Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-011793-011793 – 2025 |
| Diary Number | 22115/2012 |
| Judge Name | HON’BLE MR. JUSTICE J.B. PARDIWALA |
| Bench | HON’BLE MR. JUSTICE J.B. PARDIWALA and HON’BLE MR. JUSTICE R. MAHADEVAN |
| Precedent Value | Binding authority |
| Overrules / Affirms |
|
| Type of Law | Constitutional law (Article 14, 39(b)), administrative law, energy/PSU regulation |
| Questions of Law |
|
| Ratio Decidendi | The Court held that coal price-fixing authority, once deregulated by CCO 2000, remained vested in Coal India Ltd., and an interim price notification was within its executive domain. A 20% surcharge on linked non-core consumers satisfied Article 14’s rational-classification test, serving the legitimate aim of sustaining coal supply in light of rising operational costs. Refund claims fail absent proof that surcharge burdens were not passed on (unjust enrichment). Judicial review of PSU pricing is limited to legality and reasonableness, not economic wisdom. |
| Judgments Relied Upon | Ashoka Smokeless Coal India v. UOI (2007) 2 SCC 640; Pallavi Refractories v. Singareni Collieries (2005) 2 SCC 227; Cynamide India (1987) 2 SCC 720; Shri Sitaram Sugar (1990) 3 SCC 223; Natural Resources Allocation (2012) 10 SCC 1; Shree Meenakshi (1974) 1 SCC 468; Prag Ice (1978) 3 SCC 459; Mafatlal Industries (1997) 5 SCC 536; State of TN v. River Interlinking (2021) 15 SCC 534 |
| Logic / Jurisprudence / Authorities Relied Upon by the Court | Statutory delegation of price-fixing to coal companies under CCO 2000; Article 14’s tolerance for reasonable classification; Article 39(b)’s common-good mandate; rational-nexus test for classificatory measure; limited judicial inquiry into economic policy (Balco 2002; Kirloskar Ferrous 2025). |
| Facts as Summarised by the Court | Coal India Ltd., a PSU formed by nationalisation, distributed coal via core/non-core linkage until its e-auction policy was struck down in Ashoka Smokeless (2006). It then notified an Interim Coal Policy (Dec 2006–Oct 2007) with a 20% price hike for linked non-core consumers and 30% for unlinked non-core. Respondents challenged the surcharge as arbitrary under Article 14. Single Judge and Division Bench quashed it and ordered refunds. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts, High Courts and tribunals on PSU pricing power and interim measures |
| Persuasive For | Administrative tribunals, policy-making bodies in PSU sector |
| Distinguishes | Ashoka Smokeless (e-auction invalid, but PSUs retain price-notification power); Maa Mundeshwari (Patna HC on surcharge refund without full context) |
| Follows | CCO 2000 deregulation; Pallavi Refractories on dual pricing; Mafatlal on unjust-enrichment principles |
What’s New / What Lawyers Should Note
- Confirms PSUs retain executive authority under CCO 2000 to notify interim prices even when e-auction struck down.
- 20% surcharge on linked non-core sector survives Article 14’s rational-classification test if tied to a legitimate aim (sustaining supply amid cost rise).
- Judicial review limited to legality and reasonableness of price-fixing, not economic wisdom; respects separation of powers.
- Refunds of excess charges require claimant to prove surcharge burdens were not passed to end consumers (Mafatlal unjust-enrichment test).
- Limited-notice appeals can be expanded to address core legality of policy decisions (Biswajit Das 2025).
Summary of Legal Reasoning
- Statutory delegation: CCO 2000 withdrew Central Govt’s power to set coal prices (CCO 1945, clauses 4 & 8) and vested it in Coal India Ltd. and subsidiaries.
- Constitutional constraints: Article 14 permits dual pricing if based on rational classification (Pallavi Refractories). Article 39(b) demands subserving the common good, allowing reasonable profit to maintain supply.
- Ashoka Smokeless clarity: PSU cannot abdicate pricing to variable e-auction purely for profit; must fix prices on known criteria. Committee directions related to supply policy, not a blanket ban on interim price notifications.
- Rational-nexus test: Surcharge targeted at linked non-core users, who consume coal in small volumes, to offset 1.2% of input-cost rise—legitimate aim, minimal public burden.
- Refund and unjust enrichment: Claimants must prove surcharge wasn’t passed on to third-party end users. Absent such proof, refund requests fail and public money remains for public purposes.
Arguments by the Parties
Appellant (Coal India Ltd.)
- Price fixation is an executive/PSU function under CCO 2000; courts may review only for legality and rationality, not substitute policy choice (Cynamide India; Sitaram Sugar; Natural Resources Allocation).
- Interim Coal Policy validly notified under price-deregulation; 20% surcharge rationally classified to protect core consumers and offset PSU cost increase.
- Dual pricing is commercially expedient; no constitutional bar to reasonable profit.
- Refund demands trigger unjust-enrichment principle: respondents must show surcharge not passed to end users; public money shouldn’t be returned absent such proof.
Respondents (Linked non-core manufacturers)
- PSU lacked authority under Ashoka Smokeless to notify interim prices without expert-committee guidelines.
- 20% surcharge was arbitrary, discriminatory against non-core linked users, violating Article 14’s equality guarantee.
- Surcharge served profit motive, not public good; no justification for targeting only 1% of consumer base.
- Refund entitlement is absolute for excess levy, following precedents (Tetulia Coke; SJ Coke; Horra Coke); unjust-enrichment defence inapplicable to price refunds.
Factual Background
Coal India Ltd., a nationalised PSU, supplied coal via core/non-core linkages at notified prices until adopting an e-auction system (2003–2006). After the Supreme Court struck down e-auction in Ashoka Smokeless (2006), the PSU issued an Interim Coal Policy (Dec 15 2006–Oct 2007) raising coal prices by 20% for linked non-core users. Non-core manufacturers challenged the surcharge as arbitrary under Article 14. High Court quashed the interim policy and ordered refunds; Coal India appealed to the Supreme Court.
Statutory Analysis
- Colliery Control Order, 1945 (CCO 1945): empowered Central Govt to fix coal prices (clause 4) and regulate disposal (clause 8).
- Colliery Control Order, 2000 (CCO 2000): repealed price-fixing role of Central Govt; delegated price notification to coal companies (clause 6 preserving only disposal-regulation powers).
- Constitutional Provisions
- Article 14 (equality, reasonable classification versus proportionality).
- Article 39(b) (common-good distribution of natural resources, allowing reasonable profit).
- Article 298 (PSU power “to carry on trade/business”).
Alert Indicators
- ✔ Precedent Followed – CCO 2000 price-deregulation; Pallavi Refractories dual-pricing test
- ✔ Precedent Followed – Ashoka Smokeless (PSUs retain pricing authority)
- 🔄 Conflicting Decisions – Patna HC’s Maa Mundeshwari (single-judge quashing surcharge without detailed reasoning)
- 📅 Time-Sensitive – Interim Coal Policy applicable only Dec 2006–Oct 2007