Jharkhand High Court
Balaji Fuels Private Limited Having Its ... vs Central Coalfields Limited on 26 September, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
2025:JHHC:30573-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.568 of 2012
------
Balaji Fuels Private Limited having its unit located at Village Latan
Pore Road, P.S. Patori (Nandiha) District-Palamu (Jharkhand)
through its Director Sushma Devi, W/o Rajendra Singh, presently
residing at New Area, Dutta Lane, P.O. Morabadi, P.S. Bariatu,
District-Ranchi. .... .... Petitioner
Versus
1. Central Coalfields Limited, a Subsidiary of Coal India Ltd.,
Darbhanga House, P.O. G.P.O. P.S. Kotwali, District Ranchi
through its Chairman-Cum-Managing Director, Ranchi.
2. Chairman-Cum-Managing Director, Central Coalfields Limited,
Darbhanga House, P.O. G.P.O., P.S. Kotwali, District-Ranchi.
3. The Director (Technical), Central Coalfields Limited, Darbhanga
House, P.O. G.P.O., P.S. Kotwali, District-Ranchi.
4. The General Manager (S&M), Central Coalfields Limited,
Darbhanga House, P.O. G.P.O., P.S. Kotwali, District-Ranchi.
5. The Deputy Chief Sales Manager (RS) Sales and Marketing
Division, Central Coalfields Limited, Darbhanga House, P.O.
G.P.O., P.S. Kotwali, District-Ranchi.
6. The SOM (RS) Sales and Marketing Division, Central Coalfields
Limited, Darbhanga House, P.O. G.P.O., P.S. Kotwali, District-
Ranchi. .... .... Respondents
CORAM : HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE ARUN KUMAR RAI
------
For the Petitioner : Mr. Rajendra Krishna, Advocate
Mr. Shubham Mayank, Advocate
Ms. Priya Sahay, Advocate
For the Resp.-C.C.L. : Mr. Amit Kr. Das, Advocate
Mr. Vineet Sinha, Advocate
------
C.A.V. on 23.09.2025 Pronounced on 26/09/2025
Per Sujit Narayan Prasad, J.
Prayer
1. This writ petition is under Article 226 of the Constitution of India seeking therein for the following reliefs: -
"(i) For issuance of an appropriate writ(s)/direction(s) or a writ in nature of certiorari 1 W.P.(C) No.568/2012 2025:JHHC:30573-DB for quashing the order contained in letter No.CCL/HQ/C-4/BALAJI/1059-60 dated 27.12.2011 by which the Fuel Supply Agreement dated 16.03.2010 has been terminated invoking the Clause under 15.1.5 of the Fuel Supply Agreement with a further direction of forfeiture of the security deposit amounting to Rs.1,84,000/- under Clause 3.5 of the said agreement;
AND
(ii) For issuance of an appropriate
writ(s)/order(s)/direction(s) or a writ in nature of mandamus commanding upon the respondents to pay a sum of Rs.98 lakhs approximately to the petitioner, since the said money was deposited for purchase of coal for the month of March, 2011 but on account of the order of suspension of coal, the authorities did not accepting the booking of coal in favour of the petitioner and, therefore, the aforesaid money Rs.98 lakhs approximately is still lying with the CCL authorities which is the price paid for purchasing the coal. The respondent authorities should refund the said amount along with the interest at the rate of 16.6% since the money which the petitioner has given to the CCL, is taken from the financial institutions as a loan and upon the said loan the petitioner is paying interest at the rate of 16.6% per annum.
AND
(iii) For issuance of an appropriate
writ(s)/order(s)/direction(s) or a writ in nature of Mandamus commanding upon the respondents to refund the sum of Rs.52 lakhs which has been 2 W.P.(C) No.568/2012 2025:JHHC:30573-DB invoked by the respondents furnished by the petitioner as bank guarantee.
AND
(iv) For issuance of an appropriate
writ(s)/order(s)/direction(s) or a writ in nature of Mandamus commanding upon the respondents to resume the supply of coal to the SSI unit on month to month basis after reviving the Fuel Supply of Agreement since the respondent authorities have no evidence to prove the allegation against the petitioner with regard to the misutilization of coal.
AND/OR
(v) For further issuance of an appropriate writ(s)/order(s)/direction(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case and in the interest of justice."
Factual Matrix
2. The brief facts of the case, as per the pleading made in the writ petition, requires to be enumerated, which read as under: -
(i) It is the case of the writ petitioner that the petitioner is a small-scale industry manufacturing special smokeless fuel (SSF).
The writ petitioner was invited by the Coal India Limited to set up special smokeless fuel (SSF). The petitioner's unit is incorporated under the Companies Act, 1956 and a certificate of incorporation was issued by the Registrar of Companies, Bihar bearing Registration No.03-04710 dated 16.12.1991. The petitioner had approached the Coal India Ltd. Kolkata for coal linkage and Coal 3 W.P.(C) No.568/2012 2025:JHHC:30573-DB India Ltd. in terms of letter no.916-17 dated 13/16.05.1991 cleared the case of the coal linkage and advised the petitioner to get in touch with CMPDI for further necessary action and on the basis of inspection report of CMPDIL which recommended for monthly release of 5000MT/month of coal, M/s Coal India Ltd. accordingly fixed 5000 MT/month of coal which was in consonance with the monthly capacity of the unit.
(ii) The petitioner's unit which is situated in the District of Palamu had applied before the Director of Industries, Govt. of Bihar for permanent SSI Registration and the General Manager, District Industries Centre, Palamu granted permanent registration number 030905169 in terms of letter dated 18.12.1995 for the manufacturing of smokeless fuel.
(iii) The petitioner who after completion of formalities had been lifting linked quantity of coal to the satisfaction of authorities apart from satisfying the authorities of CCL pertaining to 19 points which was asked to be submitted by the authorities vide letter dated 05.02.2005, Dy. CSM (RS) vide letter dated 24.09.2005 kept further supply of coal in favour of the petitioner apart from other consumers in abeyance without issuing any prior notice and affording opportunity of hearing to the petitioner and further also chooses not to recall the said impugned letter in view of the decision of this Court passed in W.P.(C) No.4870 of 2005 dated 02.02.2006. The petitioner being aggrieved and dissatisfied, had also approached this Court by filing writ petition being W.P.(C) 4 W.P.(C) No.568/2012 2025:JHHC:30573-DB No.6044 of 2006 challenging the said wireless message and also prayed for immediate resumption of coal supply. The said writ petition was taken up by this Court and the same in terms of order dated 01.04.2009 was disposed of with the following direction/observations:
"Be that as it may, the Respondent/opposite parties are directed to record their final decision on the petitioner's prayer for resuming coal supply on the basis of the findings record by the Enquiry Committee specially constituted by the respondents and on the basis of the documents submitted by the petitioner, as per directions contained in the order of the Court in the writ petition. Such decision shall be taken within two months from the date of receipt/production of a copy of this order and the same be communicated to the petitioner effectively. Let this case be posted in the first of April, 2010".
(iv) On account of non-compliance of the aforesaid order, the petitioner had to file a regular contempt case being contempt case civil no.550 of 2009 and the said contempt was first time taken up by this Court on 08.12.2009 and this Court while adjourning the matter for a week on the undertaking having given by the CCL authorities has been pleased to observe that considering the assurance given by the Respondents' that a final decision on the petitioner's claim could be taken by the concerned authorities within 10 days from today, the respondent's shall ensure that the directions contained in the order of this Court was complied with. The said contempt case finally was 5 W.P.(C) No.568/2012 2025:JHHC:30573-DB dropped in terms of the order dated 17.04.2010 on the submission of the respondent's that during pendency of the contempt application, the decision has been taken for resumption of coal supply in favour of the petitioner.
(v) It is the further case of the writ petitioner that the respondent CCL has invited the petitioner to enter into conditional Fuel Supply Agreement with CCL for one month for release of monthly quota of coal vide letter dated 15.03.2010 and asked the petitioner to submit documents pertaining to 9 points and after furnishing of all the desired documents, a conditional agreement was executed on 16.03.2010. Further, vide letter dated 20.03.2010, the petitioner was informed that the coal supply would be made for a period of one month only and thereafter, the plant would be inspected by a team constituted by the competent authorities/FDs or CCL.
(vi) After execution of conditional agreement, the CCL authorities accepted the draft for the month of March, 2010 and further, released the coal for the said month and after supply of one month coal, the unit was inspected on 22.04.2010 and on the basis of the said inspection report, the authorities decided to continue supply coal again for one month.
(vii) It is the further case of the writ petitioner that the sale and marketing Division of CCL who were continuing with month-to- month release with breaks in certain months without any rhyme or reason carried another inspection of the unit after 22.04.2010 6 W.P.(C) No.568/2012 2025:JHHC:30573-DB on 22.09.2010 by a team consisting of CCL authorities and retired CBI officials. The said inspection team gave their report in the following manner as under:
(i) The factory was in running order.
(ii) 21 labourers were working.
(iii) Existing stock was approximately 300 tonnes (raw material) as seen and 300 tonnes SSF.
(viii) After 2 ½ months from the date of aforesaid inspection, another inspection of petitioner's unit was carried out by a team consisting of CCL authorities and CBI officials who again in terms of their report dated 05.12.2010 certified the working status of the petitioner's unit. Despite three positive inspection reports, the authorities of CCL without any rhymes and reasons have not released the coal for the month of March, 2011, the amount of which, has already been deposited by the petitioner with the CCL.
(ix) The petitioner on account of non-release of D.O. for the month of March, 2011 and onwards filed detailed representation dated 02.05.2011 and 04.05.2011 with a copy of S.P., CBI, CMD, CCL, DT and CVO but till date nothing has been done and the petitioner has been facing great difficulties and the same has also been causing irreparable loss to the petitioner.
(x) Thereafter, the petitioner was offered for booking of coal for the month of March, 2011 and the petitioner deposited the money to the extent of approximately Rs.78 lakhs against the said offer but the coal for the month of March has not yet been utilized in 7 W.P.(C) No.568/2012 2025:JHHC:30573-DB favour of the petitioner nor respondent CCL has issued any sale order of the said amount.
(xi) During pendency of the said writ petition, the respondent authorities vide letter having Reference No.CCL/HQ/C- 4/Balaji/1059-60 dated 27.12.2011 by which the Fuel Supply Agreement dated 16.03.2010 has been terminated invoking Clause 15.1.5 of the Fuel Supply Agreement. The said order is under challenge in this writ petition.
Submissions of the learned counsel for the petitioner
3. Mr. Rajendra Krishna, learned counsel for the writ petitioner has taken the following grounds in assailing the impugned order: -
(i) There is no specific finding if the impugned order would be taken into consideration of diversion of coal.
(ii) The imputation has been made against the writ petitioner merely on the basis of presumption, since, the respondents have never inspected the petitioner's unit.
(iii) Only inspection which is available on record has been carried out at the time when the CBI has raided the petitioner's unit and there is no independent inspection said to be there by the respondents.
(iv) It is not the case that the Unit is not running, rather, subsequent report of C.C.L. authority suggests that petitioner's unit was running which has been certified by giving a certificate as per the statement made at 8 W.P.(C) No.568/2012 2025:JHHC:30573-DB paragraphs-20 and 21 to the writ petition, supported by Annexure-8 & Annexure-9 to the writ petition.
(v) It has been contended that the condition stipulated under Clause 4.4 of the Agreement, is not available, since, there is no reference in the impugned order that the coal was sold out or diverted or transferred and hence, exercising the power under Clause 15.1.1. of the Agreement in passing the order of termination of the Agreement, is not available but even then, the agreement has been terminated.
4. Learned counsel, based upon the aforesaid grounds, has submitted that order impugned therefore needs interference. Submissions of the learned counsel for the respondents-CCL
5. Per contra, Mr. Amit Kumar Das, learned counsel for the respondents-CCL has taken the following grounds by defending the impugned order passed by the respondent-authority: -
(i) It is incorrect on the part of the writ petitioner to take the ground that there was no inspection, rather, it would be evident from the impugned order itself that the inspection was carried out independently, as has been referred that the irregularities have been found at the time of surprise checking.
(ii) Show cause notice also stipulates that the Unit had lifted coal of around 22052.33 MT during the financial year but no documents could be produced to the 9 W.P.(C) No.568/2012 2025:JHHC:30573-DB inspecting team to prove the consumption of raw material. It has also been found in course of physical inspection of the unit shows that the unit runs on generator set however the bills/invoices pertaining to procurement of diesel were not available. The show cause also finds reference of the fact of failure to produce Labour Licence/PF/ESI register/Returns/Wages and Attendance Register, Certificate issued by Pollution Control Board, Certificate issued by District Industries Centre, Sale Register, Invoice bills, Stock Register, Production register etc.
(iii) It has been contended that based upon the aforesaid, non-availability of the documents, a show cause notice was issued to the writ petitioner asking the explanation by pointing out all these irregularities.
The petitioner has submitted its reply but the same has not been found to be satisfactory, as has been referred in the impugned order as under paragraphs- 1 to 4 and based upon the said reason, the respondents' authorities, in exercise of power conferred under Clause 15.1.1 of the Agreement has terminated the same with forfeiture of the security deposit amounting Rs.51,84,000/- in accordance to the terms of the agreement out of total deposit of 10 W.P.(C) No.568/2012 2025:JHHC:30573-DB Rs.52,00,000/- under Clause 3.6 of the agreement.
6. Learned counsel for the respondents-CCL, based upon the aforesaid grounds, has submitted that there is no infirmities in the decision so taken by the respondents' authorities, hence, the writ petition lacks merit.
Analysis
7. We have heard the learned counsel for the parties, gone through the pleadings made in the writ petition, the counter affidavit and the terms and conditions of the agreement as also the finding recorded in the impugned order.
8. This Court needs to consider the issue, i.e.,
(i) "Whether the order impugned dated 27.12.2011 suffers from an error warranting interference by this Court by issuing Writ of Certiorari and;
(ii) Whether on analysis of the facts and circumstances of the case, there is breach in the terms and conditions of the agreement."
9. Since both the issues are interlinked, therefore, the same are being taken up together.
10. This Court, before considering the aforesaid issue, needs to refer herein the underlying principle in which the Writ of Certiorari is to be issued.
11. The law in this regard has been settled, as has been held in the case of Syed Yakoob vs. Radhakrishnan, reported in A.I.R. 1964 Supreme Court 477, wherein, at paragraph-7 it has been 11 W.P.(C) No.568/2012 2025:JHHC:30573-DB held as under:
"7. The question about the limits of the jurisdiction of High Courts in issuing a writ of certiorari under Art. 226 has been frequently considered by this Court and the true legal position in that behalf is no longer in doubt. A writ of certiorari can be issued for correcting errors of jurisdiction committed by inferior courts or tribunals:
these are cases where orders are passed by inferior courts or tribunals without jurisdiction, or is in excess of it, or as a result of failure to exercise jurisdiction. A writ can similarly be issued where in exercise of jurisdiction conferred on it, the Court or Tribunal Acts illegally or improperly, as for instance, it decides a question without giving an opportunity to be heard to the party affected by the order, or where the procedure adopted in dealing with the dispute is opposed to principles of natural justice. There is, however, no doubt that the jurisdiction to issue a writ of certiorari is a supervisory jurisdiction and the Court exercising it is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior Court or Tribunal as result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be. In regard to a finding of fact recorded by the Tribunal, a writ of certiorari can be issued if it is shown that in recording the said finding, the tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected by a writ of certiorari. In dealing with this category of cases, however, we must always bear in mind that a finding of fact recorded by the Tribunal cannot be challenged in proceedings for a writ of 12 W.P.(C) No.568/2012 2025:JHHC:30573-DB certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the Tribunal, and the said points cannot be agitated before a writ Court. It is within these limits that the jurisdiction conferred on the High Courts under Art. 226 to issue a writ of certiorari can be legitimately exercised."
12. Similarly, in the case of Hari Vishnu Kamath vs. Ahmad Ishaque and Ors., reported in AIR 1955 Supreme Court 233, the Hon'ble Supreme Court has held at paragraph-21 as hereunder: -
"21. With regard to the character and scope of the writ of certiorari and the conditions under which it can be issued, the following propositions may be taken as established: (1) Certiorari will be issued for correcting errors of jurisdiction, as when an inferior Court or Tribunal acts without jurisdiction or in excess of it, or fails to exercise it. (2) Writ of certiorari will also be issued when the Court or Tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice. (3) The Court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction. One consequence of this is that the Court will not review findings of fact reached by the inferior Court or Tribunal even if they be erroneous. This is on the principle that a Court which has jurisdiction over a subject-matter has jurisdiction to decide wrong as well as right, and when the Legislature does not choose to confer a right of appeal against that decision, it would be defeating its purpose and policy, if a superior Court were to rehear the case on the evidence and substitute its own findings 13 W.P.(C) No.568/2012 2025:JHHC:30573-DB in certiorari."
13. In the case of Sawarn Singh and Anr. vs. State of Punjab and Ors., reported in (1976) 2 SCC 868, their Lordships, while discussing the power of writ under Article 226 of the Constitution of India for issuance of writ of certiorari, has been pleased to hold at paragraph nos.12 and 13 as hereunder:
"12. Before dealing with the contentions canvassed, it will be useful to notice the general principles indicating the limits of the jurisdiction of the certiorari jurisdiction can be exercised only for correcting errors of jurisdiction committed by inferior courts or tribunals. A writ of certiorari can be issued only in the exercise of supervisory jurisdiction which is different from appellate jurisdiction. The Court exercising special jurisdiction under Article 226 is not entitled to act as an appellate Court. As was pointed out by this Court in Syed Yakoob's case (supra).
13. In regard to a finding of fact recorded by an inferior tribunal, a writ of certiorari can be issued only if in recording such a finding, the tribunal has acted on evidence which is legally inadmissible, or has refused to admit admissible evidence, or if the finding is not supported by any evidence at all, because in such cases the error amounts to an error of law. The writ jurisdiction extends only to cases where orders are passed by inferior courts or tribunals in excess of their jurisdiction or as a result of their refusal to exercise jurisdiction vested in them or they act illegally or improperly in the exercise of their jurisdiction causing grave miscarriage of justice."
14. Adverting to the factual aspect, the relevance first would be to refer the terms and conditions of the Contract and bearing upon the case are Clause 3.6, Clause 4.4 and Clause 15.1.1, for ready reference, these Clauses are being referred as under: - 14 W.P.(C) No.568/2012
2025:JHHC:30573-DB "3.6 In the event of termination of the Agreement by the Seller in accordance with Clause 15.1.4 to 15.1.8, the Seller shall be entitled to forfeit the Security Deposit of the Purchaser in addition to any other rights vested with the Seller upon such termination. 4.4 The total quantity of Coal supplied pursuant to this Agreement is meant for use at SSF plant at Vill: Patan More, PO: Patan (Naudiha), Dist: Palamau - 822 123 as listed in Schedule-1. The Purchaser shall not sell/divert and/or transfer the Coal for any purpose whatsoever and the same shall be treated as material breach of Agreement. In the event that the Purchaser engages or plans to engage into any such resale or trade, the Seller shall terminate this Agreement forthwith without any liabilities or damages, whatsoever, payable to the Purchaser. It is expressly clarified that the Seller shall reserve the right to verify including the right to inspect/call for any document from the Purchaser and physically verify the end-use of Coal and satisfy itself of its authenticity. The Purchaser shall have the obligation to comply with the Seller's directions/ extend full co-operation in carrying out such verification/inspection.
15.1.1 In the event that either Party is rendered wholly or partially unable to perform its obligations under this Agreement ("Affected Party") because of a Force Majeure Act, as described in Clause 16 below, and such inability to perform lasts for not less than a total of ninety (90) days in any continuous period of one hundred eighty (180) days, and in the considered assessment of the other Party ("Non- Affected Party") there is no reasonable likelihood of the Force Majeure Act coming to an end in the near future, such Party 15 W.P.(C) No.568/2012 2025:JHHC:30573-DB shall have the right to terminate this Agreement, by giving at least ninety (90) days prior written notice to the Affected Party of the intention to so terminate this Agreement. In such event, the termination shall take effect on expiry of the notice period or ninety (90) days whichever is later, and the Parties shall be absolved of all rights/obligations under this Agreement, save those that had already accrued as on the effective date of termination."
15. It is evident from Clause 3.6 that in case of termination of the Agreement by the Seller in accordance with Clause 15.1.4 to 15.1.8, the Seller shall be entitled to forfeit the Security Deposit of the Purchaser in addition to any other rights vested with the Seller upon such termination.
16. Clause 4.4 stipulates that total quantity of Coal supplied pursuant to this Agreement is meant for use at SSF plant at Vill: Patan More, PO: Patan (Naudiha), Dist: Palamau - 822 123 as listed in Schedule-1. The Purchaser shall not sell/divert and/or transfer the Coal for any purpose whatsoever and the same shall be treated as material breach of Agreement. In the event that the Purchaser engages or plans to engage into any such resale or trade, the Seller shall terminate this Agreement forthwith without any liabilities or damages, whatsoever, payable to the Purchaser. It is expressly clarified that the Seller shall reserve the right to verify including the right to inspect/call for any document from the Purchaser and physically verify the end-use of Coal and satisfy itself of its authenticity. The Purchaser shall have the obligation to 16 W.P.(C) No.568/2012 2025:JHHC:30573-DB comply with the Seller's directions/ extend full co-operation in carrying out such verification/inspection.
17. It is evident from Clause 15.1.1 that either Party is rendered wholly or partially unable to perform its obligations under this Agreement ("Affected Party") because of a Force Majeure Act, as described in Clause 16 below, and such inability to perform lasts for not less than a total of ninety (90) days in any continuous period of one hundred eighty (180) days, and in the considered assessment of the other Party ("Non- Affected Party") there is no reasonable likelihood of the Force Majeure Act coming to an end in the near future, such Party shall have the right to terminate this Agreement, by giving at least ninety (90) days prior written notice to the Affected Party of the intention to so terminate this Agreement. In such event, the termination shall take effect on expiry of the notice period or ninety (90) days whichever is later, and the Parties shall be absolved of all rights/obligations under this Agreement, save those that had already accrued as on the effective date of termination.
18. Clause 4.4 provides that as per the condition, the agreement is to be terminated in the event that the Purchaser engages or plans to engage into any such resale or trade, the Seller shall terminate this Agreement.
19. Clause 15.1.1 confers power that in the event, either party is rendered wholly or partially unable to perform its obligations under this Agreement, then, Agreement is to be terminated. 17 W.P.(C) No.568/2012
2025:JHHC:30573-DB
20. Adverting to the factual aspect, it is evident that a joint surprise check was conducted jointly by the team consisting of CCL authorities and retired CBI officials in presence of the representatives of the purchaser. In consequent upon the same, an FIR has been lodged by the Superintendent of Police ACB, Ranchi on 19.04.2011 being RC No.07(A)/2011-R under Sections 120-B r/w 420 IPC and 13-(2) r/w 13(1)(d) of PC Act 1988 mentioning allegations against the purchaser for wrongful gain to themselves to the tune of Rs.1,16,85,668 and corresponding loss the seller M/s Central Coalfields Limited.
21. The criminal case as has been submitted is going on, in which, the trial is in progress.
22. The respondent has also decided to take action on the basis of terms and conditions of the Agreement, particularly, as referred under Clause 4.4 and Clause 15.1.1 thereof. Such decision was taken based upon the irregularities found to be there considering the same to be a breach in the terms and conditions of the Agreement. The following irregularities have been found, i.e., a. Stock of raw material and Production register (maintained till 30.06.2010) b. U.S. Coal register (maintained till 07.06.2010) c. Stock of finished goods register (maintained till 30.06.2010) d. SSF Coal sale register (maintained till 15.06.2010) e. The unit had lifted coal of around 22052.33 MT during the financial year and no documents could be produced to the 18 W.P.(C) No.568/2012 2025:JHHC:30573-DB inspecting team to prove the consumption of raw material. f. The physical inspection of the unit shows that the unit runs on generator set however the bills/invoices pertaining to procurement of diesel were not available.
g. The challans /bill books required essentially for sale of coal were not available in the factory premises.
23. The respondents-CCL, in order to ascertain as to whether the coal was being used in the unit for which the coal was being supplied under the linkage system as also called upon the petitioner to produce the labour licence/PF/ESI register/Returns/Wages and Attendance Register, Certificate issued by the Pollution Control Board, Certificate issued by the District Industries Centre, Sale Register, Invoice bills, Stock Register, Production register etc. but no such documents have been provided.
24. The further reason was that the unit had lifted coal of around 22052.33 MT during the financial year and no documents could be produced to the inspecting team to prove the consumption of raw material.
25. Further, the physical inspection of the Unit has clarified to the respondents-authorities that the unit runs on generator set however, the bills/invoices pertaining to procurement of diesel were not available. Further, the challans/bill books required essentially for sale of coal were not available in the factory premises.
19 W.P.(C) No.568/2012
2025:JHHC:30573-DB
26. The respondents-authorities, on consideration of the aforesaid irregularities, said to be breach in the terms and conditions of the Agreement has called upon the writ petitioner to file an explanation in terms of the show cause notice dated 12.06.2011 and in turn thereof, the reply has been furnished.
27. The respondents-authorities have found the said reply not to be satisfactory by assigning the reason, i.e., (1) The justification for not keeping documents in Purchaser's factory premises is unsatisfactory in as much as documents with regards to transaction till June 2010 was available in the factory premises whereas documents beyond that were not available and hence such contention is trashed.
(2) The Purchaser failed to produce the relevant documents on the pretext of being seized by CBI is not tenable because the document were seized at a later date after the inspection and the Purchaser could have had photocopies or could have approached the appropriate forum to get the certified copies of the same to rebut the allegations leveled in show cause.
(3) The purchaser had lifted coal of around 22052.33 MT during the relevant financial year but the check team conspicuously had observed that the plant was inoperative and there was no sign of operation during the recent past and also there was no justification furnished by the purchaser in this regard in the show cause dated 12.06.2011, manifestly reveals that coal was neither been processed nor products sold from the said premises of the said unit.
20 W.P.(C) No.568/2012
2025:JHHC:30573-DB (4) The contention that the documents were not kept in factory premises because of threat of MCC is also not convincing because documents up to June 2010 along with a stock of coal was available in the premises of the unit. This contention is further contrary to the reply in the personal hearing wherein they have explicitly admitted that there was no threat of theft or loot of coal and hence the statement of MCC threat is not at all plausible.
28. This Court is to scrutinize, as to whether, the said reasons which have been found to be not satisfactory, can be said to suffer from arbitrariness or without any application of mind.
29. This Court, on consideration of the reply furnished by the writ petitioner which is available on record, has found that evasive reply has been submitted so far as it relates to producing the expenditure incurred in running the generator by not producing the bills from the diesel retail outlet.
30. The case of the writ petitioner when has been made that there is no electricity supply, rather, the Unit is running on generator, then certainly the generator will run on consumption of diesel and for that, diesel was to be purchased and in order to maintain the account, the bills which are being issued by the retail outlet ought to have been there with the record of the petitioner's unit. But no such record has been produced.
31. The explanation has also not been considered by this Court to be satisfactory with respect to the consumption of the coal which was lifted in the aforesaid financial year around 22052.33 MT, 21 W.P.(C) No.568/2012 2025:JHHC:30573-DB since, no documents could be produced to the inspecting team to prove the consumption of raw material.
32. It is the specific case that for the aforesaid purpose, the petitioner's unit has been established for the manufacturing process of the coal for its consumption and if it is being sold out in favour of the purchaser, then, certainly the said purchase is to be supported by the vouchers in order to substantiate the element of transaction of the manufactured products of selling out to the subsequent purchaser. But no such document has been found to be there and even, it has not been provided by the writ petitioner to the inspecting team.
33. The stock of raw material and production register has been found to be maintained till 30.06.2010, U.S. Coal register has been found to be maintained till 07.06.2010, Stock of finished goods register has been found to be maintained till 30.06.2010 and SSF Coal sale register has been found to be maintained till 15.06.2010. Thereafter, the aforesaid records have not been maintained.
34. The justification which has been shown on behalf of the writ petitioner for not keeping the documents in purchaser's factory premises therefore if has been considered to be unsatisfactory, the same cannot be said to suffer from an error, based upon the reason, as referred in the impugned order that the document with regard to transaction till 2010 was available in the factory premises whereas the documents beyond that, were not available 22 W.P.(C) No.568/2012 2025:JHHC:30573-DB without any justifiable reason and there cannot be any reason if the document is available prior to June, 2010 and the claim of the writ petitioner is that the Unit was running, then, certainly after June, 2010 also the said document would be there.
35. Similarly, the explanation which has been furnished pertaining to purchase of coal of around 22052.33 MT but the check team conspicuously had observed that the plant was inoperative and there was no sign of operation during the recent past and also there was no justification furnished by the purchaser in this regard in the show case dated 12.06.2011 and in absence of any justification, if the said reply has been found to be not satisfactory, the same cannot be said to suffer from an error.
36. Further, explanation is that the documents were not kept in factory premises because of threat of MCC, is also not found to be satisfactory, since, the documents upto June, 2010 along with a stock of coal was available in the premises of the Unit.
37. Further, in course of personal hearing, it has been brought to the notice by the writ petitioner to the respondents-authorities that there was no threat of theft or loot of coal by the MCC. No document pertaining to Labour Licence/PF/ESI register/Returns/Wages and Attendance Register, Certificate issued by Pollution Control Board, Certificate issued by District Industries Centre, Sale Register, Invoice bills, Stock Register, Production register etc. have been produced.
38. The authorities, if in such circumstances, have found the reply 23 W.P.(C) No.568/2012 2025:JHHC:30573-DB furnished by the petitioner to be not satisfactory, the same cannot be said to suffer from any vice of arbitrariness or malice.
39. So far as the ground taken and stated at paragraphs-20 and 21 to the writ petition, supported by Annexure-8 and 9 is concerned, the same cannot be ascertained in absence of reply of the show cause having not been appended with the paper book, "as to whether, the writ petitioner has taken the aforesaid ground for its consideration or not."
40. This Court, on scrutiny of the aforesaid finding and coming back to the condition of Contract as contained under Clause 4.4 wherein, it has been provided that total quantity of Coal supplied pursuant to this Agreement is meant for use at SSF plant. The purchaser shall not sell/divert and/or transfer the coal for any purpose whatsoever and the same shall be treated as material breach of Agreement.
41. The question therefore is that;
"whether on the basis of irregularities pointed out for the purpose of coming to the conclusion that the Unit was not running, will it be treated as material breach of Agreement."
42. The specific condition is there that whatever coal is being supplied that is only for the purpose for its use at SSF plant and there shall not be sell/divert and/or transfer the coal for any purpose whatsoever and the same shall be treated as material breach of Agreement.
43. Herein, the petitioner although has taken the plea that there is no 24 W.P.(C) No.568/2012 2025:JHHC:30573-DB sell or transfer or even diversion of the coal to any other purposes but the irregularities as have been found of no record having been maintained after 30.06.2010 so far as it relates to stock of raw material and production register, upto 07.06.2010 so far as it relates to U.S. coal register, upto to 30.06.2010 so far as it relates to stock of finished goods register and upto 15.06.2010 so far as it relates to SSF coal register. The unit although had lifted coal of around 22052.33 MT but no documents could be produced to the inspecting team to prove the consumption of raw material and even bills/invoices pertaining to procurement of diesel were not available. Even though, the Unit was said to run on generator. No document pertaining to Labour Licence/PF/ESI register/Returns/Wages and Attendance Register, Certificate issued by Pollution Control Board, Certificate issued by District Industries Centre, Sale Register, Invoice bills, Stock Register, Production register etc., have been produced.
44. All these things only indicate that if the coal was being supplied and the factory was not in running condition, then, it is a case of diversion of coal through sell or transfer and in that view of the matter, it will be said to be material breach of Agreement.
45. The respondents' authorities, if in the aforesaid pretext, has exercised the power conferred under Clause 15.1.1 of the Agreement by terminating the Contract, which according to the considered view of the Court, cannot be said to be unjust and improper.
25 W.P.(C) No.568/2012
2025:JHHC:30573-DB
46. We have already dealt with herein the power of issuance of Writ of Certiorari which can only be issued if there is any error apparent on the face of the order or the order is without any jurisdiction or the order suffers from perversity.
47. This Court, based upon the reasons as referred hereinabove and the reasons as available in the impugned order, as also, applying the principle laid down by the Hon'ble Apex Court for issuance of Writ of Certiorari, is of the view that the order impugned passed by the respondents' authorities, cannot be said to suffer from an error, hence, the same is not fit to be interfered with.
48. Accordingly, the instant writ petition fails and is dismissed.
49. Pending interlocutory application(s), if any, stands disposed of.
(Sujit Narayan Prasad, J.)
I Agree
(Arun Kumar Rai, J.) (Arun Kumar Rai, J.)
26/09/2025
Rohit/-A.F.R.
Uploaded on 26.09.2025
26
W.P.(C) No.568/2012