PETITIONER: GUJARAT AMBUJA CEMENT LTD. & ANR. Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT: 21/08/1998 BENCH: S.B. MAJMUDAR, M. JAGANNADHA RAO ACT: HEADNOTE: JUDGMENT:
WITH
C.A. No. 3916/98 @SLP (C) No.13097/98), C.A.Nos.2246/96,
2247 TO 2262/96, 2264/96 to 2267/96, 2385/96, 2439/96 AND
W.P. (C) No.557/97
J U D G M E N T
S.B. Majmudar, J:
Leave granted in S.L.P. (C) No.13097 of 1998.
In this group of matters, that common judgment rendered
by the Division Bench of the High Court of Madhya Pradesh at
Jabalpur, dismissing various writ petitions filed by the
writ petitioners has been brought in challenge. In order to
appreciate the grievance of the appellants viz. writ
petitioner who have filed these appeals on grant of special
leave under Article 136 of the Constitution of India, it is
necessary to note a few background facts.
BACKGROUND FACTS:
The appellant-writ petitioners 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 Orders, 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 supplies 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 or
sizes into which coal my 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 different
prices-
(i) for 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 supplies from the
collieries listed in the Annexure
to this notification.”
The grievance of the present appellant-writ petitioners
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.
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 respondents
– namely, Union of India, Coal Indian Ltd. – a Govt. Company
and South-Eastern Coal 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
Order – that 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
bulk 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 by non-premium collieries
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.
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
Govt. 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 Court’s 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
respondent’s counsel, Sri Nair
contention on this point as raised
by the petitioners are virtually
rendered pure academics.”
Accordingly, 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 read as
under:
“14. The 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.”
We may state that in these appeals, further documentary
evidence has been adduced by both the sides for supporting
their respective cases on merits.
Learned senior counsel, Shri Venugopal and other
learned advocates who raised similar contentions in the
companion appeals, submitted that even though, prima fair,
price fixation may be taken as a legislative function, it is
now well settled by a catena of decisions of this Court that
when price fixation is challenged as arbitrary and
unreasonable, the court has ample jurisdiction to go into
this question and examine the impugned price policy on the
touchstone of Article 14 of the Constitution of India. In
this connection, Shri Venugopal, learned senior counsel
invited our attention to the observations of the High Court
in Paragraph 13 of the judgment, wherein it was held that
“price fixation is neither the function nor forte of the
court. It is neither concerned with the policy nor with the
rate, it si left to the discretion of the executive”. He
submitted that the aforesaid statement of law culled out
from the decisions of this Court, is a partial enunciation
of the legal principle. It was submitted that despite the
fact that this pricing policy was in the realm of
legislative exercise if the policy is shown to be violative
of Article 14 of the Constitution of India as unreasonable,
arbitrary or involving non-application of mind to relevant
considerations or based on irrelevant considerations, it
could be challenged in court. To that extent, learned senior
counsel, Shri Venugopal is right. In fact, in fairness to
learned senior counsel for the respondents, it must be
stated that he did not challenge the locus standi of the
writ petitioners to mount such a challenge under Article 226
of the Constitution of India. But his submission was that
even during the relevant time it was open to the writ
petitioners to purchase coal from any colliery of their
choice which was a non-premium colliery. The said stand
taken in the counter before the High Court and which was
reiterated by the learned senior counsel for the respondents
before the High Court and was also reiterated before us. It
was also contended that there was nothing illegal or
unreasonable in charging 10% more for A,B,C and D grades of
coal by the premium collieries, as according to the learned
senior counsel for the respondents, relevant considerations
were kept in view by the pricing authorities in coming to
the aforesaid conclusion about charging 10% more. Shri
Venugopal challenged the said stand of learned counsel or
the respondents by submitting that because of the linkage
committee’s restrictions, writ petitioners had no choice but
to lift coal from respondent no.4 colliery located in Madhya
Pradesh, otherwise their manufacturing activities would have
come to a grinding halt and, therefore, it was a misnomer to
say that it was open to the writ petitioners to purchase
coal from non-premium collieries as they liked. He further
contended that for the purpose of utilisation of coal as
essential raw material in their plant, different grades of
coal are required. Classification of coal by grade is made
according to the standard specified by the Indian Standard
Specification depending upon the inherent ingredient
contents of coal. Before such gradation is determined in
respect of any particular type of coal, there is always a
testing process. Through such testing process, the gradation
of coal is fixed and once such a gradation is fixed, there
is no, nor can there be any, question of further testing or
relaxing the classification already made. Learned senior
counsel for the respondents on the other hand pointed out
that even on merits it could not be said that the 10% hike
in price for different grades of coal supplied by Respondent
no.4 colliery viz. the premium colliery was in any way
irrational as the coal supplied by the said colliery as
compared to non-premium collieries had a better quality, as
it had greater lasting, fuel heat value and consequently the
said 10% premium charged by the premium colliery could not
be said to be violative of guarantee of Article 14 of the
Constitution of India. It was submitted that the writ
petitioners themselves paid this 10% extra charge on the
coal lifted by them during the period from 1.1.1989 till
1991 when they filed the writ petitions in the High Court.
It is also submitted that from 1st April, 1996, coal has not
remained a controlled commodity and it is easily available
as raw material in the open market and consequently, the
grievance made by the writ petitioners has become more or
less academic and is confined only to the aforesaid limited
period from 1.1.1989 to 31.3.1996 or up to 31.8.1996 as
submitted by the learned senior counsel Shri Venugopal for
the appellant-writ petitioners.
In our view, the aforesaid rival contentions would
squarely pose the main question whether the charging of 105
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 105
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. it is also true that
the same stand is reiterated before us by learned senior
counsel for the respondents. But the real grievance of the
writ petitioners which unfortunately remained unnoticed by
the High Court is that during the relevant period with which
we are concerned in the present proceedings, from a
practical point of view, it was almost impossible for the
writ petitioners to lift the coal from any other colliery
except from these premium collieries on account of various
problems faced by the writ petitioner manufacturers of
cement as tried to be high-lighted before us in the
additional affidavit filed on behalf of the writ petitioners
in Civil Appeal No.2245 of 1996 at pages 265 to 268. It was
contended before us in the light of the aforesaid grievances
categorised in the said additional affidavit that during the
relevant time production, distribution and sale of coal was
a monopoly of the Union of India and that this power was
conferred under the Colliery Control Order of 1945. The
quotas of coal were allotted by Central Government under the
said Order to the consumers of coal. The bulk transportation
of coal was also under the control of Union of India in as
much as the same could only be done through railways as the
railways are the monopoly of the Union of India. The price
at which the coal had to be sold was fixed by the Central
Government in the said Order of 1945. The quantity of coal
allotted to bulk of consumers like the writ petitioners was
admittedly being controlled by the linkage committee of the
Central Government since the last number of years. Because
of the direction of the linkage committee the coal allotted
to the writ petitioners had to be lifted from the colliery
assigned to it by the said committee. Therefore, there was
no choice left to the writ petitioners in connection with
lifting of coal from the colliery concerned. It was,
therefore, submitted that it would not be correct to assume
as done by the High Court that the grievance of the writ
petitioners was imaginary or of academic nature.
Having given our anxious consideration to the rival
contentions, we have reached the conclusion that the High
Court simply assumed that the main grievance of the writ
petitioners against 105 hike in price by way of premium was
only of academic nature. The High Court had also not gone
into the question whether the said grievance was really
academic in view of the difficulties tried to be projected
by the writ petitioners in that connection and which were
highlighted before us by the aforesaid additional affidavit
of the appellants in the leading appeal. Similar grievances
were voiced before us by learned counsel of the other
appellants whose writ petitions were also disposed of by the
common judgment. Therefore, it was for the High Court to
consider whether the grievance of the writ petitioners had
become really academic in nature and if it was not of
academic nature, then the question regarding the merits of
the pricing policy in the light of the limited inquiry
which was required to be undertaken on the touchstone of
Article 14 of the constitution of India had to be gone into
by the High Court on a consideration of the voluminous
evidence produced before it by the respective parties in
support of their rival contentions.
Consequently, without expressing any opinion on the
merits of the controversy between the parties, we deem it
fit to set aside the impugned common judgment and restore
all the writ petitions filed by the writ petitioners before
the High Court in their original numbers for decision of the
High Court on merits. The High Court is requested to
consider the question whether the impugned premium of 10% as
charged by the respondents from the writ petitioners is, in
any way, violative of guarantee under Article 14 of the
Constitution of India and also to go into the question
whether the said grievance of the writ petitioners was
really academic in nature or was a subsisting one requiring
adjudication by the court. All these questions will have to
be considered by the High Court in the remanded proceedings.
We would also request the High Court to decide all these
questions including the main controversy on merits, even if
after hearing the parties concerned, the High Court is once
again inclined to take the view that the grievance of the
petitioners was of academic nature. In that case the High
Court may examine the said main grievance in the
alternative. This request is made to the High Court in the
case its decision on the academic nature of writ
petitioner’s grievance gets upset in the hierarchy of
proceedings.
In the result, the appeals are allowed, the common
judgment and orders of the High Court are set aside. All the
writ petitions are restored to the files of the High Court
with a request to proceed with the same in accordance with
law and in the light of observations made herein. Whatever
evidence was led by the respective parties in support of
their cases in the High Court in these writ petitions and
whatever further evidence and material may be led by the
respective parties in the remanded proceedings will of
course be examined by the High Court. It will also be open
to contesting parties to produce the material adduced in
these appeals for the consideration of the High Court in the
remanded proceedings. We may also make it clear that all
legally permissible contentions will be open for being
canvassed by the respective contesting parties for
consideration of the High Court. As the writ petitions of
1991 are being restored to the files of the High Court, we
request the High Court to make it convenient to decide these
writ petitions at the earliest, preferably within a period
of six months from the receipt of the copy of this order.
The registry of this court is directed to communicate this
order to the Registrar of the High Court for bringing it to
the notice of the Hon’ble Chief Justice of the High Court
for doing the needful.
Before parting with these appeals, we may mention that at
the SLP stage in these group of matters, ad interim relief
was given which was confirmed pending these appeals.
Identical interim orders in these group of appeals read as
under:
“The respondents are injuncted from
stopping the delivery of coal to
the petitioners on the ground that
the amount of premium claimed by
the respondents for the period
subsequent to 1st March, 1992, has
not been paid. It is also made
clear that in the event, under the
terms of the statement, the
petitioners choose any other
colliery where premium is payable,
such premium shall be paid.”
while granting special leave to appeal on 18th January,
1996, a bench of the two learned Judges of this Court,
passed further interim orders in connection with security
deposits furnished by the writ petitioner-appellants to the
following effect:
“It is pointed out that although
counsel on behalf of the
respondents was present in Court on
31st May, 1993 when interim orders
were passed, the respondents have
contended that they received the
interim orders only on 3rd June,
1993 and, in the meantime, have
adjusted the deposits made by the
appellants against demands for
premium, which is the subject-
matter of the appeals. Having
regard to the fact that counsel on
behalf of the respondents was
present on 31st May, 1993 when the
interim order was issued, this
stand of the respondents does not
appear to be justified and no
supplies to the appellants can be
held up upon that basis. Until
further order, the deposits made by
the appellants in their entirety
shall continue to be treated as
deposits.”
The aforesaid interim orders have continued through out
to operate in the present group of matters till date. We,
therefore, deem it fit to direct that the said interim
reliefs in the aforesaid terms will continue to operate till
the final disposal of the remanded writ petitions by the
High Court and will abide by the ultimate decisions rendered
by the High Court in the said writ petitions. It is obvious
that while disposing off the writ petitions finally, it will
be open to the High Court to pass appropriate final
directions as it may deem fit and proper in the light of its
decisions in the writ petitions. The appeals are allowed
accordingly. There is no order as to costs in the facts and
circumstances of the case.
W.P. (C) No.557 of 1993:
The above writ petition has been moved directly before
us under Article 32 of the Constitution of India for
declaring the impugned clause of the said notification dated
30th December, 1988 as ultra vires to the extent it imposed
premium on coal of the collieries listed in the Annexure to
the said notification. As we are remanding other writ
petitions, as indicated earlier, to the High Court for
disposal on merits, we reserve liberty to the petitioner of
this writ petition to file a fresh writ petition under
Article 226 of the Constitution of India before the High
Court within six weeks from today. If such writ petition is
filed within the aforesaid period, it will be clubbed with
the remanded writ petitions and will be decided by the High
Court along with them as the questions involved therein will
be common to all of them including the writ petition to be
filed by writ petitioner M/s H.M.P. Cements pursuant to this
order. The interim reliefs, given in W.P.(C) No.557/93 will
also continue to operate till the final disposal of the writ
petitions if filed by the petitioner as per present order
and will abide by the ultimate decision rendered therein by
the High Court.
The writ petition is disposal of accordingly subject to
the aforesaid liberty given to the petitioner and without
going into the merits of the contentions raised in the writ
petition and keeping them open for consideration of the High
Court in the writ petition that may be filed by the
petitioner.
