SC upholds validity of Coal India’s 2006 interim coal policy, sets aside Calcutta HC verdict

New Delhi, Sep 12 (PTI) The Supreme Court on Friday upheld the validity of Coal India Limited’s interim coal policy of 2006 which imposed a 20 per cent price increase on coal supplied to non-core sector industries.

In a major victory to PSU Coal India Ltd, the top court allowed its appeal and set aside the Calcutta High Court’s 2012 decision which struck down the policy.

A bench comprising Justices J B Pardiwala and R Mahadevan held, “The high court committed an egregious error in passing the impugned judgment. We are left with no other option but to set aside the impugned judgment and order dated April 04, 2012 passed by the High Court. In the result, the appeal succeeds and is hereby allowed." “We find that the question of validity of the Interim Coal Policy was important to be addressed, therefore, we allow the I.A… we find the Interim Coal Policy to be valid. As a consequence, the request for refund by the respondents’ is dismissed,” the bench added.

Writing the 128 page verdict, Justice Pardiwala said the 20 per cent increase over and above the notified prices was associated with the objective of maintaining the supply of coal and ensuring its availability in the market for all categories of consumers.

“Thus, it cannot be said that the action of the appellant (Coal India) in notifying price for the linked consumers of the non-core sector with an increase of 20% in the Interim Coal Policy, was actuated solely by a profit motive,” the verdict said.

The top court dealt with three key issues in the verdict including whether the PSU had the authority to notify the Interim Coal Policy.

The second issue was whether the increase of 20 per cent over and above the notified price introduced in the Interim Coal Policy for the linked consumers of the non-core sector was valid in terms of Article 14 (right to equality) of the Constitution.

“If the answer to the second question is in the negative, then whether the respondents (private firms) are entitled for refund of the 20% additional cost,” the third issue read.

Answering the first question, the verdict said, “We have no qualms observing that this Court placed no restriction on the appellant’s powers to regulate prices through the process of price notification as the same was already governed by the CCO, 2000 and the appellant was competent to notify interim prices by way of the Interim Coal Policy”.

Deciding the second question, it said, “We affirm the classification made by this court between the core sector and non-core sector in Pallavi Refractories …The respondents’ submission that the factum of linkage put the linked non-core sector industries on the same footing as the core sector industries is of no avail.” A perusal of the objective of increasing the notified prices for the linked non-core sector consumers by 20 per cent indicated Coal India’s action was not actuated by profit motive.

Answering the third issue, it said, “Since, we have answered the questions on the issue of validity of the Interim Coal Policy in affirmative, the issue of whether the respondents are entitled to receive a refund of the 20% additional cost is now moot.” Even if we would have found the Interim Coal Policy to be invalid, we would have declined to order for refund of the 20 per cent additional amount to the respondents, the bench said. PTI SJK SJK AMK AMK AMK