2010 Supreme(SC) 875

Supreme Court of India
THE HONOURABLE MR. JUSTICE ALTAMAS KABIR & THE HONOURABLE MR. JUSTICE A.K. PATNAIK
M/s Coal India limited & Others
Versus
Alok Fuel (P) ltd. tr. Dir.
Civil Appeal Nos.8034 of 2010 with C.A. Nos. 8035, 8036, 8041, 8042, 8039, 8040 & 8037-38 of 2010
Decided on : 15-09-2010

Headnote:(a) Government contracts – Coal linkages – Following decision in Ashoka Smokeless Central Government introducing scheme to stop black marketing and mis-utilisation of coal – Clause 4 of FSA providing for discontinuation of coal in case of black marketing and mis-utilisation – CBI filing FIR on allegation of such acts by respondents – Investigation materials with CBI – On advice from CBI CIL and BCCL suspending supplies – High Court directing resumption of supply on ground that BCCL not producing material to support allegation of black marketing and mis-utilisation – Not considering that materials were with CBI which was not impleaded – BCCL not acting arbitrarily – Interim of order of single Judge and Order of Division Bench erroneous. (Para 13, 14)

       (2007) 2 SCC 640 – Relied upon

       (b) Constitution of India – Article 226 – Jurisdiction in contractual matters – Writ court can interfere if there is violation of Article 14 – BCCL was duty bound check black marketing and mis-utilisation of coal in view of information received from CBI – Writ petition ought not to be entertained. (Para 15, 16)

       (1991) 1 SCC 537; (1993) 1 SCC 445 – Relied upon

       Facts of the case:

       Respondents were granted linkage of different quantities of coal for utilization in the manufacture of quantities of coal for utilization in the manufacture of smokeless fuel in their plants. On 18.10.2007, the government of India, ministry of coal discontinued the traditional linkage system and in its place adopted a new coal distribution policy under which coal was to be supplied to different consumers through a fuel supply agreement (FSA) at notified prices to be fixed and declared by coal India limited.

       In accordance with this new policy, Bharat coking coal limited (BCCL) entered into FSA with the respondents for supply of coal providing that the total quantity of coal supplied to the respondents under the agreement is meant for use in the plant of the respondents and the respondents shall not sell or divert or transfer the coal for any purpose whatsoever and in the event they engage or plan to engage into any such re-sale or trade, BCCL shall terminate the FSA forthwith without any liabilities or damages whatsoever payable to the respondents.

       On 07.06.2009, the central Bureau of investigation (CBI) registered FIR against 10 consumers including the respondents alleging that they entered into criminal conspiracy with Shri Udayan Bhattacharya, the then general manager (S&M) of BCCL and in furtherance thereof, lifted 11,94,940 tonnes of coal and instead of utilizing the same in their respective plants, sold the same in the open market at highter prices and as a result BCCL has suffered a loss of Rs. 4,36,15,300/— approximately and the accused have made corresponding wrongful gain to themselves. The CBI further stated that the facts disclosed the commission of offences punishable under section 120-B read with sections 420, 467, 471 of the Indian Penal code and section 13(2) read with section 13(d) of the Prevention of Corruption Act, 1988 by Shri Udayan Bhattacharya and the proprietors of different consumer firms.

       BCCL suspended supply of coal to the respondents by a wireless message dated 13.06.2009.

       The respondents filed the writ petitions praying for quashing the communications suspending the supply of coal to the respondents under FSA and also praying for interim orders directing BCCL to resume supply of coal.

       On 06.10.2009, the impugned interim orders directing resumption of supply of coal to the respondents.

       The appellants herein challenged the interim orders dated 06.10.2009 of the learned single judge. The division bench dismissed the LPAs with the liberty to the appellants to file applications for vacating the interim orders as soon as the appellants are able to procure adverse material against the respondents and in the alternative passed orders terminating FSA with the respondents.

       Finding of the Court:

       High Court erred in directing resumption of supply of coal to respondents.

       Result:

       Appeals allowed.