The Supreme Court of India has ruled that Prakash Industries Limited (PIL) is not entitled to monetary compensation for the period its coal supply was wrongfully suspended, but has instead directed South Eastern Coal Fields Limited (SECL) to provide the coal at historical “current prices” from either 2014 or 2019.
The judgment, delivered on March 17, 2026, by a Bench comprising Justice Pankaj Mithal and Justice S.V.N. Bhatti, resolved a long-standing dispute over the interpretation of previous court orders regarding restitution for interrupted fuel supplies.
Background of the Dispute
The litigation traces back to January 13, 2006, when the Ministry of Coal allocated the Madanpur (North) Coal Block to PIL for its Sponge Iron and Captive Power Plants. On October 14, 2011, the Ministry alleged that PIL had diverted coal from its Chotia Block to its power plants, leading SECL to suspend supplies on November 9, 2011.
The suspension was challenged in the High Court of Chhattisgarh, where a Single Judge quashed the order in 2012. A Division Bench upheld this in 2013, directing SECL to restore supplies and compensate PIL for the difference between the E-auction prices it was forced to pay and the lower rates under its original agreements.
However, on April 9, 2014, the Supreme Court (in S.L.P. No. 8436 of 2013) modified this relief. The Court stated:
“the petitioners shall be at liberty to supply coal to the respondents at the current rate, in lieu of the compensation granted, for the period during which the supply of coal was suspended… as we are informed that the Fuel Supply Agreement has expired by efflux of time.”
In a second round of litigation, the High Court of Chhattisgarh on May 17, 2019, quashed SECL’s attempts to provide coal on a “tapering linkage” basis, ordering instead a “normal/regular coal linkage at the current rate.” This was affirmed by the Supreme Court on August 19, 2025.
Arguments of the Parties
PIL filed Miscellaneous Applications seeking approximately ₹106.59 Crore in monetary compensation (including 6% interest). PIL argued that:
- The offer to supply coal at today’s E-auction prices was arbitrary and not in conformity with the 2014 Order.
- Physical coal is currently of “no use” because PIL has existing agreements valid until 2027 and now operates its own commercial coal mine.
- Any forced supply via a new Memorandum of Understanding (MoU) could result in penalties for failing to lift coal from existing contracts.
The Union of India and SECL contended that they had already conveyed their readiness to commence supply. They argued that they were only obligated to supply coal, not pay cash, and offered to use the price applicable as of the Supreme Court’s 2014 order.
Court’s Analysis
The Court observed that both parties were interpreting previous judicial directions to suit their own convenience. It clarified that PIL’s demand for monetary compensation lacked legal grounds based on the specific wording of the 2014 and 2019 orders.
The Bench noted:
“But, by no stretch of construction, can the orders of the High Court or this Court be understood as a direction to the Union of India/SECL to pay compensation towards the difference in coal price which the Respondent has paid during the said period.”
The Court further held that the direction was strictly to “supply coal for the suspended period at the current price and in accordance with the prevalent policy.”
The Decision
While rejecting the prayer for monetary compensation, the Court held that SECL must fulfill its obligation to supply the coal. To balance the interests and account for the delay in compliance, the Court introduced a choice for the respondent.
The Court directed:
- Option for PIL: PIL is given the choice to select the “current price and prevalent policy” of either April 9, 2014, or May 17, 2019.
- Implementation: Once PIL chooses a date and communicates its willingness to purchase, SECL must enter into a Fuel Supply Agreement (FSA) within two weeks.
- Normal Linkage: The Court explicitly ordered that the supply shall be as a normal coal linkage and not on a tapering basis.
- Timeline: The entire process must be completed within four weeks from the date of the judgment.
Case Details
- Case Title: Union of India v. Prakash Industries Limited and Another
- Case Number: Miscellaneous Application Nos. 1806-1807 of 2025 in SLP (C) No. 3529-3530 of 2020
- Bench: Justice Pankaj Mithal and Justice S.V.N. Bhatti
- Date: March 17, 2026
