Calcutta High Court
Tata Steel Limited vs Coal India Limited And Ors on 12 September, 2024
Author: Debangsu Basak
Bench: Debangsu Basak
1
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
APO 278 of 2016
With
WPO 1525 of 2003
TATA STEEL LIMITED
VS.
COAL INDIA LIMITED AND ORS.
WITH
APO 279 OF 2016
With
WPO 545 of 2002
TATA STEEL LIMITED
VS.
COAL INDIA LIMITED AND ORS.
Present:
The Hon'ble Justice Debangsu Basak
And
The Hon'ble Justice Md. Shabbar Rashidi
For the Appellant : Mr. Debashis Kundu, Sr. Adv.
Ms. Vineeta Meharia, Adv.
Mr. Jaydeb Ghorai, Adv.
Mr. Diptesh Ghorai, Adv.
For the Union of India : Mr. Sunil Kumar Singhania, Adv.
For the Respondents : Mr. Shaunak Sengupta, Adv.
Mr. Abir Debnath, Adv.
Mr. Pradipta Bose, Adv.
Signed By :
SUBHA
KARMAKAR
High Court of
Calcutta
Hearing concluded on : August 22, 2024
12 th of September
2024 03:24:18 PM Judgment on : September 12, 2024
DEBANGSU BASAK, J. :-
1. Appellant has assailed the judgement and order dated
September 6, 2016 passed in two writ petitions being WPO 545 of
2002 and WPO No. 1525 of 2003. The appellant had filed both the
writ petitions.
2. By the impugned judgement and order the learned Single
Judge has dismissed both the writ petitions of the appellant.
3. Learned Senior Advocate appearing for the appellant has
contended that, the appellant is engaged in manufacture of sponge
iron. Appellant has a requirement of a particular variety of coal to
carry out such manufacturing activity.
4. Learned Senior Advocate appearing for the appellant has
contended that, coal was clarified as an essential commodity falling
within the terms of section 2 (a) (ii) of the Essential Commodities
Act, 1955. Coal has been under control till sometime in 2001.
Appellant has been receiving specific grade of coal from certain
collieries of the subsidiary companies of Coal India Limited (CIL)
since 1987 under the coal linkage granted by the Ministry of
Coal/Ministry of Steel/CIL. Appellant has been receiving specified
quantity and quality of coal from various subsidiaries of CIL being
Eastern Coalfields Ltd (ECL), Central Coalfields Ltd (CCL), and
Mahanadi Coalfields Ltd (MCL).
5. Learned Senior Advocate appearing for the appellant has
contended that, although, Government of India had evinced an
intention of abolishing the linkage system of selling coal and
adoptinig a more direct method of selling coal by entering into Fuel
Supply Agreements, such agreements were never entered into. The
claim that, policy of linkage had been given a go bye is incorrect as
it would appear from the letter dated November 7, 2001 issued by
the Joint Industrial Adviser.
6. Learned Senior Advocate appearing for the appellant has
drawn the attention of the Court to the fact that, in 2000 the
Colliery Control Order, 2000 came into force replacing the earlier
Colliery Control Order, 1945. In terms of the Colliery Control Order,
2000, CIL had become entitled to determine the price of coal. CIL
had consequently notified coal prices in terms of Colliery Control
Order, 2000.
7. Learned Senior Advocate appearing for the appellant has
contended that, the Coal Price Notification dated September 10,
2001 was issued by CIL to all subsidiaries of it including CCL
revising the price of various grades of coal. He has referred to
clause 10 thereof which permitted imposition of additional charges
only for beneficiation/special sizing of coal over and above the
notified price. He has contended that, there was no provision for
imposition of add-on charge/source specific premium charges.
8. Learned Senior Advocate appearing for the appellant has
contended that, CCL sought to impose add-on charges over the
base price of the premium variety of coal and called upon the
appellant to make payments of the same. Faced with the threat of
non-supply of such specific variety of coal, the appellant had under
protest made payment of the same and kept on paying the same
under protest till August 18, 2002 when pursuant to directions of
CIL such add-on charges/source specific premium charges were
discontinued by CCL.
9. Learned senior advocate appearing for the appellant has
pointed out that, in WPO No. 545 of 2002, the wrongful, arbitrary
and illegal imposition of add-on charges/source specific premium
charges on the coal supplied by CCL with effect from April 1, 2001
at the rate of 10% and with effect from September 1, 2001 till
August 18, 2002 at the rate of 30% was challenged.
10. Learned senior advocate appearing for the appellant has
submitted that, during the pendency of the first writ petition,
several meetings were held and correspondences exchanged
between the appellant and CCL wherein CCL proposed entering
into a Memorandum of Understanding. Appellant had refused to
execute such Memorandum of Understanding. CCL had proposed
issuing supplementary bills for regularizing the add-on
charges/source specific premium charges which were lying in the
suspense account of CCL.
11. Learned Senior Advocate appearing for the appellant has
contended that, CCL had no power under the provisions of the Coal
Control Order, 2000 to realize any add-on sums over and above the
base price of the coal as notified by CIL from the appellant.
Appellant had challenged this wrongful action of CCL in the 2nd
writ petition being WPO No. 1525 of 2003.
12. Learned Senior Advocate appearing for the appellant has
contended that, the learned Single Judge failed to appreciate that
apart from CCL no other subsidiary had charged over and above
the price fixed by CIL and that, CCL had no power to do so.
13. Learned Senior Advocate appearing for the appellant has
contended that, all and every payment of add-on charges/source
specific premium were made under protest and laced with terms
and conditions. In this regard, he has drawn the attention of the
Court to the letters dated April 10, 2001 and April 12, 2001 of the
appellant where, the appellant paid 10% premium on supplies of
coal on protest. He has pointed out that, the letter and the
undertaking dated April 20, 2001 were on protest and on
conditions. Similarly, by the letter dated October 10, 2001
appellant had paid 30% premium on protest. He has pointed out
that, appellant had written letters dated October 20, 2001 and
November 3, 2001 to the Ministry of Steel and CIL respectively
complaining about imposition of 30% premium on coal supplies by
CCL. He has referred to the letter dated October 23, 2001 written
by the appellant to CCL requesting for refund of 30% premium if
found not payable in future. Appellant had also offered to enter into
a Memorandum of Understanding/Fuel Supply Agreement on
mutually accepted terms and to pay 30% premium subject to
adjustment based on final decision in the Memorandum of
Understanding by a writing dated November 23, 2001. Appellant
had reiterated its stand that 10% and 30% premium had been paid
under protest and sought refund of the same by the letter dated
April 23, 2003. A meeting had been held between the appellant and
CCL on June 16, 2003 where the appellant had recorded detailed
objection on imposition of 10% and 30% source specific charges.
This fact has been pointed out by the appellant by letter dated July
7, 2003. Appellant had repeated its stand by its letter dated July
20, 2003.
14. Learned Senior Advocate appearing for the appellant has
contended that, payment of source specific premium were made
under orders of Court and accepted by CCL as such. In this regard,
he has referred to the order dated March 22, 2001 passed by the
High Court in WPO 545 of 2002 permitting the appellant to accept
supply of coal upon payment of 30% premium without prejudice to
its rights and contentions. He has also pointed out that the
Memorandum of Understanding/Fuel Supply Agreement were
executed by the appellant under orders of Court and without
prejudice to the rights and contentions of the appellant. In this
regard, he has drawn the attention of the Court to the order dated
July 30, 2003 passed in WPO 1525 of 2003 directing the appellant
to sign the Memorandum of Understanding and Fuel Supply
Agreement by August 4, 2003 without prejudice to the rights and
contentions and that, payments made would be subject to the
result of the writ petition.
15. Learned Senior Advocate appearing for the appellant has
contended that the finding of the learned Single Judge that the old
contract was superseded by a new contract and that there was a
variation/novation of the old contract was erroneous. He has
contended that, the coal linkage granted to the appellant by the
letter dated March 5, 1997 was issued by CIL and not by CCL and
as such there was no agreement between the appellant and CCL for
a novation to occur. In any event, actions taken under protest and
with conditions cannot be said to have resulted in a novation of a
contract. He has contended that, the finding of the learned Single
Judge that, appellant took supply of the coal at a premium from
CCL after agreeing to pay the same unconditionally, is erroneous.
He has contended that, a right granted in favour of the appellant
cannot be superseded/varied/negated on the appellant accepting
the supplies under protest and on various conditions and paying
the illegally demanded add-on charges/source specific premium
charges.
16. That apart, learned senior advocate appearing for the appellant
has contended that, imposition of add-on charges/source specific
premium charges is illegal as it is in violation of price notifications
issued by CIL. CIL is the only authority both under the Colliery
Control Order of 1945 as well as 2000 which has the authority to
fix the price of coal. Price notifications that had been issued by CIL
are binding on its subsidiaries including CCL.
17. Learned Senior Advocate appearing for the appellant has
contended that, no reason has been disclosed for the imposition of
add-on charges/source specific premium charges by CCL. He has
contended that, any imposition which is aimed at profiteering is not
permitted and in support of such contention, he has relied upon
2007 volume 2 Supreme Court Cases 640 (Asoka Smokeless
Coal India Private Ltd and others versus Union of India and
others).
18. Learned Senior Advocate appearing for the appellant has
submitted that, since the imposition was without any basis, it was
discontinued after a period of 18 months. Parties had entered into
a Fuel Supply Agreement under which, coal was supplied to the
appellant by CCL at notified price without imposition of any
additional source specific charge. Moreover, CCL had insisted on
regularization of the illegal imposition by issuance of
supplementary bill. In this regard, he has referred to the letters
dated April 16, 2003 and July 18, 2003 issued by CCL to the
appellant and meetings held on June 16, 2003 and June 17, 2003
where, settlement of past 10% ad hoc and 30% source specific
charge already paid by the appellant were sought to be regularized
before entering into the Fuel Supply Agreement. By letter dated
February 18, 2002 appellant had complained to the Sponge Iron
Manufacturers Association about discrimination between Sponge
Iron Manufacturers and Cement/Power manufacturers.
19. In support of his contentions that, CCL is an Article 12
authority and actions taken by it have to pass the test of Article 14,
learned senior advocate appearing for the appellant has relied upon
1993 Volume 1 Supreme Court Cases 445 (Sterling Computers
Ltd versus M/s. M & N Publications Ltd and Others), 2004
Volume 3 Supreme Court Cases 553 (ABL International Ltd
and Another versus Export Credit Guarantee Corporation of
India Ltd and Others), 2006 Volume 10 Supreme Court Cases
236 (Noble resources Ltd Versus State of Orissa And Another),
2015 Volume 7 Supreme Court Cases 728 (Joshi Technologies
International Inc Versus Union of India and Others) and 2023
Volume 2 Supreme Court Cases 703 (MP Power Management Co
Ltd versus Sky Power Southeast Solar India Private Ltd and
Others).
20. Learned Senior Advocate appearing for the appellant has relied
upon 1964 SSC online SC 10 (State of Madhya Pradesh and
Another versus Bhailal Bhai) and 1998 Volume 8 Supreme
Court Cases 208 (Gujarat Ambuja Cement Ltd and Another
versus Union of India and others) for the proposition that money
extracted arbitrarily can be directed to be refunded.
21. Learned advocate appearing for the respondents has referred to
the sequence of events. He has pointed out that, coal linkage was
applicable at the material point of time. On March 7, 1997, request
for change of source made by the appellant was approved by the
respondent. Respondent had approved of coal linkages with regard
to the appellant on September 18, 1998. In April 2001, appellant
had given an undertaking to pay additional 10% price hike under
protest. A meeting had been held on September 22, 2001 between
the parties where it was pointed out that if 30% premium was not
paid by the appellant then the appellant can explore other sources
for supply. Respondent had also pointed out that, 10% premium
charged earlier was only an interim measure.
22. Learned advocate appearing for the respondents has submitted
that, the appellant agreed to pay 30% premium subject to 3
conditions, on October 10, 2001. He has submitted that, all
conditions of the appellant had been fulfilled. Appellant had
furnished an undertaking for payment of 30% premium. By the
letter dated October 23, 2001, appellant had stated that if the
premium of 30% was found not payable at a future date, then such
premium must be returned to the appellant. Appellant had paid
30% premium without any protest on December 6, 2001.
Subsequently, parties had executed a Fuel Supply Agreement.
23. Learned advocate appearing for the respondents has submitted
that, the writ petitions are not maintainable since, the subject
matter thereof relate to contract which was purely commercial in
nature as opposed to statutory contract and no public element was
involved. He has relied upon Joshi Technologies (supra) and
2000 Volume 6 Supreme Court Cases 293 (Kerala State
Electricity Board and Another vs. Kurien E. Kalathil and
Others) in this regard.
24. Relying upon Ashoka Smokeless (supra) learned advocate
appearing for the respondents has contended that, Colliery Control
Order provides no embargo on price fixation. Subsequent to the
control of coal with effect from January 1, 2000 no embargo can be
placed on price.
25. Learned advocate appearing for the respondents has submitted
that, there are several advantages of source specific coal and the
appellant had enjoyed all of the same. He has pointed out that, the
cost of coal is taken into consideration to fix the cost of production
by the buyer. Therefore, the appellant had suffered no prejudice. In
any event, appellant had conceded the discretion to charge 30%
premium to the respondents by the letter dated October 23, 2001.
Appellant did not raise any further objection subsequent thereto
and therefore cannot be allowed to contend to the contrary.
26. Appellant has a sponge iron manufacturing unit which
requires specialized quality and grade of coal not found in all
collieries in India. Central Government had treated coal to be an
essential commodity within the meaning of Section 2(a)(ii) of the
Essential Commodities Act, 1955 at the material point of time.
27. Coal is an essential commodity supply thereof had been
regulated under the provisions of the Colliery Control Order, 1955
subsequently replaced by the Colliery Control Order, 2000.
28. Appellant had enjoyed supply of coal of specified grade and
quality from various subsidiaries of CIL being ECL, CCL and MCL.
Appellant had been receiving coal from Churi and Ray Bachara
Coal mines of CCL in terms of linkage letters dated March 5, 1997,
September 18, 1998, September 23, 1998, November 7, 2001 and
April 27, 2002.
29. During the subsistence of the Colliery Control Order, 2000,
Central Government had conceived of abolishing the linkage system
of selling by adopting a more direct method of entering into Fuel
Supply Agreements, to be executed between the coal companies
and the coal consumers.
30. Under the Colliery Control Order, 2000, CIL had issued a coal
price notification dated September 10, 2001 revising/fixing prices
of various grades of coal. Such coal price notification order dated
September 10, 2001 had permitted imposition of additional charges
only for basification/special sizing of coal over the notified price in
Clause 10 thereof.
31. Disputes and differences between the appellant and CIL, in
particular CCL arose, when, CCL had imposed add on charges for
the best price of the premium variety of coal dated April 1, 2001
and called upon the appellant to pay the same. Appellant had paid
the price demanded, according to the appellant, on protest to CCL
till August 8, 2002.
32. Appellant had filed WPO No. 545 of 2002 assailing the demand
and realization of 10 % above the fixed price from April 1, 2001 and
30 % above fixed price from September 1, 2001 over the base price
notified by CIL.
33. Parties had had several meetings on the issue of charging of
additional amounts, during the pendency of the first writ petition
being WPO No. 545 of 2002.
34. Parties had met on September 22, 2001 where, CCL informed
the appellant, if the appellant did not pay 30 % premium then the
appellant is at liberty to explore other sources. CCL had also
informed the appellant that, 10 % premium paid by the appellant
was an interim measure. Appellant had agreed to pay 30 %
premium subject to three conditions being fulfilled namely, full
quantity of 12000 metric tons being allotted to the appellant, such
quantity being supplied for three years during the pendency of the
FSA and that, in the future, should any purchaser receive lower
rate from the same coal mine then the lower rate would be
applicable to the appellant. By a writing dated October 10, 2001,
appellant had placed on record such agreement.
35. The letter dated October 10, 2001 had referred to the
discussion held between the parties in this regard on October 9,
2001. It had also called upon CCL for a letter confirming the
acceptance so that, appellant could deposit the money and start
taking coal.
36. Officials of appellant had called upon the officials of CCL on
October 22, 2001. CCL had issued a letter dated October 22, 2001
to the appellant. In reference to the earlier letter dated October 10,
2001, CCL's letter dated October 22, 2001 and the meeting of the
appellant with CCL on October 22, 2001, appellant had issued a
letter dated October 23, 2001, where, appellant agreed to pay 30 %
premium on the coal supply. Such letter had also placed on record
the agreement between the parties that, CCL could stop the
premium as and when decision is taken in this connection by
CCL/CIL/Ministry. Such letter had also requested CCL to refund
the premium in future if found not payable. Apart from the three
conditions that had been specified in the letter dated October 10,
2001 for payment of 30 % premium, appellant had, specified that,
in the event, any other purchaser received coal from CCL from
Churi and Ray Bachara Collieries at a lesser price, then, the lower
rate would be applicable.
37. Nothing has been placed on record to suggest, let alone
establish that, any of the three conditions imposed by the appellant
in the letter dated October 10, 2001 was violated by CCL. CCL had
supplied the full quantity from coal mines identified. Appellant has
not placed any material to establish that, coal of the same quality
from the same coal mines had been supplied by CCL to any other
purchaser at a lower rate.
38. Apart from the letter dated October 10, 2001, appellant had
unconditionally agreed to pay 30 % premium by the letter dated
October 23, 2001. The only request in the letter dated October 23,
2001 was that, in the event, there was any decision by
CIL/CCL/Ministry to stop the premium then, such premium would
be refunded.
39. Again nothing has been placed on record to suggest, let alone
establish that, CCL/CIL/Ministry had stopped the premium at any
point of time.
40. Maintainability of the writ petition has been questioned on the
strength of the ratio of Joshi Technologies International Inc
(supra) and Kerala State Electricity Board and Another
(supra). Both authorities have held that, Writ Court is not the
ordinary forum of resolution of disputes relating to terms of
contract with statutory bodies. They have also held that the
contract does not become statutory simply because it was awarded
by a statutory body. They have observed that contractual or
commercial activities of a statutory body need not necessarily raise
issues of public law.
41. In Sterling Computers Ltd (supra) Supreme Court has held
that, while exercising powers of judicial review, in respect of
contracts entered into on behalf of the State, the Court is
concerned primarily as to whether there has been any infirmity in
the decision making process or not. By way of judicial review the
Court cannot examine the details of the terms of the contracts
which have been entered into by the public body.
42. In ABL International Ltd and Another (supra) Supreme
Court has observed that, a writ Court has jurisdiction to entertain
a writ petition involving disputed questions of fact in appropriate
cases.
43. Noble resources Ltd (supra) has held that, contractual
matters of the State are not beyond the scope of judicial review
although the ambit is limited. It has observed that, where state
violates Article 14 or public law element is involved or mala fides or
ulterior motives are admitted judicial review is permissible even in
disputed questions of fact or available of alternative remedy.
44. MP Power Management Co Ltd (supra) has held that, a
matter which allows entirely within a profit realm of affairs of a
public body may not lend itself for judicial review under writ
jurisdiction.
45. Issue as to charging of premium was violative Article 14 of the
Constitution of India or not, had been remanded by the Supreme
Court for reconsideration by the High Court in Gujarat Ambuja
Cement Ltd and Another (supra). In Bhailal Bhai (supra)
Supreme Court has observed that, a writ Court has observed that,
a writ of mandamus can be issued where money paid to the
Government was by mistake in order to give relief by commanding
repayment of the same.
46. In the facts of the present case, the awards of the coal linkage
were under the Colliery Control Order, 2000 which such orders
were passed under the provisions of the Essential Commodities Act.
Supply of coal had been regulated by the authorities. Price had
been fixed by the authorities for the supply of coal. Appellant has
alleged that it had choice in accepting the supply of coal in terms of
the coal linkages orders.
47. Appellant had assailed the action of the authorities in seeking
a price over and above the price fixed by CCL in respect of the
supply. Exercise of powers of the authorities under the four corners
of the statutes governing the coal supply has been questioned in
the writ petition. Consequently, the writ petitions are maintainable.
48. While dealing with the power of price fixation under Colliery
Control Order, 2000, Supreme Court in Asoka Smokeless Coal
India Private Ltd and others (supra) has held that, object of
price fixation under the Collieries Control Order is to see that the
ultimate consumers obtained the essential commodity at a fair
price. It has observed that, it cannot be the law that the public
sector undertakings while selling essential commodities suffered or
that public sector undertaking must distribute subsidy. It has
noted that what is required in terms of the constitutional scheme is
to make essential commodity available at a fair price. It has
observed that, although reasonable profit may be permissible,
profiteering would not be, on the garb of price fixation.
49. Appellants have not placed any material on record to suggest
that, the demand for 30 % premium was made for profiteering.
50. In the facts and circumstances of the present case, learned
Single Judge has found that, the appellant unconditionally agreed
to pay the enhanced price. Consequently, learned Single Judge did
not grant any relief to the appellant in both the writ petitions.
51. In view of the discussions above we have found no merit in the
present appeals.
52. APO 278 of 2016 and APO 279 of 2016 are dismissed without
any order as to costs.
[DEBANGSU BASAK, J.]
53. I agree.
[MD. SHABBAR RASHIDI, J.]
Later :-
Learned Senior Advocate appearing for the appellant submits
that the appellant seeks to prefer a Special Leave Petition against
the judgement and order delivered today. He points out that there
subsists an interim order which appointed Joint Special Officers
and that they are holding the money. He submits that a direction
be issued upon the joint Special Officers not to part with the money
till the disposal of the Special Leave Petition.
The Special Leave Petition is yet to be filed. Moreover, we
disposed of both the appeals. Therefore, an indefinite direction
upon the joint Special Officers as prayed for may not subserve the
interest of justice.
In order to balance the equities, we request the Joint Special
Officers not to disburse the money for a period of four weeks from
date.
[DEBANGSU BASAK, J.]
I agree.
[MD. SHABBAR RASHIDI, J.]
