Case: Bharat Coking Coal Ltd.  Vs. Steel Abrasers &amp; Allied Prodcuts

2. In this appeal, preferred by Bharat Coking Coal Limited (hereinafter referred to as the appellant), a Government Company within the meaning of Section 617 of the Indian Companies Act, 1956, and its General Manager, the only question that requires an answer is whether the appellant is entitled to realise service charges from its buyer while selling coke.3. Steel Abrasers & Allied Products Limited, the respondent person, carries on business of foundry casting and for that purpose it has to buy hard coke from the appellant. The production and disposal of coal and coke are controlled and regulated by Colliery Control Order, 1945 (Order for short initially framed by the Central Government under Rule 81(2) of the Defence of India Rules and being continued in force by Section 16(2) ofthe Essential Commodities Act, 1955. In exercise of the powers conferred by the Order, the Central Government issued a notification on December 27, 1991 fixing the prices at which different types of coal and coke, including hard coke, would be sold. Alleging that despite such fixation of price of hard coke by statutory notification the appellant was demanding and, for that matter, realising, besides the price, service charges the respondent filed a writ petition in the Patna High Court where in it contended that such action on the part of the appellant, which was a State within the meaning of Article 12 of the Constitution of India, was wholly arbitrary and illegal and, accordingly, prayed for appropriate relief. In contesting the petition the appellant submitted that coal and coke were different commodities and in view of the fact that the respondent was required to be supplied foundry hard-coke, which had a specified size, it had to put in some extra work and effort like shifting and sizing after production of the coke in the plant, and that necessarily meant extra expenditure. According to the appellant recovery of such expenditure was not barred by the notification and, not the contrary, the notification permitted such recovery. The High Court accepted the contention of the respondent and issued a writ of mandamus directing the appellant not to charge from the respondent any amount other than fixed in terms of the notification dated December 27, 1991. Hence this appeal.

Court's reasoning:
11. Having carefully considered the respective contentions of the learned counsel in the light of the material on record we are inclined to accept the contentions of Mr. Salve in preference to those of Mr. Sanyal. From a combined reading of the relevant clauses of the Order and the notes appended to the notification referred to earlier we may draw the following conclusionThe Central Government may, by Gazette Notification, fix the sale price of different grades and sizes of coal and coke and for different collieries, including plants for the production of coke.(ii) The prices so fixed are applicable to sale of coal at pit heads and of coke at coke oven plants.(iii) Prices given in table V of the notification for hard coke shall not apply to small sized hardcoke and other types of cokes as mentioned.(iv) No colliery owner shall sell and no person shall purchase coal or coke at a price which is in excess of the notified price.(v) However, besides the price so fixed, the colliery owner is entitled to realise (a) costs for transportation beyond a distance of 3 Kms to the loading point at the specific rates, (b) excise duty, royalty, cess, sales tax and other taxes/levies if any and (c) additional charges as may be negotiated between the producer and the purchaser for undertaking special sizing or benefication.Terminological coal as mined is known as run of the mine and taking a cue from the same we may conveniently describe the coke as initially produced in the plant as run-of-the plant. The run-of the plant has been categorised as hard coke of different classes and grades in Table I and their prices fixed accordingly in Table V of the notification depending upon its ash content. That the coke so produced has to be suitably handled to segregate those required for foundries according to ISI specification is evident not only from the statements made in the counter affidavit of the appellant, but also from the foreword of the ISI report as quoted earlier. The Exercise so undertaken by the appellant to screen the run-of-the plant which has an unspecified size distribution to get the extra large size, specially earmarked for foundry would certainly be one for special sizing within the meaning of Note 14. The contention of Mr. Sanyal that since the respondent has not contracted for supply of special size it was not bound to pay for the same cannot be accepted as, in view of the definition of size under the Order, the appellant is obligated to sell only according to specifications of ISI. The note referred to in the table of ISI notification does not come in aid of Mr. Sanyal as it only empowers the ISI to specify different size ranges for special use besides those specified in the table and has no bearing to the issue involved in this appeal.13. Coming now to impugned judgment we find that in negativing the contention of the appellant based on Note 14, the High Court observed that the said Note had no manner of application to the facts of the case as the respondent did not purchase special size of coal. Unfortunately in taking the above observation the High Court failed to notice the definition of size under the Order and the report of the ISI in this regard.