Case: M/s Ashoka Smokeless Coal Industries Pvt. Ltd. &amp; Others Vs. Union of India &amp; Others

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 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 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]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 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.