Holding

The Coal Controller is empowered under Clause 8 (and 9) of the Colliery Control Order to issue binding directions on coal disposal that override contractual obligations, and such directions are valid without a prior hearing and enforceable by mandamus.

Summary

The Supreme Court examined whether the Coal Controller, exercising powers under Clause 8 (and 9) of the Colliery Control Order, 1945, could direct Central Coalfields Ltd. (CCL) to transfer allotted steam‑coal from Urimari and Jarangdih collieries to Sirka collieries, thereby overriding CCL's contract with Continental Transport and Construction Corp. The Court held that such directions are within the Controller's statutory authority, prevail over any contractual terms, and are binding even if issued without a prior hearing. The direction was deemed a statutory direction enforceable by a writ of mandamus. The Court rejected the appellants' arguments that the direction was vitiated by lack of audi alteram partem or extraneous considerations, and dismissed the appeals.

Issues considered

The Coal Controller's power under Clause 8 of the Colliery Control Order to issue directions that override a contract for supply of specific grades of coal.
Whether a direction issued without a prior hearing violates the principle of audi alteram partem.
Whether the direction issued by the Coal Controller constitutes a statutory direction enforceable by mandamus.
Whether the Liberalised Sales Scheme and related notifications limit the Coal Controller's authority to give such directions.

Legislation cited

Defence of India Rules, 1939s. Rule 81(2)
Essential Commodities Act, 1955s. 16, s. 2(a)(ii)

Subjects

Essential commoditiesColliery Control OrderLiberalised Sales SchemeAdministrative lawNatural justiceMandamusContract overrideCoal disposal

Judgment

COAL INDIA LTD. AND ANR. A
v.
MIS. CONTINENTAL TRANSPORT AND CONSTRUCTION
CORPORATION AND ORS. ETC.

MARCH 18, 1997
B
[S.C. AGRAWAL AND G.B. PATTANAIK, JJ.)

Essential Commodities Act, 1955/Collieiy Control Order, 1945/Defence
of India Rules, 1939 :

S. 2(a)(ii) and S.16/Clauses 2(l)(a), 8, 9, 12B, 12E and 15/Rule
c
81 (2)-Govemment of India Notifications dated 24. 7.1967, as amended by
Notifications dated 4.6.1992 a11d 25.8.1993-Sale of Steam Coal by Coal
India Limited through its subsidimy Central Coal-fields Limited under
Liberalised Sales Scheme-II-Directions by Coal Controller to CCL to tra11s-
fer the allotment of equivalent quantity of steam Coal agreed to be sold from D
the Collie1ies mentioned i11 the agreement, to other Collie1y not covered under
LSS-II, Held, Coal Controller is competent to issue such a direction which
would prevail over a contract to the contrary and collie1y would dispose of
Coal in accordance with such direction-Directions issued by the Coal Con-
trol/er can11ot be said to be vitiated on the ground that 110 opportunity of E
hearing be/ore issuing such directions was given-Such a direction is binding
and a Wiit of Mandamus could be issued to implement the same-Constitu-
tion of India, Alticle 22tr-Administrative Law-P1inciples of Natural justice.

Maxim-Audi alteram partem-Held, inapplicable.
F
The Government of India, in order to liberalise the sale of coal-an
essential commodity under s.2 (a)(ii) of the Essential Commodities Act,
1955 - and in exercise of power under the Colliery Control Order, 1945,
issued Notification dated 24.7.1967 as amended by Notifications dated
4.6.1992 and 25.8.1993. The effect of the Notifications was that in respect G
of certain categories of coal falling within the ambit of the said Notifica-
tions, the Colliery owners were free to enter into transactions for sale of
coal without prior approval of the Central Government or the Coal Con-
troller.

In pursuance of the Notifications dated 24.7.1967 and 4.6.1992, Coal H
1
2 SUPREME COURT REPORTS [1997] 3 S.C.R.

A India Limited (CIL) framed Liberalised Sales Scheme-II (LSS-11), and
inviteq, by an advertisement, offers for purchase of Coal from various
Collieries belonging to its subsidiaries, includin~ Urimari and Jarangdih
<;ollieries - the .Collieries of Central Coalfields Limited (CCL), a sub-
sidiary of CIL. In response thereto, respondent No. 1 (in C.A. No. 2004/97)
B offered to purchase and the General Manager (Sales) CCL, allotted to it
certain quantities of Grade-B and Grade W-111 Steam Coal from Urimari
and Jarangdih Collieries respectively. However, since respondent No. 1
found that Steam Coal of Urimari · and :Jarangdih Collieries was not
matching to the declared Grades 'B' and 'W-111' respectively, and Sirka
Colliery falling in Argada area and also belonging to CCL had huge stocks
C of Grade-B Steam Coal for disposal and the General Manager of Sirka
Colliery was willing to accept the diversion of orders of other areas booked
under LSS-11, it wrote a letter to the General Manger (Argada area) or"
CCL expressing its willingness to lift equivalent quantity of Grade-B Steam
Coal from Sirka Colliery. Respondent No. 1 accordingly requested the
D General Manager (Argada area) CCL to accept the transfer of allotment
at his level. The General Manager (A) Sirka also sent to the General
Manager (S&M) CCL a copy of the aforesaid letter confirming the asser-
tions made therein.

Meanwhile, the respondents submitted a representation to the Coal
E Controller for transfer of allotments of steam coal Urimari and Jarangdih
Collieries to Sirka Colliery. The Coal Controller by its communication
dated 12.4.1994 directed the Chainnan-cum-Managing Director, CCL,
Ranchi to give effect to the transfer of the said allotments of Steam Coal
from Urimari/Jarangdih Collieries to Sirka Colliery as requested by the
F respondents and recommended by the General Manager of the area con-
cerned.

In similar circumstances, on representation of respondents (in C.A.
No. 2005/97) and recommendation of the authority concerned, the Coal
Controller, by another communication dated 12.4.1994, directed the Chair-
G man-cum-Managing Director of CCL, Ranchi to effect transfer of allot-
ment of Dirty Slurry to equivalent quantity of Steam Coal from
Sirka/Religara/Gidi-C Collieries as requested for by the party and recom-
mended by the authority of the area concerned.

H Since the directions dated 12.4.1994 given by the Coal Controller
COAL INDIA LTD. v. CONTINENTAL TPT.AND CONTN. CORPN. 3

were not implemented, the respondents filed Writ petitions before the High A
Court and ultimately the Single Judge allowed the writ petitions and
directed the Colliery owners to implement the said directions of the Coal
Controller. The Letters Patent Appeals having being dismissed by the
Division Bench of the High Court, the Colliery owners, i.e. CIL etc. filed
the present appeals. During the pendency of the appeals, the Union of B
India was also impleaded as a party.

It was contended for the appellants that under the contract between
the CCL and the respondents the former had undertaken to supply Grade
B Steam Coal from Urimari Colliery and Grade W-111, Steam Coal from
Jarangdih Colliery under LSS-11, and under the provisions of the Coal C
Control Order the Coal Controller was not competent to modify the terms
of the contract and he could not have given a direction to CCL to supply
the said quantity and quality of Steam Coal from Sirka Colliery as the
same was not covered by LSS·Il and had not been offered for sale in the
advertisement; that the directions dated 12.4.1994 given by the Coal Con-
trailer were vitiated as no opportunity of hearing was afforded to the D
appellants before issuing the said directions. It was contended that by the
communications dated 12.4.1994 the Coal Controller had advised the
Chairman-cum-Managing Director of CCL to transfer the allotments and
as such the same could not be treated to be statutory directions for
enforcement of which a writ of mandamus could be issued. E
Dismissing the appeals, this Court

HELD: 1.1. Steam Coal ofSirka Colliery was not outside the ambit of
the Colliery Control Order 1945, and the Coal Controller, in exercise of his
powers under Clause 8 thereof could give directions in respect of that coal. F
The power to give such directions is not fettered by the con tract between
CCL and the petitioners for supply of Steam Coal from Urimari and
Jarangdih Collieries. The fact that Steam Coal of Sirka Colliery was not
offered for sale by CCL in the advertisement is ofno consequence. [19-A-C]

1.2. LSS-11 was framed in pursuance of the Notification dated G
24.7.1967, as modified by Notification dated 4.6.1992. These notifications
were in the nature of a general authority given to the Central Government
under clause 12E of the Colliery Control Order. This only means that in
respect of coal covered by LSS-11 it was permissible for the Colliery owners
to dispose of the coal covered by the said scheme without obtaining prior H
4 SUPREME COURT REPORTS [1997) 3 S.C.R.

A authority from the Central Government. But this does not mean that the
Coal Controller is deprived of his powers under the Colliery Control Order
to give directions regarding disposal of the Coal which is dealt with under
LSS-11. The said coal also falls within the ambit of Colliery Control Order,
and, therefore, there was nothing to preclude the Coal Controller from
giving directions under Clause 8 in relation to the Coal dealt with under the
B
said scheme and such directions when given would take effect not·
withstanding any contract to the contrary entered by the Colliery owners.
[18-E-H, 19-A-B]
13. The general authority given to the Collieries under the aforesaid
C Notifications for sale etc. of the coal specified therein, does not affect the
power .conferred on the Central Government to give special authority
regarding disposal of Coal to a particular Colliery in respect of a specified
quantity of coal. Clause 8 of the Colliery Control Order empowers the
Central Government to issue from time to time such directions as it thinks
fit to any Colliery regulating the disposal of his stocks of coal and such
D directions can be as to the Class, grade, size, and quantity of coal which
may be disposed of, pers~n or class or description of persons to whom coal
shall or shall not be disposed of, and the order of priority to be observed
•in such disposal. In view of clause 9 the direction given under clause 8
would prevail over a contract to the contrary and the Colliery owner would
E be required to dispose of coal in accordance with such direction and would
be precluded from disposing of coal in contravention of such direction. By
virtue of Clause 15 the Coal Controller can exercise the functions of the
Central Government as enumerated therein including those under clauses
8 and 9. [17-D-G, 18-B-C]

F 2.1. The direction dated 12.4.1994 given by the Coal Controller
cannot be said to be vitiated on the ground that it was given without giving
a hearing to the appellants. [20-B-C]

2.2. The power to issue directions under clause 8 has been conferred
with a view to enable the Central Government/Coal Controller to effectively
G regulate the production, supply and distribution of and trade and Com·
merce in coal. There may arise situations where immediate action may be
called for. It cannot be said that the said power can only be exercised after
giving prior notice to the Colliery owner or other persons affected by sµch
directions. In case the colliery owner or any person feels that his interests
H are adversely affected by such a direction, he may place his case before the
COALINDIALID.v. CON"DNENTAL TPT.ANDCONTN.CORPN. [S.C.AORAWAL,J.] 5

Central Government/Coal Controller who has given the directions and A
seek reversal of the same and in that event the authority concerned shall
give due consideration to such submissions. [19-E-H]

23. In the instant case, the Coal Controller had before him the
representation submitted by the petitioners to the General Manager (Ar-
gada area) Sirka of CCL and the letter sent by the General Manager B
(Argada area) to the General Manager (S&M) CCL, Ranchi which indi-
cated that sufficient stocks of Steam Coal were available at Sirka Colliery
which was required to be disposed of. In case the appellants felt aggrieved
by the said directions, they should have moved the Coal Controller for
modifying the same. [19-G-H, 20-A-B] C

3. Although the language used in the letters dated 12.4.1994 is in the
nature of an advice, but in substance it is a direction for giving effect to
transfer of allotments. In view of clause 17 of the Colliery Control Order
such a direction was binding. A writ of mandamus could, therefore, be
issued to implement the said direction. [20-E-G] D

CIVIL APPELL0-TE JURISDICTION : Civil Appeal No. 2004 of
1997 Etc. .

From the Judgment and Order dated 31.10.95 of the Calcutta High
Court in A No. Nil of 1995 Arising out of Matter No. 941 of 1994. E

Dushyant A Dave, Manish Mishra for Fox Manda! & Co. for the
Appellants. /

Shanti Bhushan, H.K. Puri, N.D.B. Raju, Rajesh Srivastava and
Ujjwal Banerjee for the Respondents.
F

P.P. Malhotra, Arvind Kumar Sharma, Anubha Jain, Ashok Bhan
and Harish Chander for the Respondent No. 3.

The Judgment of the Court was delivered by G
S.C. AGRAWAL, J. Special leave granted.

These appeals are directed against the judgment of the Calcutta High
Court dated October 31, 1995 in appeals arising out of Matters Nos. 940
~nd 941of1994 decided by the learned single Judge of the High Court by H
6 SUPREME COURT REPORTS [1997) 3 S.C.R.

A order dated April 6, 1995. Since they raise common questions, they are
being disposed of together.
\!JI
In exercise of the power conferred on it by sub-rule (2) of Rule 81
of the Defence of India Rules, 1939 the Central Government has made the
B Colliery Control Order, 1945 (hereinafter referred to as 'the Colliery
Control Order') which has been continued in force and is now in operation
by virtue of Section 16 of the Essential Commodities Act, 1955, since coal
is an essential commodity under Section 2(a)(ii) of the said Act. The
Colliery Control Order makes provisions for regulating the production,
supply and distribution of coal. The Colliery Control Order postulates that
C coal shall be supplied by the colliery owned to a person engaged in the
business of production, supply and distribution of or trade or commerce
in coal on the basis of an order of allotment issued by the Coal Controller.
By Notification dated July 24, 1967, the Central Government authorised a
person to acquire or purchase or to despatch or to divert or transfer,
D without any order of allotment or written authority, non-coking coal of all
grades produced in all coal fields and coking coal not required for metal-
1urgical consumers and coal produced in Assam subject to the condition
that such coal shall be consumed within India. By Notification dated June
4, 1992 the earlier Notification dated July 24, 1967 was amended and the
authorisation to acquire or purchase, or to despatch or to divert or transfer,
E without any order of allotment or written authority, was given in respect of
(i) non-coking coal of all grades produced in the States of Assam and
Meghalaya, (ii) coking coal produced in the States of Assam and
Meghalaya which is not required for ~tallurgical consumers provided that·
such coking/non-coking coal was not produced in the coal mines of the
F Coal India Limited or any of its subsidiaries, and (iii) the coal sold under
any Liberalised Sales Scheme, framed by the Government of India in the
Ministry of Coal, by the Coal India Limited or any of its subsidiaries, and
the Singareni Collieries Company Limited, if such sale was not dependent
on the condition that such coal would be used by the first purchaser only
and was not meant for trading or sale. By Notification dated August 25,
G 1993 there was further amendment in the Notification dated July 24, 1967,
as amended by Notification dared June 4, 1992, whereby in respect of coal
sold by Coal India Limited (for short 'CIL') or any of its subsidiaries under
any liberalised scheme framed by the Government of India it was
prescribed that the collieries for which the coal is to be sold should be duly
H approved for the purpose by the Government of India and that the coal so

I .
.
'
COALTNDIALTD. v. CONTINENTAL 1TI.ANDCONTN.CORPN. (S.C.AGRAWAL,J.] 7

sold would not, except in the case of actual user, be subject to the A
injunction against trading or resale. In accordance with said notification,
Liberalised Sales Scheme has been framed from time to time.

...... These appeals relate to sale of coal by Central Coalfields Limited
(for short 'CCL'),a subsidiary of CIL, the appellant in the appeals.
B
In Civil Appeal arising out of Special Leave Petition No. 25983 of
1995 we are concerned with the sale of coal under the Liberalised Sales
Scheme-II (for short 'LSS-11') framed by CIL in August 1992 in pursuance
of Notifiq1tions dated July 24, 1967 and June 4, 1992. In September 1992
CIL published an advertisement in the 'Statesment' inviting offers for C
purchase in respect of coal offered for sale under LSS-11. In the said
advertisement the quantity and quality of coal that was being offered in the
various collieries belonging to the subsidiaries of CIL were specified.
Among the collieries mentioned in the advertisement were Urimari and
Jarangdih collieries of CCL. In respect of Urimari Colliery 1.35 lac tonnes D
of Grade-B Steam Coal was offered and in respect of Jarangdih Colliery
1.75 lac tonnes of Grade W-III Steam Coal was offered. In response to the
said advertisement M/s. Continental Transport and Construction Corpora-
tion, respondent No. 1 in both the appeals (hereinafter referred to as 'the
petitioners'), sent a letter dated September 16, 1992 to the General Manager
., (Sales), CCL, offering to purchase 1.35 lac tonnes of Grade-B Steam Coal E
from Urimari Colliery and 1.75 lac tonnes of Grade W-III Steam Coal from
Jarangdih Colliery. By allotment letter dated April 7, 1993, CCL allotted to
the petitioners 32,400 MT Grade-B Steam Coal from Urimari Colliery in Sayal
area in response to the offer made by the petitioners on September 16, 1992.
By another allotment letter dated April 20/21, 1993, CCL allotted to the p
petitioners 50,750 MT Grade W-III Steam Coal from Jarangdih Colliery. The.
validity of the said allotments was up to March 31, 1994, but the period of the
said allotments was extended. The case of the petitioners is that Steam Coal
at Urimari and Jarangdih Collieries was not matching to the declared Grade-B
and W-III respectively and was of lower grades. Sirka Colliery falling in
Argada area also belongs to CCL. The petitioners, having come to know that G
sufficient stocks of Grade-B Steam Coal was available for disposal at Sirka
Colliery, wrote a letter dated April 7, 1994 to the General Manager
(Argada area) of CCL, wherein it was mentioned that 32,400 MT of
Grade-B Steall} Coal from Urimari Colliery and 50,750 MT of Grade W-III
Steam Coal from Jarangdih Colliery was allotted to them vide allotment H
8 SUPREME COURT REPORTS [1997) 3 S.C.R.

A letters dated April 7, 1993 and April 20/21, 1993 respectively and that on
account of non-availability of Grade-B Steam Coal at Urimari Colliery and
Grade W-III grade steam coal at Jarangdih Colliery it would not be
possible for them to lift the required quantity of coal. In the said ietter it
was also stated that the petitioners had learnt that Sirka Colliery had huge
B stocks of Grade-B Steam Coal to the tune of 4.16 lakh MT and that he
(General Manger) was willing to accept the diversion of orders of other
areas booked under LSS-II to the tune of 2.00 lakhs MT in addition to
other pending commitments and orders/proposed deliveries to others in-
cluding the petitioners. By the said letter the petitioners expressed their
willingness to accept equivalent quantities of Grade-B Steam Coal from
C Sirka Colliery in case the General Manager was willing to accept the
transfer of allotment for Steam Coal of Urimari and Jarangdih Collieries.
The General Manager was requested to accept the proposal of the
petitioners at his level and intimate to the General Manager (Sales)/CCL
Headquarters for obtaining the formal approval in this regard. After
D receiving the said letter the General Manager (A), Sirka, sent a com-
munication dated April 8, 1994 to the General Manager (S&M), CCL,
wherein he enclosed a copy of the aforementioned letter of the petitioners
dated April 7, 1994 and, after referring to his wireless message dated April
1, 1994, he stated that in view of the stock position of 4.16 lakhs MT of
E coal at Sirka Colliery it has been confirmed that in order to liquidate stocks
such orders of steam coal, if diverted from other areas, could be accepted. •·
On April 9, 1994 the petitioners submitted a representation to the Coal
Controller for transfer of allotments of steam coal from Urimari and
J arangdih Collieries allotted by CCL/Headquarters under LSS-II from
these collieries to Sirka Colliery of Argada area. In the said representation
F the petitioners mentioned that quality of coal being produced at Urimari
Colliery was equivalent to Grade-D coal and at Jarangdih Colliery also the
quality of coal being produced was equivalent to Grade W-IV. It was stated
that at Sirka Colliery of Argada area there were huge stocks of Grade-B
Steam Coal to the tune of 4.10 lakhs MT and it was pointed out that the
G General Manager (Argada area) of CCL, in his letter dated April 8, 1994,
had recommended the request of the petitioners for diversion of allotments
to Sirka Colliery for favourable consideration and approval of the General
Manager (Sales)/CCL. A copy of the said letter of the General Manager,
Argada Area, Sirka dated April 8, 1994 was also submitted along with the
H representation. By the said representation the petitioners requested the
COALINDIA LID. v. CONTINENTAL TPT. AND CONTN. CORPN. [S.C. AGRAWAL, J.] 9

Coal Controller to issue a direction to the coal company for transfer of A
allotments of Steam Coal from Urimari and Jarangdih Collieries to Sirka
Colliery for release of equivalent quantity of Steam Coal from Sirka Col-
liery. On the said representation the Coal Controller, on April 12, 1994,
sent a communication to the Chairman-cum-Managing Director, CCL,
Ranchi referring to the letter dated April 7, 1994 submitted by the B
petitioners to the General Manager, Argada area as well as the letter dated
April 8, 1994 from the General Manager, Argada addressed to the General
Manager (Sales)/CCL wherein he had recommended for acceptance of the
transfer in order to liquidate huge stocks of coal at Sirka Colliery. In the
said letter the Coal Controller has stated :
c
"Having noted the entire circumstances and facts of the case and
the availability of steam coal at Sirka you are advised to forthwith
give effect to the transfer of these allotments of steam coal from
Urimari/Jarangdih collieries to Sirka Colliery for delivery of
equivalent quantity of steam coal Grade B to the party as requested D
for by them and recommended by the concerned area, at the
earliest."

Civil Appeal arising out of S.L.P. (Civil) No. 26366 of 1995 relates to
sale of washery products on the basis of the Notification dated July 24,
1967, before amendment introduced therein by Notification dated June 4, E
1992. On January 17, 1991 and advertisement was published in the
'Statesman' inviting offers for bulk purchase of rejects, Middlings, Slurry
and Dirty Slurry in various washeries of CCL including the Gidi Washery.
In response to the said advertisement, the petitioners, on March 2, 1991,
submitted offers for purchase of 1,79,000 MT Slurry, 90,000 MT Middlings F
and 90,000 MT Dirty Slurry. By letters dated May 11/14, 1991 CIL accepted
the offer of the petitioners and agreed to supply to the petitioners 1,79,000
MT Slurry Grade-D, 90,000 MT Middlings Grade-F and 45,000 MT Dirty
Slurry Grade-F from Gidi Washery. Subsequently by letter dated May 28,
1992 CCL approved the transfer of 88,500 MT of Grade-F Middlings
allotted to the petitioners to equivalent quantity of Grade-F Dirty Slurry G
to be delivered from Gidi Washery. By letter dated September 18, 1993,
the General Manager (Argada area) of CCL refused to accede to the
request of the petitioners to allow delivery of Grade-D also with Grade-F
Dirty Slurry and reiterated that in order to avoid possible malpractices of
lifting of Slurry against orders of Dirty Slurry, lifting of both the products H
10 SUPREME COURT REPORTS (1997] 3 S.C.R.

A concurrently was not possible. On September 20, 1993, the petitioners
sublilitted a repr.osentation to the Coal Controller requesting him to direct
CCL to transfer their allotment of 1,65,724 MT of Slurry Grade-D to
equivalent quantity of Dirty slurry Grade F which was abundantly available
at the Gidi Washery. On January 31, 1994 the Coal Controller gave a
B direction to the Chairman-cum-Managing Director, CCL, Ranchi, to trans-
fer 1,65,724 MT of Grade-D Slurry to equivalent quantity of Grade-F
Slurry in Gidi Washery. Since the direction of the Coal Controller was not
implemented by CCL, the petitioners moved the Calcu.tta High Court by
filing a Writ Petition and the High Court, by order dated February 10, 1994,
directed the appellants to act in terms of Coal Controller's letter dated
C January 31, 1994. Thereupon by letter dated February 28, 1994, CCL
confirmed the transfer of 1,65,724 MT of Grade-D Slurry to Grade-F
Slurry of Gidi Washery. The case of the petitioners is that with effect from
April 1, 1994, CCL changed the grade of Dirty Slurry of Gidi Washery from
Grade-F to Grade-E for the year 1994-95 and increased its price by about
D Rs. 85 per MT. The petitioners submitted a representation to the Coal
Controller on April 2, 1994 in that regard. On April 7, 1994, the peti.tioners
wrote a letter to the General Manager (Argada area) of CCL, wherein they
stated that in view of the difficulties mentioned in the said letter, it would
not be possible for them to lift the Dirty Slurry allotted to them from Gidi
Washery and they sought transfer of their allotments of Dirty Slurry to
E Steam Coal from Sirka/Gidi- C/Religara collieries. By his letter dated April
8, 1994 addressed to the General Manager (S&M), CCL, the General
Manager (Argada area), forwarded the said letter of the petitioners for
favourable consideration. On April 9, 1994 the petitioners submitted a
representation to the Coal Controller requesting him to transfer of their
F allotted quantity of Dirty Slurry remaining to be booked and lifted against
allotment and the entire quantity of recent allotment of 1,65,724 MT of
Dirty Slurry for release of equivalent quantity of Steam Coal by road from
Sirka/Gidi-C/Religara collieries. The Coal Controller, sent a communica-
tion dated April 12, 1994 to the Chairman-cum-Managing Director, CCL,
wherein, after taking note of the representation dated April 7, 1994 sub-
G mitted by the petitioners to the General Manager (Argada area) and the
letter from the General Manager, Argada area to the General Manager
(Sales)/CCL dated April 8, 1994, he stated :

"Having noted the entire circumstances and facts and the
H availability of the coal at Sirka/Religara/Gidi-C desired to be lifted
COAL INDIA LTD.v. CONTINENTAL TPT.ANDCONTN.CORPN. IS.CAGRAWAL,J.] 11

by the party, you are advised to forthwith effect to the transfer of A
allotments of Dirty Slurry and in the party letter dated 2.4.94 and
9.4.94 for release of equivalent quantity of steam coal from
Sirka/Religara/Gidi-C collieries as requested for by them and
recommended by the concerned area, at the earliest."

Since the directions contained in both the communications of the B
Coal Controller dated April 12, 1994 addressed to the Chairman-cum-
Managing Director of CCL were not being implemented by CCL, the
petitioners on April 18, 1994, filed two Writ Petitions (Matters Nos.
940-941 of 1994) in the Calcutta High Court. Both the Writ Petitions were
disposed of by a learned single Judge (Mitra J.) by order dated April 18, C
1994 whereby the Chairman-cum-Managing Director of CCL was directed
to act in terms of the communications dated April 12, 1994 sent by the Coal
Controller within afortnight from the date. This order was passed by the
learned single Judge without issuing notice to the appellants and by direct-
ing that a copy of the Writ Petition be served upon Mrs. A. Quraishi, D
Advocate as she generally appears on behalf of the Chairman-cum-Manag-
ing Director of CCL and the Chairman-cum-Managing Director of CCL
'Wits dir~ted to regularise her appointment in the matter. The said order
of the learned single· Judge was, however, set aside in appeal by the
Division Bench of the High Court by order June 6, 1994 and the matter
_... was remitted for reconsideration on merits. Thereafter, the matter was E
considered by Samaresh Banerjee J. who, after issuing notice to the parties,
by his judgment dated April 6, 1995, allowed both the Writ Petitions filed
by the petitioners and directed the appellants herein, who were respon-
dents in the Writ Petitions, to implement the orders of the Coal Controller
dated April 12, 1994 forthwith. Letters Patent Appeals filed by the appel-
lants against the said judgment of the learned single Judge have been . F
dismissed by the Division Bench of the High Court (KC. Agarwal CJ. and
Tarun Chatterjee J.) by the impugned judgment dated October 31, 1995.
Hence these appeals. .

We have heard Shri Dushyant A. Dave and Shri Harish Salve, the G
learned senior counsel for the appellants in these appeals, and Shri Shanti
Bhushan, the learned senior counsel appearing for the petitioners in both
the matters. During the pendency of these matters in this Court, the Union
of India was impleaded as a party. We have heard Shri P.P. Malhotra, the
learned senior counsel appearing for the Union of India. H
12 SUPREME COURT REPORTS (1997] 3 S.C.R.

A We will first take up the submissions urged by Shri Dave in Civil
Appeal arising out of S.L.P. (Civil) No. 25983 of 1995 which relates to the
contract for supply of Steam Coal from Urimari and J arangdih Collieries.
The submission of Shri Dave is that under the said contract CCI,_, had
undertaken to supply Grade-B Steam Coal from Urimari Colliery and
Grade W-111 Steam Coal from Jarangdih Colliery under LSS-11 and that ,•
B under the provisions of the Colliery Control Order the Coal Controller was
not competent to give a direction so as to modify the terms of the contract
and to direct CCL to supply the said quantity and quality of Steam Coal
from another colliery, namely, Sirka Colliery, which had not been offered
for sale under LSS-II. In order to appreciate the aforesaid submission of
C Shri Dave it is. necessary to briefly refer to various provisions of the
Colliery Control Order and the Notification dated July 24, 1967, as
amended by l'{otifications dated June 4, 1992 and August 25, 1993.
' '

As Indicated earlier, the Colliery Control Order has been made with
D a view to regulate the production, supply and distribution of coal which is
an essential commodity under the Essential Commodities Act, 1955. The
expression "Coal Controller" is defined in clause 2(1)(a) to mean the
person appointed by the Central Government to hold the post of Coal
Controller and includes the Joint Coal Controller and Deputy Co(!! Con-
troller. Clause 3 empowers the Central Government to prescribe the
E classes, grades, process into which coal may be categorised and the
specifications for each such class, grade or size of coal. The sale price at
which or the maximum or the minimum sale price or both, subject to which
coal may be sold by colliery owners is to be fixed by the Central Govern-
ment by notification in the official Gazette and such notification may fix
F different prices for different grades and sizes of coal and for different
collieries (clause 4). A colliery owner or his agent cannot sell, agree to
sell or offer to sell and no person can purchase, agree to purchase, or offer
to purchase, directly or through a broker or a del-credere/agent coal from
a colliery owner at a price which is in excess of the price or the maximum
price fixed under sub-clause (1) of clause 4 or below the price or the
G minimum price under clause 4 (claQSe 5). In clause 6 provision has been
made for fixation of commission to be paid by a colliery owner to a middle
. man employed by him as a broker and by the consumer to the middle man
who act as del-credere agent for him. Every colliery owner, every person
to whom coal is allotted under the Colliery Control Order and every other
H person engaged in the business of production, supply and distribution of,
0
COALINDIA LTD. v. CONTINENTAL TPT.ANDCONTN. CORPN. !S.C.AGRAWAL,J.] 13

-- or trade and commerce in coal, on being requested to do so, either by A
notice served on him or by special or general direction issued by the Coal
Controller has to submit to that offer such returns and other information,
in such format within such time, as may be specified in the notice of
direction (clause 7). The Central Government is empowered fo issue, from
time to time, such directions as it thinks fit to any colliery owner regulating B
the disposal of his stocks. of coal or of the expected output of coal in the
colliery during any period. Such direction can be as lo the class, grade, size
and quantity. of coal which may be disposed or and person or class or
description of persons to whom coal shall or shall not be disposed of, the
order of priority to be observed in such disposal and the stacking of coal
on Government account (clause 8). Clause 9 gives overriding effect to the C
direction,given under clause 8. A person to whom such a direction is given
is requir~d to dispose of coal in accordance therewith and not to dispose
of coal in contravention thereof. Power has been conferred upon Clause
lOA on the Coal Controller to direct by order in writing that any coal
despatched by any colliery owner, or a person acting on behalf of a colliery D
owner, to any person, which is in transit, shall subject to such terms and
conditions, if any, as the said Coal Controller deems fit, be diverted and
delivered to another person specified in the order. The said direction can
be modified or cancelled by the Coal Controller who may direct the coal
to be diverted or delivered to a person other than the person originally E
named therein. The said clause also makes provision for payment of
compensation to the person affected by such direction. Clause 11 em-
powers the Central Government to issue such directions as it thinks fit to
any colliery owner prohibiting or limiting the mining or production of any
grade of coal and the colliery is required to comply with the said directions.
The authorities competent to allot quota of coal to any or class of persons F
are required to be specified by the Central Government by a notification
in the official Gazette and such allotment of quota has to be made by the
authority subject to such instructions as the Central Government may issue
from time to time (clause 12A). Clause 12B requires that a person who has
been allotted coal under the Colliery Control Order cannot use it otherwise G
than in accordance with the conditions contained or incorporated in the
document containing the order of allotment and he cannot divert or
transfer any such coal to any other person except under the written

-
'
authority from the Central Government. If a person who has been allotted
coal does not require the whole quantity of the coal so allotted or any part H
14 SUPREME COURT REPORTS [1997] 3 S.C.R.

A thereof for the purpose for which it was allotted, the Central Government
""' I
can direct such person to deliver the whole quantity of such coal or any
part thereof to such person and at such price as may be specified in the
order (clause 12C). Clause 12E contains a prohibition and lays down that
no person shall acquire or purchase or agree to acquire or purchase any
B coal from a colliery and no colliery owner or his agent shall despatch or
agree to despatch or transport any coal from the colliery except under the
authority and in accordance with the conditions contained in general or
special authority of the Central Government. By clause 12G the ap-
plicability of clauses 12A, 12B and 12E has been excluded from September
15, 1975 so as to permit a person, without any order of allotment or
C authority, to acquire or purchase or agree to acquire or purchase .or
despatch or agree to despatch or transport or divert or transfer, Hard coke.
produced from Bee-hive Ovens, Country Ovens and By-product Ovens.
The fuqctions of the Central Government under clauses 8, 10, 11, 12A, 12B,
12C, 12D, 12E, 12F, 13 and 14 are also exercisable by the Coal Controller
, D with the Government of India, Deputy Coal Controller (Distribution), the
Deputy Coal Controller.(Production) and the Joint Deputy Coal Controller
(Distribution) (clause 15). Clause 17 requires that every colliery owner,
ever person to whom coal is allotted under the Colliery Control Order and
every other person engaged in the business of production, supply and
distribution of, or trade and commerce in coal, to whom any order or
E direction is issued under any powers conferred by or under the Colliery
Control Order shall comply with such order or direction.

A perusal of the provisions of the Colliery Control Order shows that
the control of the Central Government over the various activities involving
production, supply and distribution of coal at various levels is all persuasive
F
and certain powers that are conferred on the Central Government can also
be exercised by the Coal Controller.

In Pursuance of clauses 12B and 12E of the Colliery ct:mtrol Order,
the Central Government has issued the following Notification on July 24,
G 1967:

"In Pursuance of Clauses 12B and 12E of the Colliery Control
Order, 1945, as continued in force by Section 16 of the Essential
Commodities Act, 1955 (10 of 1955) the Central Government
H hereby authorises a person -
)
COAL INDIA LID. v. CONTINENTAL TPT. AND CO NTN. CORPN. [S.C AGRA WAL, J.) 15

(a) to acquire or purchase or agree to acquire or purchase, or A

(b) to despatch or agree to despatch or transport, or

(c) to divert or transfer,

Without any order of allotment or written authority, non-coking B
coal of all grades produced in all coal fields, coking coals not
required for metallurgical consumers and coal produced in Assam.

Provided that such coal shall be consumed within India."

The said Notification was amended· by Notification dated July 24, C

- 1967 and for the words beginning with "without any order of allotment'',
and ending with the words "consumed within India", the following words
were substituted :

"without any order of allotment or written authority -
D
(A) (i) non-coking coal of all grades produced in the States of
Assam and Meghalaya,

(ii) coking coal produced in the States of Assam and
Meghalaya, which is not required for metallurgical con-
sumers. E

- Provided that such coking/non-coking coal is not produced in the
coal mines of the Coal India Limited or any of its subsidiaries; and

(B) the coal sold under any Liberalised Sales Scheme, framed by
the Government of India in the Ministry of Coal, by the Coal F
India Limited or any of its subsidiaries, and the Singareni
Collieries Company Ltd., if such sale is not dependent on the
condition that such coal would be used by the first purchaser
only and is not meant for trading or sale."
G
By Notification dated August 25, 1992 there was a further amend-
ment in the said notifications and for the portion beginning with "the coal
sold under any Liberalised Sales Scheme" and ending with "for trading or
sale", the following were substituted :

"coal sold by the Coal India Limited or any of its subsidiaries or H
A
16 SUPREME COURT REPORTS [1997) 3 S.C.R.

the Singareni Collieries Company Limited under any Liberalised
I
Sales Scheme framed by the Government of India.

Provided that the collieries from which coal is to be sold under
the said Scheme are duly approved for the purpose by the Govern-
ment of India :
B c--
Provided further than the coal so sold under Liberalised Sale
Scheme would not, except in the case of actual users, be subject
to the injunction against trading or resale."

c As noticed earlier, clause 12E contains a prohibition to the effect
that no person can acquire or purchase or agree to acquire or purchase
any coal from a colliery and no colliery owner or his agent can despatch
or agree to despatch or transport any coal from the colliery except under
the authority and in accordance with the conditions contained in general
D or special authority of the Central Government. This means that except in
respect of coal specified in clause 12G, to which the prohibition contained
in clause 12E is not applicable, no transaction relating to sale of coal can
take place without the general or special authority of the Central Govern-
ment. The special authority referred to clause 12E is the direction that can
be issued under clauses 8 and 12A of the Colliery Control Order. The
E general authority of the Central Government envisaged in clause 12E is
contained in Notification dated July 24, 1967, as amended by notifications
dated June 4, 1992 and August 25, 1993, issued under clauses 128 and 12E
of the Colliery Control Order whereby the Central Government has
authorised that a person can acquire or purchase or agree to acquire or
F ·purchase or to despatch or agree to despatch or transport or to divert or
transfer without any order of allotment or written authority certain · ,.
specified categories of coal. Initially, as per the Notification dated July 24,
1967, such general authority covered Non-Coking Coal of all grades
produced in all coal fields, Coking Coal not required for metallurgical
consumers and Coal produced in Assam provided that such coal had to be
consumed within India. The said general authority was modified by
Notification dated June 4, 1992 and it was applicable to (i) non-coking coal
of all grades produced in the States of Assam and Meghalaya, (ii) coking
coal produced in the States of Assam and Meghalaya, which is not required
for metallurgical consumers provided that such coking/non-coking coal was
H not produced in the coal mines of CIL or any of its subsidiaries and (iii)
COALINDIA LID. v. CONTINENTAL TIT. AND CONTN. CORPN. [S.C. AGRAWAL,J.) 17

• the coal sold under any Liberalised Sales Scheme framed by the Govern- A
ment of India in the Ministry of Coal, by CIL or any of its subsidiaries, and
the Singareni Collieries Company Ltd., if such sale was not dependent on
the condition that such coal would be used by the first purchaser only and
was not meant for trading or sale. The said general authority was further
modified by Notification dated August 25, 1993 and in the place of category
(iii) in the Notification dated June 4, 1992, it was provided that the general
B
authority will be available for coal sold by CIL or any of its subsidiaries or
the Singareni Collieries Company Limited under any Liberalised Sales
Scheme framed by the Government of India. This was subject to the
condition that the collieries from which the coal is to be sold under the
said Scheme are duly approved for the purpose by Government of India c
and the coal so sold under Liberalised Sales Scheme would not, except in
the case of actual users, be subject to the injunction against trade or resale.
The effect of these notifications was that in respect of coal falling within
the ambit of these notifications, the colliery owners were free to enter into
transactions for sale of coal without obtaining prior approval of the Central
D
Government or the Coal Controller. This general authority referred to
above that is contained in the Notification dated July 24, 1967, as modified
by Notifications dated June 4, 1992 and August 25, 1993, does not affect
the power conferred on the Central Government to give special authority
regarding disposal of coal to a particular colliery owner in respect of a
specified quantity or quality of coal. Clause 8 of the Colliery Control Order E
empowers the Central Government to issue, from time to time, such
direction as it thinks fit to any colliery owner regulating the disposal of his
stocks of coal and such direction can be as to the class, grade, size and
quantity of coal ~hich may be disposed of and person or class of descrip-
tion of persons to whom coal shall or shall not be disposed of, the order
F
of prioritY to be observed in such disposal. In view of clause 9 the direction
given under clause 8 would prevail over a contract to the contrary and the
colliery owner would be required to dispose of coal in acco.rdance with
such direction and would be precluded from disposing of coal in contraven-
tion with such direction.
G
Having regard to the object underlying the making of the Colliery
. -
Control Order, i.e., controlling the production, supply and distribution of
coal and clauses 7 and 17 which expressly refer to persons engaged in trade
or commerce in coal, it must be held that the directions under clause 8 of
the Colliery Control Order can be given in the matter of supply of coal to H
18 SUPREME COURT REPORTS (1997) 3 S.C.R.

A traders engaged in purchase of coal for the purpose of sale to the small
consumers who cannot obtain direct supply of coal from coUieries.

The Colliery Control Order assigns an important role to the Coal
Controller, as defined in clause 2(1)(a), in the matter of enforcement of its
B various provisions. In certain clauses (clauses 3A, 7 and lOA) powers have
been expressly conferred on the Coal Controller and, in addition, there is
clause 15 whereby the functions of the Central Government under clauses
8, 10, 11, 12, 12A, 12B, 12C, 12D, 12E, 12F, 13 and 14 can also be exercised
by the Coal Controller. It is, therefore, open to the Coal Controller in
exercise of the power under clause 8 to give directions regulating the
C disposal of stocks of coal by any colliery owner and such directions may be
as to class, grade, size and quantity of coal which may be disposed of and
person or class or description of persons to whom coal shall or shall not
be disposed. The impugned directions dated April 12, 1994 that were given
by the Coal Controller were in the nature of a special direction given by
D the Coal Controller in exercise of power under clause 8. In view of clause
9 the said directions could override the contract entered into by CCL with
the petitioners regarding supply of coal from a particular colliery or
washery.

Shri Dave has, however, submitted that the Coal Controller could not
E give a direction to supply Steam Coal from Sirka Colliery in the place of
Steam Coal which was agreed to be supplied from Urimari and Jarangdih ..___.
.

Collieries especially when the Steam Coal o.f Sirka Colliery was not covered
by LSS-ll and had not been offered for sale in the advertisement published
in September 1992. There is no force in this contention. LSS-II was framed
p in pursuance of the. Notification dated July 24, 1967, as modified by
notification dated June 4, 1992. As indicated earlier, the said notifications
were in the nature of a general authority given to Central Government
under clause 12E of the Colliery Control Order. This only means that in
respect of coal covered by LSS-II it was permissible for the colliery owners
to dispose of the coal covered by the said Scheme without obtaining prior
G authority from the Central Government. But this does not mean that the
Coal Controller is deprived of his powers under the Colliery Control Order
to give directions regarding the disposal of the coal which is dealt with
under LSS-Il. The said coal also falls within the ambit of the Colliery
Control Order and, therefore, there was nothing to preclude the Coal
H Controller from giving directions under clause 8 in relation to coal dealt
l-
COALINDIA LTD. v. CON11NENTAL TPT. AND coNTN. CORPN. [S.~. AGRAWAL, J.] 19

with under the said Scheme and such directions when given would take A
• effect notwithstanding any contract to the contrary entered by the colliery
owners. The fact that Steam Coai of Sirka Colliery was not offered for sale
by CCL in the advertisement published in September 1992 is of on conse-
quence in so far as the competence of the Coal Controller to give directions
regarding supply of that coal instead of Stearn Coal from Urimari and B
Jarangdih Collieries is concerned. Steam Coal at Sirka Colliery was not
outside the ambit of the Colliery Control Order and the Coal Controller,
in exercise of his powers under clause 8, could give directions in respect
of that coal. The power to give such directions is not fettered by the
contract between CCL and the petitioners providing for supply of Steam
Coal from Urimari and Jarangdih Collieries. We are, therefore, unable to C
uphold the contention urged by Shri Dave that in view of the contract
between the petitioners and CCL for supply of coal in accordance with
LSS-II from Urirnari and Jarangdih Collieries it was not open to the Coal
Controller to give direction to CCL for supply of coal from Sirka Colliery
which coal was not covered under LSS-II.
D
Shri Dave has next contended that the impugned direction dated
April 12, 1994 was given by the Coal Controller without affording an
opportunity to the appellants to make their submissions in that regard. In
other words, Shri Dave has invoked the principle of audi alteram partem.
We do not find any merit in this contention. We are unable to hold that it E
was incumbent upon the Coal Controller to have afforded an opportunity
to the appellants before giving the impugned direction in exercise of his
powers under clause 8 of the Colliery Control Order. The power to issue
directions under clause 8 has been conferred with a view to enable the
Central Government/Coal Controller to effectively regulate the production, F
supply and distribution of and trade and commerce in coal. There may
arise situations where immediate action may be called for. It cannot,
therefore, be held that the said power can only be exercised after giving
prior notice to the colliery owner dr other persons ll'ffected by such
directions. In case the colliery owner or any person feels that his interests
are adversely affected by such a direction, he may place his case before the G
Central Government/Coal Controller who has given the direction and seek
reversal for the same and, in that event, the concerned authority shall give
due consideration to such submissions. In the present case the Coal Con-
troller had before him the representation dated April 7, 1994 submitted by
the petitioners to the General Manager (Argada area) Sirka of CCL and H
-\

20 SUPREME COURT REPORTS [1997) 3 S.C.R.

A the letter d_ated April 8, 1994 sent by the General Manager (Argada area)
to the General Manager (S&M), CCL, Ranehi which indicated that suffi-
cient stocks of Steam Coal were available at Sirka Colliery which was
required to be disposed of. In case the appellants felt aggrieved by the
impugned directions given by the Coal Controller on April 12, 1994, they
should have moved the Controller for modifying the said direction. But the
B
impugned direction dated April 12, 1994 cannot be said to be vitiated on
the ground that it was given without giving a hearing to the appellants.

During the course of his submissions Shri Dave suggested that in
giving the impugned direction the Coal Controller was influenced by
C extraneous considerations and he has invited our attention to letter dated
April 4, 1994 sent by Prof. Mumtaz Ansari, MP, to the Coal Controller
forwarding the representation dated April 2, 1994 submitted by the
petitioners. We have gone through the said letter. We are unable to hold
that in the facts of this case it can be said that the impugned direction
dated April 12, 1994 given by the Coal Controller was vitiated by any
D extraneous considerations.
j
Shri Harish Salve has urged an additional point that the letter from
the Coal Controller to the Chairman-cum-Managing Director. of CCL
dated April 12, 1994 cannot be treated as a statutory direction for enfor-
cement of which writ of mandamus can be issued. The submission is that
E
in the said letter the Coal Controller has advised the Chairman-cum-
Manager Director to give forthwith effect to the transfer of allotments.
There is no force in this contention. Although the language used in the said
letter is in the nature of an advice, but in substance it is a direction for
giving effect to transfer of allotments. In view of clause 17 of the Colliery
F Control Order such a direction was binding on CCL. A writ of mandamus
could, therefore, be issued to implement the said directions.

Since none of the contentions urged by the learned counsel for the
appellants merit acceptance, the appeals fail and are, therefore, dismissed.
G But in the circumstances, there will be no order as to costs.

R.P. Appeal dismissed.