Independent auction transactions and arbitration clause bar cross-adjustment of debit-note demands under the scheme.

Each e-auction sale under the Spot E-Auction Scheme 2007 was treated as an independent and complete transaction, so demands raised through debit notes could not be recovered by adjustment against amounts due in other transactions. Where the buyer disputed the debit-note demands, Clause 11.12 required the controversy to be resolved by arbitration under the scheme. The judgment also noted that the petitioners did not challenge the inclusion of stowing excise duty and royalty in the transaction value. Recovery was therefore confined to the contractual dispute mechanism, and cross-adjustment of unrelated transactions was not permitted.

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Issues: Whether the debit notes issued by the coal company could be enforced by adjustment from other transactions, and whether any dispute arising from those debit notes had to be resolved through arbitration under the auction scheme.

Analysis: The debit notes were treated as demands for realisation of amounts. The judgment noted that each e-auction sale was an individual, independent, unique and complete transaction under Clause 11.11 of the Spot E-Auction Scheme 2007, so amounts due in one transaction could not be recovered by appropriation from other transactions. It further held that if the petitioners disputed the demands, the controversy would fall within Clause 11.12 of the Scheme, which required resolution by arbitration. The Court also recorded that the petitioners had not challenged the basis on which stowing excise duty and royalty formed part of the transaction value.

Conclusion: The disputes arising from the debit notes were held to be arbitrable under the scheme, and recovery could proceed only by following the arbitration mechanism, not by adjustment against other transactions.

Final Conclusion: The writ petitions were disposed of by relegating the parties to the contractual arbitration remedy under the auction scheme, while declining to permit recovery through cross-adjustment of unrelated transactions.

Ratio Decidendi: Where an auction scheme makes each sale a separate transaction and provides arbitration for disputes, a demand raised under the scheme cannot be enforced by appropriation from other transactions and must be pursued through the stipulated arbitral process.

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