CIL moves apex court against HC order on coal supply

Coal India (CIL) today moved the Supreme Court against an order by the Allahabad High Court, which had reversed the mining major's decision to suspend a fuel supply agreement with four Uttar Pradesh-based firms accused of black marketing.

Admitting CIL's plea, a bench comprising Justice Altamas Kabir and Justice A K Patnaik stayed the High Court order.

Meanwhile, the court also directed the four firms to file their replies to CIL's allegation that the cheap coal alloted to them under the agreement was diverted to other industries.

Solicitor General Gopal Subramanium, appearing for CIL, submitted before the bench that the PSU had supplied coal to an NGO, Coal Consumer Association, and three firms.

"As per the agreement between CIL and NGO, the respondent (NGO and firms) should be the end user of the coal. They have no right either to divert or sell," submitted Subramanium, adding that the PSU has the right to terminate coal linkage agreements with NGOs in case of violations.

He further submitted that after due verification, the PSU had discovered that a portion of the coal allotted to them was diverted to industries while the rest was sold in the open market.

"We have no option but to suspend it. CIL served them notices on June 8, 2010, and subsequently terminated the agreements with them," he said.

Later, this was challenged by the NGO and firms before the High Court. They contended that as coal was now decontrolled, CIL can have no control over its end user.

Later, on July 26, 2010, the High Court stayed the orders of the PSU.

The Supreme Court has listed the next hearing for August 18.