Patna High Court: Rajendra Kumar Mishra, J., heard the instant petition challenging the order of Central Coalfields Limited (CCL), by which the petitioner had been debarred from doing business with CCL till the final adjudication of FIR registered by the CBI against the petitioner.


The petitioner was a Company incorporated under the provisions of the Companies Act, 1956. In pursuance of the advertisement inviting the entrepreneurs to establish Special Smokeless Fuel Industries by the Coal India Ltd., the petitioner established a unit for supply of smokeless coal to the consumers after investing good amount and the loan taken from the Bank and the Financial Institutions. Central Coalfields Limited agreed to supply coal for special smokeless fuel to the petitioner at the notified price.

The facility of linkages had been granted to various units including the unit of the petitioner. Later on, Ministry of Coal, vide Office Memorandum dated 18-10-2007 declared New Coal Distribution Policy by which the linkage system was replaced with a more transparent bilateral commercial arrangement of enforceable Fuel Supply Agreement.


 The petitioner, in view of the commencement of New Coal Distribution Policy, entered into Fuel Supply Agreement on 30-04-2008, and thereafter, the respondents were supplying coal to the Petitioner Unit without any interruption and the petitioner was regularly submitting its utilization report about the manufacture and sale of Soft Coal as required by the Respondents. Later on, the Industrial Unit of the petitioner was inspected by the C.B.I. Team on 23-09-2011 without any prior intimation. The petitioner was not furnished with any outcome of the inspection of the C.B.I. Consequent to inspection, the coal dispatches to the petitioner Unit was suspended vide letter dated 22-05-2012 without disclosing any reason. The petitioner tried to know the reason of suspension of supply of coal to the petitioner but nothing was disclosed to the petitioner.

Meanwhile, FIR was lodged by C.B.I. on 03-04-2012. The petitioner challenged the said FIR by filing the quashing application before the Jharkhand High Court and the interim protection to the petitioner in criminal case was granted.

Blacklisting of Petitioner Company 

On 12-08-2015, the petitioner was served with an Order by which it was informed that its Unit had been blacklisted by banning all business activities in between the petitioner and the Central Coalfields Ltd. However, on the urge of the petitioner, the High Court had quashed the aforesaid order dated 12-08-2015 and remanded the matter to the General Manager (Sales & Marketing), Central Coalfields Ltd., for taking a fresh decision with respect to the period of blacklisting to be imposed upon the petitioner after granting an opportunity of hearing to the petitioner in accordance with law. Thereafter, respondent 2 passed the impugned order dated 10-10-2018 to the effect that all business activities between CCL and the petitioner should be banned till the final adjudication of FIR registered by CBI.

The respondent contended that the petitioner had grossly breached the terms and conditions of clause 4.4 of the Fuel Supply Agreement. The petitioner received the coal for the use of its special smokeless fuel plant but the same was sold/diverted/transferred to others for other purposes and that was material breach of the terms of the agreement.

Analysis and Decision

Noticing that CBI registered FIR in the year 2012 but even after lapse of eight years, no substantive progress was reported and the disposal of the criminal case, as usually and generally found, would take one or two decades more, therefore, debarment of the petitioner from doing any business with the company amounts to debarment for the whole life of the petitioner and it was almost permanent. The Bench stated,

If the authorities under the law could not blacklist or debar a person from doing any business for life or for indefinite period, the authority could not be allowed to pass such order contingent to happening of certain events in future.

The Bench while citing Kulja Industries Ltd. v. Western Telecom Project, Bharat Sanchar Nigam Ltd, (2014) 14 SCC 731, expressed, happening of such events may take decades and till then the petitioner might suffer irreparable loss as CBI had not taken any step during the pendency of last eight years.

It was further observed that the coal had been de-listed from essential commodities and was sold by the company on E-Auction. Therefore, the Bench stated,

“The person who wishes to purchase coal can purchase the coal at the maximum price offered by different bidders in E Auction. Now the coal is not made available to any plant on a low or subsidized price, therefore, there is no question of selling coal in black market.”

Hence, it was held that no useful purpose would be served if the unit of the petitioner would be closed for non-supply of coal. The impugned order was quashed and the matter was remanded to the respondents to pass order afresh after considering the relevant facts which would be commensurate to the acts done by the petitioner within three months. [Jai Mangala Fuels Pvt. Ltd. v. Central Coalfields Ltd., 2021 SCC OnLine Pat 228, decided on 04-02-2021]

Kamini Sharma, Editorial Assistant has put this story together.

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