M/S. COAL INDIA LIMITED AND ORS.versusALOK FUELS (P) LTD. THROUGH DIRECTOR

                 [2010] 12 S.C.R. 299


          MIS. COAL INDIA LIMITED AND ORS.                     A
                             v.
      ALOK FUELS (P) LTD. THROUGH DIRECTOR
            (Civil Appeal No. 8034 of 2010)
                  SEPTEMBER 15, 2010
                                                                B
       [ALTAMAS KABIR AND A.K. PATNAIK, JJ.]

      Coal - Coal Distribution - Mis-utilization and black
marketing of allotted coal - Coal supplied to different
consumers like respondents through Fuel Supply Agreement C
(FSA) at prices notified by Coal India Ltd. - Respondents had
entered into an FSA with BCCL, a subsidiary of Coal India
Ltd. - FIR lodged by CBI alleging that respondents were
involved in a criminal conspiracy leading to breach of the
terms and conditions of FSA - It was alleged that instead of D
utilizing the allotted coal in their respective plants as required
under the FSA, the respondents sold the same in open
market at higher prices - Subsequently, BCCL suspended the
supply of coal to respondents - Respondents filed writ E
petitions challenging the suspension of coal supply - High
Court passed interim orders directing resumption of coal
supply to the respondents on the ground that no material was
placed by the BCCL to show that the respondents were
involved in any kind of black marketing or mis-utilization of F
the allotted coal - Justification of - Held: Not justified - The
High Court failed to appreciate that the FIR was lodged by CBI
and, therefore, CBI and not BCCL was in possession of
material in support of the allegations made in the FIR - Such
material could not be placed before the Court because the G
 CBI was not impleaded as a respondent in the writ petitions
 filed by the respondents - BCCL is a public authority; and if
 the FIR lodged by CBI created serious doubts that the allotted

                             299                                H
. ..,. 300      SUPREME COURT REPORTS          [2010] 12 S.C.R .


A coal could be diverted or sold in the open market instead of
  being utilized in the plants of respondents, BCCL was within
  its rights to suspend the supplies of coal to the respondents
  till the doubts were cleared in appropriate proceedings -
  Orders of High Court set aside - Orders of High Court set
B aside Penal Code, 1860 - s.120-8 rlw ss.420, 467, 471 -
  Prevention of Corruption Act, 1988 - s.13(2) rlw s.13(d).

       Coal was supplied to different consumers such as
  the respondents through Fuel Supply Agreement (FSA)
C at prices notified by Coal India Ltd. The respondents had
  entered into an FSA with BCCL, a subsidiary of Coal
  India Limited. The Central Bureau of Investigation (CBI)
  lodged FIR alleging that the respondents were involved
  in a criminal conspiracy leading to the breach of the terms
D and conditions of FSA. It was alleged that instead of
  utilizing the allotted coal in their respective plants as
  required under the FSA, the respondents sold the same
  in open market at higher prices. Subsequently, upon
  advice of Coal India Ltd., BCCL suspended the supply of
E coal to respondents.

       Aggrieved, the respondents filed the writ petitions in
  the High Court praying for quashing the communications
  suspending the supply of coal to the respondents under
F FSA and also praying for interim orders directing BCCL
  to resume supply of coal. The Single Judge of the High
  Court passed interim order directing resumption of
  supply of coal to the respondents on the ground that no
  material was placed by the BCCL to show that there was
G any kind of black marketing or mis-utilization of the
  allotted coal by the respondents. The interim order was
  upheld by the Division Bench of the High Court.

             Allowing the appeals, the Court
H
COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 301
           LTD. THROUGH DIRECTOR

     HELD:1.1. The Single Judge and the Division Bench            A
of the High Court were not right in directing BCCL to
resume the supplies of coal to the respondents. What the
Single Judge and the Division Bench of the High Court
failed to appreciate is that the FIR containing the
allegations of mis-utilization of the allotted coal and sale      B
of the allocated coal by the respondents in the open
market was lodged by the CBI and, therefore, the CBI and
not the BCCL was in possession of information or
materials with regard to such mis-utilization of the allotted
coal or sale of the coal in the open market by the                C
respondents. As a matter of fact, in the charge-sheet filed
after investigation in the Court of Special Judge, CBI
cases, it is stated that a search was conducted at the
plant premises of the respondents by the CBI. officials in        D
presence of independent witnesses during which the
plants of the respondents were found to be non-
functional and the names of employees I workers as per
the Attendance Register as well as other documents
               /

relating to sale of finished goods as produced by the             E
respondents were found to be fake and fabricated as full
particulars, addresses etc. were not provided in the
records in respect of such employees I workers engaged
and purchasers of finished goods and thus the quantity
of coal issued to respondent-companies were not utilized          F
in their plants but sold in black-market. It is thus clear that
there were materials with the CBI in support of the
allegations made in the FIR against the respondents that
they were not utilizing the allotted coal in their plants but
were selling the same in black-market, but these materials        G
could not be placed before tile Court because the CBI
was not impleaded as a respondent in the writ petitions
filed-by the respondents. [Para 13] [311-E-H] [312-A-D]

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    302     SUPREME COURT REPORTS             [2010] 12 S.C.R.


A        1.2. In the counter-affidavit filed in the High Court in
    reply to the writ petitions filed by the respondents, Coal
    India Limited and BCCL have pleaded that under Clause
    4.4 of FSA the respondents were required to utilize the
    entire quantity of coal allotted to them in their respective
B   plants and had undertaken not to sell / divert/ transfer the
    coal for any purpose whatsoever and as the FIR lodged
    by the CBI disclosed breach of this clause of FSA, Coal
    India Limited and BCCL had to suspend the supplies of
    coal to prevent further diversion of coal by the
C   respondents and this decision was taken pending a final
    decision regarding termination of FSA in terms of Clause
    15 thereof. Thus the case of the appellants before the
    High Court was that suspension of supply of coal has
    been ordered to prevent further diversion of coal by the
0
    respondents. The Coal India Limited and BCCL are
    Government Companies of the Government of India and
    are bound by the policy decisions of the Government of
     India, Ministry of Coal, and since under the New Coal
E    Distribution Policy, mis-utilization of allotted coal and
     black-marketing of such coal by the respondents was to
    be checked, the Coal India Limited and BCCL did not act
     arbitrarily or unreasonably to suspend the supplies of
     coal under FSA to the respondents, if they entertained a
F   serious doubt on the basis of the FIR lodged by the CBI
     that the supplies of coal, if made to the respondents, may
     be mis-utilized by the respondents and may be sold in
     the open market. [Para 14] [312-E-H] [313-A-C]

        1.3. One relevant consideration which the Coal India
G
    Limited and BCCL as public authorities have to consider
    is whether continuation of supply of coal to the
    respondents may not lead to mis-utilization or black-
    marketing of the coal by the respondents, which are
H
COAL INDIA_ LIMITED AND ORS. v. ALOK FUELS (P) 303
            LTD. THROUGH DIRECTOR
prohibited under FSA and the policy decision of the            A
Government, considering the allegations made by the
CBI in the FIR. This relevant aspect has not been
considered by either the Single Judge of the High Court
while passing the impugned interim order or by the
Division Bench of the High Court while dismissing the          B
LPAs against the impugned interim order of the Single
Judge. [Para 15) [313-F-H] [314-A]

     Kumari Shrilekha Vidyarthi v. State of UP. (1991) 1 SCC
537 and Sterling Computers Ltd. v. Mis M & N Publications      c
Limited and Others (1993) 1 SCC 445 - referred to.

     Ashoka Smokeless Coal India (P) Ltd. and Ors. v. Union
of India and Ors. (2007) 2 SCC 640 - referred to.

     1.4. BCCL has the right to suspend supplies of coal D
to the respondents where it has doubts that the
respondents may mis-utilize the allotted coal and divert
or sell the same in open market because, as would be
clear from Clause 4.4 of the FSA and the new Coal
                                                               E
Distribution Policy, the very object of FSA as well as
policy of the Government is to allot coal to respondents
for utilization in their plants and not for any other purpose.
Therefore, if the FIR lodged by the CBI, which is a premier
investigation agency of the Central Government, created . F
serious doubts that the allotted coal may be diverted or
sold in the open market instead of being utilized in the
plants of respondents, BCCL would be within its rights
to suspend the supplies of coal to the respondents till the
doubts are cleared in appropriate proceedings. [Para 16) G
[314-C-F]

                    Case Law Reference:
    (2001) 2 sec 640         referred to          Para 8
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    304      SUPREME COURT REPORTS              [2010] 12 S.C.R.


A         (1991) 1 sec 537        referred to          Para 15
          (1993) 1 sec 445        referred to          Para 15
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    8034 of 2010.
B
        From the Judgment & Order dated 6.10.2009 of the High
    Court of Jharkhand at Ranchi in Writ Petition (C) No. 2948 of
    2009.

c                               WITH

    C.A. Nos. 8035, 8036, 8041, 8042, 8039, 8040 & 8037-38 of
    2010.

      Jaideep Gupta, M.L. Varma, S.B. Upadhyay, Anupam Lal
D Das, Abhishek Kumar, Gaurav Agrawal, Manish Kumar Saran,
  Rajendra Krishna, Ratan Kumar Chaudhary, Santosh Mishra,
  Dharmendra Kumar Sinha for the appearing parties.

          The Judgment of the Court was delivered by
E
         A. K. PATNAIK, J. Delay in filing Special Leave Petitions
    arising out of CC Nos. 5440, 5452 and 5459 of 2010 is
    condoned.

          2. Leave granted.
F
       3. These appeals are against the interim orders dated
  06.10.2009 passed by the learned Single Judge of the High
  Court of Jharkhand in W.P.(C) Nos.2948 of 2009, 3536 of 2009
  and 3080 of 2009 and the final order dated 07.01.2010 of the
G Division Bench of the Jharkhand High Court in LP.A Nos. 484
  of 2009, 485 of 2009, 486 of 2009 and 523 of 2009. Since
  common issues of fact and law arise for decision in this batch
  of cases, we are disposing of these appeals by this common
H judgment.
COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 305
  LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.]

     4. The relevant facts very briefly are that the respondents      A
were granted linkage of different quantities of coal fo 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           B
to be supplied to different consumers through a Fuel Supply
Agreement (for short 'FSA') at notified prices to be fixed and
declared by Coal India Limited. In accordance with this new
policy, Bharat Coking Coal Limited (for short the 'BCCL'), a
subsidiary of Coal India Limited,-entered into FSA with the           C
respondents for supply of coal. Clause 4.4 of FSA provided 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 even they engage or plan            D
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 (for short the 'CBI') registered First
Information Report (FIR) against 10 consumers including the           E
 respondents alleging inter alia that the 10 consumers entered
into a 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        F
market at higher 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. In the FIR,
the CBI further stated that the facts disclosed the commission
of offences punishable under Section 120-B read with Sections         G
420, 467, 471 of the Indian Penal Code (for short 'IPC') 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 and, therefore, a criminal
 case be registered and the investigation be taken up. The
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     306     SUPREME COURT REPORTS               (2010] 12 S.C.R.


A    Chairman of the Coal India Limited thereafter advised the
     Chairman-cum-Managing Director of BCCL to suspend supply
     of coal to the firms named in the FIR including the respondents
     and accordingly BCCL suspended supply of coal to the
     respondents by a wireless message dated 13.06.2009.
!B
        5. Aggrieved, the respondents filed the Writ Petitions in
  the High Court of Jharkhand at Ranchi 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
C learned Single Judge of the Jharkhand High Court passed the
  impugned interim orders directing resumption of supply of coal
  to the respondents on the ground that there was no material
  placed by the BCCL to show that there was any kind of black
  marketing done by the respondents or any kind of mis-utilization
D of the allotted coal by them. The appellants herein challenged
  the interim orders dated 06.10.2009 of the learned Single
  Judge before the Division Bench in the LPAs. By order dated
  07.01.2010 the Division Bench dismissed the LPAs with the
  liberty to the appellants to file applications for vacating the
E 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.

        6. Mr. Anupam Lal Das, learned Counsel for the
F appellants, submitted that the learned Single Judge of the High
  Court by directing resumption of supply of coal to the
  respondents had granted a final relief to the respondents by
  interlocutory orders and this was not permissible in law. He
  further submitted that the only reason given by the learned
G Single Judge for passing the interlocutory order directing
  resumption of supply of coal was that there were no materials
  other than the FIR lodged by the CBI to show that any kind of
  black marketing was done or any kind of mis-utilization of
  allotted coal was made by the respondents. He submitted that
  the FIR lodged by a premier investigating agency like the CBI
H
COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 307
  LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.)
and the chequered history of the respondents before the FIR        A
were sufficient materials to suspend the supply of coal to the
respondents. He further submitted that in any case investigation
into the allegations made in the FIR has already been completed
by the CBI and charge sheet has been filed against the
respondents which vindicate the stand taken by the appellants      B
that the respondents were diverting coal meant for their plants
for sale in the open market.

     7. Mr. Das further submitted that two of the consumers to
whom the supply of coal was similarly suspended, namely, M/
s Sushila Chemicals Pvt. Ltd. and M/s Magadh Smokeless Fuel C
Co. moved the Patna High Court in two separate Writ Petitions
and the learned Single Judge of the Patna High Court passed
a common order dated 26.08.2009 allowing the Writ Petitions
with a finding that the investigation of criminal case or
allegations of misuse of coal is no ground for suspension of D
coal supply under FSA, but the appellants filed LPA Nos. 1265
of 2009 and 1266 of 2009 before the Division Bench of the
Patna High Court and the Division Bench held that in larger
public interest resumption of supply of coal could not be
ordered so long as the appellants do not consider the show E
cause of the Writ Petitioners and taken a final view on merits.
He submitted that similarly some other consumers, namely, M/
s Pratap Fuel Industries and M/s National Fuels Industry moved
the Allahabad High Court in Civil Miscellaneous Writ Petition
Nos. 33576 of 2009 and 36430 of 2009 against the suspension F
of supply of coal under FSA and the Division Bench of the
Allahabad High Court held that the order suspending the supply
of coal to the two consumers passed by the appellants herein
needed no interference by the Court in its extraordinary
jurisdiction and instead directed the appellants herein to G
consider the explanations of the two consumers furnish:ed      in
                                                          '-- ...,;
reply to show cause notices dated 16.07 .2008 and take a final
decision in the matter. He submitted that although the orders
passed by the Patna High Court and the Allahabad High Court
were cited before the Division Bench of the Jharkhand High
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    308      SUPREME COURT REPORTS                 [2010] 12 S.C.R.


A Court, the same had not been referred to or dealt with in the
  impugned orders passed by the Division Bench of the
  Jharkhand High Court in the LPAs. He submitted that an
  anomalous situation now prevails with regard to supply of coal
  to the 10 consumers against whom the CBI has lodged the FIR.
B Those consumers who moved the Patna High Court and the
  Allahabad High Court are not getting the supply of coal under
  FSA, whereas those consumers who moved the Jharkhand
  High Court and in whose favour the Jharkhand High Court has
  passed orders would be entitled to supply of coal under FSA,
C though the two classes of consumers are similarly situated.

          8. Mr. Das cited the observations of this Court in Ashoka
    Smokeless Coal India (P) Ltd. & Ors. Vs. Union of India &
    Ors. [(2007) 2 SCC 640] in Para 188 at Page 703 on the need
    to control black marketing and mis-utilization of coal. He
D   submitted that it is pursuant to these observations of this Court
    that the new coal distribution policy has been framed to
    discontinue the Linkage System which could not check the
    menace of black marketing and diversion of coal to the open
    market and supply of coal on strict terms and conditions
E   stipulated in FSA to the consumers has been contemplated to
    ensure proper utilization of the coal in the plants. He submitted
    that this is why in Clause 4.4 of the FSA it is clearly provided
    that the total quantity of coal supplied to the respondents under
    the agreement is meant for use in the plants of the respondents
F   and the respondents shall not sell/divert and/or transfer the coal
    for any purpose whatsoever and in the event they engage or
    plans to engage into any such resale or trade, the BCCL shall
    terminate the FSA forthwith without any liabilities and damages
    whatsoever payable to the respondents. He submitted that
G   therefore the BCCL can suspend supply of coal to the
    respondents if the respondents have not been able to establish
    that the coal already supplied to the respondents has been used
    in the plants of the respondents. He submitted that Clause 13
    of FSA, which provides that if the respondents fail to pay any
H   amount including any interest due to the BCCL towards
COAL !NOIA LIMITED AND ORS. v. ALOK FUELS (P) 309
  LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.]
purchase price of the coal the BCCL can suspend supply of          A
coal to the respondents, is not exhaustive of the contingencies
in which the BCCL can suspend supply of coal to the
respondents. He submitted that the learned Single Judge and
the Division Bench of the Jharkhahd High Court have lost sight
of these provisions of FSA made in the public interest while       B
passing the impugned orders.

      9. Mr. M.L. Varma, learned Senior Counsel appearing for
the respondent M/s Alok Fuels (P) Ltd. submitted that the case
of the respondent before the High Court was that supplies of       C
coal to the respondent was suspended arbitrarily and in
violation of Article 14. He submitted that the industry of the
respondent was functional as would be evident from the report
of the General Manager, District Industry Centre before the
Punjab & Haryana High Court in Civil Writ Petition No. 9863
of 2008. He further submitted that no materials were produced      D
by the appellants before the learned Single Judge or the
Division Bench despite opportunity being given to the
appellants to produce materials against the respondent. He
further submitted that no opportunity has been given to the
respondent to explain and rebut the materials now found and        E
filed alongwith the charge sheet against the respondents by the
CBI.

     10. Mr. Ranjeet Kumar, learned Senior Counsel,
appearing for the respondent M/s Faridabad Industries, on the      F
other hand, supported the impugned orders passed by the
learned Single Judge and the Division Bench of the High Court
and submitted that besides the FIR lodged by the CBI, no other
material whatsoever was placed by the appellants before the
High Court to show that the respondents Mis Faridabad              G
Industries diverted coal from its plant and sold the same in the
open market. He submitted that due opportunity was given by
the learned Single Judge of the High Court by the order dated
15.07.2009 to the appellants about materials which were in their
possession on the date on which supply was directed to be          H
    310     SUPREME COURT REPORTS                [201 O] 12 S.C.R.


A   suspended but despite such opportunity, the appellants did not
    produce any material whatsoever before the High Court to show
    that the respondent Mis Faridabad Industries has resorted to
    any black marketing or sale in the open market or had diverted
    coal from its plant. He submitted that supply of coal to the
B   respondent M/s Faridabad Industries was very essential for its
    industry and business and suspension of supply of coal to the
    industry of the respondent could not be allowed by the Court
    for an indefinite period of time and therefore the learned Single
    Judge of the High Court had rigl":tly passed the interlocutory
c   order directing the appellants to resume supply of coal to the
    respondents.

         11. Mr. U.U. Lalit, learned Senior Counsel appearing for
  the respondent M/s Ajay & Company Fuel Product adopted the
  submissions of Mr. Ranjeet Kumar and further submitted that
D it will be clear from Para 2 of the Additional Affidavit filed on
  behalf of the appellant on 10.05.2010 in SLP (C) No. 11307
  of 2010 that prior to the new coal distribution policy introduced
  w.e.f. 18.10.2007, there were 230 national consumers and 94
  Cokeries and Cokery-cum-Washery units drawing coal from
E BCCL, but after introduction of this new policy on 18.10.2007,
  only five consumers other than private cokery units were found
  suitable for execution of FSA under the new coal distribution
  policy. He submitted that the respondent M/s Ajay & Company
  Fuel Product was one of these five consumers found suitable
F for execution of FSA and at this stage a stand cannot be taken
  by the appellants that M/s Ajay & Company Fuel Product was
  not suitable for supply of coal under FSA.

      12. Mr. S.B. Upadhyay, learned Senior Counsel,
G appearing for the respondent M/s M.G.M. Contrade Pvt. Ltd.
  adopted the arguments of Mr. Ranjit Kumar and further
  submitted that Clause 13 of the FSA executed by BCCL in
  favour of M/s. M.G.M. Contrade Pvt. Ltd., stipulated that BCCL
  could suspend supplies of coal to the respondent if the
H respondent fails to pay any amount including any interest to
COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 311
  LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.]
BCCL under FSA. He submitted that the supply of coal to the            A
respondent therefore could not be suspended on any ground
other than the failure on the part of the respondent to pay any
amount or interest due to the BCCL under FSA. He submitted
that suspension of supply of coal by the petitioner to the
respondent pursuant to the FIR lodged by the CBI is, therefore,        B
in breach of Clause 13 of the FSA. He referred to the
observations of this Court in Para 189 in the case Ashoka
Smokeless Coal India (P) Ltd. & Ors. Vs. Union of India &
Ors. (Supra) that inspection should be carried out by the officers
appointed by the Chairman cum Managing Director of the                 c
company concerned within whose jurisdiction the unit is located
before entering into any agreement for supply of coal to ensure
the genuineness of the unit. According to Mr. Upadhyay, since
 FSA has been executed in favour of the respondent after all
 such inspection and scrutiny, the appellants cannot at this stage     D
 take the stand that the unit of the respondent is not genuine.

      13. We have considered the submissions of learned
counsel for the parties and we find that the only reason w~y the
learned Single Judge of the High Court has by the impugned
interim orders directed the appellants to resume supplies of           E
coal under FSA to the respondents is that BCCL has not placed
any material before the Court to show that there was any kind
of black-marketing of coal done by the respondents or any kind
of mis-utilization of the allotted coal by them and this is also
the reason given by the Division Bench of the High Court for           F
dismissing the LPAs filed by the appellants against the
impugned interim orders passed by the learned Single Judge.
What the learned Single Judge and the Division Bench of the
High Court failed to appreciate is that the FIR containing the
allegations of mis-utilization of the allotted coal and sale of the    G
allocated coal by the respondents in the open market was
lodged by the CBI and therefore the CBI and not the BCCL was
in possession of information or materials with regard to such
mis-utilization of the allotted coal or sale of the coal in the open
 market by the respondents. As a matter of fact in the charge-         H
    312      SUPREME COURT REPORTS                 [2010] 12 S.C.R.


A sheet which has been filed after investigation in the Court of
  Special Judge, CBI cases, Dhanbad, it is stated that a search
  was conducted at the plant premises of the respondents in June
  2009 by the CBI officials in presence of independent witnesses
  during which the plants of the respondents were found to be
B non-functional and the names of employees I workers as per
  the Attendance Register as well as other documents relating
  to sale of finished goods as produced by the respondents were
  found to be fake and fabricated as full particulars, addresses
  etc. were not provided in the m.cords in respect of such
c employees I workers engaged and purchasers of finished
  goods and thus the quantity of coal issued to the respondent-
  companies were not utilized in their plants but sold in black-
  market. It was thus clear that there were materials with the CBI
  in support of the allegations made in the FIR against the
  respondents that they were not utilizing the allotted coal in their
0
  plants but were selling the same in black-market, but these
  materials could not be placed before the Court because the CBI
  was not impleaded as a respondent in the writ petitions filed
  by the respondents.

E       14. We further find that in the counter-affidavit filed in the
  High Court in reply to the writ petitions filed by the respondents,
  Coal India Limited and BCCL have pleaded that under Clause
  4.4 of FSA the respondents were required to utilize the entire
  quantity of coal allotted to them in their respective plants and
F had undertaken not to sell I divert I transfer the coal for any
  purpose whatsoever and as the FIR lodged by the CBI
  disclosed breach of this clause of FSA, Coal India Limited and
  BCCL had to suspend the supplies of coal to prevent further
  diversion of coal by the respondents and this decision was
G taker;i pending a final decision regarding termination of FSA
  in terms of Clause 15 thereof. Thus the case of the appellants
  herein before the High Court was that suspension of supply of
  coal has been ordered to prevent further diversion of coal by
  the respondents. The Coal India Limited and BCCL are
H Government Companies of the Government of India and are
 COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 313
   LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.]
 bound by the policy decisions of the Government of India,              A
 Ministry of Coal, and since under the New Coal Distribution
 Policy formulated pursuant to the observations of this Court in
 Ashoka Smokeless Coal India (P) Ltd. & Ors. Vs. Union of
 India & Ors. (Supra), mis-utilization of allotted coal and black-
 marketing of such coal by the respondents was to be checked,           B
 the Coal' India Limited and BCCL did not act arbitrarily or
 unreasonably to suspend the supplies of coal under FSA to the
 respondents, if they entertained a serious doubt on the basis
 of the FIR lodged by the CBI that the supplies of coal, if made
 to the respondents, may be mis-utilized by the respondents and         C
 may be sold in the open market.

        15. It is settled by a series of decisions of this Court
  starting from Kumari Shrilekha Vidyarthi v. State of U.P. [(1991)
  1 SCC 537] that even in the domain of contractual matters, the
  High Court can entertain a writ petition on the ground of violation   D
  of Article 14 of the Constitution when the impugned act of the
  State or its instrumentality is arbitrary, unfair or unreasonable
· or in breach of obligations under public law. I Sterling
  Computers Ltd. v. Mis M & N Publications Limited and Others
  [(1993) 1 SCC 445] in para 28, however, this Court held:              E

      "Public authorities are essentially different from those of
      private persons. Even while taking decision in respect of
      commercial transactions a public authority must be guided
      by relevant considerations and not by irrelevant ones."
                                                                        F
 Obviously, one such relevant consideration which the Coal India
 Limited and BCCL as public authorities have to consider is
 whether continuation of supply of coal to the respondents may
 not lead to mis-utilization or black-marketing of the coal by the
 respondents which are prohibited under FSA and the policy              G
 decision of the Government considering the allegations made
 by the CBI in the FIR on the basis of the reliable information
 received. This relevant aspect has not been considered by
 either the learned Single Judge or the High Court while passing
 the impugned interim orders or by the Division Bench of the            H
    314      SUPREME COURT REPORTS                 (2010] 12 S.C.R.


A   High Court while dismissing the LPAs against the impugned
    interim orders of the learned Single Judge.

          16. It is true as has been contended on behalf of the
    respondents that Clause 13(1) of FSA provides that in the event
    respondents fail to pay any amount including any interest due
8
    to BCCL under FSA within a period of 30 days of the same
    falling due, BCCL shall have the right to suspend supplies of
    coal to the respondents, but Clause 13(1) does not stipulate that
    in no other contingency BCCL can suspend supplies of coal
    under FSA to the respondents. Moreover, Clause 13(1) of FSA
C   enumerates the three options available to BCCL in case the
    dues towards the price of coal and interest is not paid by the
    respondents and it does not provide for the different
    contingencies in which BCCL can suspend the supplies of coal
    to the respondents. In our considered opinion BCCL will also
D   have the right to suspend supplies of coal to the respondents
    where it has doubts that the respondents may mis-utilize the
    allotted coal and divert or sell the same in open market
    because, as would be clear from Clause 4.4 of the FSA and
    the new Coal Distribution Policy decision dated 18.10.2007,
E   the very object of FSA as well as policy of the Government is
    to allot coal to respondents for utilization in their plants and not
    for any other purpose. Therefore, if the FIR lodged by the CBI,
    which is a premier investigation agency of the Central
    Government, created serious doubts that the allotted coal may
F   be diverted or sold in the open market instead of being utilized
    in the plants of respondents, BCCL would be within its rights
    to suspend the supplies of coal to the respondents till the doubts
    are cleared in appropriate proceedings.

       17. We, however, find that BCCL has initiated such
G proceedings by issuing show cause notices dated 16.07.2009
  to the respondents to explain why FSA executed in favour of
  the respondents should not be cancelled on the basis of the FIR
  lodged by the CBI containing the allegations that the
  respondents were involved in a criminal conspiracy leading to
H
COAL INDIA LIMITED AND ORS. v. ALOK FUELS (P) 315
  LTD. THROUGH DIRECTOR [A.K. PATNAIK, J.]
the breach of terms and conditions of FSA. If the respondents    A
have furnished their explanations, BCCL may consider the
same and take a decision whether or not to resume supplies
of coal in accordance with law.

     18. We, therefore, hold that the learned Single Judge and
                                                                 8
the Division Bench of the High Court were therefore not right
in directing BCCL to resume the supplies of coal to the
respondents and accordingly set-aside the impugned orders
dated 06.10.2009 of the learned Single Judge and dated
07 .01.201 O of the Division Bench of the High Court and allow   C
these appeals with no order as to costs.

B.B.B.                                      Appeals allowed.