The Singareni Collieries Co. Ltd. vs Mallikarjuna Chemicals and Others

Jeevan Reddy, J.—A common question arises in this batch of Writ Appeals and writ petitions. Some of the writ petitions came up for disposal before a learned single Judge who allowed the same with certain directions under his judgment and order dated 19-9-1989. Writ Appeals are preferred against the said judgment. Other writ petitions which were not disposed of are posted for hearing along with the Writ Appeals. For the sake of convenience we may refer to the facts in Writ Appeal No. 1555/1989 (arising from W.P.No. 1039/89). It is agreed by the counsel for the appellant as well as Sri S. Ramachandra Rao, appearing on behalf of the writ petitioners, that the facts in this case may be taken as representative of the facts in all other cases.

The petitioner in WP.No. 1039/89, "M/s Mallikarjuna Chemicals, Piduguralla", came forward with the following averments:

The petitioner-company is a small scale industry engaged in manufacturing/processing activities of ''burnt lime''. It is registered with the Industries Department as a small scale industrial unit Before registering it as a small scale industrial unit, the Industries Department had verified from the Singareni Collieries their ability to supply the quantity of coal required by the petitioner-industry. The requirement of the petitioner was assessed at 230 Metric Tonnes per month, and only after Singareni Collieries expressed its readiness to supply the said quantity to the petitioner, did the Industries Department register the petitioner unit as a small scale industry. It is in this manner that the appellant, Singareni Collieries, agreed to supply coal to the petitioner. However, since the date of registration, the appellant-Collieries has not been supplying the said quantity of coal regularly. Sometimes it has been supplying 50%; sometimes 70%, and in some months not at all. In spite of the petitioner approaching the Collieries on a number of occasions, it was submitted, no supplies have been made over the last several months. The petitioner-industry cannot be run except with coal. The petitioner cannot also import coal from outside the State, because it is not permitted. Moreover, the price of coal outside is highly prohibitive. The Collieries is under an obligation to supply the coal in the agreed quantity regularly. Accordingly, a writ of mandamus was sought against the Singareni Collieries, directing it to supply coal every month to the petitioner at the agreed quantity of 230 Metric Tonnes per month.

A counter-affidavit was filed on behalf of the Singareni Collieries denying the various averments made in the writ affidavit. While admitting that the petitioner is registered as a small scale industry, it is stated: "The respondent company has agreed to supply coal as per the norms recommended by the Technical Advisory Committee constituted by the Government of Andhra Pradesh and also as per the sale note terms and "conditions. Coal supply to any industry including the petitioner''s is subject to sale note terms and conditions..." It is stated that the appellant-company has fixed the Maximum Permissible Quantity (MPQ) of coal for each of such units, and that the MPQ fixed for the writ-petitioner herein is 230 Metric Tonnes, but that is only the maximum, and it does not happen that every month the unit consumes the full maximum quantity. For that reason, the Collieries has been supplying a portion of the said quantity depending upon the availability of coal, and its other commitments. It is stated further:

"Coal is an essential commodity covered under Essential Commodities Act, and the demand is more than production. Hence to distribute such a scarce commodity to the needy industries on a rational and scientific basis, the respondent-company has evolved a scientific and accurate method to make coal available for genuine consumer, and at the same time to ensure proper utilisation of allotted coal....."

It is submitted that the petitioner has violated the terms and conditions of sale-note, inasmuch as it has sold the coal supplied to it, in black-market. Certain instances are mentioned in support of the said allegation. It is further submitted that, on being discovered, the petitioner gave in writing that it will not violate the terms and conditions of sale-note. Moreover, when the petitioner''s kiln was sought to be inspected, it could not be identified for lack of name-plate. The name-board of the petitioner''s kiln was found removed. There are as many as 200 lime kilns in Piduguralla, and all are located in one place and side-by-side. In the circumstances, establishing the identity of each kiln has become impossible. Moreover, the petitioner has been repeatedly misusing the coal supplied to it.

Before proceeding further, we may refer to the constitution of the Technical Advisory Committee. It is contained in G.O.Ms.No. 631, dated 26-12-1983. The G.O. recites that the Government have been contemplating to streamline and rationalize the system of coal distribution to industrial units in Andhra Pradesh from the coal produced in the Singareni Collieries; that, Technical Committees were constituted for each district with officers of District Industries Centres and Small Industries Service Institute to ascertain the requirements of each small scale unit, and that for the purpose of fixing realistic quantities of coal required by such units on the basis of technical norms, and priorities to be fixed in the matter of supply of coal, it is found necessary to constitute an Advisory Committee of Technical Officers. The G.O. further recities.

"The Government have carefully examined the question and direct that a Technical Advisory - Committee of officials be constituted with the following members:-

(1) Sri G.S.K.C.V. Prasad Rao, General Manager, A.P. Industrial Infrastructure Corporation Ltd., Hyderabad.

(2) Sri Syed Azmatullah, Joint Director of Industries, Office of the Commissioner of Industries, Hyderabad.

(3) Sri B. Vasudeva Rao, General Manager (R.M.)

A.P. Small Scale Industrial Development Corporation Ltd., Hyderabad,

(4) Sri T. Ramamohana Rao, Joint Director of Industries on O.D. as Officer on Special Duty, Singareni Collieries Company Ltd., Hyderabad. Sri T. Ramamohana Rao shall be the Convenor of the Committee...."

The functions of the Committee as stated in paragraph 4, are the following. It would be appropriate to extract paragraphs 4 to 6:-

"4. The functions of the Committee shall be:

a) To workout an appropriate and meaningful set of norms for each category of industry in the small, medium and large scale sectors and apply such norms and guidelines for ascertaining their respective coal requirements at the present level of operation of each individual unit. The requirement so ascertained for each unit may be called its ''Basic Quota''.

b) The committee will inter alia'' utilize the reports received or to be received from the DIC Level Committees which are already functioning for small scale sector, and collect such further data as it deems necessary from District Industries Centres concerned.

c) All necessary data will be normally collected through D.I.Cs. The committee will, however, be free to collect data through any other agency or directly also.

d) The Committee may inspect and directly enquire into any unit''s requirement collectively or through any of its members or by deputing anyone else on its behalf.

e) The Committee will categorize industries for purposes of:

i) Priorities of movements;

ii) Priorities for particular quantity/type of coal;

iii) Differentiated percentages of cuts/enhancement on the ''Basic Quota'' when the total availability of coal for industries in Andhra Pradesh falls short by, exceeds the aggregate of ''Basic Quotas''.

iv) Any other matter relevant and ancillary to the tasks entrusted to it. The Committee shall also advise Singareni Collieries Company Ltd., on any specific issues referred to it in regard to distribution and movement of coal to industries.

The Committee will submit such reports to the Government and Singareni Collieries Company Ltd. as may be called for with regard to the tasks entrusted to it. All the recommendations of the Committee will be of an advisory nature.

The Commissioner of Industries, A.P. Industrial Infrastructure Corporation Ltd., and A.P. Small Scale Industrial Development Corporation are requested to permit the officers to work on the Committee on a priority basis...."

It appears the argument before the learned single judge proceeded on the footing that there was an agreement between the Singareni Collieries and the petitioners for supply of coal. On that basis, an objection was raised by the Singareni Collieries that a writ petition does not lie to enforce a contractual obligation. The learned Judge went elaborately into the said question and held that, even a contractual obligation can be enforced by way of a writ of mandamus. At the hearing of this appeal, however, we found no factual basis for the assumption (or contention, as it may be called) that there exists an agreement between the writ-petitioners and Singareni Collieries whereunder the Collieries has agreed to supply any particular quantity every month, or at any other given interval. No such agreement is placed before us. All that the petitioner stated was that, before registering the petitioner-unit as a small-scale industrial unit, the Industries Department had written to the Singareni Collieries asking its readiness to supply 230 Metric Tonnes of coal per month to the petitioner-unit, and that only on the Singareni Collieries agreeing to supply the said quantity was the registration as ''small scale Industrial Unit granted. But absolutely no material is placed before the Court in support of, or to substantiate the said agreement No such communication, either from the Industries Department to Singareni Collieries or from Collieries to the Department, much less to the petitioner, is produced before us. We must, therefore, hold that there is no agreement as such between the Singareni Collieries and the petitioner, or for that matter, between the Singareni Collieries and the petitioner represented by the Industries Department, whereunder the Collieries had agreed to supply a particular quantity. Mr. K. Srinivasa Murthy, learned counsel for the appellant, denied the existence of any such agreement. All that he stated was that the supplies are being made as per the recommendations of the Technical Advisory Committee, and that their obligation is no more than to abide by the directions given by the Technical Advisory Committee. We are also of the opinion that, on the basis of the pleadings and the material placed before us, it is not possible to infer any contract between the parties and, therefore, the question of enforcing any contractual obligation by way of a writ petition is beside the point. We are, therefore, of the opinion that the law discussed by the learned single judge and the propositions enunciated by him are not really called for in this case and are, accordingly, set aside. Indeed, the paid question is being considered by a Full Bench. It is unnecessary to go into the same herein.

Now coming to the facts of the case, the position is this: Coal is an essential commodity. Its demand is more than its supply. The rate at which Singareni Collieries supplies coal to industries is far lower than what may be called the market rate. There are number of demands upon the Singareni Collieries. Besides public sector units and industries, the other industries which depend upon Singareni Collieries for supply of their coal requirements are Units engaged in manufacture of cement and lime, paper and paper products, mineral based industries, oils and solvent extractions, Sugar and Agro products, cotton, textile and processing, chemicals and Pharmaceuticals, Engineering and other miscellaneous industries, like tyre manufacturing, etc. It is inherent in the very circumstances that there should be a scale of priorities in the matter of supplies to these various units, depending upon their significance and importance to national economy, and the object of promotion of industrial production as a whole. The Technical Advisory Committee is constituted by the Government of Andhra Pradesh precisely for this purpose. The main function of the Committee is to "work out an appropriate and meaningful set of norms/or each category of industry in the small, medium and large scale sectors and apply such norms and guidelines for ascertaining their respective coal requirements at the present level of operation of each individual unit...." The requirement so ascertained for each unit is called the ''Basic Quota''. It is evident from G.O.Ms.No. 631 that the Committee first collects material from the District Level Committees, and after such inspection and enquiry as it thinks appropriate, it categorizes industries for purposes of (i) priorities of movement, (ii) priorities for particular quantity/type of coal, and also determines differenciated percentages of cuts/enhancement on the ''basic quota'' when the total availability of coal for industries in Andhra Pradesh falls short by/ exceeds the aggregate of ''basic quota''. It may also look into any other matter relevant and ancillary to the tasks entrusted to it. It is empowered to call for such information as it thinks appropriate on any specific issues, from the Singareni Collieries. It is evident that once the Technical Advisory Committee fixes the above norms and quotas, supply has to be effected by the Singareni Collieries in accordance therewith. Each unit for which a particular ''basic quota'' is determined, will go and purchase the requisite quantity every month, or at other specifie intervals, on remitting the appropriate price. In this context, it must be remembered that Singareni Collieries is wholly owned and controlled by the Central Government and the State Government, respectively in the proportion of 49:51. It is engaged in excavating coal which is an essential commodity for several industries and other public sector industries in this country. It is, undoubtedly, a ''State'', being an agency/instrumentality of the State. Its position is akin to that of an Electricity Board which supplies another form of energy, i.e., electricity, to various consumers. After all, coal is also a source of energy/power . In its dealings with consumers, the Collieries, being ''State within the meaning of Article 12 of the Constitution, is subject to the disciplines of Part-Ill, and in particular Article 14. It goes without saying that, if any consumer mis-utilizes or blackmarkets the coal supplied to him, either partly or wholly, he ought to be disqualified from future supplies. But the finding that there has been a mis-utilisation or blackmarketing, as the case may be, ought to be arrived at in a fair manner. The subjective satisfaction of the Collieries cannot be treated as final. An opportunity-however brief-must be given to the affected party to meet the allegation against him, and it is only after hearing him that a decision must be arrived at whether he has been guilty of any irregularity, or violation of any of the terms and conditions of the sale-note. This is the minimum requirement of the duty to act fairly, which flows from Article 14. Whether we equate the said duty to a quasi-judicial function or not, the result is the same, viz., that before holding a consumer guilty of any irregularity or violation, a hearing must be given to him with an opportunity to rebut and/or contradict the allegation made against him. After such enquiry it shall be open to the authority concerned to disqualify such person either permanently, or for a limited period, as may be found appropriate in the circumstances. But such a machinery ought to be evolved, and that can be done, and ought to be done, in the circumstances by the appellant-Collieries itself. Take the analogy of Electricity Board. If a consumer is alleged to have tampered with the meter, or otherwise with the supply of energy, a mere allegation by the Board or any of its officers is never treated as enough. An enquiry is provided for, at which enquiry the guilt or otherwise of the person concerned is determined, as also the damages or other compensation amount which he is liable to pay on account of such irregularity/violation. While we do not say that an identical procedure must be devised here, a procedure must all the same be evolved which provides a minimum but reasonable opportunity to the person affected of showing cause against the allegation.

The question then arises as to what are the appropriate directions to be given in the facts and circumstances of the case? In particular, the allegation of the Collieries is that in Piduguralla there are as many as 200 lime-kilns; that all of them are located in one place; and that, because of the absence of name-boards it has not been found possible to identify each of the units and ascertain their precise requirements. It is obvious that such a situation is bound to lead to abuse.

We are, therefore, of the opinion that the appellant-Collieries shall specify an officer or other authority who shall register each of the lime-kilns/units (writ-petitioners herein) after such verification as the authority thinks appropriate. Each of the lime-kilns/ units shall be asked to file an application for registering it as a consumer. It shall be open to the Collieries to prescribe an appropriate fee to be remitted along with such application to meet the expenses of the authority. The authority shall make such enquiry and verification as it thinks appropriate, and register the several lime-kilns both at Piduguralla, and at other places, and also determine their monthly requirements. Once the monthly requirement is prescribed, the Collieries shall supply such portion thereof in uniform and equitable manner, as may be found feasible having regard to its other commitments and priorities. The authority so specified shall also be competent to enquire into the allegations of irregularities as may be received by the Collieries. The authority shall, before holding a consumer guilty, given an opportunity to such consumer to show-cause against the proposed action, and then pass an order. It shall equally be open to such authority to suspend the supply pending enquiry into such allegations, if it so decides. It is evident that the supply to lime-kilns shall be within such overall frame-work, norms, and guidelines as may be prescribed by the Technical Advisory Committee.

If any allegations are already pending against any of the petitioners, the same shall be referred to, and enquired into by the authority so specified.

The directions given hereinafter are on the same lins as were made by the Supreme Court in Liberty Oil, Mills'' case.''

Writ Appeals and the. writ petitions are disposed of with the above directions. There shall be no orders as to costs.

Pending completion of the process indicated here in above, the Singareni Collieries shall supply such portion of the M.P.Q. of coal to each of the petitioners as may be found feasible, having regard to its overall commitments. But, whatever supply is made shall be uniform to all units, except where there are specific allegations and the supply is stopped pending investigation into, or as a result of the enquiry into, such allegations.. Govt. Pleader''s Fee Rs. 100/- in each.