Case: Gujarat Ambuja Cement  Vs. Union Of India

BACKGROUND FACTS:3. Thepetitioners are manufacturers of cement. Their manufacturing plants are located in different parts of the country. For manufacturing cement, essential raw material is coal. During the relevant period with which this group of matters is concerned, namely, from 1.1.1989 to 31.3.1996, coal was controlled commodity being treated as an `essential commodity under the Essential Commodities Act, 1955 (hereinafter referred to as `the Act). Prior to the independence of the country, there was in force Colliery Control Order, 1945, wherein as per clause 4 thereof, price for supply of coal to the consumers was controlled. The said scheme was continued in force by Section 16 of the Act. As during the relevant time, coal was a controlled commodity, its price was being monitored and fixed under the aforesaid Colliery Control Order by the appropriate authority functioning thereunder. Till December, 1988, the price of coal supplied from collieries to different consumers, like the appellants, concerning different grades of coal had not posed any difficulty to the consumers of coal. However, according to the appellants, the problem started after the letter dated 1st, January, 1989 issued under the provisions of the Colliery Control Order as promulgated under Section 16 of the Act. By Item No. 20 of the notification dated 1st January, 1989, the premium of 10% of the price given in Table II of the notification was to be charged by the collieries supplying coal to the consumers in the country in connection with A,B,C & D grades of coal sold to them. The clauses 3 and 4 of the Colliery Control Order as operative during the relevant period read as under :"3. The Central Government may for the purposes of this order prescribe the classes, grades of sizes into which coal may be categorised and the specifications for each such class, grade or size of coal.4. The Central Government may, by notification in the official Gazette, fix (the sale price at which, or the maximum sale price, or both) subject to which coal may be sold by colliery owners and any such notification may fix differentfor different classes, grades and sizes of coal; and(ii) for different collieries."Item No. 20 of the notification dated 1.1.1989, which is impugned in the present proceedings, read as under :"A premium of 10% over and above the prices given in Table II of this notification will be charged by coal companies on coals of Grades A,B,C & D supplied from the collieries listed in the Annexure to this notification."The grievance of the presentpetitioners before the High Court was that though same quality of coal as comprised in grades A,B,C & D was being supplied by different collieries, 10% premium over price was being charged only by some of the collieries as per Item No. 20. According to the writ petitioners, there was no choice of colliery from which they had to purchase coal at the relevant time as their choice was fettered by the decision of the linkage committee compelling the writ petitioners to purchase coal from a particular colliery. Shri K.K.Venugopal, learned senior counsel appearing for the appellant in Civil Appeal No. 2245 of 1996, which is treated as the leading appeal, vehemently contended that the cement manufacturing plants in the western region of the country had not been given linkage by the linkage committee to lift coal from collieries situated nearby which were within reasonable distance, but they were forced to take coal from collieries situated in Madhya Pradesh wherein the respondent authorities were requiring the collieries, treating them as premium collieries, to charge 10% extra on the price of every grade of coal supplied to consumers like the writ petitioners. It was the contention of the writ petitioners before the High Court in these writ petitions that A,B,C and D grades of coal produced from any colliery were of similar quality and, therefore, their prices had to be similar. Charging of higher price in respect of coal purchased from certain collieries like the premium collieries was discriminatory and violative of the right guaranteed under Article 14 of the Constitution of India. It was also contended that premium was not a price and Union of India had no legal right to impose premium. It was submitted that in fact charging anything over and above the price fixed was an offence punishable under the Act. It was also contended that while fixing the price and imposing 10% premium on all these grades of coal manufactured and supplied by the premium collieries, relevant material had not been taken into consideration and in an arbitrary manner and relying on an irrelevant consideration, 10% premium was fixed for being charged to the consumers of coal supplied by these premium collieries. It was, therefore, contended that Item No. 20 of the impugned notification ultra vires the Constitution. It was also additionally contended that clause 4 of the Colliery Control Order did not provide for nor did it lay down any guidelines, more or less, for the fixation of coal price. It was, therefore, ultra vires.4. All these writ petitions were heard in common by a Division Bench of the High Court at Jabalpur. The contesting parties produced material in support of their respective cases. We are told that the hearing of these writ petitions was spread over a week or so. However, at the final stage of arguments before the Division Bench of the High Court, a clear stand was taken by learned Counsel for the respondentsnamely, Union of India, Coal India Ltd.a Govt. Company andCoal Fields Ltd.a Govt. company, which were supplying the disputed quantity and quality of coal to the consumers like the writ petitioners and the coal controller who was functioning under the Colliery Control Orderthat the grievance made by the petitioners was of academic nature as it was open to the consumers of coal concerned to lift coal from any colliery of their choice and it was not compulsory for such a consumer to indent coal for their factory only from a premium colliery which was charging 10% extra price on the quality of the coal supplied to these consumers. Of course, the High Court noted in the impugned judgment that the main grievance of the writ petitioners was that they had no choice as far as the purchase of coal was concerned. It could not be disputed that coal was a controlled commodity and it was a monopolised trade in the hands of Government or governmental agencies during the relevant time. It was the linkage committee which allotted collieries to the bulk consumers. It was this linkage committee which allotted racks of railway wagons for supplying of coal from collieries to the built consumers. Because of the monitoring by the linkage committee, consumers of coal like the writ petitioners were compelled to purchase coal from collieries situated at long distances wherein unwillingly they had to pay 10% extra premium price for the same quality of coal which otherwise could have been supplied to them bycollieries situated nearby. An attempt was also made on behalf of the respondents before the High Court to justify the charge of 10% more premium on A,B,C and D grades of coal supplied by these premium collieries. It was submitted that the coal being of proper quality as supplied by premium collieries, charging of 10% more by way of price of such coal was legally justified and was not arbitrary.5. These rival contentions would have required the High Court to closely examine the challenge to this 10% extra charge on A,B,C and D grades of coal supplied by the premium collieries but according to the High Court it was not necessary to go into this wider question as it was told by learned senior counsel for the respondents that there was no compulsion for the writ petitioners to lift coal from these collieries which were premium collieries and they were free to purchase coal from any other colliery which was not charging 10% extra price by way of premium. Heavily relying upon the said submission of learned senior Counsel for the respondents, which, we are told, was also the stand of the respondents in their counter filed before the High Court, in the impugned common judgment at paragraph 13, the High Court observed as under :".... in view of the categorical statement made by the learned Counsel for the respondents, it is no longer necessary for us to go into this question. It was contended by the petitioners that premium is not a price and Central Government has no power to impose premium. Various dictionaries were referred to us so as to bring home the meaning of the word `premium. And this Courts interim order dated 16.3.1992, was also brought to our notice. We would like to make it clear that since it is not necessary to dwell at length on this point, in view of the statement made at the Bar by the respondents counsel, Sri Nair, contentions on this point as raised by the petitioners are virtually rendered pure academics."Accordingly, the the High Court without addressing itself to this moot question which went to the root of the matter, in the light of the aforesaid stand taken by the learned senior Counsel for the respondents, disposed of the writ petitions, in terms of paragraphs 14 and 15, which areas as underThe statement made by the learned Counsel Shri Abhay Supre, that Cl. IV of the notification provides unguided and arbitrary power in the matter of fixation of price need not to be discussed in detail as the real controversy involved in the case, a stand (sic) relied by the statement made by the respondents counsel at the Bar. In view of the foregoing discussion, we are of the view that no interference is called for in the matter of charging of premium of 10% as part of price of coal produced from certain collieries.15. The petitions are, therefore, dismissed with no order as to costs."

Court's reasoning:
8. In our view, the aforesaid rival contentions would squarely pose the main question whether the charging of 10% premium over the price given in Table II to the impugned notification can be treated to be so unreasonable and arbitrary as to fall foul on the touchstone of Article 14 of the Constitution of India. For deciding the aforesaid question, evidence was led by the contesting parties before the High Court and more voluminous evidence is led before us by the contesting parties in these appeals. However, unfortunately, the High Court in the impugned judgment has not thought it fit to address itself to this moot question presumably because of the stand as taken by learned senior counsel for the respondents, on the basis of counter filed in the High Court on their behalf that the grievance of the writ petitioners was academic as it was free for them not to purchase coal from these premium collieries by paying 10% more and they could well purchase coal from other collieries which were supplying requisite coal to them at cheaper rates. It is this stand which, as we have noted earlier, appealed to the High Court for disposing of the writ petitions without going into the main question in controversy between the parties as aforesaid. It is true that the stand of the respondents before the High Court was that it was not compulsory for the writ petitioners to purchase coal from premium collieries.