PALLA VI REFRACTORIES AND ORS. ETC. ETC. versus M/S. SINGARENI COLLERIES CO. LTD. ETC. ETC.

Citation: [2005] 1 S.C.R. 30 · Decided: 04-01-2005 · Supreme Court of India · Bench: ASHOK BHAN · Disposal: Dismissed

Judgment (excerpt)

A 
PALLA VI REFRACTORIES AND ORS. ETC. ETC. 
V. 
MIS. SINGARENI COLLERIES CO. LTD. ETC. ETC. 
JANUARY 4, 2005 
B 
(ASHOK BHAN AND A.K. MATHUR, JJ.] 
Constitution of India, Article 14-Coal-Dual price policy vis-a-vis Core 
.1-
Sector and Non-Core sector-Lesser price charged from Core Sector-Validity 
C of-Held, charging of lesser price from Core Sector does not amount to treating 
equals as unequals or an irrational classification-Core Sectors being of 
national importance, call for special treatment as increase in price, in their 
case, would have substantial impact on cost of finished goods of vital 
importance and cost of services to public in general-Administrative law--
D Policy decision-Price fixation. 
Respondent, a state owned company, had been supplying coal to core/ 
priority sector and non-core/unlioked industries. Few industries which 
were of national importance were identified as core industries which 
consumed 90% of coal produced by respondent and rest was covered by 
E non-core industries to which appellant belonged. Respondent had 
accumulated heavy losses and was facing financial problems. To overcome 
the crisis, Government had been notifying de-regulation of price from time 
to time. State Government granted discretion to respondent to determine 
economic price of coal produced. Pursuant to this, Respondent issued 
F notification No. 3/96-97. Clause IO of the Notification provided that non-
core industries were required to pay 20% additional price over and above 
the notified price. 
Appellant filed Writ petition challenging levy of additional price as 
being discriminatory and violative of Article 14 of Constitution. High 
G Court dismissed Writ Petition. 
H 
In appeal to this court, appellant contended that classification of 
core/linked sector industries and non-core/unlinked sector industries made 
by the respondent for the purpose of pricing is irrational and gives rise 
to hostile discrimination; that the classification carved out between core 
30 
PALLA VI REFRACTORIES v. SINGARENI COLLERJES CO. LTD. 
3 J 
and non-core industries for the purpose of price fixation is arbitrary and A 
unreasonable and an instrumentality of State, even though running a 
business activity cannot take the stand that it has unfettered freedom in 
charging any prices it deems fit from any customer and that there is no 
reasonable basis for the classification introduced for the first time and the 
appellants cannot be subjected to bear the brunt of much higher prices. B 
Respondents contended that fixation of price is within the discretion 
of the company and coal being not a controlled commodity now, the 
company cannot be precluded from fixing appropriate price for the 
produce including dual price; and that number of factors such as financial 
problems of the company, operational cost and importance of certain C 
categories of industries in the larger national interest can be legitimately 
taken into account while fixing the price. 
Dismissing the appeals, the Court 
HELD 1. Clause 10 of the Notificacion is not violative of equality D 
clause enshrined in Article 14 of Constitution of India. By evolving the 
dual price policy and charging lesser price from the core-sector industries, 
it cannot be said that the respondent has treated equals as unequals or 
that the classification made was not rational. [40-H; 41-A] 
2.1. Admittedly the respondent is facing heavy financial deficit 
having accumulated loss of more that Rs.1,000 crores. The decontrol of 
prices was done with the predominant object to enable the respondent and 
other coal companies to wriggle out of the financial predicament to some 
extent and to derive returns so as to prevent or minimize further losses. 
E 
An industrial company completely held by the Government cannot be F 
denied the right to keep in view the consideration of commercial 
expediency while formulating its policies in the discharge of its functions. 
Though absolute and unfettered freedom cannot be granted to the State-
owned company but a wide latitude and flexible approach should be 
conceded to it especially when the price fixation is outside the realm of G 
statutory control. [38-G-H; 39-A[ 
2.2. The primary consideration for placing the seven industries in 
the core-sector is of their intrinsic importance to the economy of the 
country and the role which they play in the nation building activities. The 
same consideration will hold good for charging lesser price from them. H 

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