1 2026:CGHC:23963-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 2641 of 2022 South Gujarat Federation Of Industries A Company Duly Constituted Under The Provisions Of The Companies Act 2015, Through Its Authorised Representative, Having Its Registered Office At 406, 4th Floor, Lobby-1, Sakar-Ix Near City Gold, Ashram Road, Navrangpura, Ahmedabad. Pin- 380009 ... Petitioner(s) versus 1 - Union Of India Through The Secretary, Ministry Of Coal, Government Of India, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi. 2 - Coal India Ltd. Through Its Chairman, Coal Bhawan, Premise No. 04 Mar, Plot No.- Af-Iii, Action Area-1a, Newtown, Rajarahat, Kokata. Pin- 700156 3 - South Eastern Coalfields Ltd. Through Its Chairman-Com-Managing Director, Secl Bhawan, Seepat Road, Bilaspur, Chhattisgarh. 4 - Chief General Manager (Sales And Marketing) South Eastern Coalfields Ltd. Secl Bhawan, Seepat Road, Bilaspur, Chhattisgarh. ... Respondent(s) For Petitioner(s) : Mr. Amrito Das, Sr. Advocate along with Mr. Abhyuday Singh, Advocate For Respondent No. 1 For Respondent No. 2 to 4 : : Mr. Rishabh Dewangan, Advocate Dr. Sudeep Agrawal, Advocate SAGRIKA AGRAWAL Digitally signed by SAGRIKA AGRAWAL Date: 2026.06.18 15:11:10 +0530 2 Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri R avindra Kumar Agrawal , Judge Order on Board Per Ramesh Sinha, Chief Justice 16/06/2026 1. Heard Mr. Amrito Das, Senior Advocate along with Mr. Abhyuday Singh, learned counsel for the petitioner as well as Mr. Rishabh Dewangan, learned counsel for the Respondent No. 1 and Dr. Sudeep Agrawal, learned counsel for Respondent No. 2 to 4. 2. The present petition has been filed by the petitioner under Article 226 of Constitution of India seeking the following reliefs:- “(i) This Hon'ble Court may kindly be pleased to call the entire record pertaining to the present case from respondent No. 3 for its kind perusal. (ii) This Hon'ble Court may kindly be pleased to pass an appropriate writ directing respondent No. 3 to refund the advance full coal value to the tune of Rs. 4,06,48,532.30/- along with interest @ 12% per annum from the date of deposit till the date of refund. (iii) This Hon'ble Court may kindly be pleased to pass an appropriate writ directing respondent No. 3 to refund the security deposit to the tune of Rs. 1 crore along with interest @ 12% per annum from the date of conclusion of the agreement till the date of refund. (iv) Cost of the petition.” 3. The brief facts of the case are that the petitioner, a company nominated by the State of Gujarat as a State Nominated Agency under the New Coal Distribution Policy, entered into a Fuel Supply Agreement dated 17.11.2021 with Respondent No. 3 for supply of 5 lakh MT of 3 coal annually and deposited a security amount of Rs. 1 crore. Pursuant to the coal allocation made in February 2022, the petitioner deposited an advance coal value of Rs. 5,14,81,490/- for supply of 19,166 MT of coal. However, despite receipt of the entire advance amount, the respondents failed to dispatch or deliver the allocated coal. The petitioner repeatedly requested refund of the advance amount through various representations, pursuant to which only Rs. 1,08,32,957.70/- was refunded, leaving a balance amount of Rs. 4,06,48,532.30/- unpaid. Even after expiry of the Fuel Supply Agreement, the respondents neither refunded the remaining advance coal value nor returned the security deposit of Rs. 1 crore. Aggrieved by the arbitrary and illegal withholding of its money, the petitioner has approached this Court seeking refund of the balance advance amount and security deposit along with interest. 4. Learned Senior Advocate for the petitioner submits that the petitioner, being a State Nominated Agency under the New Coal Distribution Policy, had entered into a Fuel Supply Agreement with Respondent No. 3 and, in terms thereof, deposited a security amount of Rs. 1 crore and an advance coal value of Rs. 5,14,81,490/- towards the coal allocated to it. Despite receipt of the entire advance consideration, the respondents failed to dispatch or deliver the allocated quantity of coal. The non-supply of coal was not attributable to any fault, breach, or default on the part of the petitioner. It is submitted that once the respondents did not supply the coal for which payment had already been made, they were under a legal obligation to refund the amount deposited by the petitioner. However, except for a partial refund of Rs. 4 1,08,32,957.70/-, the remaining amount has been illegally retained by the respondents. 5. It is further submitted that the Fuel Supply Agreement has long since expired, yet the respondents have neither refunded the balance advance coal value amounting to Rs. 4,06,48,532.30/- nor returned the security deposit of ₹1 crore. The continued retention of the petitioner's money is wholly arbitrary, unreasonable, and violative of Article 14 of the Constitution of India. The respondents have no lawful authority to withhold the petitioner's funds when the coal was never supplied and the contractual period has already concluded. The petitioner is, therefore, entitled to refund of the balance advance amount and security deposit along with appropriate interest for the period during which the respondents have unjustly retained and utilized the petitioner's money. 6. Learned counsel appearing for Respondent Nos. 2 to 4 submits that the present writ petition is not maintainable either on facts or in law. The dispute raised by the petitioner arises purely out of a contractual relationship governed by the Fuel Supply Agreement (FSA) and involves disputed questions of fact requiring examination of evidence. The FSA itself contains an arbitration clause (Clause 16) providing an efficacious alternative remedy for resolution of disputes through arbitration under the Arbitration and Conciliation Act, 1996. It is further submitted that the petitioner has not approached before this Court with complete and candid disclosure of material facts, particularly the order dated 22.03.2022 issued by the Government of Gujarat whereby the petitioner was denotified as a State Nominated Agency and the Fuel Supply Agreement stood cancelled. Therefore, in view of the availability 5 of an alternative remedy and suppression of material facts, the writ petition deserves to be dismissed at the threshold. 7. He is further submitted that the respondents have acted strictly in accordance with the terms and conditions of the Fuel Supply Agreement. Complaints regarding diversion of coal by the petitioner and other State Nominated Agencies were received, pursuant to which the Government of Gujarat directed stoppage of coal lifting and subsequently denotified the petitioner. Under Clause 17.1(a) of the FSA, withdrawal or cancellation of the petitioner’s nomination by the State Government constitutes a deemed default on the part of the purchaser, resulting in automatic termination of the agreement. Further, Clause 3.7 of the FSA empowers the respondents to forfeit the security deposit upon such termination. The amount withheld by SECL was towards the balance security deposit which the petitioner was contractually bound to maintain but failed to deposit. In these circumstances, the petitioner is not entitled to claim refund of the withheld amount or security deposit as a matter of right, and the reliefs sought in the writ petition are liable to be rejected. 8. We have heard learned counsel for the parties and considered their rival submissions made herein above and also gone through the entire records of the case with utmost circumspection. 9. From the pleadings and documents available on record, it is evident that the dispute between the parties arises out of the Fuel Supply Agreement (FSA) executed between the petitioner and respondent No. 3 on 17.11.2021. The petitioner seeks refund of the balance advance coal value and security deposit alleging non-supply of coal despite 6 payment of the entire advance consideration. On the other hand, the respondents have raised a preliminary objection regarding maintainability of the writ petition on the ground that the dispute is purely contractual in nature and involves disputed questions of fact. It is not in dispute that Clause 16 of the Fuel Supply Agreement contains an arbitration clause providing for resolution of disputes through arbitration under the Arbitration and Conciliation Act, 1996. Clause 16 of the Fuel Supply Agreement reads as under :- “In the event of any dispute or differences between the Purchaser and the Seller, such dispute or differences shall be resolved amicably by mutual consultation. If such resolution is not possible, then, the unresolved dispute or difference shall be referred to the sole arbitrator for arbitration as per the Arbitration & Conciliation Act, 1996 and rules made thereunder from time to time. The sole Arbitrator shall be nominated by Chairman, Coal India Limited In the event of such an arbitrator to whom the matter is originally referred, being transferred or vacating his office or being unable to act for any reason whatsoever, the Chairman, CIL shall appoint another person to act as an arbitrator in accordance with terms of the agreement and the person so appointed shall be entitled to proceed from the stage at which it was left out by his predecessors.” 10. A perusal of the record further reveals that complaints alleging diversion of coal by State Nominated Agencies, including the petitioner, were received by the respondent authorities. Pursuant thereto, communications dated 09.02.2022 and 23.02.2022 were issued seeking examination of such complaints from the competent authorities of the State of Gujarat. Thereafter, the Commissioner, MSME, Gujarat requested stoppage of coal lifting by the State Nominated Agencies and consequential directions were issued by SECL for withholding 7 supplies. Subsequently, Coal India Limited directed suspension of supplies to Non-Governmental Agencies nominated by the States. The record further indicates that by order dated 22.03.2022, the Government of Gujarat denotified the petitioner as a State Nominated Agency and cancelled its nomination. The said order has a direct bearing on the rights and obligations flowing from the Fuel Supply Agreement and constitutes a material circumstance in the adjudication of the dispute. 11. It is also pertinent to take note of the relevant provisions of the Fuel Supply Agreement governing the rights of the parties. Clause 17.1(a) specifically provides that the agreement shall stand terminated automatically in the event the nomination of the purchaser is withdrawn or cancelled by the concerned State Government, which shall be deemed to be a default of the purchaser under the agreement. Further, Clause 3.7 stipulates that upon termination in the contingencies specified therein, the seller shall be entitled to forfeit the Security Deposit of the purchaser. The respondents have specifically pleaded that the petitioner had deposited only Rs. 1 crore towards Security Deposit against the total Security Deposit requirement and had failed to maintain the balance Security Deposit as contemplated under the agreement. The respondents have further asserted that while refunding part of the advance amount, an amount corresponding to the balance Security Deposit along with applicable GST was withheld in accordance with the contractual terms. 12. The material available on record further discloses that after issuance of the order of denotification dated 22.03.2022, the respondents initiated 8 proceedings for termination of the Fuel Supply Agreement and forfeiture of Security Deposit by issuing a show cause notice dated 03.08.2022. The petitioner was afforded an opportunity to submit its explanation and also participated in a joint meeting held on 09.08.2022. Thus, the action taken by the respondents appears to have been preceded by due notice and opportunity of representation. Whether the withholding of the amount by the respondents is legally justified, whether the petitioner was in breach of the contractual obligations, whether the denotification order validly attracted the consequences contemplated under Clauses 3.7 and 17.1(a) of the Fuel Supply Agreement, and whether the petitioner is entitled to refund of the withheld amount and Security Deposit, are issues which would necessarily require examination of the contractual terms, surrounding circumstances and disputed factual assertions raised by the parties. 13. In view of the aforesaid facts, this Court finds that the controversy essentially arises out of reciprocal rights and liabilities flowing from the Fuel Supply Agreement and involves disputed questions of fact relating to compliance with contractual obligations, effect of the denotification order issued by the Government of Gujarat, entitlement to refund of advance coal value and Security Deposit, and the legality of the respondents’ action in withholding the amount. Such issues cannot be adjudicated satisfactorily without detailed examination of evidence and interpretation of contractual clauses. In the presence of an arbitration clause providing an efficacious alternative remedy and in view of the settled legal position that writ jurisdiction is ordinarily not invoked for resolution of purely contractual disputes involving disputed questions of fact, this Court is of the considered view that the petitioner ought to 9 avail the remedy available under the Fuel Supply Agreement and the Arbitration and Conciliation Act, 1996. 14. So far as the claim of the petitioner seeking refund of the balance advance coal value amounting to Rs. 4,06,48,532.30/- along with interest and refund of the security deposit of Rs. 1 crore is concerned, it is evident that the dispute emanates from the Fuel Supply Agreement dated 17.11.2021 executed between the parties. The respondents have specifically contended that the petitioner was denotified by the Government of Gujarat vide order dated 22.03.2022, resulting in automatic termination of the Fuel Supply Agreement under Clause 17.1(a), and that the amount withheld was in accordance with the contractual stipulations relating to maintenance and forfeiture of Security Deposit. The petitioner, on the other hand, disputes the legality of such action and asserts entitlement to refund of the entire amount. The resolution of these rival claims would necessarily require examination of the terms of the Fuel Supply Agreement, the effect of the denotification order, the rights and liabilities accrued between the parties, and other disputed factual issues arising out of the contractual relationship. Significantly, Clause 16 of the Fuel Supply Agreement provides for resolution of disputes through arbitration under the Arbitration and Conciliation Act, 1996. In view of the existence of such an efficacious alternative remedy and the disputed questions of fact involved, this Court is not inclined to adjudicate the contractual claims of the petitioner in exercise of its writ jurisdiction under Article 226 of the Constitution of India. 15. Accordingly, having regard to the nature of the dispute, the contractual framework governing the parties, and the availability of an alternative 10 statutory remedy by way of arbitration, this Court is of the considered opinion that no case for interference under Article 226 of the Constitution of India is made out. The issues raised by the petitioner are essentially contractual in nature and are required to be adjudicated before the appropriate forum in accordance with the dispute resolution mechanism agreed upon by the parties. Consequently, the writ petition, being devoid of merit, deserves to be and is hereby dismissed. 16. It is, however, made clear that the petitioner shall be at liberty to avail such remedy as may be available to it in law, including recourse to arbitration in terms of Clause 16 of the Fuel Supply Agreement, if so advised. Any observation made herein shall not be construed as an expression on the merits of the claims and counterclaims of the parties, which shall be considered independently by the competent forum. 17. No order as to costs. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice sagrika