New Delhi, September 13 - The Supreme Court on Friday delivered a sharp rebuke to Coal India Limited (CIL) for unilaterally hiking coal prices under its 2006 Interim Coal Policy. The bench, led by Justice J.B. Pardiwala, ruled that the company must refund the 20% excess it charged small manufacturers of smokeless fuel.
Background
After the court struck down an earlier e-auction pricing method in Ashoka Smokeless, CIL introduced an “Interim Coal Policy” in December 2006. This policy added a flat 20% over the last notified price for “non-core” linked consumers—mostly small coke and smokeless-fuel producers. These businesses, already squeezed by rising costs, challenged the hike in the Calcutta High Court, which twice sided with them.
Court’s Observations
“The coal companies are not private traders; they are instrumentalities of the State,” the bench observed, stressing that public sector firms handling natural resources must act for the “common good” under Article 39(b) of the Constitution. The Court rejected CIL’s argument that it needed the hike to offset input costs, noting the company had offered no solid proof of losses. It also dismissed the plea of “unjust enrichment,” saying the onus lay on CIL to show the manufacturers passed on the extra cost to their customers.
The judges recalled their own precedent in Ashoka Smokeless, where they held that essential commodities like coal cannot be sold through profit-maximising mechanisms without a fixed and fair price. “Good governance requires protecting weaker sections, not treating coal like any other commodity,” the bench said.
Decision
Upholding the Calcutta High Court’s orders, the Supreme Court directed Coal India to refund the 20% excess charges collected from the non-core sector between December 2006 and March 2008, along with 10% annual interest in case of delay. The ruling closes a 17-year battle and reinforces the principle that State-owned enterprises cannot use interim policies to sidestep constitutional obligations.
Case Title: Coal India Ltd. & Others vs. M/s Rahul Industries & Others
Appeal No.: Civil Appeal No. 11793 of 2025 (arising from SLP (C) No. 21888 of 2012)
Decision Date: 13 September 2025
