Disposed

D. B. Power Limited v. Union of India

Chhattisgarh HC2 Sept 2024WPC/3261/2020

Case brief

AI extract

What is this about?

This order addressed disputes between power generating companies and Coal India entities regarding coal quality (grade slippage) and refund obligations for excess levies. The Court examined the Mineral Concession Rules and Central Government directives to determine the State Government's liability for refunding royalty differences, ultimately directing the lessee to approach the State Government.

What did the court decide?

Direction to CIL to submit petitioner's claim for refund/adjustment before State Govt within 2 months; direction to State Govt to reconsider and decide expeditiously.

D. B. Power Limited Vs Union of India — Mining and Natural Resources | Chhattisgarh HC (2024)

2024:CGHC:34189

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

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Order reserved on 29.7.2024 Order delivered on 03/09/2024

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WPC No. 3366 of 2020

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D. B. Power Limited Having Its Registered Office At Block 1a, Corporate Block, Db City Park, Arera Hills, Opp. Mp Nagar, Zone- , Bhopal- 462016 (Madhya Pradesh), District : Bhopal, Madhya Pradesh

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Corporate Office 3rd Floor, Naman Corporate Link, Opp. Dean Bank, C- 31, G- Block, Bandra Kurla Complex, Bandra (East), Mumbai- 400051, Represented By Shailendra Bajpai S/o Shri D.P. Bajpai, Aged About 40 Years R/o Village Badadarha, Tehsil Dabhara, District- Janjgir-Champa (Cg).

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---- Petitioners

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versus

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Union Of India Through Ministry Of Coal A Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi- 110001, District : New Delhi, Delhi

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Coal India Limited Coal Bhawan, Premise No. 04 Mar Plot No. Af-Iii, Action Area-1a, Newtown, Rajarhat, Kolkata- 700156, District : Kolkata, West Bengal

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South Eastern Coalfields Limited Seepat Road Bilaspur, Chhattisgarh- 495006, District : Bilaspur, Chhattisgarh

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---- Respondents

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WPC No. 2082 of 2022

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M. B. Power (Madhya Pradesh) Limited Having Its Registered Office At Hotel Govindam Complex, Kotma Road, Anuppur, Madhya Pradesh- 484224, District : Anuppur, Madhya Pradesh ---- Petitioner

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Versus

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Union of India Through Its Secretary, Ministry Of Coal, A-Wing, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi110001, District : New Delhi, Delhi

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Coal India Limited Through Its Secretary Coal Bhawan, Premise No. 04, Mar, Plot No. Af-Iii, Action Area- 1a, Newtown, Rajarhat, Kolkata- 700156, District : Kolkata, West Bengal

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South Eastern Coalfields Limited Seepat Road, Bilaspur, Chhattisgarh 495006, District : Bilaspur, Chhattisgarh

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Western Coalfields Limited Coal Estate, Civil Lines, Nagpur, Maharashtra- 440001, District : Nagpur, Maharashtra

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Northern Coalfields Limited Singrauli, Madhya Pradesh486889, District : Singhrouli, Madhya Pradesh

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Central Coalfields Limited, Darbhanga House, Kutchery Road, Ranchi- 834029

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State Of Chhattisgarh Represented By Its Chief Secretary, Mantralaya, Naya Raipur, Chhattisgarh- 492002, District : Raipur, Chhattisgarh

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State Of Madhya Pradesh Represented By Its Chief Secretary, Mp Mantralaya, Vallabh Bhavan, Bhopal- 462004, District : Bhopal, Madhya Pradesh

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State Of Uttar Pradesh Represented By Its Chief Secretary, 101, B Block, Lok Bhawan, Up Secretariat, Lucknow- 226001

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State Of Jharkhand Represented By Its Chief Secretary, 1st Floor, Project Building, Dhurwa, Ranchi- 834004

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---- Respondents

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WPC No. 833 of 2023

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South Eastern Coalfields Limited Having Its Registered Office At S E C L Bhawan, Seepat Road Bilaspur Pin 495006, District : Bilaspur, Chhattisgarh

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---- Petitioner

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Versus

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State Of Chhattisgarh Department Of Mines And Minerals, Mahanadi Bhawan, Naya Raipur Atal Nagar Raipur 492002, District : Raipur, Chhattisgarh

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S K S Ispat And Power Limited Village Siltara, 18th Mile Stone, Bilaspur- Raipur Road, Police Station Dharsiwa Raipur 493111, District : Raipur, Chhattisgarh

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D. B. Power Limited Block 1 A, Corporate Block, D B City Park Arera Hills, Opp. M P Nagar, Zone-I Bhopal 462016, District : Bhopal, Madhya Pradesh

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M. B. Power (Madhya Pradesh) Limited Hotel Govindam Complex, Kotma Road, Anuppur Madhya Pradesh 484224, District : Anuppur, Madhya Pradesh

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---- Respondents

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WPC No. 3261 of 2020

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D. B. Power Limited Having Its Registered Office At Block 1a, Corporate Block, Db City Park, Arera Hills, Opp. Mp Nagar, Zone-I, Bhopal- 462016 (Madhya Pradesh) Corporate Office3rd Floor Naman Corporate Link, Opp. Dena Bank, C-31, G- Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 Represented Shri Shailendra Bajpai S/o Shri D.P. Bajpai, Aged About 40 Years Village Badadarha Tehsil Dabhara, Distt. Janjgir-Champa (Chhattisgarh).

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---- Petitioner

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Versus

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Union Of India Through Ministry Of Coal A-Wing, Shashtri Bhawan, Dr. Rajendra Prasad Road, New Delhi- 110001, District : New Delhi, Delhi

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Coal India Limited Coal Bhawan, Premise No.-04 Mar Plot No.Af-Iii, Action Area-1a, Newtown, Rajarhat, Kolkata- 700156, District : Kolkata, West Bengal

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South Eastern Coalfields Limited Seepat Road, Bilaspur, Chhattisgarh- 495006, District : Bilaspur, Chhattisgarh

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---- Respondents

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WPC No.3366/2020 & 3261/2020

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For Petitioners	: Mr. Deepak Khurana, Advocate with Mr. Anand Shukla and Mr. Parth Shrivastava, Advocates
For Respondent UOI	: Mr. R.K. Mishra, Dy. Solicitor General with Mr. Tushar Dhar Diwan and Ms. Anmol Sharma, Advocates.
For Respondent	: Mr. B.S. Rajput, Advocate on behalf of Mr. R.K.
SECL	Gupta, Advocate.

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WPC No.2082/2022

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For Petitioners :	Mr. Kishore Bhaduri, Sr. Advocate assisted by Mr. Anand Singh Ubeja, Mr. Sajal Kumar Gupta, Ms. Deep Shikha and Mr. Naimish Tewari, Advocates
For Respondent UOI :	Mr. R.K. Mishra, Dy. Solicitor General with Mr. Tushar Dhar Diwan and Ms. Anmol Sharma, Advocates.
For Respondent State :	Mr. Praveen Das, Dy. Advocate General
For Respondent No.3 :	Mr. Rajeev Agrawal, Mr. Akshat Agrawal and Mr.
& 4	Pankaj Agrawal, Advocates

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	WPC No.833/2023
For Petitioners :	Mr. Rajeev Agrawal, Mr. Akshat Agrawal and Mr. Pankaj Agrawal, Advocates
For Respondent State : For Respondent No.3 :	Mr. Praveen Das, Dy. Advocate General Mr. Deepak Khurana, Advocate with Mr. Anand Shukla and Mr. Parth Shrivastava, Advocates
For Respondent No.4 :	Mr. Kishore Bhaduri, Sr. Advocate assisted by Mr. Anand Singh Ubeja, Mr. Sajal Kumar Gupta, Ms. Deep Shikha and Mr. Naimish Tewari, Advocates

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SB: Hon’ble Mr. Justice Parth Prateem Sahu

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C A V Order

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As the issue involved in above four writ petitions are inextricably interlinked, therefore, they were heard together and are being decided by way of this common order. However, ‘WPC No.3366/2020’ is taken as a lead case and for

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appreciating the controversy between the parties, the facts of lead case only will be referred hereinafter.

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Petitioners company in WPC No.3366/2020 is a power generating company registered under the Companies Act, 1956 and engaged in the business of generation and sale of power. Petitioner has set-up a coal 1200 MW (2x600) based thermal power plant in village Badadarha, District Janjgir Champa (CG). Power generated from this project is being sold under the combination of long term and short term Power Purchase Agreements (PPAs) to the State owned/private distribution companies and industrial consumers. Petitioner’s thermal power plant depends entirely on coal. Petitioner company purchases coal from South Eastern Coalfields Ltd. (SECL) through e-auction conducted by SECL as also by entering into Coal Supply Agreement/Fuel Supply Agreement with SECL for supply of specific grade of coal in terms of agreement. Price of coal including royalty, levy towards District Mineral Foundation Trust (DMF) and National Mineral Exploration Trust (NMET) is to be paid in advance to SECL. Royalty is paid ad-valorem @ 14% on base price of coal and DMF & NMET levies are paid ad-valorem on royalty. According to e-auction scheme and the provisions of Standard Operating Procedure (SOP), as modified by Coal India Ltd. from time to time, in the event of supply of inferior quality of coal/grade slippage, the SECL is required to refund all excess price of coal including levy/taxes to the consumers. Upon supply of inferior quality of coal to some extent which

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adversely impacted operations and elements in petitioner’s plant, petitioner raised grievance that quality of coal received is inferior than what was agreed to be supplied under agreement, whereupon SECL compensated petitioner only to the limited extent of difference in base price of declared grade of coal and not refunded differential excess price towards ad-valorem royalty, DMP and NMET. Petitioner has written letter dated 25.3.2020 to respondent SECL, giving reference of meeting held on 13.3.2020, calling upon respondent SECL to release pending dues of petitioner towards refund to excess price paid towards ad-valorem royalty, DMP and NMET. Thereafter petitioner sent various reminders informing that due to delay in refund process huge amount of petitioner is blocked at the end of SECL causing heavy interest burden on credit facilities availed from petitioner’s bank and requested to release balance coal value in full along with interest for delayed period. However, respondent SECL has not paid any heed to the request of petitioner.

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Learned counsel for petitioner further submitted that a meeting under the chairmanship of the Secretary, Ministry of Coal, Govt. of India was convened on 13.3.2020 to consider the issue of non-refund of differential excess price towards advalorem royalty, DMP and NMET and in the said meeting it was resolved that SECL shall refund all pending excess levies/taxes to producers on account of grade slippage by 31.5.2020. Respondent CIL also agreed to take up the issue with the concerned State Government in case any difficulty is

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faced. Thereafter, the Central Government vide Notification dated 7.9.2022 amended Rule 64B of the Mineral Concessions Rules and inserted second proviso to the effect that any royalty paid under the first proviso shall be subject to adjustment on the basis of final declaration of the grade of run-of-mine (ROM) coal after sampling and payment of shortfall royalty to the lessor or refund of additional royalty to the lessee, shall be made based on such adjustment.

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Learned counsel appearing on behalf of petitioners submits that petitioner company, which requires coal for running its thermal power plant, entered into Coal Supply Agreement (CSA) with respondent SECL for supply of coal. Price of coal includes base price of coal and levies on it i.e. royalty, DMF, NMET. Respondent SECL is under obligation to supply specific grade of coal as agreed under the said agreement. As per Standard Operating Procedure (SOP), which is being followed by Coal companies, the price of coal is fixed based on the spot sampling of coal at the loading end by the third party and after receipt of sample report satisfying grade of coal loaded in wagon, basic price is to be charged by the SECL or coal supplier. In the event of supply of inferior of coal, the SECL is required to compensate purchaser company by issuing credit notes. During the course of supply of coal, petitioner company received inferior grade of coal as against the contracted quality of coal, therefore, petitioner requested respondent SECL for issuance of credit notes/refund of payment towards slippage in quality/ grade of coal supplied including taxes, royalties etc.

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Respondent No.3 issued credit notes adjusting base price of the coal on actual price as mentioned in invoices/bills, however, refused to adjust excess amount of royalty, DMF and NMET arising out of grade slippage of coal supplied. He submits that price of coal at which royalty, DMF and NMET are charged by respondent SECL, are on agreed grade of coal supplied and not on declared grade. In case of supply of grade of coal better than declared grade, excess amount is payable by coal purchaser to SECL and in case of grade slippage, coal purchaser is entitled to seek difference amount of coal with levies such as royalty, DMF, NMET. The Government of India in the meeting with the Association of Power Producers, has already decided that the Coal India Limited shall direct refund of excess levy of taxes to the consumers in case of grade slippage by SECL. Hence, action of respondent SECL in withholding excess royalty etc. is arbitrary and unreasonable.

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Learned counsel appearing on behalf of SECL argued that there is no dispute that the grade of coal supplied to petitioner was lower than what has been agreed and reached at the destination, therefore, as per agreement, respondent SECL adjusted price of coal which they have charged. Royalty and taxes though they received along with price of coal, but the same has been transferred in the account of the State Government and it is for the State Government to issue direction with respect to adjustment of said amount. Respondent SECL has written several letters to the State Government including letter dated 30.12.2023, seeking

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clarification as to whether the amount of royalty, NMET and DMP, in case of grade slippage, could be adjusted by SECL by issuance of credit notes, however, they have not responded for sufficient long time and ultimately, in the reply filed in WPC No.2082/2022 the State Government in categorical terms denied the scope of adjustment/refund of differential levies.

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He further submits that SECL is an agent to collect royalty on behalf of the State Government and thereafter to transfer the same, hence, respondent SECL cannot be held responsible for inaction on the part of respondent State. Respondent SECL cannot be directed to first pay or adjust the amount and thereafter to settle the claim with the State Government. In support of his submission, he placed reliance on the decision of Hon’ble Supreme Court in case of Corporation Bank vs. Saraswati Abharansala and another , reported in (2009) 1 SCC 540. He next contended that as per terms of agreement, there is provision for settlement of dispute through negotiation and settlement, however, the petitioner without invoking said provision i.e. clause 15 of agreement, has straightaway filed writ petition, hence, petitioners are not entitled for any relief, as claimed. In case, this Court reaches to the conclusion that petitioner is entitled for refund of differential levies, necessary directions be issued to the State Government to refund differential amount to the petitioner company.

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Respondent SECL has also filed writ petition seeking following reliefs:-

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“i. Pass an Order/Direction/Writ in nature of Mandamus or any other Writ as appropriate, directing Respondent No.1 to allow refund/adjustment of the differential levies in case of grade slippage so as to pass on the benefit to the Respondent No.2, 3 & 4.

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ii. Pass such other Orders/Directions as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case.”

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Learned State Counsel submits that as per Section 9 of the Act of 1957, the State Government has right to recover royalty etc. from the holder of mines and as petitioner company is not the holder of any mine, no amount towards royalty etc. is charged from petitioner and being so, petitioner is not entitled to claim adjustment of amount of royalty etc. Mere supply of inferior grade of coal to petitioner by SECL does not affect the calculation of royalty etc. payable to the State ex-chequer for the reason that royalty is levied on the basis of excavated quantity of coal as per Sr. No.10 of Schedule II appended to the Act of 1957, according to which, royalty at the rate of 14% on price of coal mentioned in invoice is payable. Amount of royalty etc. is charged on the basis of excavated quantity of coal and therefore, if there is any amount of different due to slippage of coal at the time of transporting of coal from mines of SECl to power producer company, respondent State cannot be held responsible for the same and hence, no refund can be claimed.

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Heard learned counsel for the parties and perused the documents available in record of writ petition.

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Indisputably, petitioner company, in all writ petitions, having thermal power plant are engaged in manufacture and distribution of electricity. They use coal as primary / only raw material in their respective thermal power plant for manufacture of electricity. In thermal power plant, chemical energy in coal gets converted to heat energy which in turn gets converted to mechanical energy which ultimately gets converted to electrical energy. SECL is a Government of India undertaking and is engaged in the business of mining of coal and its sale. SECL is engaged in supply of coal to various power plants and industries within and outside the territory of Chhattisgarh including petitioners in these writ petitions. To fulfill requirement of coal, petitioner company purchases coal from respondent SECL through e-auction under e-auction schemes for power producers and also entered into Coal Supply Agreement/Fuel Supply Agreement with the SECL For the purchase/ supply of coal. As per agreement, respondent SECL was under obligation to supply particular grade of coal assured under the agreement. Price of coal means sum of base price, other charges and statutory charges, as applicable at the time of delivery of coal. In case of grade slippage, the SECL shall give regular credit note to the extent of difference in the Base Price of declared grade and analyzed grade of coal.

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The Coal India Limited, in order to bring transparency in the process of sale and supply of coal, vide notice dated 24.9.2015 issued revised/modified the Standard Operating Procedure (SOP) by introducing provision of third party i.e. agency to be appointed by the seller and agency to be appointed by purchaser, for sampling and analysis of coal for declaration and maintenance of grade/quality. In case of grade slippage/improvement, credit/debits notes, as the case may be, are to be issued by SECL.

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Grievance of petitioners in these batch of writ petitions is that as per agreement, respondent SECL is providing coal of a particular grade and for the purpose of assessing the quality of coal, provisions are made providing for taking joint samples in respect of coal at power station and the loading point of the petitioner. Coal supplied by SECL to petitioner was tested and found to be of inferior quality than which was agreed to be supplied/invoiced, accordingly, credit notes were issued in favour of petitioner company. As credit notes issued by SECL only include difference in base price and do not include ad valorem taxes such as royalty, DMF, NMET etc., therefore, petitioner company represented before SECL for adjustment of amount of royalty, DMF, NMET on differential coal base price. Since the royalty, DMF, NMET charged by SECL was deposited with the State Government as per provisions of the Mines and Minerals (Development and Regulation) Act 1957 (for short ‘the Act of 1957’) and the rules made thereunder i.e. Mineral Concession Rules, 1960 (for short ‘the Rules of 1960’),

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said request of petitioner was forwarded by SECL to the State Government. However, respondent State Government refused to adjust/refund taxes/levies in case of grade slippage of coal.

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It is not disputed that mining rights have been leased to the SECL by the State Government under the provisions of the Act of 1957. As per Section 4 of the Act of 1957, no mining operation in any area shall be undertaken except under and in accordance with the terms and conditions of a mining lease granted under the Act of 1957 and the rules made thereunder.

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Section 9 of the Act of 1957 deals with royalties in respect of mining leases and envisages that the holder of a mining lease shall pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee from the lease area at the rate for the time being specified in the Second Schedule in respect of that mineral. Section 9B of the Act of 1957 provides for District Mineral Foundation (DMF), a non-profit body, and the holder of mining lease or a prospecting license cum mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the district in which the mining operations are carried on, an amount which is equivalent to such percentage of royalty paid in terms of Second Schedule. Section 9C provides for National Mineral Exploration Trust (NMET) and the holder of mines is required to make contribution of a sum equivalent to 2% of the royalty paid towards NMET simultaneous with payment of royalty.

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Thus, it is clear that Section 9 is the charging section, which enables the State to recover/charge royalty in respect of the minerals extracted by the holder from the land given on lease for the purpose of mining. The methodology for calculating the amount of royalty is determined by the Rules and by the Notifications issued by the Central Government from time to time. Rule making power has been conferred on the Central Government by Section 13 of the Act of 1957 and relevant part of Section 13 is extracted and reproduced hereunder:-

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“13. Power of Central Government to make rules in respect of minerals . - (1) The Central Government may, by notification in the Official Gazette, make rules for regulating the grant of [reconnaissance permits, prospecting licenses and mining leases] in respect of minerals and for purposes connected (sic) (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all of any of following matters, namely:-

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(a) to (f) xxx xxx xxx

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(g) the terms on which, and the conditions subject to which, any other [reconnaissance permit, prospecting licences or mining leases] may be granted or renewed;

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(h) xxx xxx xxx

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(i) the fixing and collection of fees for [reconnaissance permits, prospecting licences or mining leases] surface rent, security deposit, fines, other fees or charges and the time within which and the manner in which the dead rent or royalty shall De payable;]

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(j) to (qqk) xxx xxx xxx

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(r) any other matter which is to be, or may be, prescribed under this Act.”

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In exercise of the powers conferred by above quoted Section

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13, the Rules of 1960 have been framed. Rules 64A, 64B, 64C & 64D of the Rules of 1960 are relevant Rules, which pertain to calculation of amount of royalty etc. payable by the holder of the lease in respect of the minerals extracted from the land leased to the holder of the mining lease. Rule 64B of the Rules of 1960 deals with charging and instance of payment of royalty in case of minerals subjected to processing, which reads thus:-

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“ 64B. Charging of Royalty in case of minerals subjected to processing : (1) In case processing of runof-mine mineral is carried out within the leased area, then , royalty shall be chargeable on the processed mineral removed from the leased area.

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(2) In case run-of-mine mineral is removed from the leased area to a processing plant which is located outside the leased area, then, royalty shall be chargeable on the unprocessed run-of-mine mineral and not on the processed product.”

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Rule 64B underwent following amendment vide Notification dated 7.9.2022 and after first proviso, following proviso has been added:

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“Provided further that any royalty paid under the first proviso shall be subject to adjustment on the basis of-

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(a) final declaration of the grade of run-of-mine coal or lignite after sampling; or

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(b) final declaration of the National Coal Index of the relevant basket of coal grade of National Lignite

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Index, as applicable, on the date of dispatch or consumption.

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as the case may be, and payment of shortfall royalty to the lessor or refund of additional royalty to the lessee shall be made based on such adjustment.”

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Upon perusal of above amendment it is clear that royalty paid

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at the time of dispatch shall be subject to adjustment on the basis of final declaration of grade of run-of-mine coal or lignite after sampling or final declaration of the National Coal Index of the relevant basket of coal grade or National Lignite Index, as applicable, on the date of dispatch of consumption, as the case may be, and payment of shortfall royalty to the lessor or refund of additional royalty to the lessee shall be made based on such adjustment. Thus, insertion of second proviso in Rule 64B of the Rules of 1960, clearly denote intention of the Central Government with regard to adjustment of royalty on the basis of final declaration of the grade of run-of-mine coal considering that final declaration of coal/lignite may not be available at the time of payment of royalty i.e. at the time of dispatch from or consumption within leased area, and quantum of royalty varies with the grade of coal upon sampling.

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Section 20A of the Act of 1957 empowers the Central Government to issue direction to the State Governments. Relevant portion of Section 20A is reproduced below:-

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“20A. Power of Central Government to issue directions .-

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(1) Notwithstanding anything contained in this Act, the Central Government may issue such directions to the State Governments, as may be required for the conservation of mineral resources, or on any policy matter in the national

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interest, and for the scientific and sustainable development and exploitation of mineral resources.

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(2)In particular, and without prejudice to the generality of the foregoing powers, the Central Government may also issue directions in respect of the following matters, namely:-

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(i) improvement in procedure for grant of mineral concessions and to ensure co-ordination among agencies entrusted with according statutory clearances; (ii) maintenance of internet-based databases including development and operation of a mining tenement system;

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(iii)implementation and evaluation of sustainable development frameworks;

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(iv)reduction in waste generation and related waste management practices and promotion of recycling of materials;

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(v)minimizing and mitigating adverse environmental impacts particularly in respect of ground water, air, ambient noise and land;

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(vi)ensuring minimal ecological disturbance, in terms of bio-diversity, flora, fauna and habitat;

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(vii)promoting restoration and reclamation activities so as to make optimal use of mined out land for the benefit of the local communities; and

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(viii)such other matters as may be necessary for the purposes of implementation of this Act.”

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In exercise of its power under Section 20A of the Minor Minerals (Development and Regulation) Act, 1957, which enables the Central Government to take appropriate steps to ensure proper and effective implementation of the Act of 1957, the Ministry of Coal, Government of India issued the order dated 12^th August/September, 2023 to the Chief Secretaries of

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various States, including State of Chhattisgarh, and making reference of second proviso to Rule 64B of the Rules of 1960, which provides for adjustment of royalty so paid after final declaration of grade of coal and also entitles the mining lease holders to a refund of additional royalty, if paid, directed the State Government to refund the differential / excess royalty and payment to DMF in the event of grade slippage within one month from the date of final declaration of the grade of coal else granted leeway to mining lease holders of adjustment from royalty and amount payable to DMF accruing in future. Relevant portion of the order dated 12^th August / September,. 2023 reads thus:-

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“Now therefore, in exercise of the said powers under S.20-A(2)viii) of the MMDR Act, for ensuring implementation of the MMDR Act and Rules made thereunder in letter and spirit, the Central Government hereby directs the respective State Governments to refund the differential/excess royalty and payment to DMF in the event of grade slippages within one month from the date of final declaration of the grade of coal/lignite or National Coal Index, as applicable, otherwise the minding lease holders may adjust the same from the royalty and amount payable to DMF accruing in future.”

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In the case at hand, it is not in dispute that petitioner company entered into Coal Supply Agreement with respondent SECL under SECL agreed to supply a particular grade of coal. It is also not in dispute that petitioner company paid the price of coal as per invoices raised by SECL, which includes all levies and taxes. It is also not in dispute that the amount received by

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SECL towards royalty and other taxes have not been retained by it and the same has been deposited in the treasury of the State. It is also not in dispute that State Government denied to adjust/refund differential amount of royalty etc. on account of slippage of grade of coal supplied to petitioner company, although, as per second proviso to Rule 64B of the Rules of 1960 the State Government is bound to refund differential/excess royalty etc. in the event of grade slippage.

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A meeting between Secretary, Ministry of Coal, Govt. of India and the Association of Power Produces was held on 13.3.2020 to resolve several issues including issue of refund of royalty, taxes, levies etc. arising out of grade slippage. It was resolved in said meeting that Coal India Limited shall refund all pending excess levies/taxes on account of grade slippage and in case of any difficulty is faced by CIL, the Ministry of Coal shall take up the same with the concerned State. Ministry of Coal, Government of India issued an order dated 12^th August/September, 2023 to the Secretaries of various States including State of Chhattisgarh, directing the State Governments to refund differential / excess royalty and payment to DMF in the event of grade slippage.

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In the above circumstances, these writ petitions are disposed of with a direction to the SECL to put-forth the claim of petitioner in all these writ petitions for refund/adjustment of excess amount towards royalty etc. on account of slippage of grade of coal supplied, before the State Government of Chhattisgarh within a period two months and in turn, the State

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Government of Chhattisgarh is directed to reconsider and take decision with respect to claim of petitioner companies as also SECL expeditiously, keeping in mind second proviso to Rule 64B of the Rules of 1960 as well as the order dated 12/89/2023 issued by the Ministry of Coal, Govt. of India, New Delhi.

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SYED ROSHAN ZAMIR ALI

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Digitally signed by SYED ROSHAN ZAMIR ALI Date: 2024.09.03 19:19:23 +0530

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No order as to costs.

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Sd/(Parth Prateem Sahu) Judge

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roshan/-

D. B. Power Limited v. Union of India

Case brief

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D. B. Power Limited v. Union of India

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