Court has already declared the said E-auction as an unconstitutional and therefore the earnest money paid to the Eastern Coalfields Limited for being successful bidder for taking delivery of the above coals should be refunded. His Lordship has held as follows:
In my opinion, since the Eastern Coalfields Ltd. had failed to offer the contracted quality of coal for delivery, it refunded the amounts of coal value to the petitioners deposited by them. But Eastern Coalfields Ltd. has still withheld the earnest monies deposited by the petitioners, taking the fullest advantage of its mighty position and for no valid reasons. I ask myself whether I can shut my eyes to one of the most fundamental aspects of the matters that eventually the e-auction itself was declared to be unconstitutional as it violated Article 14 of the Constitution of India by the Supreme Court itself by its above judgment. Even today, if I direct the petitioners to take delivery of the coal, neither the petitioners nor the Eastern Coalfields Ltd. would be able to discharge their respective obligations under the alleged contract as there is no existence of e-auction today in the eye of law in view of the above pronouncement of the Supreme Court.
It is further held by His Lordship that the Eastern Coalfields Limited by its own conduct has made it very clear that since it was not in a position to deliver the quality of coal which was contracted to be sold through e-auction and decided to refund the amounts to the writ petitioner and in fact refunded the amounts, which has been specifically stated by Mr. Banerjee by citing a Single Bench judgment of this Court.
The Trial Court has also held that the Eastern Coalfields Limited cannot act arbitrarily being an authority under Article 12 of the Constitution and thereby directed to refund the amounts of earnest money, namely Rs.2 lakhs and Rs.10,000/- to the writ petitioners. The Trial Court also directed to refund the said amounts within a week from the date of communication of the said order with interest at the rate of 6% on the respective amounts to be paid from the date of the order so passed. Being aggrieved by the said order this appeal has been filed by Eastern Coalfields Limited and it is strenuously urged before us by Mr. Mullick, learned Senior Advocate appearing on behalf of the appellant that in the case of Ashoka Smokeless Coal India (P) Ltd. & Ors. vs. Union of India & Ors. even the Supreme Court has observed as follows :
193. However, discussions made hereinbefore should not be taken to lay down a law that the Central Government and for that matter the coal companies cannot change their policy decision. They evidently can; but therefor there should be a public interest as contradistinguished from a mere profit motive. Any change in the policy decision for cogent and valid reasons is acceptable in law; but such a change must take place only when it is necessary, and upon undertaking of an exercise of separating the genuine consumers of coal from the rest. If the coal companies intend to take any measure they may be free to do so. But the same must satisfy the requirements of constitutional as also the statutory schemes; even in relation to an existing scheme e.g. Open Sales Schemes, indisputably the coal companies would be at liberty to formulate the new policy which would meet the changed situation. Eadvertisement or e-tender would be welcome but then therefor a greater transparency should be maintained. and Mr. Mullick relying on the said submitted that E-auction has been approved by the Supreme Court but only directed to maintain transparency. It appears to us that while passing the impugned order declaring E-auction to be bad in law the Trial Court duly took into account that there were four categories of consumers who were aggrieved by introduction of the Eauction i.e.
(i) non-core linked consumers who were manufacturers of smokeless coal;
(ii) non-core sector consumers who were manufacturers of various products wherein coal is a raw material;
(iii) hard coke owners, although a non-core linked category but who had been recommended for being included in core category; and
(iv) coal traders. It further appears that in the said decision the Supreme Court also dealt with the matter in paragraphs 4 and 5 which are quoted as follows :
4)Coal is used as a primary raw material in many core sectors which are vital for the economy of the country e.g. power, steel, oil, etc. Fixation of price of coal by the Central Government, regarding the quality thereof, had all along been subjected to statutory orders. The gradation of coal dependent upon the quality thereof was to be determined by the Coal Board constituted under the Coal Mines (Conservation and Development) Act. Quality of coal may depend not only on the location of the coal mines but also on the particular seams wherefrom it is extracted. Requirement of maintenance of fixed price of coal on an all-India basis, as far as practicable had all along been considered to be imperative in the economic and industrial development of the country.
5) Coal indisputably is an essential commodity. Its importance is widely accepted. The Essential Commodities Act, 1955 was enacted inter alia for securing equitable distribution and availability of essential commodities at fair price. Coal despite partial deregulation having regard to the Colliery Control Order, 2000 (the 2000 Order) is still a regulated commodity.
The Supreme Court also held that consumers were categorised in two sectors and a Standing Linkage Committee was set up for supply of coal. The Supreme Court also dealt in connection with the open sales scheme and E-auction in paragraphs 44 and 45 of the said decision, which are quoted below :
44. The coal companies contend that the schemes of linkage, sponsorship or OSS were part of the policy decisions which were taken by them from time to time with a view to meet the exigencies of the situation which were prevailing then. Keeping in view, however, the fact that the supply could not meet the demand which to a great extent was artificial and man-made, a new policy decision was required to be evolved so as to meet the new situation, particularly when measures taken to prevent black marketing of coal by procuring coal in excess of their requirements and/or the units being non-existent as also by the traders, did not fructify.
45. A new scheme known as e-auction was made purportedly to meet the liberalisation policy of the Central Government in regard to import of coal and opening of private coal mines and to provide pragmatic and transparent system of distribution of coal. 4.8 million tonnes of coal were offered to the non-core sector in 2003-2004. The quantity earmarked for non-core sector was restricted to 933 validly linked consumers. The objectives of the said scheme are stated to be as under:
Objectives The present system of sale of coal to non-core sector consumers needs to be made more pragmatic and transparent by accommodating the following changes:
a) A consumer having requirement of specified quality of coal from a particular colliery/source and siding/pilot should have an access to buy coal by paying the market determined price for the same.
b) This approach would enable the non-core sector consumers to receive coal of their choice, on payment of market price, determined through auction confined to noncore sector consumers. The Supreme Court also dealt with regarding the reasonableness of dual pricing which is quoted below: 84. Price fixation has a direct relationship with the fiscal health of the country. Finance is one of the most important catalysts. The modality of price fixation will depend upon the nature of the commodity, the provisions of the statute concerned governing the same and other relevant factors. When price is fixed in terms of the provisions of the Essential Commodities Act, the State would be governed by the doctrine of public necessity. It may in terms of its statutory power and having regard to the penal provisions engrafted therein compel a manufacturer or a dealer of an essential commodity to sell it to the public at a reasonable price or at no profit. Price fixation by the State for its own benefit, however, has an element of profit. Whenever a dual price is resorted to, the same must be rational. The formula for fixing the dual price may be reasonable only under certain circumstances.
Article 39(b) was incorporated in the Constitution to indicate the necessity for ensuring equitable distribution of resources. It further appears that the Supreme Court thereafter dealt with the matter in paragraphs 109 and 112 to 114 which are quoted below:
109. It may be true that prices are required to be fixed having regard to the market forces. Demand and supply is a relevant factor as regards fixation of the price. In a market governed by free economy where competition is the buzzword, producers may fix their own price. It is, however, difficult to give effect to the constitutional obligations of a State and the principles leading to a free economy at the same time. A level playing field is the key factor for invoking the new economy. Such a level playing field can be achieved when there are a number of suppliers and when there are competitors in the market enabling the consumer to exercise choices for the purpose of procurement of goods. If the policy of the open market is to be achieved the benefit of the consumer must be kept uppermost in mind by the State.
112. Does e-auction ultimately lead to fixation of a price? The answer to the said question that must be rendered is a big emphatic No, as by reason thereof even the coal companies would not know what would be the price of different varieties of coal. The issue must be determined from the perspective as to whether the coal companies can be allowed to say that despite their monopolistic character and they being State can fix a price which would otherwise be unfair or unreasonable. 113. The State or a public sector undertaking plays an important role in the society. It is expected of them that they would act fairly and reasonably in all fields; even as a landlord of a tenanted premises or in any other capacity.
114. E-auction is not a mode to fix price. It is only a mode to obtain maximum price. In other words, deriving the optimum benefit by sale of coal is the goal. While doing so the State does not have to follow the principles of fixation of price. It is not required to apply its mind as to its effect. It treats coal like any other commodity. It treats itself like a private trader. A distinction must be borne in mind when a State intends to part with a privilege or a largesse as a competitor in the market and when it is expected to fulfil its constitutional goal enshrined under Article 39(b) of the Constitution. 10 The Supreme Court thereafter dealt with the matter in respect of constitutionality of e-auction which is quoted below:
163. E-auction is not a policy decision of the Central Government. Such a policy decision on the part of the executive of the Central Government must be strictly construed in terms of Article 77 of the Constitution of India. Its exercise of such powers has nothing to do with the price fixation by a policy. The State while exercising its power under the Essential Commodities Act, fixes the price keeping in mind several factors, in particular the larger interest of the people. Price fixation of an essential commodity, therefore, is determined on the touchstone of public interest. While doing so the State is expected to follow a rational and fair procedure and for the said purpose may collect data, obtain public opinion, and may appoint an Expert Committee.
188. Coal being a scarce commodity, its utility for the purpose for which it is needed is essential. Although, technically, in view of the fact that no price is fixed for coal, there may not be any black marketing in the technical sense of the terms; but this Court cannot also encourage black marketing in general sense. Nobody should be allowed to take undue advantage while dealing with a scarce commodity. The very fact that despite best efforts of the Central Government, the coal companies failed to curb the menace of a section of people and to deal in coal excluding other general people therefrom or the linked consumers misusing their position or obtaining allotment of coal either wholly or in part, it is absolutely necessary that some mechanism should be found out for plugging the loopholes. The Union of India or the coal companies appear to have lost confidence in the State Governments. They had carried out joint inspection and in that process they must have arrived at a satisfaction about the genuineness of the claims of industrial units for which the linkage system was meant for. Mr. Banerjee, learned Advocate appearing on behalf of the respondent relied on a decision reported in (2009) 15 SCC 314 and submitted that in this case the Honble Supreme Court dealt with the case of Ashoka Smokeless Coal India (P) Ltd. (supra) in paragraph 10 and held that the eauction was invalid, which is quoted below:
10. This Court by the judgment and final order in Ashoka Smokeless Coal India (P) Ltd. v. Union of India upheld the challenge of the applicants to the scheme of e-auction. While allowing the writ petitions this Court held that the aforesaid scheme of e-auction was invalid and declared the same as ultra vires of Article 14 of the Constitution of India and quashed the said e.auction scheme. The consequence of the said judgment and order is that the coal companies like the respondent were required to refund the entire price paid by the applicants over and above the notified price as per their undertaking before this Court and as recorded in the orders dated 12-12-2005 and 30-10-2007. In the circumstances, the Supreme Court came to a conclusion and declared that the said e-auction is bad since it does not lead to fixation of price and held that the allocation of coal by e-auction is inequitable, irrational and hence is unconstitutional and invalid. Therefore, it appears to us that the Court while delivering the judgement on 11th June, 2010 correctly assessed the position in the matter. In our considered opinion law is applicable to all. Therefore the instrumentalities of the State cannot blow both hot and cold in favour of one or the other.
Accordingly, in our considered opinion, the order so passed by the Trial Court does not suffer from illegality or irregularity.
Hence we do not find any merit in this appeal and the appeal must fail and is hereby dismissed. So far as interest part is concerned, in the event the amount so directed to be paid by the appellant is refunded to the respondent within two weeks from date, no interest should be paid by the appellant. In view of dismissal of the appeal itself, nothing remains to be decided in the application and the same is, accordingly, dismissed.
All parties concerned are to act on a Xerox signed copy of this order on the usual undertakings. Urgent Xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.