Supreme Court Upholds Appellant in Coal Price Notification Dispute — Service Charges for Coke Sizing and Handling Permissible Beyond Notified Pit-Head Price. Under Colliery Control Order, 1945 and Note 14 of Price Notification, specified-size coke sale required additional handling and sizing operations beyond production; hence colliery owner could recover negotiated charges over and above fixed prices.

Case Note & Summary

This appeal before the Supreme Court of India arose from a judgment of the Patna High Court in a writ petition filed by Steel Abrasers & Allied Products Limited (respondent) against Bharat Coking Coal Limited, a Government company under Section 617 of the Indian Companies Act, 1956, and its General Manager. The respondent carried on business of foundry casting and required hard coke from the appellant. The production and disposal of coal and coke were regulated by the Colliery Control Order, 1945, initially framed under Rule 81(2) of Defence of India Rules and continued under Section 16(2) of the Essential Commodities Act, 1955. On December 27, 1991, the Central Government issued a notification under the Order fixing prices for different types of coal and coke, including hard coke. The respondent alleged that despite this price fixation, the appellant was demanding and realising service charges in addition to the price, which was arbitrary and illegal because the appellant was a State under Article 12 of the Constitution. The respondent sought a writ of mandamus directing the appellant not to charge any amount beyond the notified price. The appellant contended that coal and coke were different commodities; foundry hard coke required extra work like shifting and sizing after production, and recovery of such expenditure was permitted by the notification, particularly Note 14. The High Court accepted the respondent's contention and issued mandamus. The appellant appealed to the Supreme Court by special leave. The Supreme Court examined the relevant provisions of the Order and notification. Clause 2(1) defined coal to include coke, but the Court observed that the two products were distinct: coal was a stone-like product excavated from the earth, whereas coke was a processed product obtained by indirect heating in Beehive ovens and by-product ovens in coke oven plants. Clause 2(2) included a plant for production of coke in the definition of colliery. Clause 4 empowered the Central Government to fix sale prices, and Clause 5 prohibited selling above that price. Clause 12A dealt with quota allotment. The notification prescribed tables for classes, grades and prices, with explanatory notes. Note 10(i) stated that prices were applicable at pit-heads on FOR colliery siding basis or FOB purchaser's transport basis. Note 10(ii) permitted additional transport costs beyond 3 km. Note 12 allowed realisation of duties of excise, royalty, cesses, sales tax, etc., in addition. Note 14 stated that for undertaking special sizing or beneficiation of coal, additional charges as may be negotiated between purchaser and producer could be realised over and above fixed prices. Note 15 excluded small sized coke, coke breeze below 12 mm, low temperature carbonization coke, pelletised coke or briquettes from the hard coke and soft coke prices in Tables V and VI. The Court also referred to the Indian Standard (Third Revision) relating to size analysis of coal and coke for marketing, adopted by ISI and published by Bureau of Indian Standards in 1979. The foreword explained that coal and coke need size grading for rational and economic use, and Table 2 prescribed size analysis of hard coke, including "Coke, extra large" as foundry coke with size range -100 mm and undersize tolerance 10%. The Court noted that sizing of marketable hard coke had an important bearing on the issue. The appellant's counsel submitted that pit-head for coke meant coke oven plant; coke as produced required handling, screening, shaping, and stacking to attain ISI specification for foundry coke; hence handling charges could be demanded under Note 14. The respondent's counsel did not dispute that pit-head meant coke oven plant but argued that only transportation charges under Note 10(ii) and duties/levies under Note 12 could be added; Note 14 was inapplicable because the respondent did not ask for special size, only specified size. The Court, after considering contentions, accepted the appellant's submissions. It held that the respondent's reliance on Note 14 being limited was misplaced; the supply of foundry coke of specified size under ISI required additional handling beyond normal production, and such additional charges were permissible over and above the fixed prices. The appeal was allowed and the High Court's mandamus was set aside.

Headnote

Issue of Consideration

Final Decision

Supreme Court allowed the appeal, set aside the High Court's writ of mandamus, and held that the appellant was entitled to recover handling charges for specified-size foundry coke beyond the notified pit-head price under Note 14 of the notification.

Law Points