SC asks Mahanadi Coalfields to supply 2.8 L tonne coal to JSL

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Jul 31 2012, 08:14am hrs
The Supreme Court on Monday asked Mahanadi Coalfields to supply 2,84,750 tonne of coal to Jindal Stainless 1.6 million tonne-integerated stainless steel plant in Orissa.

A Bench, headed by Justice KS Radhakrishnan, continued its earlier order asking the Mahanadi Coalfields' to supply 25% of the agreed quantity, as per the coal supply agreement of February 2009, to Jindal Stainless plant till the disposal of the petition filed by the Ratan Jindal's firm before the Orissa High Court. JSL's entitlement under the February 2009 contract was 11,39,000 metric tonne per annum.

Shyam Metalics & Energy, through its counsel Sumit Goel, also informed SC that it will soon file a SLP, seeking a similar relief as its petition has been dismissed by the Calcutta High Court last week.

Earlier, the Orissa High Court had denied any interim relief to JSL, which had challenged the the coal ministry's January 31, 2011, order that said that entire coal supply to JSL would come to an end on May 29, 2012. Besides, the policy directed the tapering of the coal supply, which is against the terms of the Coal Supply Agreement with JSL.

Seeking restoration of the long-term linkage coal by Mahanadi coalfileds, JSL said such policy impliedly overrides the contract entered between the parties and sought to reduce its coal supply entitlement on a tapering basis to 2,84,000 tonne per annum for May 30, 2011, to May 29 this year. Further, the impugned order contemplated the coal supply to be entirely stopped to JSL, it added.

Senior counsel Abhishek Singhvi had argued that the arbitrary action by the Centre was purely prospective and applied to those end-use projects where no tie-ups for supply of coal had taken place.

"It was neither the purport nor the intention of the guidelines to take away any vested or contractual rights of a party which had already entered into a contract for supply of coal and there was nothing in the policy that even remotely suggested that the existing contracts would stand rescinded," the petition stated.

JSL contended that huge loss would be caused if the integerated steel plant came to a halt. "It would result in shutting down of the captive power plant and for the precarious power position in Orissa, there is no chance of obtaining the requisite quantum of power supply from the state grid," it added. Later, JSL entered into a coal supply agreement with Mahanadi Coalfields for supply of coal to its captive power plant at Kalinganagar Industrial Complex pursuant to the Letter of Assurance issued in January 2008.