Garpathlal Dokania and Others vs Coal India Ltd. and Others

Kalyanmoy Ganguli, J.—In this application under Article 226 of the Constitution, of India, the petitioners, inter alia, pray for a writ in the nature of mandamus commanding the respondent no. 1 to direct the respondent no. 2 to revoke, cancel, rescind, set aside, forbear from giving effect or further effect to or acting on the basis of the purported advertisement made in the local newspaper Awaz dated July 13, 1989 which is annexure ''E'' to the petition and to give permission to the petitioners to lift lower grades of coal i.e. grades E, F and Washery shrinks which are suitable for manufacture of briquettes from the colliery pit heads directly. The matter was very hotly contested by both the parties and in course of hearing several points of law cropped up for decision including the points regarding the teritorial jurisdiction of this Court to entertain the instant petition and the maintainability of the application for amendment of the writ petition. Another point raised was the point of interference by the writ court in the matter of concluded contract. It is stated in the petition that the petitioners carry on the business of manufacture of briquett and all of them have their own briquett plants where they manufacture briquett coke for domestic use. It is alleged that the petitioners have licences under the Factories Act, which are still valid and subsisting. The petitioners also have been treated as small scale industries by the Directorate of Industries, Bihar and have been allotted provisional certificates to that effect. The petitioners have formed an association under the name and style of Dhanbad Briquett Industry Association. The members of the said association have moved the instant petition. The manufacture of briquett requires a temparature of 4000C to 8000C and it is a continuous process plant and must be run continuously. The basic essential raw material for the manufacture of the said briquett is coal which is cheaper quality of coal.

The nature of the requirement of the petitioners will be evident from the statements made in para 7 of the petition which states that the petitioners no. 1 alone needs about 1600 M.T. of coal per month.

The petitioners made applications before Coal India. Ltd. for supply of coal for manufacture of briquett and obtained linkage orders which contain details like grade, size, mode of transport etc. The said linkage order also contains an advice requiring the applicant thereof to contract the Bharat Coking Coal Ltd. the respondent no. 3 at Dhanbad, hereinafter referred to as the B.C.C.L. The copies of linkage orders have been annexed to the writ petition.

The petitioner no. 1 thereafter obtained a linkage order also from the B. C. C. L. dated 26th December, 1988 for 500 M.T. of coal per month from the Govindpur Colliery.

The petitioner no. 1 states that lifting of coal, in terms of the linkage order issued by the Coal India Ltd. hereinafter referred to as C.I.L., was from the pit head of the collieries of B.C.C.L. such as Khaskusunda, Kasalpur, Salarapur, Loharputty, Godhar Govindpur etc. In pursuance of such linkage orders, B.C.C.L. had issued sale orders in respect of the petitioners, specimen copies of such sale orders have also been annexed to the petition, one of which is annexure ''D'' at page 39.

There was an advertisement in the local newspaper ''Awaz'' dated July, 13, 1989 whereby the Brick Kiln owners and briquett industries were informed that from October 1, 1989 all sales by road will be commenced from the satellite stockyard, hereinafter referred to as S. S. Y. It was also stated in the said advertisement that no new booking would be done to lift coal by road from the collieries after July 31, 1989. A copy of the English translation of the said advertisement have been annexed to the writ petition marked with the letter ''E''. The original Hindi version has also been annexed.

The petitioner no. 1, by his letter dated August 26, 1989 addressed to the Chief Manager, B.C.C.L. requested him to allow the members of the association mentioned above to lift their quota of coal directly from the colliery pit head and not from coal dumps. B.C.C.L. was further requested to allow the members of the petitioners'' association to lift lower grade of coal i.e., E and F grades instead of D grade. A copy of the aforesaid letter has also been annexed to the. writ petition marked with the letter ''F''. It is the allegation of the writ petitioners that B. C. C. L. did not care to send any reply to the letter of the petitioner no. 1 dated August 26, 1989 and the holders of the linkage orders were thus compelled to lift coal from the S. S. Y coal dumps instead of the colliery pit head for which they had to pay a service charge @ Rs. 25/- per M.T. Besides this they were also compelled to lift coal from the S.S.Y which loses its quality due to the same getting mixed up with stones and mud during the process of mechanical handling and becomes unsuitable for the manufacture of briquett. ''D'' grade coal is costlier than ''E'' or ''F'' grade coal and lifting of ''D'' grade coal from the S.S.Y. makes it doubly uneconomic.

The petitioner no. 1 alleges that the type and grade of coal required for manufacture of briquett must have ash contents and casting index and should be free from all impurities. The petitioners alleges that since no analysis report of its certificate in respect of quality and grade of coal is provided by B.C.C.L. the members of the association have to lift the coal as received from B. C. C. L. which, at the time of actual use is often found to be unsuitable for the manufacture of briquettes. This inevitably results in regular accumulation of the wastes at the factory premises.

The other grievance of the petitioner is that the authorities concerned have adopted a policy of discrimination and arbitrariness in so far as they have been allowing some of the briquett manufacturers to lift coal from the colliery pit head and that too the lower grade of coal although the manufacturing units of such business are situated outside Dhanbad. The petitioner no. 1 further states that the traders who have no linkage orders are allowed to lift coal from the colliery pit head directly without having to pay the extra charge of Rs. 25/- per M.T. Such favourities, according to the petitioner no. 1, have neither any factory of their own nor do they possess any snail scale industry registration certificate. Such allottees, again according to the petitioner no. 1, get the coal at much cheaper rate than the petitioners and sell the said coal in the open market at such higher rate.

The twin grievances of the petitioners seem to be that they have to pay the extra charge for lifting the coal from the S.S.Y coal dumps for which they have to pay an additional amount of Rs. 25/- per M.T. and that the inferior grade of coal being rot supplied'' to them, they have to pay a much higher price for the grade of coal that they have to purchase. Such extra expenses both in terms of payment of service charges and price for higher grade of coal make the business of the petitioner No. 1 and the association concerned economically non-viable and as a result the industry is facing a total closure resulting in large scale unemployment. It may be mentioned that the sale price of briquett is fixed. Illustrations have been given in various paragraphs of the petition to emphasise the point of discrimination.

The contention of the petitioners is that the respondents are bound by the promise made by them and are also bound by the principle of promissory estoppel and that in the instant case the respondents concerned, in terms of the linkage order contained in annexures C-1 and C-2, cannot back out of such promises unilaterally. The petitioners contended that the respondents have acted illegally in refusing to supply coal in terms of the linkage orders referred to above. The petitioners also contend that the change of ''policy'' is itself arbitrary and without any rhyme or reason and as such the respondents should not be permitted to take shelter under the theory of ''policy matter'' of the Government. It is contended that although the courts should not interfere with the policy matters of the Government, yet, if the policy itself is arbitrary and not backed by any cogent reason the court may strike down such a policy. The petitioners further contended that the respondents have exercised their power dishonestly and not in good faith. The petitioners have emphasised the point of violation of the principles of Article 14 of the Constitution of India, inter alia, inasmuch as the respondents have adopted a policy of ''pick and choose'' as they are allowing some industries and some traders like the petitioners to lift coal from the S.S.Y. at a higher price and of a more costly superior grade of coal.

The respondent no. 2 has filed a rather volumnious affidavit-in-opposition through its Deputy Chief Sales Manager.

The first point taken by the respondent no. 2 is the point of lack of territorial jurisdiction of this Court to try, entertain and determine the writ petition and that the writ petition is liable to be dismissed in limine for want of territorial jurisdiction of this Court. It is further stated in paragraph 5 of the affidavit-in-opposition that no part of the cause of action has arisen within the jurisdiction of this Court. It has also been contended by the respondent no. 2 that any interference in this matter by this Court would amount to imposition of conditions by this Court affecting the contractual obligation of the parties.

It is also submitted by the respondent no. 2 that the impugned advertisement made in the local newspaper ''Awaz'' on July 13, 1989 being annexure ''E'' to the petition does not confer any right to the writ petitioners to move this Court and that there is no infringement of any legal or constitutional right of the petitioners which can be gone into or be determined by this Court. The other submission of the respondent no. 2 is that in case of disputed question of fact the writ court should not entertain the plea of the petitioners.

It may be mentioned here that pursuant to the leave granted by this Court, the petitioners filed an application for amendment of the writ petition. In the said applictaion for amendment, the petitioners in effect wanted to make out two points viz.

(i) that all the petitioners besides the petitioner no. 1 have also their places of business in Calcutta, within the jurisdiction of this Court;

(ii) that the petitioners suffered loss also within the jurisdiction of this Court as a result of the impugned advertisement, inter alia, inasmuch as their products are sold both in Calcutta and the other parts of West Bengal and as such a part of the cause of action arose within the territorial jurisdiction of this Court.

Mr. Mallick filed an affidavit-in-opposition to the application for amendment taking principally 2 points viz.

(i) that if originally the cause of action arose beyond the territorial jurisdiction of this Court, by an amendment, the cause of action cannot be brought within its jurisdiction by pleading certain additional facts; the main thrust of the argument of Mr. Mallick is that if the court lacks the initial jurisdiction to entertain the original writ petition, then by allowing an amendment the court cannot seek to have a jurisdiction to try a dispute;

(ii) the second point of Mr. Mallick regarding the application for amendment is that the provisions of Order VI Rule 17 of the CPC may be applicable for the purpose of determining the real questions of controversy in the lis and not for the purpose of determining the territorial jurisdiction of a court.

In the instant case the real point of controversy is the advertisement impugned in the writ petition by which the petitioners choose to feel aggrieved and not the place of the publication of such advertisement. According to Mr. Mallick in that view of the matter the applictaion for amendment should not be allowed in the instant case. Before proceeding further it may be noted here that both the parties referred to the provisions of the Code of Procedure although the same are not strictly applicable in a writ proceeding. It may, however safely be said that the principles of that code may be taken into consideration even in a writ proceeding.

Mr. Subrata Roy Chowdhury, the Learned Counsel appearing for the petitioners tried to contend that Order VI Rule 17 of the CPC is indefendent of and not subject to the provisions of Order VII Rule II of the Code of Civil Procedure. Both the parties cited a number of decision on this aspect of the matter viz., whether by the amendment the petitioner is seeking to bring the lis and/or the cause of action within the territorial jurisdiction of this Court when this Court initially lacked the jurisdiction on the basis of the original writ petition.

For the reasons to be stated hereinafter it will be seen that it is not necessary to enter into this question both regarding the cause of action arising within the territorial jurisdiction of this Court and the seat of the respondent being within the territorial limits of the jurisdiction. It appears from the original writ petition that at least petitioner no. 1 has his office at 24, Brabourne Road, Calcutta and that the petitioner no. 1 is also the Secretary of Dhanbad Briquett Industry Association. True it is that the addresses of the other petitioners are all of Dhanbad and by the proposed amendment it is ought to be established that the other petitioners have also their offices in Calcutta within the territorial limits of the jurisdiction of this Court. Secondly, in paragraph 13 of the application for amendment the petitioners tried to highlight the fact that the cause of action, or at least a part thereof, had arisen within the territorial jurisdiction of this Court and that they have suffered losses within the aforesaid jurisdiction. The petitioners, further wanted to show that all the activities of the respondent no. 2 are controlled by the respondent no. 1 which has its office at 10, Netaji Subhas Road, Calcutta.

In paragraph 44 of the original writ petition it has been stated that the cause of action arose at the head office of the respondent no. 1 situated at 10, Netaji Subhas Road, Calcutta and that the petitioner no. 1''s zonal office is also situated at 24, Brabourne Road, Calcutta and as such this Court has jurisdiction to try and decide the instant petition.

If it can be shown from the original writ petition that the petitioners had pleaded the existence of the jurisdiction of this Court both in respect of the location of the petitioners and respondents as also the accrual of the cause of action or part of it within the jurisdiction, it is not so much necessarily to lay much importance or emphasis on the application for amendment inasmuch as in the application for amendment the petitioners, in their anxiety, have given detailed descriptions about the existence of the jurisdiction of this Court, the rudiments of which are to be found in the original writ petition. It may be noted in this connection that the truth or otherwise of the pleadings relating to the jurisdictional issue need not be gone into at the initial stage. It is enough that the pleadings as to jurisdiction is there. It may be said that this Court, on the basis of the pleadings in the original petition did not lack initial jurisdiction and as such the argument of Mr. Mallick that if the court does not have initial jurisdiction then by way of amdendment the court cannot seek to confer on itself the said jurisdiction, is not applicable. In that view of the matter reference to the number of cases cited at the bar may not be necessary The other question that may arise is that if only one of the petitioners, according to the original writ petition, has either his place of business within the territorial jurisdiction of this Court or has also suffered within the aforesaid jurisdiction the writ petition may be maintainable so far as the petitioner no. 1 is concerned but as ail the other petitioners either have the it-offices beyond the territorial jurisdiction of this Court or have suffered losses also beyond the aforesaid jurisdiction then the said petitioners cannot maintain a writ petition before this Court. It has been decided in the case of N.N. Singh and Others Vs. General Manager, Chittaranjan Locomotive Works and Others, that even in a case of joint petition, where a claim of the petitioners for relief arises out of the same act or transaction or involves common questions of fact or law and the relief claimed by the petitioners is severable from the other petitioners claimed in such a case, even if the petition fails in respect of the some such petitioner, the entire application will not fail and a writ of mandamus will be available in respect of the claim as pertaining to such petitioners (paragraph 13 at page 343). The above case was relied on by a Division Bench of this Court in the case of Ajit Sanyal & Anr. Vs. Basiruddin Mondal & Ors. reforted in 1982(1) CLJ 483. The stamp of approval of the Division Bench on the decision of the learned Single Judge rules out the two contrary views expressed by two other single Judges to which reference need not be made at the moment.

From the unamended writ petition it appears that at least the petitioner no. 1 has cause of action which is maintainable before this Court and as such the question of the need for amendment loses much of its importance. As such the obligation to Mr. Mallick as to the admissibility of the application for amendment also loses much of its force. In the circumstances, reference to the numerous cases cited by both sides is obviated. It may incidentally be mentioned here that the respondent no. 2 has also its zonal office within the territorial jurisdiction of this Court, even according to the original writ petition.

The other point that was strenously urged by both the parties is the point as to whether the writ court should interfere in the matter of concluded contracts as, according to Mr. Mallick, the linkage orders issued by the respondent no. 1 create contractual rights and even if the respondents commit a breach of such contracts, the appropriate remedy is by way of an action before the civil court. Cases on this aspect of the matter have been cited both by Mr. Roy Choudhury and Mr. Mallick. In the case of In re : D.M. Enterprises vs. Coal India Limited and Ors. reported in 1990(I) CHN 470 on a review of a number of decisions of this Court as also the Hon''ble Supreme Court, this Court held, inter alia.

In the circumstances, we can say with a degree of certainty that for breach of a contract, even though a wrongful breach, the appropriate remedy is by way of a civil proceeding and the writ court should not interfere in such cases.

The above decision was made keeping in mind the case of Dwarkadas Marfatia and Sons Vs. Board of Trustees of the Port of Bombay,

The chapter on that score seems to be closed for the time being till the settled state of law undergoes some metamorphosys. So I agree with the submission of Mr. Mallick that writ courts ordinarily should not interfere in matters of concluded contracts simpliciter.

But one of the main questions in the instant writ petition is whether the linkage orders concerned, constitute any contract at all. If not, into what category would such linkage orders, from which the petitioners derive their rights to get coal, fall. The linkage orders are not contracts as there is no quid pro quo in them.

It is stated that the welfare state pours wealth in various forms, contracts licences, privileges, bounties, charities, subsidies, quotas etc. The linkabe orders come into the category of privileges as by virtue of such linkage orders, the petitioners acquire the right to get coal from respondent no. 1 through the respondent no. 2.

It is equally settled law that even in matters of acts of pure bounty, charities, subsidies, licences and privileges the state and for the matter of that any public authority, cannot act arbitrarily. It is needless to cite the number of cases on this point as it has become the settled law of the land.

Having disposed of the peripheral issues we now come to the merit of the case.

The impugned advertisement in the newspaper ''Awaz'' which is annexure ''E'' to the petition, inter alia, states that with effect from October 1, 1989 consumers of coal of brick kilns and briquett industries will have to take delivery of coal by road only through satellite stockyard and not from colliery pit heads.

Mr. Mallick submitted, quoting from the affidavit-in-opposition and clause 8. of the linkage order that linkage is merely a clearance to the link supply company, but does not establish and right for the linked unit to get coal. As such, Mr. Mallick submitted, that under the linkage order the petitioners could not claim coal as a matter of right which depends on various factors including the availability of coal and/or availability of the particular grade of coal.

Such chance of policy according to the respondent no. 2 was done after a detailed enquiry and in order to facilitate delivery of coal by mechanical loaders and to avoid administrative difficulties in supplying coal to hundreds of parties from colliery pit heads. It has also been submitted that placement of numerous trucks at pit heads would creat administrative difficulties and that other infrastructural facilities are also not available at pit heads to effect delivery. It has further been stated on behalf of respondent no. 2 that the stockyards were opened in pursuance of the recommendation made by Kumarmanglam Committee of 1983 and the respondents were opening satelite coal dumps in a phased manner. This, according to the respondent no. 2 will also check corruption and pilferage.

It is true that the respondent no. 2 has a right to intoduce a new policy regarding delivery of coal to its diverse types of customers and that a policy matter of the respondent No. 2 should not be lightly interfered with by the writ court.

But it is equally true that even if the Government or the public authority as the case may be, either adopts a policy or changes its policy, the court can examine such policy to find out whether the policy itself is arbitrary and/or discriminatory. If arbitrary or discriminatory the court can strike down such a policy.

It is found from the advertisement impugned which is annexure ''E'' to the petition that only brick kilns and briquett industries are to get their supplies of coal from S. S. Y. with effect from October 1, 1989. Nothing is stated about the myriads of other kinds of customers who have been and are still obtaining coal from pit heads. The writ petitioners contend that even trader of coal or persons who have no linkabe order are also getting coal from the pit heads.

The respondents contend that the system of supply of coal from S.S.Y. being introduced in a phased manner and coal dumps are being established gradually, It is true that a scheme may be implemented in a phased manner and it need not be introduced at the sme point of time throughout the country. In this connection a reference may be made to the case of Lakhanlal Vs. State of Bihar, reported in AIR 1968 1408 where a five Judge Bench of the Supreme Court held as follows :-

Para 8 : The State Government is not bound to implement the act and the rules in all parts of Bihar at the same time. It may establish markets regulating the sale and purchase of agricultural produce in different parts of Bihar gradually and from time to time.

From the above it may be stated that respondents are entitled to open such coal dumps or the S. S. Y in a phased manner in the different parts of the country of any State and on that score the petitioners cannot object. But the point does not rest there. Purchasers from a particular region or area are being discriminated apparently in the instant case, namely, it appears from the impugned advertisement that only brick kiln owners and owners of briquett industries are to take delivery of coal from satelite stockyards but ex-facie it appears from the said advertisement that other consumers of coal are still entitled to take delivery of coal from the colliery pit heads and it has been categorically stated argued by the petitioners that even ordinary traders and unlinked consumers are permitted to take delivery of coal from the pit heads to the exclusion of the owners of brick kilns and briquett industries. In my opinion this constitute gross discrimination and if this be the policy then the policy itself is arbitraty and discriminatory. There is no rational basis as to why only the two kinds of consumers would have to take delivery of coal from the S.S.Y and the others from the pit heads. There seems to be no hbasis to say that there is some intelligible differential in the method applied by the respondents. It would be understandable if the advertisement stated that all consumers of a particular region are to take delivery of coal from the S. S. Y and some particulars types of consumers who stand on a different footing can take delivery from the pit heads. Neither in the affidavit-in-opposition not in the submission made by the respondents this aspect of the matter has been highlighted. It has not also been disclosed to this Court the contents of the report of the aforesaid Kumarmangalam Committee of 1983. Even if there was any rational basis the same does not appear to have been implemented uniformly or on the basis of any reasonable classification based on an intelligible differentia. The impugned advertisement can only be saved if the respondent direct all varities of consumers who are otherwise similarly circumstanced, to the delivery of coal from the S. S. Y and delivery from the pit heads is reserved only for some specific kinds of consumers namely, the core sector industries like rower generation sector etc. Where the Government in a welfare State is the regulator and dispenser of special services and provider of a large number of benefits, it is not permitted to lay down arbitrary and capricious standards for the choice of persons with whom alone it will deal in a particular way.

The above concept has been laid down in the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, .

So on this aspect of the matter I am constrained to hold that the impugned advertisement, as it stands, cannot be upheld and has to be set aside. I, however, hasten to add that if the respondents classify the types of consumers reasonably and properly and reframe the advertisement, then such a proposed advertisement can be upheld if the same is otherwise reasonable.

The other question raised by the petitioners is that although under the linkage orders, the petitioners are entitled to have E and F grade coal, they are not being supplied with such cheaper grades of coal but the petitioners are being compelled to accept D grade and washary (iv) grades coal which are costlier and render the manufacturing units of the petitioners not economically viable. The respondents come out with the case that the coal mines of B.C.C.L. are coking coal mines and E and F grades coals are non coking coal and the production of non coking coal in the B.C.C.L. mines is negligible compared to the other superior grades of coal and of coking coal. The respondents further state and contend that whatever little coal of the inferior grades like E and F are produced in the B.C.C.L. mines those have to be reserved for the core sector industries namely, the power generation units. The explanation is both understandable and plausible. The linkage orders are to be read subject to the availability of coal, and subject to priorities inter se of the different industries. If the production of the inferior grades of coal are meagresand cannot meet the demands of all types of consumers then the production of such grades of coal are to be allocated on the priority basis. If after meeting the needs of the priority sectors, any quantity of coal of grades E and F are left the same has to be given to the linked units on a pro-rata basis first before giving it to sundry purchasers. In this case I am decising a question of principle and I do not want to embark on a voyage of discovery of the quantity of production and the manner and method of distribution. The statistical data supplied by the respondent no. 2 raises a question of fact and even if the petitioners dispute such statistical data this Court should not go into such disputed question of fact.

In summing up it is stated that the impugned advertisement as appear from the annexure ''E'' to the petition cannot be sustained in law for the reasons mentioned hereinbefore and is set aside with liberty to the respondents to issue any other order or advertisement restricting the supply of coal either from the pit heads or from the S.S.Ys based on a proper an reasonable basis treating likes alike. So far as the grades of coal to be supplied to the petitioners under the linkage orders are concerned it is not possible for this Court to pronounce any opinion on that, inter alia, inasmuch as the same depends on certain disputed figures of production and the demands of preferential consumers but as a broad proposition it may be laid down that if after meeting the needs of the priority sector any coal of E and F grade are left the sme should be given to the petitioners on a pro-rate basis before it can be offered to sundry customers. The application is disposed of as above.

There will be no order as to costs.

In conclusion I must record to my grateful appreciation to the Learned Counsel appearing for both the sides who had takenenormous pains to uphold their respective view points and to assist the court in coming to a conclusion. I must further record that I have deliberately not referred to all the cases cited at the Bar for the obvious reason that both in respect of point of jurisdiction and the point of interference of the writ courts in matters of concluded contracts, the law is well settled and I do not think futile intellectual exercises in referring to and discussing the merirts of all the cases cited at the Bar would have served any useful purposes as I have agreed with deep respect with all the propositions laid down in the aforesaid cases.