M/S ASHOKA SMOKELESS COAL IND. P. LTD. AND ORS. versus UNION OF INDIA AND ORS.

Citation: [2006] SUPP. 9 S.C.R. 954 · Decided: 01-12-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Disposed off

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Judgment (excerpt)

A 
M/S ASHOKA SMOKELESS COAL IND. P. LTD. AND ORS. 
B 
v. 
UNION OF INDIA AND ORS. 
DECEMBER 1, 2006 
[S.B. SINHA AND P.P. NAOLEKAR, JJ.] 
Coal-Price fi:xation-Of essential commodity (coal)-Coking coal mines 
and coal mines subjected to nationalisation-Subsequntly price and distribution 
C thereof deregulated by Government-Price fixation left to coal companies-
Introduction of Scheme of £-Auction-Agencies of the Central Government 
and the State Governments kept out of the purview of E-Auction-F or promotion 
of manufacture of special smokeless fuel, advertisements inviting entrepreneurs 
to manufacture the same, assuring them to provide them coal and the 
manufacturing technology-Pursuant thereto, plants for manufacturing 
D smokeless coal set up-Validity of the scheme of £-Auction-Held: The 
methodology for allocation of coal to a bidder of £-Auction is in equitable, 
irrational and fortuitous-Central Government while exercising its power under 
Colliery Central Order, could not have issued any direction in the garb of 
disposal of coal by wcry of £-Auction-The Coal Companies were under a 
E constitutional obligation to fix a reasonable price-While fi:xing a fair and 
reasonable price in terms of Essential Commodities Act, it is necessary that 
price is actually fixed and not kept viable-Price fixation of an essential 
commodity is determined on the touch stone of public interest-While adopting 
a policy decision as regards mode of determination of price of coal either 
fixed on variable, the coal companies were bound to keep in mind social and . 
F economic aspect of the matter-Although a reasonable profit is permissible, 
but profiteering would not be-Scheme of £-Auction is also ultra vires Article 
14-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-a-vis the interest of consumers of coal-Central Government also 
advised to widen definition of coal so as to include the smokeless coal-
G Colliery Control Order, 1945-Colliery Control Order, 2000-Essential 
Commodities Act, 1955-Coking Coal Mines (Nationalization) Act, 1972-
Coal Mines (Nationalization) Act, 197 3-Constitution of India, 1950-Part IV 
and Articles 14 and I9(6). 
H 
954 
' 
ASHOKA SMOKELESS COAL IND. P.LTD. v. U.0.1. 
955 
Constitution of India, 1950: 
A 
Part JV-Article 39 (b)--Directive Principles-Violation-Effect of--
On price fixation of essential commodities-Held: Though violation of Directive 
Principles would not be ultra vires, but they would from a relevant 
consideration for determining a question of price fixation of essential 
commodity. 
B 
Directive Principles-Role of-Held: They provide for a guidance to 
interpretation of Fundamental Rights of a citizen as also the statut01y rights. 
Judicial Review-Permissibility of--ln cases of policy decision-Held: 
Policy decision is a subject matter of judicial review-But such policy on the C 
part of executive of Central Government must be strictly construed in terms 
of Article 77--C_onstitution of India, 1950-Article 77. 
Doctrines: 
Doctrine of legitimate expectation-Applicability of 
D 
Doctrine of reasonableness-Applicability of 
Doctrine of Promissory Estoppel--Applicability of 
Doctrine of public necessity-Applicability of 
E 
Words and Phrases: 
'Business'--Meaning of 
Production, distribution, supply and price of coal were controlled 
and regulated under the Colliery Control Order, 1945 framed under F 
Defence of India Rules. The Order was continued under the Essential 
Commodities Act, 1955. Coking Coal Mines and Coal Mines were 
subjected to nationalization in terms of Coking Coal Mines 
(Nationalization) Act, 1972 and Coal Mines (Nationalization) Act, 1973 
with a view to give effect to the provisions of Article 39 (b) of the G 
Constitution of India. 
After the nationalization, consumers of coal were categorized as Core 
Sector and Non-core Sector. Linkage system was evolved initially for Core 
Sector and then also for Non-Core consumers. The linkage was to be 
determined on the basis of availability of coal, requirements thereof in H 
956 
SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R. 
A respect of each industry as certified by the State, and the capacity of the 
railways to transport coal. Government issued several Notifications from 
time to time leading to deregulation as regard price and distribution of 
coal. By Colliery Control Order, 2000, Order of 1945 was repealed and 

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