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Informist, Friday, Sept. 12, 2025

NEW DELHI – The Supreme Court Friday upheld Coal India Ltd.'s interim coal policy 2006 and also upheld collection of 20% over and above the notified price of coal from the linked consumers falling in the non-core sector. The apex court rejected a request by Rahul Industries and a bunch of private companies to seek refund of the excess 20% collected by Coal India.

The Supreme Court noted that the objective of the interim coal policy was to ensure sustainable operation, maintenance and development of the coal mines. The top court found the objective of the interim coal policy to be legitimate in light of the increase in operational costs of Coal India and one that serves the "common good" of maintaining an adequate supply of coal in the market.

"...We observe that the interim coal policy made a reasonable classification between the linked industries of core and non-core sectors and was introduced with the legitimate aim of ensuring an adequate supply of coal in the market by reinforcing the financial capabilities of the appellant company, in this case Coal India, to sustainably operate and invest in the production of coal," the apex court said. Therefore, there can be no gainsaying in the fact that the interim coal policy fulfilled the test of reasonable classification and hence, was not contrary to Article 14 of the Indian Constitution to this extent, said the court.

Private companies had challenged the company's interim coal policy that increased the notified price of coal by 20% for the non-core linked sectors. The private companies were engaged in the business of manufacturing smokeless fuel for which coal was the raw material. Coal India came out with the interim coal policy after the top court struck down the e-auctioning methodology of pricing in 2006.

The private companies had argued that the interim coal policy was in contravention of apex court's dictum in 2006 as the procedure prescribed in the judgment for formulating a policy for the sale of coal was not followed by Coal India. The top court in the 2006 verdict directed formation of an expert technical committee to decide on a viable policy, and Coal India did not have any authority to notify an interim measure in this regard, said the private companies.

The 20% hike in price of coal for the linked non-core sector consumers was a measure of profit-making for Coal India, the companies said. Coal India failed to assign any cogent reasons in the interim coal policy for the price increase of 20% only for the linked consumers of the non-core sectors as no such measure was adopted in respect of the linked consumers of the core sector, said the private companies.

In 2012, the Calcutta High Court had held that Coal India had no authority to frame and notify the interim coal policy and thereby collect an excess of 20% amount over and above the notified price of coal from the linked consumers falling in the non-core sector. Coal India had moved the top court challenging the same.

On Friday, shares of Coal India ended at INR 394.35 on the National Stock Exchange, up 0.3% from the previous close.  End

Reported by Surya Tripathi

Edited by Nishant Maher

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