HIGH COURT OF CHHATTISGARH: BILASPUR Writ Petition (C) No. 1370 of 2007 PETiTIONER: M/s Mahanadi Minerals -Versus- RESPONDENTS: Union of India, and others ,iCr-' POST FOR ORDER ON % JULY. 2009 Sd/- Dhirendra Mishra Judge Q2./7/2009 Ltfr ,^»!. ^ss'ss ^.; •-:sv"' HIGH COURT OF CHHATTISGARH: BILASPUR Writ Petition (C) No. 1370 of 2007 PETITIONER: ,£» M/s Mahanadi Minerals, Through its partner Navneet Jagatramka, S/o Late Prem Prakash Jagatramka, Aged About 39 years, R/o Naya Ganj, Raigarh (CG) 496001 -Versus- RESPONDENTS: 1. Union of India, Ministry of Coal, Through the Secretary, Shastri Bhawan, New Delhi 2. Coal India Limited, Through the Chief General Manager (Marketing) Marketing Division, 15, Part Street, Kolkata (WB) 700014 3. South Eastern Coalfields Ltd., Through the General Manager (Sales & Marketing) Seepat Road, Bilaspur (CG) (Writ Petition underArticle 226/227 ofthe Constitution of India) Present: Shri Prashant Mishra, Sr. Advocate with Shri M.L. Pastore, Advocate for the petitioner. Shri S.K. Beriwal, Standing Counsel with Shri Ajay Barik, Advocate for Union of India/respondent No.1. Shri P.S. Koshy & Shri Vivek Verma, counsel for respondents No.2 & 3. ORDER _-t*l (Passed on % July, 2009) DHIRENDRA MISHRA. J. 1. The petitioner by this petition under Article 226/227 of the Constitution of India has prayed for issuance of writ of mandamus commanding respondents No.2 and 3 to regularly supply 1250 MT of coal per month te i» -4 on the basis of Linkage Advise Letter (for short 'LAL') and to include the name of the petitioner unit as a valid consumer as per the new policy of the coal sector under the directives issued by the Supreme Court, apart from other reliefs. 2. The case of the petitioner, in brief, is that it is a small scale industrial unit engaged in manufacture of Lime and is validly linked (non-core sector) consumer of coal supplied by respondents since 1998. He obtained coal under 'LAL' at the notified price from respondent No.3. The respondents introduced e-auction scheme for sale of coal to non-core sector in April, 2005. E-auction policy was declared ultra vires by the Supreme Court. Because of the new policy, the coal price went up and became unaffordable by the petitioner. The petitioner deposited a sum of Rs.4,66,893/- on 31-5-2005 with respondent No.3 for purchase of coal to protect the interestof its unit, however, no coal was supplied to the petitioner despite several representations made by him in this regard. 3. In the rejoinder, the petitioner has submitted that its unit needed coal and, therefore, the petitioner was ready to purchase coal at the prevalent rate fixed by the SECL. Respondent No.1 has notified new coal distribution policy on 18-10-2007 (Annexure-P/10) and as per clause 2.3 of the above policy, the petitioner is also entitled to obtain coal being an existing linkage holder (non core sector). The petitioner never refused to take delivery order as per applicable price. On the contrary, it addressed numerous letters (Annexure-P/6) to the respondents for supply of coal, which was never answered by the respondents. The contention of the respondents that linkage has been (\"n. ll? snapped is totally false, as SECL had no right to cancel linkage, which rests only with Coal India Limited (for short 'CIL'). 4. The respondents in their reply have raised prellminary objection regarding maintainability of the writ petition on the ground that the dispute raised by the petitioner relates to disputed contractual obligation of the parties. Highly disputed questions of facts are involved and the same cannot be adjudicated upon in a writ proceeding. The dispute arising from contractual obligation, particularly, a dispute of commercial nature of private bodies cannot be agitated in a writ petition, particularly, when the dispute has no public law element. The petitioner was regular non core linked consumer of SECL. It obtained coal on the basis of MPQ on monthly basis. As per guidelines issued by the CIL/Ministry of Coal (Annexure-R/1), the respondents switched over to e-auction for sale of coal from the month of April, 2005. The non core sector linked consumers were also charged Weighted Average E-Auction Price (for short 'e-auction price') as per directions of theCIL /MOC. The coal for the month of May, 2005 could not be released to the petitioner, as the petitioner insisted for release of coal on notified price as was being charged earlier from non core sector consumers whereas, the other linked consumers were supplied coal as per e-auction price. Since the petitioner refused to take delivery order as per applicable price for a consecutive period of 12 months, his linkage was snapped as per clause-3 of the terms and conditions of 'LAL' (Annexure-R/2). Though the petitioner deposited amount of Rs.4,66,893/- for delivery order in the month of May, 2005, however, he refused to accept delivery order on e- auction price. The price of coal ordered by the petitioner as per the •Sih 1 11/ SS»S!«:i~ ^r .. ".' ^•''c'" t existing e-auction price was Rs.10,10,223.60/- whereas, the amount deposited against the ordered coat was Rs.5,43,330.60/- less, which was never deposited by the petitioner. In W.P. No. 1905/2005, the High Court directed the petitioner to lift the coal at the price mentioned in the delivery order, however, the same was not accepted by the petitioner, who insisted for lifting the coal at the notified price. The petitioner has furnished indemnity bond in W.P. No.1905/2005 against the supply of coal at the notified price to the petitioner towards difference of price. SECL is to recover amount of Rs.3,37,050/- from the petitioner against the indemnity bond and, therefore, refund of Rs.4,66,893/- could not be made. The petitioner has also lifted coai under e-booking/e-auction between 18-5-2007 and 4-6-2007. 5. Shri Prashant Mishra, learned Senior Counsel for the petitioner submitted that the respondents have not disputed that the petitioner was a regular non-core linked consumer of SECL and it obtained coai monthly on MPQ basis. When the respondents did not honour delivery orders issued by them, they approached the High Court for suitable directions. Accordingly, an interim order was passed on 12-5-2005 in W.P. No. 1905/2005 and the respondents were directed to permit the petitioner to lift the coal as per the delivery order at the notifled price on petitioner's filing indemnity bond for the difference amount before the 1-ligh Court. The indemnity bond was accordingly filed and they were permitted to lift the coal. 6. Subsequentiy, the above petition was transferred to the Supreme Court along with other connected petitions pending before the different High Courts. The Hon'ble Supreme Court allowed the appeal against the @ ^J judgment ofthe Madhya Pradesh High Court wherein it was held that 'e- auction is valid In law. Price fixatlon by e-auction is not arbitrary. Change of price by reason pf e-auction being a normal facet in commercial transaction is not bad in law' and the petitioner's petition was also disposed of in the aforesaid terms. 7. The petitioner had deposited huge sum of Rs.4,66,893/- on 31 May, 2005 with the SECL for purchase of coal, however, no coal was supplied and later on, he learned that the respondents are treating the linkage faciiity made available to the petitioner as snapped on the pretext that the petitioner failed to lift any amount of coal in the preceding 12 months, though representations cumulatively filed as Anneuxre-P/6 would go to show that the petitioner had been making repeated requests to the authorities of the respondents to supply him coal against the sums deposited by him as advance. The correspondences would also go to show that the petitioner was ready and willing to purchase the coal at the current price as it then existed as per e-auction poiicy, though no formal order of snapping the linkage was ever communicated to the petitioner nor any order was passed. 8. It was further argued that as per condition No.3 of the conditions of the Linkage Advise Letter (Annexure-P/2), even after snapping the linkage, the respondents were obliged to consider the application of the petitioner for restoration of linkage filed within the period of 36 months. The averment of the petitioner with regard to the various applications for supply of coal at the existing price has not been rebutted by the respondents in their return. The fact that he deposlted a sum of more than Rs.4 lakhs for supply of coal is also not disputed. In that view of 9V). 6 the matter, the contention of the respondents that his linkage stood snapped for non lifting of coal for a consecutive period of 12 months is factually incorrect and false. 9. Relying upon paragraph-37 of the judgment in the matter of Ashoka Smokeless Coal India (P) Ltd. and others Versus Union of India and others , it was argued that as per the new Sales Policy, the existing iinkages could not be snapped and in these circumstances, the respondents be directed to enter into bilateral commercial arrangement by executing enforceable Fuel Supply Agreement, as per clause-4 of the new Sales Policy ofAnnexure-P/10. 10. Relying upon the judgment in the matter of Reliance Energy Ltd. and another Versus Maharashtra State Road Development Corpn. Ltd. and others , it was argued that the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. 11. He further argued that the action of the respondent Government company in not honouring the Linkage Advise Letter on the false pretext of non lifting of coal for 12 months is unfair, unreasonable and arbitrary and thus, hit by Articles 14 and 21 of the Constitution. He also argued that the stand ofthe respondents that thelinkage ofthe petitioner stands snapped is also falsified from the document of Annexure-P/16, which is a list of valid linkage consumers as available in the website of SECL (2007) 2 Supreme Court Cases 640 (2007) 8 Supreme Court Cases 1 (t^ "^r~F-,:r^<sf--' t' teaBSf- wherein the name ofthe petitioner's firm also findsplace as vatid linked consumer. 12.0n the other hand, Shri P.S. Koshy, learned counsel appearing on behalf of respondents No.2 and 3 argued that indisputably the petitioner is seeking directions against the respondents to comply with their contractual obligation arising out of Linkage Advise Letter issued in the year 1998 by the SECL and accordingly, supply coal on monthly basis. The stand of the respondents is that because of non lifting of coal for a consecutive period of 12 months, the linkage stood snapped, as per clause-3 of the 'LAL', the question whether the petitioner failed to lift the coal for a consecutive period of 12 months is a disputed question of fact and the same cannot be decided in a writ proceeding. 13. It was further argued that amount of Rs.4,66,893/- was deposited by the petitioner as advance towards purchase of coal on the basis of notified price by the SECL whereas, the petitioner was required to deposit current price as computed on the basis of new e-auction policy. The petitioner has himself admitted in paragraph 6.3 of the petition that he could not lift the coal during 12 months period from May, 2005 because he could not afford the exorbitant price of coal arrived at by e-auction and he is entitled to get the coal at the notified prtee presently in vogue. Looking to the above admission of the petitioner, his contention that he made various correspondences (Annexure-P/6) to the authorities wherein he mentioned that he was ready and willing to purchase the coal at current price appears to be an afterthought and the correspondences have been made with a view to cite the same in the legal proceeding. '^ 14.1t was further argued that as per the procedure of the SECL, any consumer including any non-core sector linked consumer is required to deposit entire amount towards purchase of the ordered coal in advance and only thereafter, delivery orders are issued to the consumers. In the instant case, there is nothing on record to suggest that the petitioner placed any order by following the above procedure and, therefore, submission that he was prepared to purchase the coal at the existing price is contrary to the fact and false. In compliance of the order dated 17-11-2008, representation ofthe petitioner was decided by the SECL vide their memo dated 10 December, 2008 addressed to the petitioner by which it was apprised that because of non lifting of coal continuously for a period of more than one year, his linkage got snapped/lapsed. The 'CIL' has decided to do away with the system of linkage w.e.f. 6-6-2001, therefore, revival/restoration of linkage cannot be considered. The coal js to be supplied to all consumers as per new policy notified on 18-10- 2007 and the petitioner can also purchase coal according to new policy. He was also apprised that deposit with SECL may be refunded without interest, if they apply for the same. 15. He further argued that the linkage facility of the petitioner got automatically snapped due to non lifting of coal for a consecutive period of 12 months; trte same could not be restored as by then the CIL had already taken a decision on 1-1-2000/6-6-2001 that no fresh linkage would be issued. Reference is made to para-29 of Ashoka Smokeless Coal india (P) Ltd. case (Supra). 16.1 have heard learned counsel forthe parties. 17. The undisputed facts in the case are that the petitioner was a valid linked consumer of coal, as the Coal India Limited had issued Linkage Advise Letter dated 20/27-10-98 (Annexure-P/2). He regularly lifted the coai as linked consumer tilt May, 2005. The Coal India Limited took a policy decision on 6-6-2001/1-1-2000 that no fresh linkages would be issued. In the meanwhile, the Coal India Limited switched over to e- auction policy for the purposes of sale of coal to its non core sectors consumers. Because of the above change in the policy, respondent SECL did not issue coal to the petitioner at notified price even after delivery orders were issued. The petitioner filed a writ petition for suitable directions to supply coal against the delivery orders already issued. In the said petition, an interim order was passed in favour of the petitioner directing the respondents to supply coal at the notified price against the delivery orders subject to petitioner's furnishing an indemnity bond for the difference of amount from the current price. Accordingly, the coal was supplied as per the directions of the High Court. The petition was ultimately transferred to the Supreme Court and the same was disposed of by the Hon'ble Supreme Court with other connected writ petitions in Ashoka Smokeless Coal India (P) Ltd case (Supra) wherein sale of coal through e-auction policy was held to be invalid. In the meanwhile, new Coal Distribution Policy (Annexure-P/10) dated 1 8- 10-2007 has been notified by the Government of India and as per clause-4 of the above policy, the linkage system is to be replaced by Fuel Supply Agreement (for short 'FSA'). is.The only question to be decided in this petition is - whether the respondents were justified in treating the linkage facility extended to the ^ .' • / 10 petitioner in the year 1998 as snapped on the ground of non lifting of coal for a consecutive period of 12 months? Whether the petitioner after depositing advance of Rs.4,66,893/- towards purchase of coal in the month of May, 2005 was ready and willing to purchase the coal even at the current price and it is the respondents who failed to supply the coal to the petitioner? 19. From pleadings of the respective parties, l find that the petitioner right from the beginning disputed the authority of the respondents to insist for payment of price of coal as computed according to new e-auction policy. It also appears that the above controversy led to filing of writ petition No.1905/2005 by the petitioner. With the consent of the parties, an interim order was passed in the above petition on 11-7-2005 directing the respondents to supply maximum permissible quantity of coal to the petitioner as per price quoted in the delivery order on the basis of undertaking given by the respondents that in case, the petition is allowed, they will return the difference amount along with interest at the prevailing rate. 20. From pleading in para-6.3 of the writ petition, it appears that the petitioner could not lift the coal for a period of 12 months from May, 2005, as he could not afford the increased price of coal arrived at by e- auction. Though the documents of Annexure-P/6 filed by the petitioner reveals that he was ready and willing to purchase the coal in that period even at the existing price as flxed by the SECL, I find no documents in the shape of demand draft for purchasing coal at the existing price as fixed by the SECL as per e-auction policy produced by the petitioner to 11 .V establish that he had ordered for supply of coal with the necessary price and the same was not supplied. 21. The stand of the respondents that the petitioner failed to lift the coal for a consecutive period of 12 months led to automatic snapping of the linkage facility as per clause-3 of the 'LAL' is to be considered in the light of petitioner's own admission in the petition as also other attending circumstances. 22. For the aforesaid reason, 1 am unable to accept the contention of the petitioner that he was ready and willing to lift the coal and it is the respondents who did not supply the coal and treated the linkage of the petitioner as snapped on the false prete)d of non lifting of coal. 23. So far as the argument that even if the linkage is treated to be snapped, the respondents were required to consider the application of the petitioner for restoration of linkage as per clause-3 of the 'LAL' is concerned, in view of the policy decision of the 'CIL' taken in the year 2000/2001 that no fresh linkages shall be issued to the consumers, l find force in the contention of the respondents that the same could not be revived/restored. Even though the Hon'ble Supreme Court observed in para-37 of the judgment that existing linkages would not be snapped, however, in the instant case, since the respondents have come up with a stand that linkage stands snapped due to non lifting of coal, question of extending facility of 'FSA' in place of linkage system to the petitioner does not arise. 24.1 further observe that the petitioner has other options for getting the coal from the respondents as per the National Coal Distribution Policy, as £^:\ ;.. ^/ 12 ''^^ <: V- Ban/e detailed in para-4 ofthe memo dated 10-12-2008 ofthe SECL whereby the representation of the petitioner was decided. The respondents have also stated in their reply that the petitioner has lifted coal under e- booking/e-auction policy and the petitioner has not controverted the above fact in his rejoinder. 25.0n the basis of aforesaid discussion, 1 am of the opinion that the petitioner has not been able to make out a case for issuance of direction to the respondents to supply 1250 MT of coal on the basis of 'LAL' and to incorporate his unit as valid linked consumer for the purposes of New Coal Distribution Policy. 26. However, if the petitioner applies for refund of advance of Rs.4,66,893/-, the same may be refunded with interest at the rate of 6% per annum from the date of deposit, after due verification. 27. With the aforesaid observatlons, the petition is disposed of. _^-- ^endra^ra Judfee