Holding

The Court held that the refund of the enhanced amount must attract interest at 12% per annum calculated up to the actual date of refund (28 June 2008), and any interest earned on the fixed‑deposit should be paid back to the petitioners.

Summary

The petitioners, non‑core linked coal consumers, had paid an extra amount (one‑third of the enhanced price) under an interim Supreme Court order pending the validity of the E‑auction scheme. The scheme was later declared ultra vires of Article 14 and the coal company undertook to refund the extra amount with 12% interest per annum. The petitioners sought interest calculated up to the actual date of refund (28 June 2008) rather than the date fixed by the company (30 April 2008) and also demanded the interest earned on the fixed‑deposit made with the refunded sum. The Court held that interest must be computed up to the date the refund was actually made and that any interest earned on the fixed deposit should be returned to the petitioners. Directions were issued for the coal company to provide the bank statement of the fixed‑deposit interest and for the Bombay High Court to expedite the pending writ petition.

Issues considered

Whether interest on the refunded enhanced amount should be payable up to the actual date of refund or the date fixed by the coal company.
Whether the coal company must pay the interest earned on the fixed‑deposit created with the refunded amount.
Whether the pending writ petition concerning the E‑auction scheme should be expedited by the High Court.
Whether the undertaking given by the coal company in the interim order is enforceable.

Subjects

refundinterestinterim ordercoal purchaseE‑auction schemecontemptSupreme Courtfixed depositArticle 14constitutional challenge

Judgment

[2009) 3 S.C.R. 500 (

,_ -
A NIFTY CHEMICALS PVT. LTD.
v.
UNION OF INDIA
(I.A. Nos. 1-2 in T.C. (Civil) No. 113 of 2005 etc.)
FEBRUARY 27, 2009
B
[S.B. SINHA AND DR. MUKUNDAKAM SHARMA, JJ.]

Refund - Of amount paid as per interim order- Litigation
between coal suppliers and coal purchasers - Over
c enhanced amount demanded by supplier - Interim order
directing the purchasers to pay 1!3rd of the enhanced amount
- Supplier undertaking for refund of amount, if final decision
-
passed against them - Final decision passed against the
supplier - Applications and contempt petitions, seeking
D refund and direction for payment of interest thereon till the •
actual date of payment - Held: Coal purchasers are entitled
to refund, with interest computed till the date refund payment
was actually made.

Applicants {non-core linked consumes of coal) of the
E respondent-coal company {a susbsidiary of Coal India
Ltd.) were getting supply of coal at fixed price {Notified
price). After introduction of E-Auction Scheme, the non-
core linked consumers were required to pay the price as
'
determined by market forces in place of the notified price.
F
During pendency of the cases challenging 'E-Auction
Scheme' it was directed by interim order passed by
Supreme Court that the coal would be supplied to the
coal consumers on their paying 113rd of the enhanced
G price i.e. in addition to the notified price and on their
furnishing security for the balance 2/3rd of the enhanced
price. Coal India and its subsidiaries under-took that if 'E-
Auction Scheme' if not upheld consequently, they would
refund the enhanced price of 113rd with interest thereon
H 500
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 501

-'-• A
at 12% PA, from the date of payment. Thereafter, E-
Auction scheme was quashed holding the same invalid
and ultra vires Article 14 of the Constitution. The coal
consumers filed contempt petitions alleging violation of
the orders wherein the undertaking for refund of the price,
over and above the notified price, was made. Thereafter, B
present applications were filed seeking the refund as
__. undertaken. They also sought interest on the amount
already refunded not only upto 30.4.2008, but till the date
of payment. Respondent-Company in its affidavit stated
that it had released the refund payments to 118 parties c
out of 122 parties. It also stated that it had no objection
_,.
to pay the interest on the amount till the date, the amount
was actually refunded.

~
Disposing of the applications and contempt
petitions, the Court D

HELD: 1. Since the applicants were refunded the
extra amount deposited by them only on 28.6.2008 they
are entitled to receive interest computed and calculated
up to 28.6.2008 and not till 30.4.2008, for which there is E
no basis at all. Interest is payable on the amount found
due and payable on the ground that the concerned
~

person is deprived of the benefit of the aforesaid amount
-1
which is otherwise due and payable to it. The intention
is to compensate the concerned person for being F
deprived of utilizing the money for the period during
which he was unable to utilize the amount. Similarly, the
extra amount which was paid by the applicants was
invested in the fixed deposit receipt pursuant to the order
of this Court. [Para 14] [509-G, H; 510-A] G
2. Whatever interest was received by the coal
company as against the FDR made on the amount
( deposited by the applicants towards extra amount
charged, may be paid back to the applicants. The
aforesaid aspect could be settled between the parties, if H
502 SUPREME COURT REPORTS (2009] 3 S.C.R.
.. •.
A the coal company provides to the representatives of the
applicants, the statement of the bank indicating the
interest that actually accrued and was paid on the
aforesaid FDR to the Respondent-Company, which was
made against the extra payment made by the applicants.
B [Para 15) [510-C, DJ

CIVIL APPELLATE JURISDICTION : Transfer Case No. -
)>. -
113 of 2005.

From the Judgment and Order dated 12.12.2005 in SLP
c No. 20471 of 2005.
M.L. Verma, Manish Kumar Saran, Jyoit Mendiratta, S. .,.
Chandra Shekhar, Manish Pitale, Chander Shekhar Ashri,
Manish Kumar Saran and Nirmal Kumar Ambastha for the
D
Petitioner. ..
Anip Sachthey, Mohit Paul, Anil Katiyar, S.P. Singh, Kiran
Bhardwaj, D.S. Mehra, Cp. Capt. Karan Singh Bhati, Sweta
Rani, Rekha Giri, Ajit Kumar Sinha and V.K. Verma for the
Respondents.
E
The Order of the Court was delivered by
ORDER .
DR. MUKUNDAKAM SHARMA, J. 1. By this order we
F propose to dispose of the above mentioned interlocutory
applications arising out of Transfer Case Nos. 113, 115, 117,
118, 119, 120, 121, 122 of 2005 and contempt petition No. 4 7
of 2008 in T.C. (C) 116/2005 and contempt petition No. 49 of
2008 in T.C. (C) 112/2005.
G 2. The basic facts in all these applications are similar.
Therefore, the facts in I.A. No ......with I.A. Nos. 1-2 in T.C.

H
(Civil) No. 113 of 2005 are taken as illustrative for the purpose
of our decision.

3. The present application is filed on behalf of the four
-
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 503
[DR. MUKUNDAKAM SHARMA, J.]
..> "

applicants, namely, Mis. Trimurti Moulds Pvt. Ltd., Coventry A
Stonewares Pvt. Ltd., Vidharbha Ceramics Pvt. Ltd. and
Ceramics Industries (I) Pvt. Ltd. through their respective
Directors praying for issuance of directions to the M/s. Western
Coalfields Ltd. (a subsidiary of Coal India Ltd) being respondent
herein for implementation and execution of the direction given B
by this Court in its order dated 30.10.2007 in T.P. (C) No. 100
_,.( of 2006. The prayer was to the following effect : -

(i) Direct the respondent Coal Company i.e. M/s.
Western Coalfields Ltd. to implement and obey their
own undertaking given before this Court and as c
recorded by this Court in it's order dated
12.12.2005 and 30.10.2007 in Transfer Petition
(Civil) No. 100 of 2006 and analogous matters and
~...,

refund excess money deposited by the Petitioners/
" Applicants herein over and above the Notified D
Price since the introduction of E-auction along with
interest at the rate of 12% per annum, and/or

(ii) Direct the Respondent M/s. Western Coalfields Ltd.
to pay Bank interest on the amount already E
refunded to applicants (on 25.07.2008) not only up
to 30.4.2008 but till the date of payment.
•
... 4. The applicants are non-core linked consumers of coal
of M/s. Western Coalfields Ltd. It is stated in the application
that the applicants and other similarly situated non-core linked F
consumers were being supplied coal by M/s. Western
Coalfields Ltd. at fixed price which is stated to be Notified
Price, which was used to be fixed once in a year by the
respondent coal company. The Coal India Ltd. and its subsidiary
coal company like the respondent herein introduced a new G
Scheme in the year 2004 for sale of coal and the said scheme
was made applicable to even non-core linked consumers like
the applicants herein. The aforesaid Scheme was called as "E-
auction Scheme" in which price of coal was to be determined
H
504 SUPREME COURT REPORTS [2009] 3 S.C.R.
). .
A by market forces in place of fixed price, i.e. the Notified Price.
The validity and legality of the aforesaid scheme of E-auction
was challenged by the various companies like and including the
applicants herein by way of writ petitions before the Bombay
High Court, Nagpur Bench. The writ petition of the applicants
B was registered as Writ Petition (Civil) No. 2421 of 2005. In the
said writ petition the High Court passed an interim order on
21.06.2005, whereby and whereunder Coal India Ltd. and M/
s. Western Coalfields Ltd. were directed to supply coal to the
applicants at Notified Price subject to petitioner depositing with
Mis. Western Coalfields Ltd. the difference between the E-
c auction price and the Notified Price.
5. In view of and in terms of the aforesaid interim order
-applicants started lifting coal after depositing the amount in
cash, with respect to the difference between the average E- ~,

D auction price and the notified price. Similar writ petitions were
filed challenging the legality of the aforesaid Scheme of sale
of coal through E-auction in various other High Courts. Interim
orders were passed by a number of High Courts also, and
therefore, special leave petitions came to be filed by the
E companies like the applicants in this Court. The coal companies
preferred a number of transfer petitions in this Court seeking
transfer of all the writ petitions pending on the aforesaid ~

subjects before the various High Courts to this Court. The •
special leave petitions filed by the various coal consumers in •
F this Court and the transfer petitions preferred by the coal
companies were taken up together and this Court under order
dated 12.12.2005 finally allowed all the transfer petitions
preferred by different coal companies by passing a detailed
order. The operative portion of paragraphs 8 and 9 of the
aforesaid order is reproduced hereinbelow :
G ;-

"8 ......... Taking note of the circumstances as a whole we
feel that it would be just and proper to direct the petitioner
companies/firms, having coal linkage, to pay in addition
to the notified price, 33 1/3 % of the enhanced price, each
H
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 505
[DR. MUKUNDAKAM SHARMA, J.]

time they claim supply of coal to them based on the linkage A
and by furnishing security for the balance 66 2/3 % of the
enhanced price with an undertaking filed in this Court that
the said part of the price will also be paid within 6 weeks
of the decision of this Court in the Writ Petitions in case
the writ petitions are decided against the petitioners. To B
protect the interest of the petitioners and to ensure that no
permanent harm is caused to them we also think it proper.
to record the undertaking given on behalf of the Coal India
, Ltd. and its subsidiaries that in case this Court upholds the
challenge made by the petitioners and allows the writ c
petitions filed by them, the enhanced price of 33 1/3% now
to be paid by the petitioners will be refunded to the
petitioners within 6 weeks of the judgment of this Court with
interest thereon at 12% per annum from the date of
payment till the date of return to the concerned petitioner. 0

9.............. All the same, we think it appropriate to direct
that on the concerned petitioner paying the notified price
plus 33 1/3% of the enhanced price as per the E-auction
and furnishing security for the bi:tlanee 66 2/3% of the
enhanced E-auction price, and filing thE! µndertaking in this E
Court within four weeks from today, the coal as per the
linkage will be supplied to the concerned petitioner within
a period of 3 weeks from the date of $UCh payment. It is
clarified that there will be no obligation on the part of the
Coal India Ltd, and its subsidiaries to supply the coal as F
per this interim order in the case of those who have not
complied with the order for payment of 33 1/3% of the
difference in price in addition to the notified price and for
furnishing of security for the balance 66 2/3% of the
enhanced price, and filing the undertaking in this Court to G
pay the entire amount if they do not succeed in their
challenge. it is directed that this interim order will enure until
these writ petitions are finally heard and disposed of by
this Court." '
H
506 SUPREME COURT REPORTS (2009] 3 S.C.R.

A 6. On 18.1.2006, the aforesaid order passed on
. .

12.12.2005, came to be clarified in the following manner :

".......We must note that assurance has been given by the
learned Solicitor General appearing on behalf of Coal India
Ltd. and other subsidiary Companies that the interim order
B
of this Court date December 12, 2005 shall be
implemented in letter and spirit. ,..__
We would clarify that so far as furnishing of security
for the balance 66 2/3% of the enhanced price is
c concerned, the Coal Companies shall not insist on
furnishing bank guarantees and shall supply Coal on their
furnishing undertaking by the Managing Director or
Managing Partner of the Company/Firm, as the case may
be, apart from indemnity bonds or other types of securities
D subject of course to the compliance of other directions." • "--
The applicants have stated in the application that pursuant
to the aforesaid orders passed by this Court they submitted
entire detail in a chart showing the amount which the respondent
M/s. Western Coalfields Ltd. was liable to refund to the
E
applicants.

7. This Court by the judgment and final order dated
01.12.2006 in Civil Appeal No. 5302 of 2006 titled as Ashoka ~

Smokeless Coal India (P) Ltd. v. Union of India, reported in
F (2007) 2 sec 640 upheld the challenge of the applicants to
the scheme of E-auction. While allowing the writ petitions this
Court held that the aforesaid scheme of E-auction was invalid
-
and declared the same as ultravires of Article 14 of the
Constitution of India and quashed the said E-auction Scheme.
G Consequence of the said judgment and order is that the coal
companies like the Respondent were required to refund the
.....
entire price paid by the applicants over and above the Notified
Price as per their undertaking before this Court and as
recorded in the order dated 12.12.2005 and 30.10.2007.
H
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 507
[DR. MUKUNDAKAM SHARMA, J.]

-·-· 8. Alleging violation of the aforesaid orders passed by this
Court contempt petitions were filed in which the following order
A

came to be passed by this Court on 30.10.2007 :

"(i) The Petitioners shall furnish all documents to the learned
Advocates-on-Record of the respondents, showing the B
actual payments made to any of the subsidiaries of the
Coal India Ltd. and the difference between the amount paid
. '""' and the amount notified by 12th November, 2007 .

(ii) The documents furnished by the Petitioners shall be
verified by the officers of the concerned Coal companies c
within four weeks thereafter.

(iii) In case of any difference, the learned counsel, would
deliberate upon the matter so as to enable them to come
out with an accepted solution. D
••
(iv) The Bank guarantee furnished by the Petitioners shall
stand discharged"

9. Despite representation filed in that regard by the
aforesaid four applicants and no effective steps having been E
taken by the Respondent for redressal of their grievances, the
present application was filed in which an affidavit also came
• to be filed on behalf of the M/s. Western Coalfields Ltd., the
_,. respondent herein. In the said affidavit the respondent coal
company has stated on oath that after verification of all records F
and after considering the report of t~e Committee constituted
under the order of this Court and on their recommendation the
respondent herein released the refund payments to 118 parties
out of 122 parties, as the remaining 4 parties were directed to
submit documents, namely, money receipt and PAN so as to G
~-~
enable the company to release their amount. The company has
further stated in their affidavit in the following manner :

" .... Further the parties who have deposited the additional
amount due to increase in the e-auction price at the time
H
508 SUPREME COURT REPORTS [2009) 3 S.C.R.

~~

A of delivery are also entitled to refund alongwith interest."

10. In the light of the aforesaid pleadings of the parties we
have heard the learned counsel appearing for the parties.

11. Mr. M.L. Verma, theJearned senior advocate primarily
B made following threefold submissions before us. His first
submission was that the interest which was payable pursuant
to the orders of this Court on the extra amount taken and >- •
received by the respondent in terms of the interim orders of this
Court is payable till the date when extra money taken by the
c respondent was refunded but instead the respondent coal
company has computed the said interest only till 30.4.2008 and
not till 28.6.2008, when the aforesaid extra money taken by them
was actually refunded. His second submission was that the
respondent-Company has also not paid to the applicants the
D entire interest that actually accrued on the fixed deposit receipt
which was deposited on the account of the applicants. It is next
submitted by him that the writ petition of the applicants
registered as Writ Petition (Civil) No. 6629 of 2005 is still
pending disposal in the High Court of Judicature Bombay,
E Nagpur Bench and the said High Court did not take up the writ
petition for final disposal as the issue with regard to excess
amount over and above Notified Price paid prior to passing of
'
the order dated 4.7.2005, i.e. from the date on which E-auction •
Scheme came to the existence is pending consideration before ~

F this Court. He further submitted that since now this Court has
disposed of the said issue, there should be a direction to the
concerned High Court to dispose of the aforesaid writ petition
as expeditiously
. as possible.
.

12. Mr. Anip Sachthey, the learned counsel appearing for
G the coal company during the course of his submission
submitted that they have paid the amount which became
.....
refundable to all the claimants who are entitled to receive it
inclusive of interest in fixed deposit calculated up to 30.4.2008
as the fixed deposit receipts were time bound and, therefore,
H
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 509
[DR. MUKUNDAKAM SHARMA, J.)
_, ·• a fixed date was taken for calculation of the interest which was A
30.4.2008. He also submitted that whatever interest is due and
payable to the applicants have already been paid while
refunding the amount due and payable to the applicants. He
further submitted that the coal company has no objection if a
direction is issued to the Bombay High Court, Nagpur Bench B
for early disposal of the aforesaid writ petition for according to
him the issues raised in the said writ petition would now be
.... governed and covered by the decision of this Court .

13. While considering the aforesaid submissions in the
light of the pleadings of the parties we find that the area of
c
controversy and the dispute between the parties, as highlighted
in the present application, lie in a very narrow compass for
during the course of arguments Mr. Sachthey, learned counsel
for the respondent coal company has fairly stated that the coal
i company cannot have any objection to pay the interest accrued D
on the amount payable to be computed up to 28.6.2008 when
the amount came to be actually refunded to the applicants. We
also find justification in the claim of the applicants for the
respondent coal company had agreed to refund the amount, if
later on found to be due and payable with interest till the date E
when it is actually refunded. In fact that was also the intention
of the order passed by this Court when the interim order to that
.... effect was passed. We may point out that though the applicant
"'I in the application stated that the amount was refunded on
25.7.2008 but however during the submissions it was agreed F
that the same was refunded on 28.6.2008

14. According to us, since the applicants were refunded
the extra amount deposited by them only on 28.6.2008 they are
entitled to receive interest computed and calculated up to G
28.6.2008 and not till 30.4.2008, for which there is no basis at
• ·~")'\

all. Interest is payable on the amount found due and payable
on the ground that the concerned person is deprived of the
benefit of the aforesaid amount which is otherwise due and
payable to it. The intention is to compensate the concerned
H
510 SUPREME COURT REPORTS (2009] 3 S.C.R.

A person for being deprived of utilizing the money for the period
. '

during which he was unable to utilize the amount. Similarly, the
extra amount which was paid by the applicants was invested
in the fixed deposit receipt pursuant to the order of this Court.

15. There is an apprehension in the mind of the applicants
B
that the entire interest accrued on the said FDR, is not paid to
the applicants. In that view of the matter, we are of the
considered opinion that whatever interest was received by the )- .
coal company as against the FDR made on the amount
deposited by the applicants towards extra amount charged,
c and not covered by the directions issued in the preceding
'
paragraph may be paid back to the applicants. The aforesaid
aspect could be settled between the parties if the coal company
provides to the representatives of the applicants the statement
of the bank indicating the interest that actually accrued and was
D paid on the aforesaid FDR to the Respondent - Company, t

which was made against the extra payment made by the
applicants.

16. We are also of the considered opinion that since this
E Court has finally pronounced the judgment and order on
1.12.2006 in respect of the challenge to the Scheme of E-
auction and passed consequential orders thereof, the writ
petition filed and registered as Writ Petition (Civil) No. 6629 ~

of 2005 could now be disposed of by the Bombay High Court, ~

F Nagpur Bench. Consequently, we pass the following directions
in terms of the discussions and observations made
hereinbefore :

I. the respondent coal company shall now pay interest
at 12% per annum in terms of order of this Court
G dated 12.12.05 on the extra amount which was )or- •.
refunded in terms of the claim of the applicants
calculating and computing the same till 28.6.2008
when the said amount was actually refunded to the
applicants and not till 30.4.2008 as has been done
H
NIFTY CHEMICALS PVT. LTD. v. UNION OF INDIA 511
[DR. MUKUNDAKAM SHARMA, J.]
by the applicants. A

II. The respondent-Company shall make available to
the representatives of the applicants statement of
the bank indicating interest accrued on the FDR
created as against the extra amount paid by the B
applicants and not covered by the directions issued
in the preceding paragraph.

Ill. We also issue a direction to the Bombay High
Court, Nagpur Bench now to take up the Writ
Petition (Civil) No. 6629 of 2005 for consideration C
and disposal as expeditiously as possible. It is
needless to say that all the contentions relating to
the issue of extra amount over and above the
Notified Price, that is to say, difference between
-+ average E-auction and Notified Price in cash and D
the issues relating to validity of Scheme of E-
auction shall be decided in terms of the decision
of this Court those are covered and governed by
the said decision. If, however, any other and
additional contentions are raised in the writ petition E
and pleadings of the parties which are not covered
by the issues decided by this Court, the same shall
be decided by the High Court as expeditiously as
possible and according to law.

15. All the applications and contempt petitions stand F
disposed of in terms of this order.

K.K.T. Applications and contempt petitions disposed of.