Case: M/S. SKJ COKE INDUSTRIES LTD Vs. COAL INDIA LTD AND ORS

a linked units. Such treatment as a linked unit do not mean grant of actual linkage. So, Mahabir Coke cannot claim to be a linked unit. The advantage of being treated as a linked unit was that Mahabir Coke will be assured for monthly supply of 4000 MT coal per month by NEC. The said resolution/decision also provides that the price to be charged for supply of low ash coal to Mahabir Coke will be decided by NEC on the basis of price prevalent at any point of time i.e. current price prevailing at the time of supply. 17. There are nearly 200 Cokery units, in India out of them only three cokery unit, including cokery unit of Mahabir Coke, are located at Assam. Mahabir Coke, along with other two cokery units have been getting low ash Assam coal which is of superior grade than what the other cookeries of all over India have been getting from their respective coal companies. Normally all other cookeries are getting the higher ash content coal. The other cookeries located outside Assam get coal having ash content of 25 – 30%, whereas the cookeries located in Assam are getting low ash coal of NEC having ash content of only 7%. The other cookeries located outside Assam take supply of low ash coal from NEC, under LSS for blending the same with higher ash content coal which they have been getting from other coal companies. All other cookeries including three cookeries of Assam, who are buying the same low ash coal as supplied to Mahabir Coke, have been paying the LSS price as notified from time to time. 12. Learned counsel for the appellants has brought to our notice the following observations of the Division Bench in different parts of the judgment:- At the time the Linkage Committee stipulated that the price payable by the appellant company would be as per the prevailing rate to be decided by the fifth Respondent, no coal company had any authority to supersede the price fixed by the Central Government by a notification issued under the Colliery Control Order, 1945. At the highest, such conditional treatment of the appellant company as a linked unit, could come into play only if the price of coal was deregulated by the Central Government; ipso facto by reason of the Linkage Committee decision of November 16, 1995 the appellant company could not be charged at a rate in derogation of what the Central Government notified. xx xx xx xx xx xx The price of Assam coal at Rs. 741/- per MT (subject to the variation on account of ash content) became inoperative upon the notification of March 12, 1997. xx xx xx xx xx xx The appellants remain liable to pay the difference in price on the basis of price fixed by the respondents subsequent to the notification of March 12, 1997. 13. In our opinion, the exemption granted by the Central Government by the notification dated 9 th January, 1996 to Coal India and their subsidiaries from the provisions of Clauses 4, 4A and 4B of the 1945 Control Order in respect of sale of coal under LSS, the fetter imposed by the aforesaid notification of June 1994 got effectively removed. Specific stand taken by the respondents is that the linking of the first appellant was only in respect of the quantum of coal to be obtained by them and they were not entitled to price benefits of linked consumers. For the appellants, it was only a case of allocation. Thus, the point of time from when the appellants became liable to pay LSS rate would be the time when LSS price was raised after 9 th January 1996. Prior to that date, we have already reproduced the coal companies submission that the linked price and non-linked price had remained the same. So far as the aforesaid observations in the impugned judgment is concerned, such reasoning does not appear to us to be correct. But our views on this point would not advance the case of the appellants. That is so because in our opinion, it was within the power of the NEC to enhance the price for LSS consumers upon CIL and their subsidiaries being exempted from Clause 4 of the 1945 Control Order on and from 9 th January 1996. 14. It appears that a liberalised pricing system has been prevailing since the year 1993. We find no reason to disbelieve the coal companies when they assert that there was only allocation of coal in favour of the first appellant. Thus the appellants did not have vested legal right to preferential pricing as linked consumers. The 9 th January 1996 notification empowered Coal India Ltd. and their subsidiaries to charge price to consumers beyond that notified on 16 th June 1994 in respect of Assam coal. The appellants were in the non- core sector. Around that point of time only parity between LSS price and linked price was broken and the first appellant was required to pay the LSS price. So far as allocation is concerned, the agenda 24 of the 85 th meeting of the linkage committee retained the supply volume. But that Resolution is in tune with the NECs stand taken before us that LSS price ought to be charged to the appellants. The factual argument of the appellants that the two other cokery units in Assam were not linked, are of no relevance. The appellants have not been able to sustain a case before us that their linking agreement covered both allocation and pricing as is the case of other linked consumers. So far as the other cokery units are concerned, it has been clarified by the learned counsel for the coal companies that they lift coal of high ash content between 25-30% which would automatically take them out of the price advantage specified in Table II of the 1994 notification. We accordingly do not find any reason to set aside the judgment of the Division Bench.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 0

Reasoning from the judgment:
0[ds]We also confirm this view of the Appellate Bench as we find such view to be the correct view so far as applicability of the ratio of the case of Ashoka Smokeless Coal India (supra) is concernedFrom the said Resolution, however, we find a specific agenda item concerning the first appellant, and the Resolution as adopted specifically stipulates that the price to be charged from the appellants was to be decided by the NEC Assam as prevalent at any point of time. In view of this specific treatment of pricing along with reference to the first appellant as a linked unit, in our opinion, said Resolution has to be construed to mean that treatment of the appellant as a linked unit was for the purpose of regular supply of coal and the pricing factor was separated from such deemed linking. This would be apparent from the decision taken against agenda item no.23, in which reference has been made to SSF units and cokery units which had been allocated (emphasis supplied) coal, and it was these units which were to be treated as linked units. The distinction between allocation and linking clearly emerges from the said decision of the linking committee. It is a fact that the first appellants treatment as a linked unit was a fiction. But such fiction was replaced by reality on the basis of a specific provision in the Resolution (agenda item no.24) so far as pricing is concerned. As the Resolution dealt with linking and pricing separately, the fictional linking could not be extended to actual pricing13. In our opinion, the exemption granted by the Central Government by the notification dated 9 th January, 1996 to Coal India and their subsidiaries from the provisions of Clauses 4, 4A and 4B of the 1945 Control Order in respect of sale of coal under LSS, the fetter imposed by the aforesaid notification of June 1994 got effectively removed. Specific stand taken by the respondents is that the linking of the first appellant was only in respect of the quantum of coal to be obtained by them and they were not entitled to price benefits of linked consumers. For the appellants, it was only a case of allocation. Thus, the point of time from when the appellants became liable to pay LSS rate would be the time when LSS price was raised after 9 th January 1996. Prior to that date, we have already reproduced the coal companies submission that the linked price and non-linked price had remained the same. So far as the aforesaid observations in the impugned judgment is concerned, such reasoning does not appear to us to be correct. But our views on this point would not advance the case of the appellants. That is so because in our opinion, it was within the power of the NEC to enhance the price for LSS consumers upon CIL and their subsidiaries being exempted from Clause 4 of the 1945 Control Order on and from 9 th January 199614. It appears that a liberalised pricing system has been prevailing since the year 1993. We find no reason to disbelieve the coal companies when they assert that there was only allocation of coal in favour of the first appellant. Thus the appellants did not have vested legal right to preferential pricing as linked consumers. The 9 th January 1996 notification empowered Coal India Ltd. and their subsidiaries to charge price to consumers beyond that notified on 16 th June 1994 in respect of Assam coal. The appellants were in the non- core sector. Around that point of time only parity between LSS price and linked price was broken and the first appellant was required to pay the LSS price. So far as allocation is concerned, the agenda 24 of the 85 th meeting of the linkage committee retained the supply volume. But that Resolution is in tune with the NECs stand taken before us that LSS price ought to be charged to the appellants. The factual argument of the appellants that the two other cokery units in Assam were not linked, are of no relevance. The appellants have not been able to sustain a case before us that their linking agreement covered both allocation and pricing as is the case of other linked consumers. So far as the other cokery units are concerned, it has been clarified by the learned counsel for the coal companies that they lift coal of high ash content between 25-30% which would automatically take them out of the price advantage specified in Table II of the 1994 notification. We accordingly do not find any reason to set aside the judgment of the Division Bench.