I.K. Jain, J.@mdashBy this petition, petitioners seek issuance of writ of certiorari or any other appropriate writ quashing and setting aside communications dated 26-2-2013 and 5-3-2013 issued by respondent No. 3. The facts giving rise to the petition may be stated in brief as under:--
Petitioner No. 1 is an Association of Industries of Vidarbha. Petitioner Nos. 2 to 35 are the industries situated in various parts of Vidarbha Region and members of petitioner No. 1 association. Respondent No. 1 is Ministry of Coal. It controls manufacturing, mining, marketing and import of coal. Respondent No. 2 Coal India Limited is a public sector coal company. It operates under the administrative control of Ministry of Coal. Respondent No. 3 Western Coal Fields Limited (WCL) is one of the subsidiary company of Coal India Limited (CIL). It is engaged in the activities of mining and sale of coal.
2. On 29-4-2008, an agreement was entered into between petitioner Nos. 2 to 35 and respondent No. 3 for coal supply. Clause 4.4 of the Coal Supply Agreement entitles respondent No. 3 WCL to reserve the right to verify including the right to inspect/call for any document from the purchaser and physically verify the end-use of the coal and satisfy itself of its authenticity.
This clause further stipulates that purchaser shall be under obligation to comply with the seller''s directions and extend full co-operation in carrying out such verification/inspection. In view of Clause 4.4 of the agreement, respondent No. 3 issued communication dated 26-2-2013 to the petitioners for submission of documents with regard to end-use of the coal. As per the said communication, petitioners were advised to submit the following documents/affidavits/certificates by 1st March, 2013 for evaluation and verification of the same by designated committee of WCL for release of coal against the entitlement.
(a) Affidavit (in the prescribed format) on a Non Judicial Stamp Paper of Rs. 100/- duly sworn before the 1st Class Executive Magistrate.
(b) Details of raw material, consumption (coal and other than coal), finished products, Power and Fuel duly attested/authenticated by Proprietor/Partner/Director and certificated by Chartered Accountant and
(c) Certificate in the prescribed format by statutory auditors/independent Chartered Accountants/Chartered Engineers (empanelled with Income Tax Dept.)
The formats of affidavit, submissions of information/details and certificates were enclosed with the communication.
2A. Thereafter, on 5-3-2013 petitioners were called upon to submit the annual documents/affidavits/certificates by 30th June, 2013 for evaluation and verification of the same by the designated committees of WCL. It was accompanied by the respective formats. Petitioners were aggrieved by the said communications. Hence this petition.
3. We have extensively heard Shri Dewani and Shri Mehadia, learned counsel for petitioners and respondent Nos. 2 and 3 respectively.
4. The learned counsel for petitioners submitted that this is the second round of litigation between the parties. The similar issues were raised in Writ Petition Nos. 1222/2011 and 1223/2011 with only difference that the insistence for submission of documents for verification was by District Industries Centre (DIC). The learned counsel submitted that all the issues which are raised by the parties in this writ petition were raised earlier and following the law laid down by the Hon''ble Supreme Court in
5. Shri Dewani, learned counsel for petitioners, then submitted that insistence for certificate from Chartered Accountants or Chartered Engineers is contrary to the explicit policy laid down in New Coal Distribution Policy (NCDP). The Chartered Accountants or Chartered Engineers have not been assigned any role under any law or the policy of Central Government wherein they are necessarily required to issue any certificate as desired by respondent No. 3. According to the learned counsel for the petitioners, impugned communications dated 26-2-2013 and 5-3-2013 are bad in law being in conflict with the judgment in W.P. Nos. 1222/2011 and 1223/2011 passed by this Court and also by the Hon''ble Apex Court in Ashoka Smokeless case referred above.
The next contention raised on behalf of the petitioners is that many documents asked by respondent No. 3 are either irrelevant or unnecessary considering the purpose for which they are asked for. It is submitted that documents were supplied by the industries at the time of commencement of coal supply along with monthly and annual data from time to time. The learned counsel for petitioners submitted that calling upon the industries to submit the same data is nothing but burdening the industries with submitting thousands of papers with various information detrimental to the interest of the industries. It is submitted that the communications dated 26-2-2013 and 5-3-2013 have been issued with a view to harass the industries and reasons given by respondents for calling the documents are absolutely improper and contrary to the factual position as well.
Another submission made on behalf of the petitioners is that despite pendency of the petition and orders passed in the matter, respondent No. 3 has taken unilateral decision on 14-6-2013 to stop coal supply to the petitioners and other industries with effect from 1-7-2013 though Coal Supply Agreement (CSA) executed by them was in force till 30-7-2013. The learned counsel submitted that communications dated 26-2-2013 and 5-3-2013 issued by respondent No. 3 asking the petitioners to fulfil the condition beyond their capacity or control for supply of coal are thus liable to be quashed and set aside.
6. Per contra, standing counsel for respondent Nos. 2 and 3 Shri Mehadia vehemently submitted that petitioners are industrialists and huge quantify of coal is consumed by the petitioners industries. Most of the petitioners might have secured funds from various banks and each of them must be getting their accounts from Chartered Accountants/Chartered Engineers for submission to income tax authorities and banks. Respondents are asking for certificate from the very same Chartered Accountants and Chartered Engineers and not by third parties as alleged by the petitioners.
The next contention raised on behalf of respondents is that documents/certificates are required to be scrutinized by respondents and in case it is found that consumer is not making end-use of the coal bona fidely, legal action as per the provisions of Coal Supply Agreement (CSA) is required to be taken against the erring unit. Shri Mehadia, learned counsel submitted that to do away with black marketing of coal a decision was taken by the Ministry of Coal and Mines to verify the bona fides of the consumers drawing coal from the coal companies and for ensuring bona fide use of coal both the communications were issued. It is submitted that in view of the decision of the Hon''ble Apex Court in Ashoka Smokeless referred supra respondent No. 2 has evolved the mechanism of verification of end-use of coal which calls for submission of documents by such consumers and the same are put to scrutiny by the committee comprising of officers of respondent No. 3 WCL.
7. We have given our anxious thought to the contentions canvassed by the learned counsel for the parties and perused clause 4.4 of the Coal Supply Agreement. We have also gone through the decision of the Hon''ble Apex Court in Ashoka Smokeless Coal India Private Limited (supra) and judgment of this Court in W.P. Nos. 1222/2011 and 1223/2011.
Before we advert to clause 4.4 of the CSA it would be appropriate to consider office memorandum dated 18-10-2007 relating to New Coal Distribution Policy (NCDP). Clause 9 of the office memorandum reads as under:
9. Discipline and economy in coal use
Coal is no longer an essential commodity but it is still considered a scarce fuel and hence it must be used efficiently and economically. The consumers getting coal through FSA would be expected to use it efficiently so as not to waste this scarce resource and hence norms and efficiency compliance should be carried out diligently by the concerned designated authority/agencies. This would also require that coal supplied should not be misused or diverted by FSA holder to others. The existing norms, wherever being made applicable for deciding linkage quantity etc., would be reviewed in consultation with the nodal Ministry concerned, and revised norms would be made applicable for working out the satisfaction level, wherever applicable.
Thus, as per the provisions of NCDP verification of end-use of coal is to be done by subsidiary coal company to ensure discipline, economy of coal use and check the veracity of the claim of being bona fide consumers of coal.
8. Under Clause 4.4 of Coal Supply Agreement purchaser is not permitted to sell/divert and/or transfer the coal for any other purpose whatsoever than the purpose for which the quantity of coal is released in favour of purchaser and if he does so, it shall be treated as material breach of agreement and seller shall have a right to terminate the agreement on this count forthwith without any liability. For ready reference Clause 4.4 of CSA is reproduced here as under:--
4.4. The total quantify of Coal supplied pursuant to this Agreement is meant for use at the M/s. Ispat Industries Ltd., Works : A. 10/1, MIDC Industrial Area, Kalmeshwar-441501, Dist. Nagpur (M.S.) (name and location of the Plant(s) as listed in Schedule-I, the purchaser shall not sell/divert and/or transfer the Coal for any purpose whatsoever and the same shall be treated as material breach of Agreement. In the event that the purchaser engages or plans to engage into any such resale or trade, the Seller shall terminate this Agreement forthwith without any liabilities or damages, whatsoever, payable to the Purchaser. It is expressly clarified that the Seller shall reserve the right to verify including the right to inspect/call for any document from the Purchaser and physically verify the end-use of Coal and satisfy itself of its authenticity. The Purchaser shall have the obligation to comply with the Seller''s directions/extend full co-operation in carrying out such verification/inspection.
This clause further explicitly clarifies that WCL shall reserve the right to verify including the right to inspect/call for any document from the purchaser. It is equally necessary for the purchaser to supply such documents.
9. In Writ Petition No. 1222/2011 and 1223/2011 WCL required petitioners to submit documents to be issued by District Industries Centre in a specific format. Petitioners were ready and willing to supply the documents provided DIC was ready to issue the same. DIC refused to issue documents. There was no statutory obligation on DIC to issue such documents. In this premise, it was observed by the Division Bench of this Court that submission of documents was beyond the capacity and control of petitioners since DIC refused to oblige the petitioners.
10. In the present case, petitioners have been asked to submit details as per (b) vide communication dated 26-2-2013 certificate by Chartered Accountants and certificates as per (c) by statutory auditors/independent Chartered Accountants/Chartered Engineers (empanelled with income tax department). The format of certificate enclosed with communication dated 26-2-2013 is relevant. It runs as under --
CERTIFICATE
I/We........................................ Chartered Accountant/Chartered Engineer......................(address) having Membership Registration No./Registration No............have verified the unit(s)/site (s) on................which are producing/manufacturing/processing..............as its finished products. On the basis of physical verification at unit(s)/site(s), we hereby confirm that Unit is in operation/production and details have been physically verified from the documents/certificates issued by the various governments agencies in respect of Stamina 3 and 4 (C.S.) 5, 6, 7 and 8 (C.A.). Further, it is certified that all the information/details furnished by the unit are true and correct.
For....................
Chartered Accountants/Chartered Engineers
Seal/Signature
Name
Membership No.
Seal/Signature
Name
Proprietor/Partner/Director of the firm/unit/factory
11. On 18-7-2013, when the matter was heard by the Division Bench of this Court an affidavit sworn by Sunilkumar Surendra Kharwar Assistant Manager was filed. In the said affidavit it was mentioned that a notice dated 10-7-2013 was sent to CSA consumers in modified format and the certificates are to be issued by the Chartered Accountants/Statutory Auditors. The affidavit also disclosed that Chartered Accountants/Statutory Auditors are required to issue certificate based on verification of documents and provision for physical verification of the Unit/site before issuance of certificate came to be deleted. Vide order dated 18-7-2013 notice issued to CSA consumers dated 10-7-2013 was taken on record and marked as Exhibit ''X'' for identification. The said notice requires the Chartered Accountants/Chartered Valuers to issue certificate in respect of item Nos. 6 to 10 of the earlier communication dated 5-6-2013. Except item Nos. 4 and 5, the said notice mentioned about certification by Chartered Engineer/Registered Valuer. By the said order respondents were permitted to evolve other appropriate arrangement in relation to submission of annual certificate.
12. For ready reference, format of modified certificate is reproduced here as under:--
"I/We................Chartered Account/Statutory Auditor.......(address) having Membership Registration No./Registration No..........have verified the documents of the unit which is producing/manufacturing/processing.............as its finished products. On the basis of the verification of documents produced by the unit, I hereby confirm that the Unit is in operation/production and details have been verified from the documents/certificates issued by the various government agencies in respect of Item Nos. 6, 7, 8, 9 and 10. The true copy of the information/documents authenticated/certified by me/us (in respect of Item Nos. 6, 7, 8, 9 and 10) are enclosed."
In para 56 of the petition, petitioners have submitted that Chartered Accountants have agreed to give certificates based on documents though they did not agree to certify the information upon physical verification of the unit. In view of the modification of the format of annual certificate vide communication dated 10-7-2013 deleting the old requirement of physical verification of the unit, petitioners would not have any difficulty now in submission of annual certificates and documents as prescribed under the verification procedure particularly when the information required is to ascertain whether a particular unit is functioning or not and to ensure discipline, economy in coal use and to check veracity of the claim of a particular unit being the bona fide consumer of coal.
13. One of the contentions of the petitioners is that impugned communications are against the observations of the Hon''ble Apex Court in Ashoka Smokeless Coal India Private Limited case (supra). The observations of the Hon''ble Apex Court in paras 188, 189, 190 and 193 are important. It will be appropriate to refer the same which read thus:
188. 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.
189. Before us most of the consumers, with a view to obtain supply of coal had filed documents to prove their genuineness. The said documents must be scrutinised by the authorities of the coal companies. In the event, they have any suspicion, inspection should be carried out by officers appointed by the Chairman-cum-Managing Director of the company concerned within whose jurisdiction the unit is situated. 190. 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.
191...............
192..............
193. However, discussions made hereinbefore should not be taken to lay down a law that the Central Government and for that matter the coal companies cannot change their policy decision. They evidently can; but therefor there should be a public interest as contradistinguished from a mere profit motive. Any change in the policy decision for cogent and valid reasons is acceptable in law; but such a change must take place only when it is necessary, and upon undertaking of an exercise of separating the genuine consumers of coal from the rest. If the coal companies intend to take any measure they may be free to do so. But the same must satisfy the requirements of constitutional as also the statutory schemes; even in relation to an existing scheme e.g. Open Sales Schemes, indisputably the coal companies would be at liberty to formulate the new policy which would meet the changed situation. E-advertisement or e-tender would be welcome but then therefor a greater transparency should be maintained.
14. On the plain reading of the observations made by the Hon''ble Supreme Court in the above referred paras, it is clear that in order to verify genuineness of the documents supplied by the customers, it is the duty of the Authorities of the Companies supplying coal to scrutinize those documents and in the event, they have any suspicion, inspection should be carried out by the Officers appointed by the Chairman-cum-Managing Director of the Company concerned within whose jurisdiction the Unit is situated. It is for the Coal Companies to evolve modalities and ensure proper use of coal and eliminate misuse thereof, by formulating such policy which they think fit and proper. Thus in view of the subsequent development clarified vide communication dated 10-7-2013 grievance of the petitioners regarding physical verification of the unit/site does not survive as the said requirement is deleted by the respondents. The learned counsel for respondent No. 3 made a statement that during pendency of this petition, petitioners Nos. 11, 16, 19, 21, 22 and 35 have submitted the documents and except the remaining petitioners no one has agitated the same. Considering the provisions of NCDP, CSA and the observations of the Hon''ble Apex Court in Ashoka Smokeless (supra) we do not find that action of respondents is anywhere affected by bias or actuated by mala fides. In any circumstance, requirement of certification by Statutory Auditors/Independent Chartered Accountants/Chartered Engineers (empanelled with income tax department) cannot be termed as arbitrary, unfair, illegal, irrational or unreasonable. It is very well within the reach of the petitioners to comply with the requirements and within the domain of respondents to ask for the same as was done vide communications dated 26-2-2013 and 5-3-2013.
In the light of the above, we do not find any substance in the submissions of the petitioners. Petition stands dismissed. No order as to costs. Rule is discharged.
