London-based The Children's Investment Fund (TCI) has warned that it might file a legal case against the India government alleging that the country's government could have short-changed other investors in Coal India.

TCI will use some of the provisions within an agreement signed between the UK and the Indian government to file its lawsuits. TCI, which is he second largest investor in Coal India Limited (CIL), had earlier warned of a legal action against the company for allegedly ignoring the interests of minority shareholders.

TCI's Chris Hohn has said that the government policy that forces CIL to sell coal below market prices causes a loss of earnings to the tune of $20 billion a year. He said that the CIL might face legal action because it failed to do its duty of acting on the interest of all the shareholders, including minority shareholders.

TCI said that it is considering taking legal action individual directors for not performing their duties to protect the rights of minority investors in the company. The activist hedge fund has written a letter to directors and top officials of Coal India on Monday.