Janpad Int. Bhatta Samiti and Others vs Union of India (UOI) and Others

These two modification applications have been filed by respondent No. 5 and respondent No. 3 respectively making substantially following prayers:

(i) It is, therefore Most Respectfully prayed that this Hon''ble High Court may graciously be pleased to modify the interim order dated 13.5.2010 and to vacate the interim mandamus granted by it, which is contrary to the order dated 13.4.2010 passed by the coordinate bench of Lucknow Bench of this Hon''ble Court in Civil Misc. Writ Petition No. 3254 (MB) of 2010 which is an absolutely identical matter and has same cause of action, otherwise applicant-respondent No. 5 shall suffer irreparable loss and injury, and/or to pass such other and further orders as this Hon''ble Court may deem fit and proper in the facts and circumstances of the case.

(ii) It is, therefore, Most Respectfully prayed that this Hon''ble High Court may graciously be pleased to modify the interim order dated 13.5.2010 and to vacate the interim mandamus granted by it, which is contrary to the order dated 13.4.2010 passed by the coordinate bench of Lucknow Bench of this Hon''ble Court in Civil Misc. Writ Petition No. 3254 (MB) of 2010 which is an absolutely identical matter and has same cause of action, otherwise applicant-respondent No. 3 shall suffer irreparable loss and injury, and/or to pass such other and further orders as this Hon''ble Court may deem fit and proper in the facts and circumstances of the case.

We have heard Sri Ravi Kant, learned Senior Advocate, assisted by Sri Ashish Kumar Dubey for respondent No. 5 (applicant), Sri C.L. Pandey, learned Senior Advocate, assisted by Sri Manoj Kumar for respondent No. 3 (applicant), Sri V.C. Mishra, learned Senior Advocate, assisted by Sri A.K. Pandey for the petitioner and Sri Madhur Prakash appearing for respondent No. 4.

The submissions on behalf of respondents No. 3 and 5 (applicants) are almost to the same effect except one submission, which has been additionally made on behalf of respondent No. 5, that notice on respondent No. 5 was not served.

We now proceed to examine the submissions made by learned Counsel for the parties.

The first submission, which has been made by Sri Ravi Kant on behalf of respondent No. 5 is that notice, which was issued to respondent No. 5, was not served and the notice cannot be deemed to be sufficient as observed in the order dated 13th May, 2010. He has referred to Order V, Rule 9 of the C.P.C. and Chapter VIII of the Rules of the Court. In the writ petition by order dated 16th April, 2010 passed by the earlier Bench, which was hearing the writ petition, M/s Real Coenergy Private Limited, New Delhi was permitted to be impleaded as one of the respondents. By subsequent order dated 20th April, 2010 notice was issued to respondent No. 5. The order3 sheet mentions, ''RPAD Notices issued to respondent No. 5 fixing 12.5.2010... The office report dated 13th May, 2010 states, ''Notices were issued by registered post fixing 12th May, 2010. Neither acknowledgement nor undelivered cover has been received back.'' The Court after perusing the order-sheet proceeded to observe that notice is deemed sufficient. Chapter-VIII, Rule 12 of the Rules of the Court pertains to service of notice by post or publication. Explanation II of Chapter VIII, Rule 12 is as follows:

[Explanation II].- A notice sent by registered post shall, unless it is received back from the post office as undelivered, be deemed to have been served at the time at which it would be delivered in the ordinary course of post.

The Court held that the notices are deemed to be served on respondent No. 5 in view of Chapter VIII, Rule 12 of the Rules of the Court. It is also relevant to be noted that respondent No. 5 has been appointed as coal coordinator by respondent No. 3 and respondent No. 5 is nothing but an agent of respondent No. 3, who has been associated by respondent No. 3 with regard to the distribution and working as an handing agent for respondent No. 3. The respondent No. 3 was represented in the Court when the case was heard 20th April, 2010 and 13th May, 2010. Moreso, the respondent No. 5 has been heard on merits, hence we proceed to examine the submissions of the parties on merits with regard to applications of the respondents No. 3 and 5 for modification/vacation of the order dated 13th May, 2010.

The submission, which has been pressed at forefront in the modification applications is that a writ petition being Writ Petition No. 3254 (MB) of 2010 (Saroj Kumar Pandey v. Union of India and Ors.) was filed in the Lucknow Bench of this Court for the same relief and in that writ petition on 13th April, 2010 the Lucknow Bench of this Court did not pass any interim order as has been passed by this Court on 13th May, 2010 which is sought to be vacated.

For appreciating the said contention, it is relevant to look into the prayers in Writ Petition No. 3254 (MB) of 2010 copy of which writ petition has been placed before the Court for perusal. In the said writ petition M/s Real Coenergy (respondent No. 5 in the present writ petition) was not impleaded as party nor any relief was claimed against respondent No. 5. The reliefs, which were claimed in that writ petition, are as follows:

I. Issue writ, order, or direction in the nature of certiorari quashing the order dated 24.3.2010 and 30.3.2010 passed by Principal Secretary, Small Industries, Anubhag-4, Government of U.P., Lucknow (the respondent no.3).

II. Issue writ, order, or direction in the nature of mandamus commanding the respondent, the State of U.P. to nominate petitioner''s association a Nodal Agency for distribution of coal to the consumers.

III. Issue writ, order, or direction in the nature of mandamus restraining UPSIC in entering into the Fuel Supply Agreement with Coal India Limited.

The principal relief in the writ petition of Saroj Kumar Pandey was for quashing the orders dated 24th March, 2010 and 30th March, 2010 by which the representations of petitioner of that writ petition was rejected by the Principal Secretary, Small Industries, Government of U.P., Lucknow. A mandamus was also sought commanding the State of U.P. to nominate petitioner''s association a Nodal Agency for distribution of coal to the consumers. No submission has been made with regard to respondent No. 5 in that writ petition nor any relief was there with regard to respondent No. 5. Thus the issues regarding respondent No. 5, which are raised in the present writ petition, were not the issues, which were raised in the writ petition of Saroj Kumar Pandey. Hence insofar as respondent No. 5 is concerned, the order of this Court dated 13th May, 2010, can in no manner be said to be contrary to the order passed in the writ petition of Saroj Kumar Pandey, which was principally with regard to nomination of the petitioner of that writ petition as Nodal Agency. The observations made in the order dated 13th April, 2010 in the writ petition of Saroj Kumar Pandey are as follows:

We are not aware regarding any fresh demand having been raised and whether it be accepted or not, but considering the case of the parties, we provide as an interim measure, that in case any fresh nomination is to be made, it will be open to the petitioner to participate therein, where his case shall also be considered along with other eligible persons. This order has been passed without prejudice to the right of either of the parties in respect of their claim in the present writ petition.

Thus the submission of the applicants/respondents No. 3 and 5 that in view of the order Division Bench of the Lucknow Bench of this Court dated 4th May, 2010, the order dated 13th May, 2010 of this Court could not have been passed, cannot be accepted.

Sri Ravi Kant, Senior Advocate, as well as Sri C.L. Pandey, Senior Advocate, further contended that there were no pledings with regard to respondent No. 5 in the present writ petition and the relief which was claimed, was only to the effect that mandamus be issued not to appoint Coordinator as middle man to supply coal to the real consumers. It is contended that respondent No. 5 having already been appointed, the said relief could not have been granted. The submission much pressed by the applicants is that there being no pleadings with regard to working of respondent No. 5, the interim order could not have been passed on 13th May, 2010.

Sri V.C. Mishra, appearing for the petitioners, refuting the contentions of learned Counsel for respondents No. 3 and 5, has submitted that in the writ petition there were specific pleadings against respondent No. 5 in paragraphs 25 and 28 of the writ petition. He has further contended that two more writ petitions being Writ Petition No. 26941 of 2010 and Writ Petition No. 21758 of 2010 were heard on 13th May, 2010 and in those writ petitions same order dated 13th May, 2010 as passed in the present writ petition, was passed since in the said writ petitions on 13th May, 2010 following order was passed:

For orders see our order of date passed in Writ Petition No. 20950 of 2010

It is submitted that in Writ Petition No. 26941 of 2010 there was prayer for quashing the appointment of M/s. Real Coenergy Private Limited, which was arrayed as one of the parties and there was specific pleadings in the said writ petition. It is submitted that all the writ petitions were heard together, hence it cannot be said that there was no pleading or allegation against respondent No. 5.

Before we proceed further to examine the contentions, it is necessary to look into the scheme, which has been framed by the Central Government in pursuance of the judgment of the Apex Court in the case of Ashoka Smokeless Coal Ind. P. Ltd. and Others Vs. Union of India (UOI) and Others, . The Apex Court in the said case had examined in detail the method for allocation of coal which is one of the most important raw material for the core and non-core sectors. The Apex Court considered the method, which was adopted by Coal India and the Central Government with regard to allocation and distribution of coal to various core and non-core sectors including the E-auction which was being adopted by Coal India and other coal companies. The Apex Court after considering the entire matter in detail passed the following order in paragraphs 188 and 190 of the said judgment:

Coal being a scarce commodity, its utility for the purpose for which it is needed is essential. Although, technically, in view of the fact that no price is fixed for coal, there may not be any black marketing in the technical sense of the terms; but this Court cannot also encourage black marketing in general sense. Nobody should be allowed to take undue advantage while dealing with a scarce commodity. The very fact that despite best efforts of the Central Government, the coal companies failed to curb the menace of a section of people and to deal in coal excluding other general people therefrom or the linked consumers misusing their position of obtaining allotment of coal either wholly or in part, it is absolutely necessary that some mechanism should be found out for plugging the loopholes. The Union of India or the coal companies appear to have lost confidence in the State Governments. They had carried out joint inspection and in that process they must have arrived at a satisfaction about the genuineness of the claims of industrial units for which the linkage system was meant for.

With a view to evolve a viable policy, a committee should be constituted by the Union of India with the Secretary of Coal being the Chairman. In such a committee, a technical expert in coal should also be associated as most of the projects involve consumers of coal, particularly manufacturers of hard coke and smokeless fuel. In our opinion, it may not be difficult to find out, having regard to the technologies used therein as regards the ratio of the input vis-''-vis the output, with a balance and 10% margin. On the basis of such finding alone, apart from the requirements of five years, supply should form the basis of MPQ. We may, however, hasten to add that the Central Government in collaboration with the coal companies would be at liberty to evolve a policy which would meet the requirements of public interest vis-''-vis the interest of consumers of coal. They would be entitled to lay down such norms as may be found fit and proper. They would be entitled to fix appropriate norms therefor. In the event, any industrial unit is found to violate the norms, it should be stringently dealt with.

In pursuance of the judgment of the Apex Court in Ashoka Smokeless Coal India''s case (supra), the Government of India, Ministry of Industries and Civil Supplies has formulated the New Coal Distribution Policy vide its order dated 18th October, 2007. Paragraph 3.1 of the said policy, which is relevant in the present case, is quoted below:

Compensation in Small and Medium Sector

3.1 The State Government are requested to work out genuine requirement of such units in small and medium sector like Smokeless Fuel, Brick Kiln, Code Oven Units etc. on a transparent and scientific basis and distribute coal to them accordingly. The State Governments may take appropriate steps to evaluate the genuine consumption and monitor use of coal. The present cap is also enhanced to 4200 tones per annum for the targeted consumers undere this category. In order to meet the enhanced cap fixed for such consumers, the quantity earmarked for distribution to these agencies would also be increased to 8 million tones annually, to start with. This quantity would be allocated for distribution to those units/consumer in small and medium sector across the country whose requirement is less than 4200 tones per annum and are otherwise not having any access to purchase coal or conclude Fuel Supply Agreement (FSA) for coal supply with coal companies.

The earmarked quantity would be distributed through agencies notified by the State Governments. These agencies could be State Govt. Agencies/Central Govt. Agencies (National Co-operative Consumer Federation (NCCF)/ National Small Industries Corporation (NSIC) etc. or industries associations, as the State Govt. may deem appropriate. The agency so notified will continue to distribute coal until the State Govt. chooses to denotify it.

The agency/association so notified by the State Govt. would be required to enter into FSA with coal company to be designated by the Coal India Ltd. The FSA will continue to remain in force till either the State Govt. denotifies the agency/association or CIL shifts the obligation to some other coal company due to production, transportation and logistics etc. In the latter case, a fresh FSA would signed with the new coal company. The FSA would be based on firm commitment and compensation for default in performance on either side. These State Government/Central Government agencies would be free to devise their own distribution mechanism. However, the said mechanism should inspire public confidence and should result in distribution of coal in a transparent manner.

The price charge to such agencies would be same notified price as applicable to other consumers entering into FSA. The agency would be entitled to charge actual freight and upto 5% margin as service charge. Over and above the basic price charged by the coal company, from their consumers. The concerned State Governments and Central Govt. Deptt. having administrative control over the agencies would be responsible to ensure that coal allotted for targeted consumer is distributed in a fair and transparent manner and appropriate action taken to prevent its misuse.

1.2 The quantity to be allotted to this sector may be reviewed on the basis of their performance in the beginning of every year. Allocation of this quantity amongst the States would be done on the basis of their consumption pattern in the past.

The scheme of the Government of India indicates that the State Governments were directed to work out the genuine requirement of the units so that earmarked quantity would be distributed through the agencies notified by the State Government. Those agencies could be State Government Agencies/Central Government Agencies [National Cooperative Consumer Federation (NCCF)/National Small Industries Corporation (NSIC) etc.] or industries associations, as the State Government may deem appropriate. The scheme further provided, ''The agency/association so notified by the State Government will continue to remain in force till the State Government denotifies''. The scheme further provided that the State Government/Central Government agencies would be free to devise their own distribution mechanism, however, the said mechanism should inspire public confidence and should result in distribution of coal in a transparent manner.

In the present case, as noticed above, the respondent No. 3 (U.P. Small Scale Industrial Corporation) has been notified as a Nodal Agency by the State Government for the year 2010-2011. A Government order was issued on 24th March, 2010 notifying respondent No. 3 as Nodal Agency. The scheme, as noticed above, has contemplated two basic things, i.e., calculation of the earmarked quantity and distribution through agencies notified by the State Government. The facts as have come on the record in the present case is that respondent No. 5 was appointed as Coal Coordinator by respondent No. 3. A tender notice dated 9th June, 2007 (Annexure-12 to the writ petition) has been brought on the record, which mentions that person selected shall be appointed as Coal Coordinator for a period of three years. Under the scheme of the Central Government, the State Government agencies, who are appointed as Nodal Agencies, are free to evolve their own mechanism. The pleadings, which have been made in the writ petition against respondent No. 5 are contained in paragraphs 25 and 28 of the writ petition, which are quoted as under:

That the UPSIC has further committed illegality in appointing of middle man by inviting an application in news paper and the appointment as indicated in the news paper is for 3 years. A true/photo copy of the Advertisement published in news paper is being annexed herewith and marked as Annexure No. 12 to this writ petition.

That the UPSIC has appointed a contractor as a middle man to distribute the coal as the UPSIC has not his own infrasructure for distribution of coal to the real consumers. There are several complaints against the middle man (Real Coneargy India Limited, New Delhi) by the consumers that he was committed illegality and has sold coal on enhanced price that the basic price was fixed by the Coal India Limited and the consumers are forced to purchase the coal on the terms and conditions fixed by the middle man i.e. Real Coneargy India Limited, New Delhi.

In the affidavit filed in support of the amendment application, which was allowed on 20th April, 2010 by this Court, following averments have been made against respondent No. 5 in paragraphs 5 and 7:

That the Nodal Agency appointed by the State Government for year 2009-2010, has appointed Real Coinery Pvt. Ltd., New Delhi as Coordinator to distribute the coal. The UPSIC while appointing Coordinator who is company established out side the state, has not fix any guideline to distribute the coal. The Real Coinery PVT Ltd. New Delhi has distributed the coal in few districts (9 districts) on higher rates. The Industrial Associations arranged a meeting, in the meeting about 50 Industrial Associations have participated and have pointed out the irregularities committed by UPSIC and its middle in distribution of coal. The minutes of meeting was communicated to the State Government, Ministry of Coal, Govt. of India and the authorities of UPSIC. In the minute the Industrial Associations pointed out their problems and further communicated their suggestions. A copy of Communication Letter is being annexed herewith and marked as Annexure- No. 1 to this affidavit.

That the perusal of the provision referred above the State Government is mandated to appoint more than one agency and further the industrial associations shall be appointed for equitable distribution of coal. The policy further provide that the State Government will fix the norms and will take appropriate steps for distribution of coal. Admittedly the State Government has not fixed norms till date and it directly appointed Real Coinery Pvt. Limited, New Delhi to distribute coal without providing any mechanism. However, the policy provides that the State Government should provide the effective mechanism to check of mis-utilisation of coal to consumers. And in case of any mis-utilisation or diversation of coal the action should taken to cancel allocation etc. Despite several complaints no action whatsoever has been taken by the state to against either UPSIC or its middle man i.e. Real Coinery Pvt. Limited and has further continued UPSIC as Nodal Agency without fixing any norm.

Although part from the aforesaid pleadings, the submission of learned Counsel of the writ petitioner was that this writ petition was heard along with Writ Petition No. 26941 of 2010 in which specific prayer was made for quashing the appointment of respondent No. 5 in pursuance of notice dated 9th June, 2007 but taking into consideration the pleadings in this writ petition, as quoted above, the grievance was raised by the petitioner with regard to distribution by respondent No. 5. The very appointment of respondent No. 5 was challenged on the ground that it is against the scheme of the Central Government. In this context it is also relevant to note that a counter affidavit was filed in the writ petition by the State Government as well as by respondent No. 3. In paragraph 27 of the counter affidavit of respondent No. 3 it has been stated that respondent No. 5 has been appointed and their work is not to distribute the coal and it has been appointed only to manage the finances only. Paragraph 27 of the counter affidavit of respondent No. 3 is quoted below:

That the averments made in paragraph No. 25 of the writ petition are not admitted as stated in reply thereto it is submitted that the advertisement annexed as Annexure No. 12 to the writ petition is prior to the new coal distribution policy 2007. It is further submitted that no one is appointed as a middle man by the answering respondent to distribute the coal in the State of U.P., an agency has been nominated for the logistics such as liaison with the railway authorities for rakes allotment or loading and unloading of the coal as well as for the quality control of the coals at various collieries and other works for successful execution of Fuel Supply Agreement with the Coal India Ltd., and the said agency is known as a Coal Co-ordinator and the same has been appointed in full transparent manner after due publication in the news papers and there work is not to distribute the coal, they were appointed to manage the finances only. As such the allegation levelled against the answering respondent is absolutely baseless.

By the interim order, which was passed by this Court on 13th May, 2010 only following direction was issued:

In the meantime respondent No. 5 is restrained from exercising any functions with regard to distribution of the coal to the applicants who make application of allotment of the coal in the year in question.

From the scheme of the Central Government as has been delineated above, it is clear that the distribution of coal has been specifically entrusted to the State Government or the agencies nominated by it, i.e., Nodal Agency. The respondent No. 3 being a Nodal Agency, the obligation has been imposed on respondent No. 3 to distribute the coal. The allegations were made in the writ petition as well as in the rejoinder affidavit that respondent No. 5 has been taking drafts in its own name. Copy of the drafts were filed as Annexure RA-2 to the rejoinder affidavit, which was filed in reply to the counter affidavit of respondent No. 3. This Court in furtherance of the scheme of the Central Government provided that no work of distribution of coal shall be done by respondent No. 5. By interim order dated 13th May, 2010 the appointment of respondent No. 5, in no manner, has been stayed nor the working of respondent No. 5 insofar it relates to providing of finances and working as handing agent of respondent No. 3 has been stopped.

In the writ petition, looking to the allegations made against appointment of respondent No. 5 as middle man by respondent No. 3, who is a Nodal Agency, appointed by the State Government and looking to the averment that distribution is not being properly made, the said interim order was passed. We see no good reason for vacating or modifying the interim order dated 13th May, 2010. However, both the applications are disposed of with the clarification, as made above, that neither the appointment of respondent No. 5 has been stayed by this Court nor his working regarding arranging the finances has been stopped. We have already clarified in the order dated 13th May, 2010 that the Coal India, in no manner, is restrained from issuing the coal through the person specified by the Coal India.

Both the applications are disposed of accordingly.