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M/S. SKJ Coke Industries Ltd. v. Coal India Ltd & Ors.

Civil Appeal · 2020 INSC 145Decided 7 Feb 2020
Civil Appeal No. 8153 of 2009
Justice Deepak Gupta · Justice Aniruddha Bose

Background

A coke-manufacturing company in Assam had, since 1989, been allocated a fixed monthly quantity of low-ash coal from a Coal India subsidiary at a government-regulated preferential ("linked") price. In 1996, the coal-pricing regime was partly deregulated through a new "Liberalised Sales Scheme" (LSS), and the coal company began charging the appellant the higher LSS market-linked price instead. The appellant argued that an internal committee resolution had specifically labelled it a "linked" consumer, so it should have continued paying the older, lower preferential price.

Decision Breakdown

The Supreme Court held that being designated a "linked unit" in the committee's resolution was meant only to guarantee the appellant a steady monthly coal supply: the same resolution separately specified that the price to be charged would be "as prevalent at any point of time," meaning it could change. Since the Central Government had validly exempted coal companies from the older price-control rules from January 1996 onward, the coal company was legally entitled to charge the newer, higher LSS price. The Court agreed with the High Court's view and dismissed the appeal.

Lesson Learnt

Being labelled a "linked" or preferential consumer for supply purposes doesn't automatically guarantee a fixed preferential price forever: the exact wording of the governing resolution or regulation controls, and a supply guarantee is not the same as a price guarantee.

Official source (sci.gov.in)View Judgment (PDF)

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