M/S. SUSHI LA CHEMICALS PVT. LTD. AND ANR. versus BHARAT COKING COAL LTD. AND ORS.

Citation: [2010] 11 S.C.R. 518 · Decided: 15-09-2010 · Supreme Court of India · Bench: ALTAMAS KABIR · Disposal: Dismissed

Judgment (excerpt)

A 
B 
[2010] 11 S.C.R. 518 
M/S. SUSHI LA CHEMICALS PVT. LTD. AND ANR. 
v. 
BHARAT COKING COAL LTD. AND ORS. 
(Civil Appeal Nos. 8037-8038 of 2010) 
SEPTEMBER 15, 2010 
[ALTAMAS KABIR AND A.K. PATNAIK, .JJ.] 
Coal: New Coal Distribution Policy - Check on black-
marketing of coal - Agreement for supply of coal by 
C Government Company for use in the plants of consumers -
Term, of agreement that the coal was meant for use in the 
plants .of consumers and not for sale or diversion in open 
market - Criminal case by CBI against consumers alleging 
sale of coal in open market - Suspension of supply of coal -
D Writ petition challenging suspension - Single judge of High 
Court quashing the order of suspension - Division Bench of 
High Court holding that in larger interest suspension of supply 
was correct - On appeal, held: There were materials with the 
CBI in support of the allegations made that the consumers 
E were not utilizing the allotted coal in their plants but were 
selling the same in black-market - Government Company is 
bound by the policy decision of the Government of India and 
since under the Coal Distribution Policy, mis-utilization of 
allotted coal and black-marketing of such coal by the 
F consumers was to be checked, the Government Company did 
not act arbitrarily or unreasonably to suspend the supplies of 
coal, since they entertained a serious doubt on the basis of 
the FIR lodged by the CBI - Single judge of High Court, 
therefore,erred in allowing the writ petitions - Code of Criminal 
Procedure, 1973 - ss.226, 482 - Administrative law - Policy 
G decision - Government contracts - Constitution of India, 1950 
- Article 14. 
The Ministry of Coal adopted a new coal distribution 
H 
518 
SUSHILA CHEMICALS PVT. LTD. AND ANR. v. 
519 
BHARAT COKING COAL LTD. 
policy under which coal was to be supplied to different A 
consumers through a Fuel Supply Agreement (FSA) at 
notified prices to be fixed and declared by Coal India Ltd. 
In terms of the policy, respondent no.1, a subsidiary of 
Coal India Ltd. entered into an FSA with the appellants 
for supply of coal. The terms of the FSA provided that the 
B 
total quantity of coal supplied to the appellants under the 
agreement was meant for use in the plants of the 
appellants and the same could not be sold or diverted or 
transferred for any purpose whatsoever and in the event 
the appellant did so, respondent no. 1 would terminate c 
the FSA without any damages whatsoever payable to the 
appellants. 
On 7.6.2009, the CBI registered an FIR against 10 
consumers including the appellants alleging inter a/ia that 
the consumers entered into criminal conspiracy with the 
D 
then General Manager of respondent no.1 and lifted huge 
quantity of coal and instead of utilizing the same ~n their 
respective plants sold the same in the open market on 
higher prices and as a result respondent no.1 suffered a 
loss of 4.3 crores and thereby the accused made 
E 
corresponding wrongful gain to themselves. Respondent 
no.1 passed an order suspending the supply of coa1 to 
the appellants. The appellants filed writ petition before the 
High Court challenging the suspension of the supply of 
coal by respondent no.1 to the appellants. 
F 
The single judge of the High Court quashed the order 
directing suspension of supply of coal to the appellants 
holding that there was no provision in the FSA for 
suspension of supply of coal to the appellants on account G 
of criminal case instituted regarding misuse of the coal. 
The Division Bench of the High Court, however, allowed 
the appeals and held that in the larger interest, 
resumption of supply of coal cannot be directed. The 
H 
520 
SUPREME COURT REPORTS 
[2010] 11 S.C.R. 
A appellants filed the instant appeals challenging the order 
of Division Bench of the High Court. 
Dismissing the appeals, the Court 
HELD: 1. The FIR lodged by the CBI contained 
B allegations of mis-utilization of and sale of the allotted 
coal by the appellants in the open market. As a matter of 
fact, in the charge sheet which was filed after 
investigation in the Court of Special Judge, CBI Cases, 
it was stated that a search was conducted at the plant 
C premises of the appellants in June 2009 by the CBI 
officials in the presence of independent witnesses during 
which the plants of the appellants were found to be non-
functional and the names of employees/workers as per 
the Attendance Register as well as other documents 
D relating to sale of finishe

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