Supreme Court Affirms Competence of Coal India to Notify Interim Prices Under CCO 2000; Upholds 20% Increase for Non-Core Sector

The Apex Court further clarified that coal price fixation is an exercise of economic policy within the statutory domain of the executive, and judicial scrutiny is limited to examining legality rather than the merits of the policy.

The Court was hearing appeals filed by Coal India Ltd. and its subsidiaries against the judgment of the Calcutta High Court, which had struck down the Interim Coal Policy and directed the refund of the 20% additional charge levied on non-core sector industries.

A Bench of Justice J.B. Pardiwala and Justice R. Mahadevan, while delivering the judgment, observed that “we have no qualms observing that this Court placed no restriction on the appellant’s powers to regulate prices through the process of price notification as the same was already governed by the CCO, 2000 and the appellant was competent to notify interim prices by way of the Interim Coal Policy.”

Advocate Kedar Nath Tripathy appeared for Coal India Ltd. and its subsidiaries. Advocate Ravi Bharuka appeared for the respondent industries.

Background

Following the decision of the Supreme Court in Ashoka Smokeless Coal India (P) Ltd. v. Union of India, which invalidated the e-auction system of coal distribution, the Government and Coal India Ltd. introduced the Interim Coal Policy in 2006.

The Policy provided that while core sector industries such as power and steel would continue to procure coal at the notified price, non-core sector industries would pay an additional 20% over and above the notified price.

The Calcutta High Court had struck down the Policy, holding that the 20% increase was invalid. It further directed the refund of the additional cost recovered from non-core sector consumers. Aggrieved, Coal India and its subsidiaries preferred appeals before the Supreme Court.

Court’s Observations

Authority to Notify the Interim Coal Policy

The respondents argued that in light of Ashoka Smokeless, Coal India lacked the authority to frame the Interim Coal Policy until recommendations of an expert committee were placed before the Government.

Rejecting this submission, the Court held that Ashoka Smokeless did not curtail the appellant’s statutory powers under the Coal Control Order, 2000, the Court remarked that “Nowhere in the judgment was any restriction placed on the appellant company to notify prices. Even the direction for creation of an expert committee was made to provide suggestions in respect of a viable supply policy primarily. In continuation, the Court also granted liberty to the Central Government along with the coal companies to evolve a viable policy.”

It further cautioned that to read Ashoka Smokeless v. Union of India in the manner suggested by the respondents “would amount to this Court replacing the intention of the legislature and executive to deregulate prices by way of the CCO, 2000 with a policy decision of its own”, which would run contrary to the doctrine of separation of powers.

Validity of the 20% Increase Under Article 14

The Apex Court addressed whether the 20% additional charge imposed on non-core sector industries was discriminatory, holding that economic policies often involve classification, and such classification is constitutionally permissible if it is rational and linked to the object sought to be achieved.

The Bench observed that “…We are of the considered view that the increase of 20% in the notified prices for the non-core linked sector which mitigated the increase in operational costs to the extent of 1.2% of the total increase, was a measure that fulfilled the objective of sustainable operation, maintenance and development of coal mines by the appellant without engaging in excessive profiteering.”

The Court concluded that the price increase was a rational policy decision, falling squarely within the State’s economic discretion, and therefore not violative of Article 14.

Refund of the 20% Additional Cost

The respondents had further sought a refund of the 20% increase collected under the Interim Coal Policy. Dismissing the claim, the Court held that no refund was payable once the Policy was upheld as valid.

The Bench further held that refunds from public funds must be supported by irrefutable evidence, while remarking that “refunds to be made by the State or its instrumentalities, we must bear in mind that such refund will be granted from public money. Therefore, the relief of refund must be provided only when the same is corroborated by complete and irrefutable evidence. In the present case, only eight out of twenty-three respondents have placed additional documents before us.”

It was also observed that only a handful of industries had submitted certificates or bills to establish that they had themselves borne the additional cost, and the majority had not produced complete records. In such circumstances, a refund could not be granted.

Conclusion

Allowing the appeals, the Supreme Court set aside the judgment of the Calcutta High Court and upheld the validity of the Interim Coal Policy of 2006, while dismissing the claims for refund by the respondents.

Cause Title: Coal India Ltd Vs Ms Rahul Industries & Ors (Neutral Citation: 2025 INSC 1103)

Appearances

Appellants: Senior Advocate Chinmoy Pradip Sharma, Advocates Kedar Nath Tripathy AOR, Aditya Narayan Tripathy, Amit Meharia, Tannishtha Singh and others.

Respondents: Advocates Ravi Bharuka, AOR, Aishwarya Bhati, A.S.G, Gp. Capt. Karan Singh Bhati, AOR, Chitrangda Rastravara, Hemendra Sharma and others.

Click here to read/download Judgment