Compat stays Rs 1,773-cr fine on CIL, tells firm to pay Rs 50 cr

Written by Kaushal shroff | New Delhi | Updated: Feb 27 2014, 10:55am hrs
The Competition Appellate Tribunal (Compat) on Wednesday put a stay on the Rs 1,773-crore penalty levied on Coal India (CIL) by the competition watchdog subject to the condition that the state-owner miner deposits a token penalty of Rs 50 crore within three weeks.

Compat has also directed CIL to file an affidavit stating the changes and amendments incorporated by the company into the fuel supply agreements (FSAs) pertaining to the collection and testing of coal samples. Additionally, CIL has been directed to state changes in respect of other clauses in the FSAs -- such as revision and termination of agreements, aspects on force majeure and transportation charges levied on buyers -- in its affidavit before the competition tribunal.

For now, Compat has posted the matter for further hearing on March 13.

In December last year, the Competition Commission of India (CCI), acting on a plaint filed by the Maharashtra State Power Generation Company and Gujarat State Electricity Corporation, slapped a penalty of Rs 1,773 crore, which is equal to 3% of the average turnover of the company from 2009 to 2012.

During the proceedings, counsel on behalf of the power generation companies told Compat that there should be a provision for collection of coal samples and its testing during the loading and off-loading stage as the CIL is delivering lower-quality coal, even when the contract between the parties provides for a better quality of raw material. He added that more coal is used up in generation of electricity due to its low-quality, resulting in increased expenditure for the companies.

The counsel sought that an independent, accredited and neutral agency be put in charge of the sampling and testing processes to ensure that a better grade of coal is delivered to CIL customers.