The Supreme Court of India on Tuesday declined to order payment of over ₹106 crore in compensation sought by Prakash Industries Limited over the suspension of coal supplies more than a decade ago. Instead, the Court held that the company is entitled only to the supply of coal for the disputed period under a fresh fuel supply arrangement.
A Bench of Justices Pankaj Mithal and S. V. N. Bhatti clarified that earlier court orders never directed monetary compensation and must be interpreted as requiring coal supply at the applicable price under prevailing policy.
Background of the Case
The dispute traces back to 2011 when coal supplies to Prakash Industries were suspended by South Eastern Coalfields Limited after allegations that coal from a captive block was diverted for purposes other than those permitted.
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Prakash Industries challenged the suspension before the High Court of Chhattisgarh. In 2012, the High Court quashed the suspension order and directed restoration of coal supplies.
The appellate court later held that while fresh supply should resume, the company should be compensated for the period between October 2011 and December 2012 when it had to purchase coal through e-auction at higher prices.
However, when the matter reached the Supreme Court in 2014, the Court modified the relief. Instead of compensation, it permitted the government and SECL to supply coal at the prevailing price for the period during which supply had been suspended.
Following the dismissal of earlier appeals in 2025, the Union government filed a compliance affidavit stating that SECL was ready to supply coal to the company for the suspended period under a fresh fuel supply agreement.
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Prakash Industries, however, moved fresh applications before the Supreme Court seeking payment of approximately ₹106 crore. The company argued that it had already purchased coal from e-auction during the suspension period and that the difference in price should be paid along with interest.
It also contended that accepting physical coal now would be impractical because it already had sufficient supply arrangements and operational coal sources.
The Supreme Court said both sides were attempting to interpret earlier judicial orders to suit their own claims.
“The parties are interpreting the earlier orders to suit their convenience. Such an approach is incorrect,” the Bench observed.
The Court noted that when the dispute earlier reached the Supreme Court, the direction for compensation had already been modified. The Court had clearly permitted supply of coal instead of payment of money.
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The judges emphasised that none of the previous orders could be read as a direction to pay monetary compensation for the difference in coal prices.
Rejecting the company’s claim for compensation, the Court held that Prakash Industries is entitled only to coal supply for the period during which supply was suspended.
However, the Court allowed the company to choose whether the coal price should be calculated according to the policy prevailing on 9 April 2014 or 17 May 2019, when key judicial orders were passed in the dispute.
The Bench directed that once the company communicates its chosen date, SECL and the Union government must execute a fresh Fuel Supply Agreement within two weeks. Coal supply under that agreement must follow normal linkage terms and not a tapering arrangement.
With these directions, the Court disposed of the miscellaneous applications.
Case Title: Union of India v. Prakash Industries Limited & Another
