JUDGMENT : 1. The present writ petition has been filed for quashing the show cause notice dated 03.03.2016 (Annexure-4 to the writ petition) issued by the respondent No.2 whereby the petitioner has been asked to show cause as to why his Coal Supply Agreement (FSA) be not terminated under Clause 15.1.5 of the FSA. Further prayer has been made for quashing the order dated 23.05.2016 (Annexure-7 to the writ petition) issued by the General Manager (Sales and Marketing) Central Coalfields Limited, Ranchi (respondent No.2) whereby the FSA dated 30.04.2008 of the petitioner has been terminated forfeiting the Bank Guarantee deposited by the petitioner. 2. The factual background of the case, as stated in the writ petition, is that an agreement dated 30.04.2008 was entered into between the petitioner-company and the respondent-Central Coal Field Ltd. (in short CCL) for supply of coal which was to remain in force for a period of five years from the date of the agreement. The said agreement was subsequently renewed on 25/29.04.2013. A raid was conducted by the Aurangabad District Administration (Bihar) in the plant of the petitioner on 15.02.2016 and thereafter an F.I.R being Barun P.S Case No. 27 of 2016 was lodged under Sections 406, 420, 467, 468, 471, 161 and 120-B IPC alleging that the petitioner used to sell the allotted coal in the open market. Thereafter, the District Magistrate vide his letter No. 812 dated 18.02.2016, informed the respondent No.2 about the inspection of the petitioner’s plant and lodging of F.I.R and pursuant thereto, the respondent-CCL issued show cause notice to the petitioner for termination of the FSA and forfeiture of security deposit in exercise of power conferred under Clause 15.1.5 of the said FSA. The petitioner replied to the said show cause notice and expressed its inability to file any document in support of its claim as all the relevant documents were lying in the said plant which was sealed by Aurangabad District Administration. Thereafter, the respondent no. The petitioner replied to the said show cause notice and expressed its inability to file any document in support of its claim as all the relevant documents were lying in the said plant which was sealed by Aurangabad District Administration. Thereafter, the respondent no. 2 vide order dated 23.05.2016, terminated the FSA of the petitioner and forfeited its security deposit in terms of Clause 15.1.5 of the FSA primarily on the ground that since the petitioner did not produce any document in support of its innocence, there is enough reason to believe that the coal supplied to it has been sold/diverted/not unitized for the purpose mentioned in the FSA, which gives rise to filing of the present writ petition. 3. The learned Sr. counsel for the petitioner submits that monthly status report of the plant was regularly being given by the Bihar Industrial Area Development Authority (BIADA) with regard to the existence and operational status of the plant after the proper verification of the site. On perusal of the report it would be evident that the plant of the petitioner was fully operational and as such the allegation of the District Administration that the said plant was not operational is baseless. In spite of the fact that while submitting the reply to the show cause notice, the petitioner had shown its inability to produce any document due to the fact that the factory/plant was sealed by the District Administration, the same was not considered by the respondent no. 2 while passing the impugned order of termination of the petitioner’s’ FSA. Moreover, before passing the impugned order of termination, the respondent-CCL had not conducted any preliminary enquiry, rather it completely relied upon the inspection report of the District Administration and lodging of the F.I.R. The respondent no. 2 relied upon the statement of a worker recorded by the police under Section 161 of the Cr.P.C which has no evidentiary value. Moreover, the criminal case is still pending. The petitioner has not violated any term and condition of the FSA and as such issuance of show cause notice and termination of the FSA is illegal. It is further submitted that Clause 4.4 of the FSL confers the right on the seller (M/S CCL herein) to verify, inspect/call for any document from the purchaser. The petitioner has not violated any term and condition of the FSA and as such issuance of show cause notice and termination of the FSA is illegal. It is further submitted that Clause 4.4 of the FSL confers the right on the seller (M/S CCL herein) to verify, inspect/call for any document from the purchaser. However, admittedly no inspection was made by the respondent-CCL in the premises of the petitioner, rather the raid/inspection was carried out in the petitioner’s premises by a team of Aurangabad District Administration which had no jurisdiction to make such inspection. The impugned letter dated 23.05.2016 was issued by the respondent No.2 terminating the FSA and forfeiting the Bank Guarantee of the petitioner only on the basis of the inspection carried out by the District Administration. Nevertheless, in pursuance of the order dated 22.07.2016 passed by the Patna High Court in C.W.J.C No. 10250/2016, the District Magistrate, Aurangabad vide letter No. 2729 dated 29.07.2016, informed the respondent No.2 that since the earlier letter No. 812 dated 18.02.2016 has become ineffective, the coal supply to the petitioner can be made. Thus, the letter dated 18.02.2016 issued by the District Magistrate, Aurangabad being the genesis of issuance of the impugned letter dated 23.05.2016, the consequential action taken by the respondent-CCL also became redundant. Only because the FIR was lodged against the petitioner, cannot be a ground for closure of the petitioner’s business, unless sufficient evidence is found by the respondent-CCL to substantiate the allegation that the petitioner was diverting the coal being supplied by it. Though the FIR was lodged in February, 2016, the charge sheet has not yet been submitted. 4. The learned counsel for the petitioner has put reliance upon the following judgments:- (i) ABL International Ltd. & Anr. Vs. Export Credit Guarantee Corporation of India Ltd. & Ors. reported in (2004) 3 SCC 553 (ii) Karnataka State Forest Industries Corporation Vs. Indian Rocks reported in (2009) 1 SCC 150 (iii) Ashoka Smokeless Coal India (P) Ltd. & Ors. Vs. Union of India & Ors. reported in (2007) 2 SCC 640 5. Per-contra, learned counsel for the respondents submits that the contract between the petitioner and the respondent-CCL was not a statutory contract and the matter involves the disputed question of fact which cannot be adjudicated in the writ jurisdiction of this Court under Article 226 of the Constitution of India. reported in (2007) 2 SCC 640 5. Per-contra, learned counsel for the respondents submits that the contract between the petitioner and the respondent-CCL was not a statutory contract and the matter involves the disputed question of fact which cannot be adjudicated in the writ jurisdiction of this Court under Article 226 of the Constitution of India. The respondents have exercised their right reserved under the FSA and thus the same does not suffer from any illegality or infirmity. On a complaint received by the Sub-Divisional Officer, Aurangabad, a raid was conducted by the Senior Officers of the State Government in the factory premises of the petitioner during which none of the machines for production of coal tar was found in running condition, the pumps connecting the machines were found in rusted and damaged condition and there was no sign of production of coal tar in the said plant. It also appeared that the petitioner used to sell the allotted coal in open market. The petitioner was given sufficient opportunity to produce materials to show its innocence and when it failed to produce any document, the impugned order of termination of FSA was passed and as such there is no violation of the principles of natural justice requiring interference of this Court. The petitioner has challenged the finding of the inspecting team without leading any evidence or alleging any malafide against the officials of the State Government and thus the same cannot be accepted. 6. Learned counsel for the respondents has put reliance on a judgment rendered by the Hon’ble Supreme Court in the case of Sushila Vs. BCCL reported in (2010) 10 SCC 388 . 7. Heard the learned counsel for the parties and perused the materials available on record. The petitioner has put challenge to the show cause notice as well as the order of termination of its FSA and forfeiture of the Bank Guarantee. The learned counsel for the respondents has raised primary objection regarding maintainability of the present writ petition on the ground that the matter involves contractual dispute. I have perused the judgments relied upon by the learned Senior Counsel for the petitioner. 8. In the case of ABL International (Supra), the Hon’ble Supreme Court has held as under:- “37. The learned counsel for the respondents has raised primary objection regarding maintainability of the present writ petition on the ground that the matter involves contractual dispute. I have perused the judgments relied upon by the learned Senior Counsel for the petitioner. 8. In the case of ABL International (Supra), the Hon’ble Supreme Court has held as under:- “37. In our opinion, this limited area of dispute can be settled by looking into the terms of the contract of insurance as well as the export contract, and the same does not require consideration of any oral evidence or any other documentary evidence other than what is already on record. The claim of the contesting parties will stand or fall on the terms of the contracts, interpretation of which, as stated above, does not require any external aid.” 9. In the case of Karnataka State Forest (Supra), the Hon’ble Supreme Court has held as under:- “38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable.” 10. On perusal of the aforesaid judgments, it appears that the writ petition would be maintainable even if the same has been filed for enforcement of the terms of a contract, if the action of the State/its instrumentality is found arbitrary or discriminatory and the issue raised does not require leading of evidence by the parties on disputed facts. 11. The facts of the present case reveals that an inspection was carried out by Aurangabad District Administration in the factory/plant of the petitioner and it was prima facie found that the petitioner was involved in misappropriation of the allotted coal by the respondent-CCL and thereafter the factory/plant of the petitioner was sealed and an FIR was also lodged. The said fact was communicated to the respondent-CCL. Only thereafter the respondent no. 2 issued the impugned show cause notice on the basis of the allegation levelled in the F.I.R and directed the petitioner to produce the relevant documents in support of its innocence. The petitioner submitted reply to the show cause notice stating that all the relevant documents are in the factory premises which has been sealed by Aurangabad District Administration. 2 issued the impugned show cause notice on the basis of the allegation levelled in the F.I.R and directed the petitioner to produce the relevant documents in support of its innocence. The petitioner submitted reply to the show cause notice stating that all the relevant documents are in the factory premises which has been sealed by Aurangabad District Administration. Not being satisfied with the petitioner’s reply, the respondent no. 2 passed the impugned order of termination of the petitioner’s FSA and forfeiture of the Bank Guarantee. 12. The petitioner also moved before the Patna High Court in CWJC No. 7555 of 2016 wherein vide order dated 24.05.2016, a direction was issued to the District Administration for removal of seal of the petitioner’s unit and pursuant thereto the seal was removed. Thereafter, the District Magistrate, Aurangabad vide his letter dated 29.07.2016 informed the respondent no. 2 that the seal of the petitioner-company has been opened and further asked the respondent No.2 for resuming the supply of the coal linkage of the petitioner. 13. The thrust of argument of the learned Sr. counsel for the petitioner is that since the District Magistrate, Aurangabad on whose instance the FIR was lodged against the petitioner has already recalled his own letter in view of the order of the Patna High Court and as such the consequential order passed by the respondent-CCL for terminating the FSA of the petitioner is also required to be recalled. On the contrary, the case of the respondents is that the petitioner cannot be permitted to get supply of coal from the M/S CCL when there is prima facie evidence to suggest that its factory was not in running condition and the coal which was being supplied to the petitioner was being misappropriated and diverted for other use. Thus, its FSA has been rightly terminated invoking Clause 15.1.5. However, it is open for the petitioner to participate in fresh e-auction. 14. Clause 15.1.5 provides that if the purchaser resells or diverts the coal purchased pursuant to the FSA, the seller has the right to terminate the FSA forthwith. Thus, for invoking Clause 15.1.5, the pre-requisite is the resell or diversion of coal by the purchaser. However, it is open for the petitioner to participate in fresh e-auction. 14. Clause 15.1.5 provides that if the purchaser resells or diverts the coal purchased pursuant to the FSA, the seller has the right to terminate the FSA forthwith. Thus, for invoking Clause 15.1.5, the pre-requisite is the resell or diversion of coal by the purchaser. However, in the present case, resell or diversion of the coal has not yet been proved against the petitioner and the District Magistrate, Aurangabad on whose letter the supply of coal was withheld has himself asked for resuming the supply and thus the very basis of the action taken against the petitioner does not survive. It is not the case of the respondent-CCL that any independent inquiry was conducted at its level to find out the truthfulness of the allegation levelled against the petitioner, as has been provided under Clause 4.4 of the FSA. 15. In the case of Ashoka Smokeless Coal India Ltd. (Supra), the Hon’ble Supreme Court has held as under:- “188. Coal being a scarce commodity, its utility for the purpose for which it is needed is essential. Although, technically, in view of the fact that no price is fixed for coal, there may not be any black marketing in the technical sense of the terms; but this Court cannot also encourage black marketing in general sense. Nobody should be allowed to take undue advantage while dealing with a scarce commodity. The very fact that despite best efforts of the Central Government, the coal companies failed to curb the menace of a section of people and to deal in coal excluding other general people therefrom or the linked consumers misusing their position of obtaining allotment of coal either wholly or in part, it is absolutely necessary that some mechanism should be found out for plugging the loopholes. The Union of India or the coal companies appear to have lost confidence in the State Governments. They had carried out joint inspection and in that process they must have arrived at a satisfaction about the genuineness of the claims of industrial units for which the linkage system was meant for. 189. Before us most of the consumers, with a view to obtain supply of coal had filed documents to prove their genuineness. The said documents must be scrutinized by the authorities of the coal companies. 189. Before us most of the consumers, with a view to obtain supply of coal had filed documents to prove their genuineness. The said documents must be scrutinized by the authorities of the coal companies. In the event, they have any suspicion, inspection should be carried out by officers appointed by the Chairman-cum-Managing Director of the company concerned within whose jurisdiction the unit is situated.” 16. On perusal of the aforesaid judgment, it would appear that the M/S CCL has the right to make inspection so as to curb the misuse of coal by the purchasers/industrial units. The coal companies are permitted to inspect the documents of the purchasers/industrial units relating to utilization of the coal and in case of any suspicion, to make inspection in the factory premises. 17. Moreover, it appears that though the petitioner in its reply to the show cause notice had shown its inability to furnish sufficient documents on account of sealing of its factory premises, the respondent no. 2 totally ignored the said fact and concluded that the conduct of the petitioner is indicative of the fact that it had sold/diverted/not utilized the coal for the purpose it was supplied. Thus, the impugned order also suffers from violation of the principles of natural justice. The compliance of the principles of natural justice is not a mere formality, rather the same is imperative in administrative adjudication. 18. On perusal of the judgment of the Hon’ble Supreme Court rendered in the said case of Sushila Chemicals (P) Ltd. (Supra), it appears that in that case the challenge was made to the suspension of supply of coal on the strength of inspection and lodging of an FIR by the CBI alleging diversion of coal. The Hon’ble Supreme Court has held that the M/S BCCL was right in suspending the supply of coal till the doubts are cleared in appropriate proceedings. 19. However, in the present case, on the strength of inspection and lodging of an FIR by Aurangabad District Administration, the impugned order of termination has been passed without making any independent inspection and verifying the authenticity of the allegation by the respondent-CCL and thus the ratio laid down in Sushila Chemicals (P) Ltd. case (Supra) cannot be applied. 20. 19. However, in the present case, on the strength of inspection and lodging of an FIR by Aurangabad District Administration, the impugned order of termination has been passed without making any independent inspection and verifying the authenticity of the allegation by the respondent-CCL and thus the ratio laid down in Sushila Chemicals (P) Ltd. case (Supra) cannot be applied. 20. During the course of argument, the learned counsel for the respondents has submitted that presently the Government of India, Ministry of Coal has framed a new coal distribution policy which has come into effect from 15th February, 2016 whereby the auction of the linkage of non-regulated sector has been introduced and even if the aforesaid contentions of the learned counsel for the petitioner are accepted for obtaining the coal linkage, it has to apply for the same under the said policy. 21. I have perused the content of the letter dated 15.02.2016; the relevant portion of which is reproduced hereinbelow:- (iii) There may not be premature termination of FSAs of non-regulated sector as of now. However, there will be no renewal of existing FSAs of non-regulated sectors (except FSAs of CPSEs and Fertiliser (Urea)] which are maturing in 2015-16 onwards, after completion of their current agreement tenure. The extant coal supply arrangements may continue till commencement of coal supply under the auction process. 22. The aforesaid provision specifically provides that after completion of the agreement tenure, any coal supply agreement for non-regulated sector will not be renewed, however, the coal supply arrangements may continue till commencement of coal supply under the auction process. Since the coal supply agreement of the petitioner has already expired, no direction may be issued for renewal of the same in view of the new coal distribution policy. 23. In view of the discussions made hereinabove and the judicial pronouncement, the impugned order dated 23.05.2016 (Annexure-7 to the writ petition) issued by the respondent No.2 is, hereby, quashed and set aside. The petitioner is however at liberty to participate in the auction process of relevant category under the new coal distribution policy, if any. The Bank Guarantee submitted by the petitioner shall also be released by the respondent-CCL forthwith, if there is no other legal impediment. 24. The present writ petition is accordingly disposed of with the aforesaid observation and direction.