Jharkhand High Court
Industries Commerce & Association vs Union Of India on 31 August, 2024
Author: Rongon Mukhopadhyay
Bench: Rongon Mukhopadhyay, Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
LPA No. 587 of 2019
.........
Industries Commerce & Association, registered association
within the meaning of Companies Act, 1956 and having its
registered office at I.C.O. Association Road, P.O. Hirapur,
P.S.Hirapur, District-Dhanbad 826001, Jharkhand,
through its President Baidya Nath Singh, aged about 71
years, son of late Hari Narayan Singh, resident of
Ashoknagar, Dhansar, P.O. & P.S. Dhansar, District-
Dhanbad. ..... Appellant
Versus
1. Union of India, service through Secretary, Ministry of
Coal, having his Office at Shastri Bhawan, P.O., P.S. &
District-New Delhi.
2. M/s Coal India Limited, a Public Sector Undertaking
under the Ministry of Coal, Government of India, having
its registered office at Coal Bhawan, 10, Netaji Subhas
Road, Calcutta 700001, P.O. & P.s. Netaji Subhas road,
through its Chairman-cum-Managing Director, having
its office at Coal Bhawan, 10, Netaji Subhas Road,
Calcutta 700001, P.O. P.S. Netaji Subhas Road.
3. M/s Bharat Coking Coal Limited, having its registered
office at Koyla Bhawan, P.O. Koyla Nagar, P.S.
Saraidhela, District-Dhanbad 826005, Jharkhand
through Chairman-cum-Managing Director, having its
office at Koyla Bhawan, P.O. Koyla Nagar, P.S.
Saraidhela, District-Dhanbad.
4. Chief General Manager (Marketing), Coal India Limited,
having his office at Apeejay House, 15 Park Street, P.O.
Park Street, P.S. Park Street, District Kolkata-700016
(WB).
5. Chief General Manager (Sales & Marketing), Bharat
Coking Coal Limited having its registered office at Koyla
Bhavan, P.O. Koyla Nagar, P.S. Saraidhela, District
Dhanbad 826005, Jharkhand.
6. General Manager (Sales & Marketing), Bharat Coking
Coal Limited, having office at Koyla Bhavan, P.O. Koyla
Nagar, P.S. Saraidhela, District Dhanbad 826005,
Jharkhand.
7. Chief Sales Manager (Linkage), Bharat Coking Coal
Limited, having his office at Koyla Bhavan, P.O. Koyla
Nagar, P.S. Saraidhela, Jharkhand. District Dhanbad
1
826005.
8. Deputy Chief Sales Manager (Linkage), Bharat Coking
Coal Limited, having his office at Koyla Bhavan, P.O.
Koyla Nagar, P.S. Saraidhela, District Dhanbad 826005,
Jharkhand. .....Respondents
.........
CORAM: HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY
HON'BLE MR. JUSTICE DEEPAK ROSHAN
.........
For the Appellant : Mr. Sunil Kumar, Sr. Adv.
Mr. Depak Kr. Sinha, Adv.
For the Resp.-UOI : Mr. Anil Kumar, ASGI
For the BCCL : Mr. A.K.Mehta, Adv.
C.A.V. ON 06/05/2024 PRONOUNCED ON: 31/ 08/2024
Per Deepak Roshan, J.
Heard learned counsel for the parties.
2. The brief facts of the case are that the appellant is an Association of Hard Coke Manufacturers, registered under Section 25 of the Companies Act, 1956, having altogether 74 members, who own and possess their respective Hard Coke plants, which are colliery within the meaning of Colliery Control Order, 2000 promulgated by the Central Government vide Notification No. S.O. 1 (E), January, 2000 under Section 3 read with Section 5 of the Essential Commodities Act, 1955 (10 of 1955) and in supersession of the Colliery Control Order, 1945.
The members of the Appellant Association are carrying out the business of operating hard coke manufacturing units, which are registered as small-scale industries and the basic and essential raw material for manufacturing of hard coke is coking coal. They were receiving coking coal from the Respondent-Coal Company under Fuel Supply Agreement (FSA). Earlier, the linkage system was developed to ensure rational and co-ordinate development of coal production and to promote optimum 2 utilization of coal resources by effecting equitable, fair and reasonable distribution of coal.
In order to achieve the objective that the linkage of coal demand is primarily done with the objective of planning of coal supplies, keeping in view indigenous coal resources as well as the need to supply fuel of appropriate quality to the consumers at the same time making the most economic use of the available capacity of production and transport of coal; under the system of linkage, certain consumers are linked to specified mines from which they use to receive specified quantities and specified grades of coal on a monthly basis from the respondents.
The members of the appellant association were linked as non-core sector consumers of coal and, therefore, linked by the respondent-Coal India Limited (in short CIL) to Respondents-Bharat Coking Coal Limited (in short BCCL) for release of specified quantities, qualities (grade) and sources (mines) of coal (coking coal) on a monthly basis.
3. The Respondents-BCCL as also the Coal India Limited and other subsidiary coal Companies had issued notices proposing to effect sale of coal to the non-core sector consumers of respondent BCCL by e-auction and framed a scheme in relation thereto. In consequence thereof; several writ appeals were filed before the several High Courts against the said scheme of e-auction but all the writ appeals, pending in respective High Courts have been transferred before the Hon'ble Apex Court by passing appropriate orders on the Transfer appeals and the Hon'ble Apex Court has passed an order in the case of Ashoka Smokeless Coal India Private Ltd. and others-Vs.-Union of India and others reported in (2007) 2 SCC 640;
3(hereinafter to be referred as Ashoka Smokeless Fuel Case) whereby the Hon'ble Apex Court has held that the Central Government and the Coal Companies are not profit earning concerns, but, are an extended arm of welfare state. They are different from private sectors that thrive only on a profit motive and therefore, the coal companies are under a constitutional obligation to fix a reasonable price of coal. The consideration of implication of the provision of Article 39 (b) of the Constitution of India has also been dealt with, which provides provision for ensuring equitable distribution of resources and considering all these aspects of the matter; it has been laid down therein that the CIL and its subsidiaries are required to distribute coal equitably and at a fair and reasonable price and for fixation of reasonable and fair price of coal, it is essential that price of coal is actually fixed and not kept variable.
The further observation has been made that the said scheme of e-auction did not lead to fixation of price of coal. It was not a mode to fix price; rather, it was only a mode to obtain maximum price. Its motive was to derive optimum benefit by sale of coal and while doing so coal companies did not have to follow the principles of fixation of price and as such, the conclusion has been arrived that the scheme of e-auction as submitted by Union of India and coal companies were not justified.
4. Thereafter, the Central Government came out with a memorandum on 18th October, 2007, purporting to be the 'New Coal Distribution Policy' in supersession of the existing coal distribution policy and under the said policy, the members of the appellant association were required to receive 75 per cent of their requirement of coal through 4 Fuel Supply Agreement (FSA) at notified prices to be fixed/declared by the respondents-Coal India Limited and balance 25 per cent of their requirement through e- auction/import and under the said coal distribution policy, the members of the appellant-association were required to enter into Fuel Supply Agreement (FSA) with the coal companies within a period of six months' from the date notified by the Respondents-Coal India Limited.
The members of the appellant association had entered into Fuel Supply Agreement (FSA) with the Respondent-Coal Company for supply of Coal and while doing so, the Respondents have again decided to adopt the method of e-auction. The appellant association has filed a representation, inter alia, intimating the Respondent- Central Government that the said draft Policy does not clarify as to how linkage quantity will be auctioned and how quota will be fixed for each category and sub-category of consumers, but having not considered; rather come out with the decision to distribute through e-auction of linkage.
5. Mr. Sunil Kumar, Ld. Sr. counsel for the appellant contends that there is no fault in the Fuel Supply Agreement (FSA); rather, if the decision of the Central Government to supply the coal through e-auction would be allowed to continue, the appellant's requisite demand of coal will not be fulfilled and it is the settled position that if the Central Government would be allowed to go for bid, the same would be available for fetching the profit, which was contrary to the observation made by the Hon'ble Apex Court in the Ashoka Smokeless Fuel Case and therefore, the ground has been agitated that if the other big Companies will be allowed to participate in the process of e-
5auction, through their participation, the amount of coke bid will go up, thereby the poor units holders, who are solely dependent on the coal to be supplied will ultimately have to suffer either by not getting the required quantum of coal or getting it in the higher cost.
It has been submitted that it will be nothing, but will lead to monopolistic market and therefore, the policy of e- auction may not be allowed to grow.
6. Ld. Sr. Counsel further submits that Auction for Trench-IV was held between 25.06.2019 to 29.06.2019. In this auction, the Respondent BCCL had offered 10,00,000 ton of coal from six collieries for cookery/hard coke manufacturing units but out of which most of the collieries are either weakly coking coal or inferior grade of coal which is not suitable for manufacturing of hard coke. For open Auction for Trench-V was held between 18.11.2022 to 25.11.2022. In this auction 10,00,000 tons of coal have been offered for all the SSF CMPDIL technology, mini SSF CMPDIL technology, cookery / hard coke manufacturer units and CFRI technology-based plant (such as soft coke plants and other end use plants). Out of which only 1,90,000 tons of coal has been offered for hard coke plant/unit.
It has been pointed out that the total requirement of coal of hard coke unit is 36,13,027 MT of coal per annum (approx. 40,00,000 ton of coal). Due to offer of less quantity, the total Jharkhand based hard coke units were unable to participate / booked their quantity. Further, due to offer of less quantity, the price of coal has been tremendously increased during the e-auction and for the same reason maximum number of units were unable to 6 book their quantity.
7. Mr. Kumar further contended that there were no separate auctions conducted in the name of Hard Coke Manufacturing Industries/Units. Respondent BCCL never auctioned the coal for hard coke units like CPP, Sponge Iron, Cement, Steel (Coking). It has been submitted that before linkage auction, 110 units were linked with Respondent BCCL, now it is 130 units in Dhanbad, out of which only 59 units have participated from Jharkhand, Bengal and other states of country. This poor participation shows that this is not suitable for hard coke manufacturing units.
He further submits that the members of the Appellant Association, who are hard coke manufacturers, cannot be clubbed together with the other sectors, as the same would result into unequal being treated on equal footing, which is ultra vires Article 14 of the Constitution of India. Furthermore, it is absolutely incorrect on the part of the Respondents to contend that they are separately auctioning the coking coal to the members of the Appellant Association. In this regard, he submits that the Respondents are neither auctioning the coking coal separately for the members of the Appellant Association; nor giving the sufficient quantity of coking coal nor providing required quality/grade of coal which is the only raw material for these Hard Coke Units through the impugned e-auction scheme. The quality of coking coal offered through the impugned e-auctions, conducted in last eight years, was weakly coking coal; the offered coking coal contains high inherent moisture (IM), low caking index (CI), high ash contents (ASH), low volatile materials (VM) and 7 low fixed Carbons (FC), which were/are not suitable in the manufacturing of hard coke The members of the appellant association have been included in the "others" sub-sector of the non-regulated sector of consumers, for the purpose of e-auction. It is relevant to note here that the Hard Coke Manufacturers like the members of the appellant association use coking coal as their basic raw material: whereas the other consumers who have been included in the same non-core sector like steel, sponge iron, cement, aluminum, SSF etc. use coking coal as a fuel, and that too an alternative fuel, to run their units. Their basic fuel is non coking coal but under the impugned policy they are bidding for coking coal also. He contended that the members of the appellant's association use only coking coal as their raw material and as such; they can bid only for coking coal.
8. Learned senior counsel further submits that the Ministry of Coal, Government of India (Respondent no. 1) has stated in their L.A. No. 4748 of 2022 that there should be a level playing field for all consumer groups for the e- auction and that there should be enough players within a sub-category to ensure fair compel, for which the Inter- Ministerial Committee had categorized the consumers of the non-regulated sector into three categories i.e. (i) Cement & Aluminum (ii) Iron & Steel (including sponge iron) (iii) Others (includes Hard Coke Manufacturers i.e. members of the appellant association), in their 4" meeting held on 20.04.2015.
The very existence of the members of the appellant association is premised on a regular supply of coking coal from the coal mines operated by BCCL at pre-determined 8 rates. The members of the appellant association are actual users of coal linked consumers; whereas consumers like traders are not actual consumers of coal unlinked consumers. The Auction Policy treats linked and un-linked consumers as equals, even though they should not be treated as members of the same category.
He contended that it has been stated by the Hon'ble Supreme Court in Ashoka Smokeless Fuel Case that linked consumers and traders cannot belong to the same class/category as they stand on different footing. Therefore, given the fact that the demand pattern of the Hard Coke Manufacturers i.e. the members of the appellant association is also very different from that of the other consumers belonging to the non-regulated sector, the Hard Coke Manufacturers are also needed to be excluded from the e-auction policy.
Relying upon the aforesaid arguments; Mr. Kumar contended that the writ court has not considered all these aspects and dismissed the claim of the petitioner; as such, the impugned order requires interference.
9. Mr. Anup Kr. Mehta, learned counsel for the respondent-Coal India Ltd. and the Bharat Coking Coal Limited has submitted on the strength of the counter affidavit filed on their behalf that after introduction of the New Coal Distribution Policy, 2007, all valid linked consumers of Respondent-Coal India Limited executed Fuel Supply Agreement with subsidiary Companies for Annual Contracted Quantity (ACQ) equivalent to 75 per cent of the normative requirement of End Use Plants of the consumers.
The Ministry of Coal vide its Notification dated 9 15.02.2016 has introduced auction of linkage of non- regulated sector (NRS) consumers and it was decided that the existing FSAs of non-regulated sector, which are maturing in 2015-16 onwards after completion of their agreement tenure will not be renewed further and any consumer willing to continue the coal supply will have to secure linkage through transparent auction of linkage process.
10. Mr. Anil Kumar learned ASGI submits that economic policies are very dynamic in nature and are subject to change and it is a settled principle of law that the wisdom and advisability of economic policies of Government are not amenable to judicial review. It is for the Government to make, amend and cancel policy, and Parliament has unfettered power to enact, amend or repeal any law to provide enabling statutory framework to economic policies. It is not for Courts to consider the relative merits of different economic policies.
11. Learned counsels representing the respective respondents further submit that present appeal is based on incomplete, incorrect, and grossly misplaced understanding of the new policy for auction of coal linkages for NRS, introduced by the Government of India on 15.02.2016 and is driven by fear of alteration in status quo. The entire appeal is based on an incorrect understanding of the impugned policy and faulty and erroneous comparison with the E-auction scheme of coal companies which was quashed by the Hon'ble Supreme Court in the Ashoka Smokeless Fuel Case in the year 2006.
It has been further submitted that the appellant strongly relies on the judgment of Hon'ble Supreme Court 10 in the Ashoka Smokeless case, which was passed during the time of a different policy regime and the laws and policies of coal sector in general has undergone sea change since the time of Ashoka Smokeless Judgment and in particular, the system of coal linkage has transformed greatly since then after introduction of New Coal Distribution Policy (NCDP) w.e.f. October, 2007.
It has been further submitted that situation of availability of coal has also changed over this period and present situation cannot be equated with that existent at the time of Ashoka Smokeless Fuel Case. The facts, circumstances, legislative and policy framework which existed at that time greatly differ from the policy and the coal availability scenario that exists today.
12. Mr. Kumar, learned ASGI further submits that the challenge to the impugned policy and its relevance is to be scrutinized in view of recent judgment of Hon'ble Apex Court rendered in the case of Centre for Public Interest Litigation v. Union of India reported in (2012) 3 SCC 1. He further submits that the policy which preceded the impugned policy of auction of coal linkages for non- regulated sector was the New Coal Distribution Policy dated 18.10.2007 (NCDP). Under the NCDP, the classification of consumers into core and non-core sector was reviewed and was dispensed with.
It has been submitted by the ASGI that the salient feature of the NCDP was the replacement of the erstwhile non-committal form of linkage with introduction of a contractual LOA to be issued to potential consumers by CIL.
1113. Furthermore, if the appellant association was interested in formulation of a reasonable policy, they ought to have participated in the public consultation and should have submitted their comments and views sought by the Ministry of Coal. However, no such suggestions/views were submitted by the appellant association. In the 6th Meeting of the IMC held on 21.08.2015, the comments/views received from various stakeholders on proposed auction of linkages to non- regulated sector were discussed. Thereafter, Corporate Associations submitted their presentations before the IMC.
Learned ASGI further submits that the responses received from various stakeholders and individuals, besides comments from Ministries of Railways, Steel and Department of Fertilizers were placed before the 6 th meeting of IMC on 21.08.2015 for consideration. It is thus submitted that an extensive and inclusive exercise has been undertaken by the UOI while formulating the impugned policy of e-auction of coal linkages/LoA after considering views of the stakeholders.
Learned ASGI contended that the contentions raised in the instant appeal are based on conjectures, surmises and false assumptions of the appellant without any actual proof of loss or detriment to the SSI sector as a result of the impugned policy. The appeal reflects the fear of the appellant towards policy changes, the misplaced understanding of the law laid down by Hon'ble Supreme Court in Ashoka Smokeless Fuel Case and its needless comparison to the impugned policy provisions. Accordingly, the appeal is liable to be dismissed in limine.
1214. Having heard learned counsel for the parties and after going through the documents annexed with the respective affidavits, it appears that after introduction of the New Coal Distribution Policy, 2007, all valid linked consumers of Respondent-Coal India Limited executed Fuel Supply Agreement with subsidiary Companies for Annual Contracted Quantity (ACQ) equivalent to 75 per cent of the normative requirement of End Use Plants of the consumers.
The Ministry of Coal vide its Notification dated 15.02.2016, has introduced Auction of Linkage of Non- regulated sector (NRS) consumers and it was decided that the existing FSAs of non-regulated sector, which are maturing in 2015-16 onwards after completion of their agreement tenure, will not be renewed further and any consumer willing to continue the coal supply will have to secure linkage through transparent auction of linkage process.
It was decided that any consumer can secure linkage quantity up to hundred percent of their normative requirement. After implementation of linkage auction policy, Coal India Ltd. conducted auction of linkage for different subsectors of non-regulated sector consumers since 2016 onwards and so far, four phase of linkage auction is at the verge of ending.
15. It is evident from record that the existing FSAs executed during NCDP regime in all subsidiaries of Coal India Ltd., have not been renewed and the willing consumers have opted to switch over to FSAs executed under linkage auction process. Since introduction of linkage auction, a total of 960 FSAs has already been executed under different tranches all over CIL and they are 13 lifting coal without any protest.
So far as the contention of the appellant is concerned regarding quashing of linkage auction process; it appears that the present process is transparent and opportunity is given to all consumers, whether they have any previous linkage with CIL or not in order to eliminate any discrimination and as a level playing strategy. The contention of the appellant that the respondents-BCCL does not offer 100 per cent of ACQ appears to be incorrect; rather, in fact, these consumers were getting more than 70 per cent of ACQ till 2010-11 after which, their offer was reduced due to restrictions imposed by the Jharkhand State Pollution Control Board in producing hard coke in their Hard Coke Plants. After the restriction was relaxed, then subsequently, the Respondents-BCCL increased the offer percentage.
It further transpires that during the last five years, the members of the appellant-Association have hardly lifted 50 per cent of coal quantity against the offer.
16. As a matter of fact, economic policies are very dynamic in nature and are subject to change and it is a settled principle of law that the wisdom and advisability of economic policies of Government are not amenable to judicial review. Reference here may made to BALCO Employees' Union (Regd.) Vs. Union of India & Ors. reported in (2002) 2 SCC 333), the case relating to disinvestment of BALCO, wherein the Hon'ble Supreme Court pointed out that the Courts ought to stay away from judicial review of efficacy of policy matters, not only because the same is beyond its jurisdiction, but also because it lacks the necessary expertise required for such a 14 task.
It appears that the appellant strongly relies on the judgment of Hon'ble Supreme Court in the Ashoka Smokeless Fuel Case, which was passed during the time of a different policy regime and the laws and policies of coal sector in general has undergone sea change since the time of Ashoka Smokeless Fuel Case Judgment and in particular, the system of coal linkage has transformed greatly since then after introduction of New Coal Distribution Policy (NCDP) w.e.f. October, 2007. The facts and circumstances of the instant case and the Ashoka Smokeless case are non- comparable and are distinct from each other.
17. The policy under challenge in the Ashoka Smokeless Fuel Case was a scheme for e-auction of coal formulated by Bharat Coking Coal Limited (BCCL), which is just a subsidiary of Coal India Limited, at a time when multiple other ways of distribution of coal like Open Sale Scheme, Linkage etc. were available, without any public consultation and without following any reasonable criteria/eligibility to participate in auction. Thus, the scheme which was quashed in Ashoka Smokeless Fuel Case was not even a policy decided by the Respondent- Government of India. While on the other hand; the policy impugned in the instant appeal is an economic policy of Government of India, issued with approval of Cabinet Committee on Economic Affairs (CCEA) after holding public consultations and after considering views of the stakeholders.
18. At this juncture, it may be pointed out that the primary reason for the Hon'ble Apex Court to quash the e- auction of coal scheme in 2006 was that there was no 15 distinction between the class of coal consumers participating in the auction as all categories of consumers including core sector, non-core as well as the traders, were made by the coal companies to participate in single auction. Moreover, the said auction did not result in fixation of price of coal which was a necessary requirement for an essential and scarce commodity at the relevant time. Other factors included that the coal sector was nationalized and the Coal India Limited (CIL) had complete monopoly over the sale and distribution of coal in the market. Even though 'coal' as such was no longer an essential commodity under the Essential Commodities Act, the Hon'ble Apex Court in 2006 while pronouncing the judgment, had treated it as an essential commodity.
19. The basic context underlying and on whose basis the Ashoka Smokeless Fuel Case judgment was passed have either completely removed or have undergone a sea change. The Coking Coal Mines (Nationalisation) Act, 1972 and the Coal Mines (Nationalization) Act, 1973 have been repealed by the Repealing and Amending (Second) Act, 2017 w.e.f. 5th January, 2018 and with such repeal, though CIL continues to be a government company, yet the nationalization in coal sector is no longer the law.
Further, the legal regime in coal sector has changed completely with enactment of Coal Mines (Special Provisions) Act, 2015; whereby sale of coal by an allocatee, whether private or government company, is now permitted. Same provisions have been incorporated in Mines and Minerals (Development and Regulation) Act, 1957 and Coal Mines (Nationalization) Act, 1973 before its repeal. Hence, monopoly of CIL, which was an important basis of Ashoka 16 Smokeless Fuel Case Judgment, no longer exists over sale and distribution of coal.
The situation of availability of coal has also changed over this period and present situation cannot be equated with that existent at the time of Ashoka Smokeless Fuel Case Judgment. The facts, circumstances, legislative and policy framework which existed at that time greatly differ from the policy and the coal availability scenario that exists today.
20. By now it is well settled, that the right of the Government to bring in economic policies cannot be curtailed on the basis of flimsy reasons that the previous policy was better than the current one and that it will cause economic hardships to a particular class of persons. The law is now no more res integra that citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government; nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights.
It is also relevant to mention here that there is a significant change in the judicial viewpoint regarding the way the government shall deal with distribution of natural resources and auction of the same is the best option even though it is clarified that it is not the only fair method by which the resources are to be distributed. Auction, not only is a method for price fixation but also results in identification of a worthy applicant among a class of equally-situated persons to whom state largesse is to be given.
1721. The impugned policy and its relevance are to be scrutinized in view of recent judgments of Hon'ble Supreme Court regarding distribution of natural resources by the Government. To illustrate the shift in judicial approach since Ashoka Smokeless Fuel Case Judgment, it is highlighted that the Hon'ble Apex Court in Centre for Public Interest Litigation v. Union of India reported in (2012) 3 SCC 1 (also known as the 2G spectrum case) dealt with the question of following a non- discriminatory policy for alienation of natural resources. While doing so it was observed as follows:
"95. This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum, etc. it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest.
96. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process."
Thereafter, the Hon'ble Apex Court, clarified its aforesaid observation, while exercising its advisory jurisdiction and considered the Special Reference no. 1 of 2012 [2012 (10) SCC 1] (hereinafter 2G Reference Judgment) after the judgment in 2G spectrum case regarding whether auction is the only method for 18 distribution of natural resources and other incidental queries wherein on 27.09.2012 it was opined at Para 148, 149 as under:
"148. In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional requirement or limitation for alienation of all natural resources and therefore, every method other than auction cannot be struck down as ultra vires the constitutional mandate.
149. Regard being had to the aforesaid precepts; we have opined that auction as a mode cannot be conferred the status of a constitutional principle. Alienation of natural resources is a policy decision, and the means adopted for the same are thus, executive prerogatives. However, when such a policy decision is not backed by a social or welfare purpose, and precious and scarce natural resources are alienated for commercial pursuits of profit maximising private entrepreneurs, adoption of means other than those that are competitive and maximise revenue may be arbitrary and face the wrath of Article 14 of the Constitution. Hence, rather than prescribing or proscribing a method, we believe, a judicial scrutiny of methods of disposal of natural resources should depend on the facts and circumstances of each case, in consonance with the principles which we have culled out above. Failing which, the Court, in exercise of power of judicial review, shall term the executive action as arbitrary, unfair, unreasonable and capricious due to its antimony with Article 14 of the Constitution."
Therefore, a potential for abuse cannot be the basis for striking down a method as ultra vires the Constitution. It is the actual abuse itself that must be brought before the court for being tested on the constitutional provisions.
It appears that earning and increment in the public exchequer as a result of revenue maximization is in public interest. Hon'ble Justice Kehar in his separate opinion, in the above mentioned (2012) 10 SCC 1 at para 186 of the Reference Judgment, expounded the same and further added that, "186..... I am in respectful agreement with the aforesaid conclusion, and would accordingly opine, that when natural resources are made available by the State to private persons for commercial exploitation exclusively for their individual gains, the State's endeavour must be towards maximisation of revenue returns. This alone would ensure that the fundamental right 19 enshrined in Article 14 of the Constitution of India (assuring equality before the law and equal protection of the laws), and the directive principle contained in Article 39(b) of the Constitution of India (that material resources of the community are so distributed as best to subserve the common good), have been extended to the citizens of the country."
22. It further appears that the policy which preceded the impugned policy of auction of coal linkages for non- regulated sector was the New Coal Distribution Policy dated 18.10.2007 (NCDP). Under the NCDP, the classification of consumers into core and non-core sector was reviewed and was dispensed with. Instead, it was decided that each sector/consumer would be treated on merit keeping in view the regulatory provisions applicable thereto and other relevant factors. The requirements of strategic sectors of Defense and Railways were to be met in full, Power utilities including Independent Power Plants/ Captive Power Plants and fertilizer were considered as one of the categories of consumers while the rest were considered as a separate category i.e. Other consumers, in which mostly the erstwhile non-core sector consumers fall, including the companies which are members of appellant association.
The salient feature of the NCDP was the replacement of the erstwhile non-committal form of linkage with introduction of a contractual LoA to be issued to potential consumers by CIL. At this stage, it is also pertinent to observe that if the appellant association was interested in formulation of a reasonable policy; they ought to have participated in the public consultation and should have submitted their comments and views sought by the Ministry of Coal. However, no such suggestions/views were submitted by the appellant association.
20Thereafter, execution of a Fuel Supply Agreement (FSA) which both are bilateral commercial and legally binding agreements/ contracts between the coal companies and all those coal consumers, whether belonging to core or non-core sector, whose requirement of coal was more than 4200 Tonnes per Annum (TPA). The small and tiny consumers belonging to non-core sector, whose requirement was less than 4200 TPA were to get coal through State-nominated agencies. The linked consumers of erstwhile non-core sector whose requirement was less than 4200 TPA of coal were given an option to either enter the FSA or to opt out of FSA regime and access their coal requirements through State nominated Agencies. The responses received from various stakeholders and individuals, besides comments from Ministries of Railways, Steel and Department of Fertilizers were placed before the 6th meeting of IMC on 21.08.2015 for consideration. There were varying views on whether auction of linkages should be done separately for Steel / Sponge Iron / Aluminum / Cement / CPP sectors or there should be separate windows for different categories of non-regulated sectors etc. Most of the stakeholders were of the view that there should not be any premature termination of FSAS, the existing FSAs should be continued and renewed as per the present practice or the incremental quantity may only be auctioned.
In pursuance of the approval of CCEA, the policy guidelines for auction of linkages of Non-Regulated Sectors viz. Cement, Steel/Sponge Iron, Aluminum and Others (excluding Fertilizers (urea) sector) including their Captive Power Plants (CPPs) through competitive bidding duly approved by the Competent Authority was issued on 21 15.02.2016 to CIL/SCCL for implementation of the decision of CCEA. Thus, it is crystal clear that the established procedure for formulation of a crucial economic policy was followed.
23. Having regards to the facts discussed hereinabove, we are of the view that an extensive and inclusive exercise has been undertaken by the UOI while formulating the impugned policy of e-auction of coal linkages/LoA after considering views of the stakeholders. The contentions raised in the instant appeal are based on conjectures, surmises, and false assumptions of the appellant without any actual proof of loss or detriment to the SSI sector as a result of the impugned policy. The appeal reflects the fear of the appellant towards policy changes, the misplaced understanding of the law laid down by Hon'ble Apex Court in Ashoka Smokeless Fuel Case and its needless comparison to the impugned policy provisions.
24. We are having no hesitation in holding that the writ court has rightly considered the entire issue in correct perspective; relevant part of which is quoted herein below:
"Issue No.1 It is well settled that the Court in exercise of judicial review do not ordinarily interfere with the policy decision of the execution, unless the policy can be faulted on ground of mala fide, unreasonableness, arbitrariness or unfairness etc. The arbitrariness, irrationality, perversity and mala fide will render the policy unconstitutional, however, if the policy cannot be faulted on any of these grounds the mere fact that it would affect business interest of a party does not justify invalidity of the policy. The Honble Apex Court in the case of Tamil Nadu Education Department Ministerial and General Subordinate Services Association and Ors. vs. State of Tamil Nadu and Ors. reported in (1980) 3 SCC 97, has opined that: "The Court cannot strike down a government order or a policy merely because there is a variation or contradiction. Life is sometimes contradiction and even consistency is not always a virtue. What is important is to know whether mala fides vitiates or irrational and extraneous factors fouls."22
25. At this stage, it would be profitable to refer the reference of Lord Justice Lawton in Laker Airways vs. Department of Trade (1977) 2 WLR 234, while considering the parameters of judicial review in matters involving policy decision of the execution. It has been held therein:
" .............In the United Kingdom affiliation policy is to be determined by the ministers within the legal framework set out by the Parliament. Judges have nothing to do it either policy-making or the carrying out the policy. Their function is to decide whether a minister has acted within the powers given to him by the statute or the common law, if it is declared by a Court after day process of law, to have acted outside his powers, he must sought doing he has done until such time as parliament gives him the powers he wants."
Further, in the judgment rendered in the case of State of Jharkhand and Ors. vs. Ashok Kumar Dangi and Ors. reported in (2011) 13 SCC 383, the Hon'ble Apex Court has held at paragraph 17 and 18 that:
"the settled position of law is that the State Government must have liberty and freedom in framing policy."
26. We therefore, are of the considered opinion that the policy guideline formulated by the Central Government need no interference by this Court and the appellant- association has failed to establish its case of suffering from the said policy guidelines from the vice of arbitrariness, unfairness, or non-transparency.
27. In view thereof; the instant letters patent appeal stands dismissed. Pending I.A., if any, stands closed.
(Rongon Mukhopadhyay, J.) (Deepak Roshan, J.) Jharkhand High Court at Ranchi Dated:- 31/08/2024 Amardeep/ AFR/ 23