JUDGMENT:- I.P. MUKERJI, J. FACTS: This writ is by a group of coke manufacturers. Each of them belongs to the small scale industry and possesses the necessary certificate in this behalf. In their respective factories, the writ petitioners have what is stated to be-hive coke oven plants. The coke that they produce is in turn used as raw material in pig iron, steel and other factories, for their production. It is not the writ petitioners’ case that their production has stopped or been interrupted because of any action of the respondents. Their grievance is they have not been considered for allocation of any coal by the respondent company, Coal India Ltd. (hereinafter referred to as “the company”), as a result of which they have to import it. Imported coal is far more expensive than the coal supplied by the company. Thereby, the cost of production goes up. It is said that the respondent companies, which are government companies are the monopoly distributors of all the coal that is extracted in India. It has further been said, as will appear from the discussion below, that if the distribution of coal is made more equitably by these respondent companies the petitioner will have a chance of getting coal from them. That is in short, what this writ is about. On 18th October 2007, the Ministry of Coal, Government of India, announced a new coal distribution policy. This policy was in supersession of the existing coal distribution policy in respect of the class of consumers covered by it. Certain criteria and principles were sought to be evolved in this new policy for distribution of coal on priorities which were identified and mentioned in it. Para 2 of this policy states that the requirements of the defence sector and the railways would be met in full at notified prices on the date of the policy. After meeting those requirements, coal would be distributed to what is described as “Power Utilities including Independent Power Producers ( IPPs)/ Captive power Plants (CPPs) and Fertilizers Sector.” The rest of the available coal would be distributed to “other consumers”. The writ petitioners admittedly fall in this category and are aggrieved by the system of distribution envisaged in this policy. After meeting those requirements, coal would be distributed to what is described as “Power Utilities including Independent Power Producers ( IPPs)/ Captive power Plants (CPPs) and Fertilizers Sector.” The rest of the available coal would be distributed to “other consumers”. The writ petitioners admittedly fall in this category and are aggrieved by the system of distribution envisaged in this policy. As far as the “other consumers” are concerned it is stated in the policy that 75% of the requirement consumers/ actual users would be considered for supply through a fuel supply agreement to be entered into with them by the company at notified prices “to be fixed” and declared by it. The balance 25% of the coal requirements of these units would be provided to them through ‘e’ auction/ import of coal etc. as per their preference.” None of the writ petitioners is an existing user or a consumer but all of them intend to be prospective consumers of the company in the category of “other consumers.” At the time of arguments being advanced before me the writ petitioners did not seem to be agrieved by the 75% of the requirement of existing consumers/ actual users in the category of “other consumes” being supplied through the fuel supply agreement. They are agrieved by the policy of allocation of 25% of the requirement of these consumers through ‘e’ auction. SUMMARY OF RIVAL CONTENTIONS: It has been contended by Mr. Pal, learned senior advocate, supplemented substantially by Mrs. Shukla Banerjee, Advocate appearing for the petitioner as follows: a. The writ petitioners are manufacturers. Although they belong to the category “other consumers”, there are other entities in that category who are engaged in trading of coal. If 25% of the requirement of the consumers is auctioned, then traders would also participate in the auction thereby depriving a genuine manufacturer. b. The Government of India or the respondent companies have got duties and responsibilities for fair and equitable distribution of coal. If such coal is distributed by ‘e’ auction, the respondent companies and the Government are transforming themselves into mere traders of coal, selling coal to the person offering the highest price. There should be more rational criteria in the distribution of coal. This 25% should not be distributed by ‘e’ auction but by a more fair and equitable distributive process. If such coal is distributed by ‘e’ auction, the respondent companies and the Government are transforming themselves into mere traders of coal, selling coal to the person offering the highest price. There should be more rational criteria in the distribution of coal. This 25% should not be distributed by ‘e’ auction but by a more fair and equitable distributive process. c. There is irrationality in the policy of distributing 75% of consumers’ requirement by a fuel supply agreement and 25% through ‘e’ auction. On a perusal of the policy it appears that the government wants to ensure satisfaction of 75% of the requirement of the existing customers/ actual users and put 25% of the requirement into the trading process. It would have been rational if 75% was assured to them and the balance 25% distributed on more rational and equitable consideration. Thereby, the writ petitioners will stand a chance to be allotted coal. d. He has cited Ashoka Smokeless Coal India (P) Ltd. and others– v – Union of India and others reported in (2007)2 SCC 640 which will be examined in my discussion below. I have not understood the stand taken by the petitioners in their written submission. It appears that such stand is contrary to the arguments made in court. Therefore, I do not take any notice of the written notes of argument and rely on the above oral arguments which were urged in court. On the other hand, Mr. Saptangshu Basu, Senior advocate, appearing for the respondent companies has argued that the policy has not been challenged and relied on a chart appended as Annexure R-3, page 31 of their Affidavit in opposition to show that the coal balance with the respondents was negative, as on June, 2009. So there is no question of any consideration for allotment of coal to the writ petitioners. He has also relied on two unreported judgments, one of our court being W.P. No. 8864(W) of 2009 in Ballavpur Paper MFG. Ltd. –v – Coal India Limited and others decided on 17th June, 2009 by Biswanath Somadder, J. and another unreported judgment of the Patna High Court in CWJC No. 4795 of 2009, M/s. G.K. Coke Industries –v – The Coal India Ltd and others decided on 28th January, 2010 refusing to entertain similar claims made by similarly situated writ petitioners. In reply Mr. In reply Mr. Pal has argued that the respondents be called upon to produce a current statement regarding the coal balance. DISCUSSION AND FINDINGS: There is a provision in the above policy for issuance of a letter of assurance to consumers based on assessment of requirement. On 22nd June 2009, Coal India Limited in response to a letter dated 29th May 2009 by the petitioner No. 14 stated that no letter of assurance was being issued to “non SLC (LT) consumers” which I believe is the category in which the writ petitioners fall that is “other consumers”. It went on to say ‘as and when the scheme is finalised the intending consumers would be at liberty to apply for issuance of LOA as per terms and eligibility criteria given in the scheme’. Since the ambit of argument has been restricted to the legality of distributing coal by ‘e’ auction. I will confine my discussion to that issue. Before proceeding further with the discussion I would like to state that coal is a scarce commodity or resource whose ownership and absolute control is with the Government of India or its agencies. The first relevant legislation in this regard was the Colliery Control Order 1945 for regulating production, supply and distribution of coal. Then came the Essential Commodities Act 1955. By the Colliery Control Order 2000, the control and regulation under the 1945 order were relaxed. Although strict control over coal by the 1945 order was relaxed to a certain extent, nevertheless the coal controller retained the power to issue directions for regulating disposal of stocks of coal. Meanwhile, Coking Coal Mines (Nationalisation Act 1972) and the Coal Mines (Nationalisation) Act 1973 were enacted. Under those Acts both Coking coal Mines and Coal Mines vested in the Central Government. It is true, that this policy dated 18th October 2007 has not been challenged in this writ. The prayers in the writ petition are for issuance of necessary directions upon Coal India Limited to issue letter of assurance (LOA) in favour of the writ petitioners. Now, if the existing policy is allowed to stand and the said statement annexed to the affidavit-in-opposition that there is no stock of coal for distribution to “other consumers” accepted, it would be the end of the writ application and it would have to be dismissed. Now, if the existing policy is allowed to stand and the said statement annexed to the affidavit-in-opposition that there is no stock of coal for distribution to “other consumers” accepted, it would be the end of the writ application and it would have to be dismissed. But in considering this writ application I have taken into account the cause of action of the writ petitioners which is fundamentally non-availability of coal for distribution to them, by virtue of the above policy. Therefore, what has been really challenged is the implementation of the policy regarding distribution of coal to the “other consumers”. As I have recounted earlier, under the policy, 100% requirement of such consumers would have to be ascertained. Then, 75% of such requirement would be considered for supply through a fuel supply agreement at notified prices to be fixed and declared by Coal India Limited. So far, so good. The problem arises with regard to 25% of such requirement. As far as 25% of such requirement is concerned, there is no guarantee of supply by the company. This 25% coal has to be obtained by such consumers after being successful in an ‘e’ auction. As has been submitted by Mr. Pal, any person from a manufacturer to a trader can participate in this ‘e’ auction”. The person or organisation offering the highest price would be allotted this 25% quantity of coal. Therefore, in my understanding of the policy, say the allotment of coal to each such consumer is 100 metric tons, 25 metric tons would not be readily offered to him. He has to participate in an auction where along with him diverse other persons are entitled to participate. This 25 Metric tons of coal will be allotted to the most successful bidder. Such would be the fate of 25 metric tons allotment to all consumers. Now, supposing that the total allotment of coal to the consumers in this category is 1000 metric tons, 250 metric tons would be auctioned. If any or all consumers can successfully bid for 25% that 25% will be allotted to him or them, not exceeding the total allotted quota for any one consumer. If any or some of the consumers do not succeed in this auction, the proportionate quantity of coal will be distributed to others who are successful. These successful persons may well include traders including speculative businessmen. If any or some of the consumers do not succeed in this auction, the proportionate quantity of coal will be distributed to others who are successful. These successful persons may well include traders including speculative businessmen. Therefore, if one considers the true intent of this policy, only 75% of a determined requirement is considered for allotment to specific consumers. The balance 25% is notionally allotted but is subject to the auction. In my opinion, this cannot be called an allotment at all. Therefore, this 25% of coal is traded by Coal India Limited so as to fetch the highest price. A similar issue fell for consideration before the Supreme Court in Ashoka Smokeless Coal India (P) Ltd. and others - v - Union of India and others reported in (2007)2 SCC 640 , cited by Mr. Pal. Hon’ble S.B. Sinha, J. delivered an extensive and a very detailed judgment. The question of ‘e’ auction was before the court. It opined that carrying out an ‘e’ auction, the state was like a private trader. This is what was said in paragraph 114 of that judgment: “114. E-auction is not a mode to fix price. It is only a mode to obtain maximum price. In other words, deriving the optimum benefit by sale of coal is the goal while doing so the State does not have to follow the principles of fixation of price. It is not required to apply its mind as to its effect. It treats coal like any other commodity. It treats itself like a private trader. A distinction must be borne in mind when a State intends to part with a privilege or a largesse as a competitor in the market and when it is expected to fulfill its constitutional goal enshrined under Article 39(b) of the Constitution.” In distributing scarce resources the government has to follow a policy of governance which is different from the policy of governance followed in private enterprises run with the sole aim of earning maximum profit. In the above judgment, his Lordship pronounced as follows in paragraph 165: “165. Good governance and good corporate governance are distinct and separate. Whereas good governance would mean protection of the weaker sections of the people; so far as good corporate governance is concerned, the same may not be of much relevance. In the above judgment, his Lordship pronounced as follows in paragraph 165: “165. Good governance and good corporate governance are distinct and separate. Whereas good governance would mean protection of the weaker sections of the people; so far as good corporate governance is concerned, the same may not be of much relevance. Even the coal companies in taking recourse to e-auction did not give effect to the concept of corporate social responsibility.” Regarding price fixation that judgment said that price fixation had to be determined on the touchstone of public interest. While doing so, the state is expected to follow a rational and fair procedure and for the said purpose may collect data, obtain public information and may appoint an expert committee. Article 39(b) and 14 of the Constitution require the authority to make the essential commodity available at a fair price. Any policy for distribution of an essential commodity or any commodity which is in the monopoly control of the government or its agencies, or distribution or allotment of any other property or benefit by them has to satisfy the test of Article 14 of the Constitution of India. I will confine myself to the coal distribution policy only. If any policy is formulated by the government for distribution of coal, first of all, that policy has to be broadly in accordance with the principles of equality enshrined in Article 14 of the Constitution. Now, if in that particular policy a classification is sought to be made, that classification has to be reasonable and must bear a rational nexus with that policy as a whole. Justice Fazl Ali in a concurring judgment in the case Charanjit Lal Chowdhury – v – The Union of India and others reported in AIR (38) 1951 SC 41 said the following in paragraph 8 of that judgment. “(8) The only serious point, which in my opinion, arises in the case is whether Art.14 of the Constitution is in any way infringed by the impugned Act. “(8) The only serious point, which in my opinion, arises in the case is whether Art.14 of the Constitution is in any way infringed by the impugned Act. This article corresponds to the equal protection clause of the Fourteenth Amendment of the Constitution of the United States of America, which declares that “no State shall deny to any person within its jurisdiction the equal protection of the laws.” Professor Wills dealing with this clause sums up the laws as prevailing in the United States in regard to it in these words: “Meaning and effect of the guaranty – The guaranty of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. ‘It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and conditions both in the privileges conferred and in the liabilities imposed.’ The inhibition of the amendment …… was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation’. It does not take from the states the power to classify either in the adoption of police laws, or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, and nullifies what they do only when it is without any reasonable basis. Mathematical nicety and perfect equality are not required. Similarity, not identity of treatment, is enough. If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis.” [ Page 579 1st Edition of “Constitutional Law” by Prof. Willis.] Having summed up the law in this way, the same learned author adds: “Many different classifications of persons have been upheld as constitutional. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis.” [ Page 579 1st Edition of “Constitutional Law” by Prof. Willis.] Having summed up the law in this way, the same learned author adds: “Many different classifications of persons have been upheld as constitutional. A law applying to one person or one class of persons is constitutional if there is sufficient basis or reason for it.” There can be no doubt that Art. 14 provides one of the most valuable and important guarantees in the Constitution which should not be allowed to be whittled down, and, while accepting the statement of Professor Willis as a correct exposition of the principles underlying this guarantee, I wish to lay particular emphasis on the principle enunciated by him that any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed.” Ultimately, the relief which the writ petitioners seek is issuance of a letter of allotment by the company in their favour. Therefore, the ultimate issue is whether by my order a condition can be achieved when a state instrumentality can be compelled to consider the question of entering into a contract for supply of coal with the writ petitioners. On the issue of entering into contracts, the Supreme Court in the case of Kumari Shrilekha Vidyarthi and others -v - State of U.P. and others reported in (1991)1SCC 212 has said, that the preamble of the Constitution of India resolves to secure to all its citizens justice, social, economic and political; and equality of status and opportunity. Every state action must be aimed at achieving this goal. Part IV of the Constitution contains “Directive principles of state policy” which are fundamental to the governance of the country and strive at securing the above goals. (see also paragraphs 20 and 24 of the judgment) Article 14 extends to enjoying non arbitrariness in state actions in the contractual field. It forbids unfairness or unreasonableness in such actions. The impact of every state action is on public interest. In entering into a contractual relationship the state should be conscious of and promote the public good or public interest. It forbids unfairness or unreasonableness in such actions. The impact of every state action is on public interest. In entering into a contractual relationship the state should be conscious of and promote the public good or public interest. The decision recognises a difference in the approach of the State, with those of private entrepreneurs who are concerned primarily with their personal gain which may or may not promote public interest. The action of the state should always bear public good or public interest in mind, much in the same vein as His Lordship S.B. Sinha, J. said in Ashoka Smokeless Coal India (P) Ltd. & ors. - v - Union of India and others (supra) Again in Common Cause, A Registered Society - vs - Union of India and others, reported in (1996)6 SCC 530 the Supreme Court has pronounced the following dicta: “22. The Government today - in a welfare State - provides large number of benefits to the citizens. It distributes wealth in the form of allotment of plots, houses, petrol pumps, gas agencies, mineral leases, contracts, quotas and licences etc. Government distributes largesses in various forms.” “24. …………….While Article 14 permits a reasonable classification having a rational nexus to the objective sought to be achieved, it does not permit the power to pick and choose arbitrarily out of several persons falling in the same category. A transparent and objective criteria/procedure has to be evolved so that the choice among the members belonging to the same class or category is based on reason, fair play and nonarbitrariness. It is essential to lay down as a matter of policy as to how preferences would be assigned between two persons falling in the same category. If there are two eminent sportsmen in distress and only one petrol pump is available, there should be clear, transparent and objective criteria/procedure to indicate who out of the two is to be preferred. Lack of transparency in the system promotes nepotism and arbitrariness. It is absolutely essential that the entire system should be transparent right from the stage of calling for the applications up to the stage of passing the orders of allotment. The names of the allottees, the orders and the reasons for allotment should be available for public knowledge and scrutiny. Mr. Shanti Bhushan has suggested that the petrol pumps, agencies etc. The names of the allottees, the orders and the reasons for allotment should be available for public knowledge and scrutiny. Mr. Shanti Bhushan has suggested that the petrol pumps, agencies etc. may be allotted by public auction - category wise amongst the eligible and objectively selected applicants. We do not wish to impose any procedure on the government. It is a matter of policy for the Government to lay down. We, however, direct that any procedure laid down by the Government must be transparent, just, fair and non-arbitrary.” “26. This Court as back as in 1979 in Ramana Shetty case held “it must, therefore, be taken to be the law……” that even in the matter of grant of largesses including award of jobs, contracts, quotas and licences, the Government must act in fair and just manner and any arbitrary distribution of wealth would violate the law of the land……………….” I would apply the principles of the above Supreme Court judgments for distribution of coal. When the government or a public authority is the owner of a recourse which is scarce and which is demanded by many persons, but cannot be provided to all such persons or in the quantity demanded, the government or the public authority has a duty to see that this recource is distributed on reasonable considerations and in an equitable manner. That particular resource has to be distributed, after making a rational assessment of the demand and a rational and reasonable determination of priorities that have to be made in fulfilling such demand. In giving such priority, I think a necessary consideration is to see whether the coal which is demanded will be used for the purpose of manufacture of some product which is beneficial for the interests of the country or will be utilized in any other way not resulting in such benefit. A person acquiring coal for the purpose of trading should be the last in the consideration of a governmental or public authority. A person acquiring coal for the purpose of trading should be the last in the consideration of a governmental or public authority. As far as the present policy is concerned it appears to be quite sound in all other respects except allocation of 25% coal by ‘e’ auction to “other consumers.” That, in my opinion, would result in distribution of coal to persons who may not be a manufacturer of essential goods or goods manufactured for the benefit of the country or would result in utilisation of the coal for a purpose, not resulting in public good. ‘e’ auction has a tendency to promote trading in coal which has been deprecated by the Supreme Court in the above judgments. It also has a risk of procuring of coal by persons who do not have a genuine need for it but would only acquire it to make profit. In Ballavpur Paper MFG Limited - v - Coal India Limited, W.P. NO. 8864(W) of 2009, an unreported decision of Biswanath Somadder, J. dated 17th June, 2009 there was no challenge to the policy of “e auction”. So the decision in that case granting liberty to the writ petitioner therein to approach the company for issuance of letter of Assurance (LOA) as and when it was in a position to allot coal, does not really cover the case at hand. Similar was the issue before the Patna High Court in the unreported decision of M/s. G.K. Coke Industries - v - The Coal India Ltd. and others, CWJC No. 4795 of 2009 decided on 28th January 2010 which is not germane to this case. It is very important at this stage to reproduce what the Supreme Court has said in Ashoka Smokeless Coal India (P) Ltd. and others - v - Union of India and others, reported in (2007) 2 Supreme Court Cases 640 for making a policy for more equitable distribution of coal. Such is stated in paragraph 190 of that judgment which is reproduced below: “190. With a view to evolve a viable polic, a committee should be constituted by the Union of India with the Secretary of Coal being the Chairman. In such a committee, a technical expert in coal should also be associated as most of the projects involve consumers of coal, particularly manufacturers of hard coke and smokeless fuel. With a view to evolve a viable polic, a committee should be constituted by the Union of India with the Secretary of Coal being the Chairman. In such a committee, a technical expert in coal should also be associated as most of the projects involve consumers of coal, particularly manufacturers of hard coke and smokeless fuel. In our opinion, it may not be difficult to find out, having regard to the technologies used therein as regards the ratio of the input vis-à-vis the output, with a balance and 10% margin. On the basis of such finding alone, apart from the requirements of five years, supply should form the basis of MPQ. We may, however, hasten to add that the Central Government in collaboration with the coal companies would be at liberty to evolve a policy which would meet the requirements of public interest visà-vis the interest of consumers of coal. They would be entitled to lay down such norms as may be found fit and proper. They would be entitled to fix appropriate norms therefor. In the event, any industrial unit is found to violate the norms it should be stringently dealt with.” Paragraph 2.3 of that policy states that the balance 25% of coal requirement of the units will be “sourced” by them (other consumers) through ‘e’ auction/import of coal etc. as per their preference. In my opinion, in the allocation of coal through ‘e’ auction, the company according to the policy has a discretion, that is a discretion in the implementation of the existing policy. That discretion must be exercised judiciously by them, according to the principles of law laid down by the Supreme Court judgments (Supra) and those enunciated by me. There is no scope of reviewing this policy as such because this policy has been formulated by the Ministry of Coal of the Government of India and Government of India is not a party in these proceedings. Accordingly, I direct the Company to form a committee for the purpose of implementing the policy dated 18th October 2007 with regard to distribution of 25% coal to “other consumers” by ‘e’ auction and to pass a reasoned decision within a period of three months from the date of communication of this order, according to the above guidelines. Such reasoned decision must be communicated to the petitioners but no hearing need be given to them. Such reasoned decision must be communicated to the petitioners but no hearing need be given to them. Further, the above statement annexed to the affidavit-in-opposition is as of June 2009. In case there is any improvement in the stock of coal at present, resulting in a positive balance, since one year has elapsed from the date of such statement, the company will consider issuance of letter of assurance to the petitioner in accordance with law in terms of the existing policy, pending the consideration in terms of this order as aforesaid. Urgent certified photocopy of this judgment and order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.