Jharkhand High Court
M/S Maa Durga Enterprises vs State Of Jharkhand & Ors on 19 May, 2010
Author: R. K. Merathia
Bench: Ramesh Kumar Merathia
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 5385 of 2009
with
W.P.(C) No. 5321 of 2009, W.P.(C) No. 5339 of 2009, W.P.(C) No. 5340 of
2009, W.P.(C) No. 5342 of 2009, W.P.(C) No. 5344 of 2009, W.P.(C) No.
5345 of 2009,W.P.(C) No. 5352 of 2009, W.P.(C) No. 5355 of 2009,
W.P.(C) No. 5368 of 2009, W.P.(C) No. 5387 of 2009, W.P.(C) No. 5392 of
2009, W.P.(C) No. 5322 of 2009, W.P.(C) No. 5369 of 2009, W.P.(C) No.
5585 of 2009, W.P.(C) No. 5583 of 2009, W.P.(C) No. 5839 of 2009 &
W.P.(C) No. 6092 of 2009
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M/s Maha Laxmi Enterprises, Palamau
(Petitioner in W.P. (C) No. 5385 of 2009)
M/s. National Fuels , Daltonganj
(Petitioner in W.P. (C) No. 5321 of 2009)
M/s India (SF) Prducts Company, Daltongaj
(Petitioner in W.P. (C) No. 5339 of 2009)
M/s. Jagdish Fuel Industries, Palamau
(Petitioner in W.P. (C) No. 5340 of 2009)
M/s. Deccan Trade Linc, Palamau
(Petitioner in W.P. (C) No. 5342 of 2009)
M/s. Maa Durga Enterprises, Palamau
(Petitioner in W.P. (C) No. 5344 of 2009)
M/s. Volvo Enterprises, Palamau
(Petitioner in W.P. (C) No. 5345 of 2009)
M/s. Spice Jet Enterprises, Palamau
(Petitioner in W.P. (C) No. 5352 of 2009)
M/s. F. G. Engeecom & Industries, Dalgonganj
(Petitioner in W.P. (C) No. 5355 of 2009)
M/s. Classic Chemicals, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5368 of 2009)
M/s. Bhasker Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5387 of 2009)
M/s. Jai Mata Jee Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5392 of 2009)
M/s. Balajee Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5322 of 2009)
M/s. Shiv Coke Briquettes &Manufacturing Co. Daltonganj,Palamau
(Petitioner in W.P. (C) No. 5369 of 2009)
M/s. Sri Salasar Mineral Processing Works, Tendua Kalan, Palamau
(Petitioner in W.P. (C) No. 5583 of 2009)
M/s. Vananchal Mineral & Processing Works, Kataiya, Palamau
(Petitioner in W.P. (C) No. 5839 of 2009)
M/s. Shiv Sagar Industries, Manuadih, Ramgarh
(Petitioner in W.P. (C) No. 6092 of 2009)..
Versus
1. The State of Jharkhand through the Secretary, Department of
Industries
2. Jharkhand State Mineral Development Corporation Ltd. Ranchi
3. The Managing Director, Jharkhand State Mineral Development
Corporation Ltd. , Ranchi
2
4. In-Charge, Coal Marketting, Jharkhand State Mineral
Development Corporation Ltd. Ranchi
5. The Joint Director Industries, Directorate of Industries, Govt.
of Jharkhand, Ranchi ... ... Respondents
( In all cases)
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CORAM: HON'BLE MR. JUSTICE RAMESH KUMAR MERATHIA
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For the Petitioner : M/s. Anil Kumar Sinha &
Ajit Kumar, Advocate
For the State : Mr. A. Allam, Sr. S.C. II.
For the JSMDC : Mr. Anoop Kumar Mehta, Advocate.
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C.A.V. on 30.4.2010 Delivered on 19.5.2010
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9. 19.5.2010: All these writ petitions involving common questions were heard together at length. Parties agreed that these writ petitions can be disposed of on the basis of pleadings of W.P. (C) No. 5385 of 2009.
2. These writ petitions have been filed for directing the respondent-Jharkhand State Mineral Development Corporation Limited (JSMDC for short) to resume the coal supply to the petitioners from the month of October, 2009, and for quashing the letters under which, the coal supply agreements have been terminated/ suspended.
3. According to the petitioners, pursuant to Notice Inviting Tender (N.I.T.) dated 6.12.2007 issued by JSMDC inviting applications for purchase of coal of Coal India Limited (C.I.L.) collieries from JSMDC, they applied for purchase/allotment of coal. JSMDC asked the Deputy Commissioner, Palamau to hold preliminary inquiry at the District level about the status of the petitioners. Accordingly, three men committee consisting of the District Mining Officer; the General Manager, District Industries Centre, Medninagar; and the Additional Collector, Palamau inspected and recommended allotment of 350 M.T. coal per month. Accordingly, they entered into the agreements; deposited money, and started lifting coal, allotted to them, from April, 2009. In July JSMDC asked the petitioners to submit the utilization report with other documents and informations, which the petitioners complied in August and October, 2009, 3 but while the petitioners were running their industries the allotment of coal was discontinued from October 2009. Then they made several representations. But the coal supply agreements have been terminated/suspended without any show cause notice and without affording opportunity of hearing to the petitioners.
4. On the other hand the respondents justified their actions.
5. Accordingly, on 4.12.2009 the following order was passed in these writ petitions:-
"All these writ petitions involve similar controversy and therefore this common interim order is being passed in all these petitions.
These are in all 14 writ petitions of "tiny"
industries, as they are known whose supply/allocation of coal under the F.S.A. has either been cancelled or suspended. The cancellation/suspension is due to the suspicion on the part of the State Government that these industries do not exist on the spot. This suspicion has been generated because letters sent to some of these industries were returned with the endorsement that the unit was not found on the spot. This in turn led to a suspicion that in the entire district there has been some large scale fraud by showing non-existent industries to be working on the spot and thereby obtaining allocation of coal through F.S.A. Having regard to the nature of controversy, in stead of wasting time in obtaining lengthy affidavits from the parties, hearing lengthy arguments only for deciding the question of fact whether the industries actually exist on the spot or not, it seems to be more appropriate to require a dependable officer to conduct a spot inspection and to submit a report regarding existence of each of these 14 industries on the spot and either their running or their ability to run upon supply of fuel, along with photographs taken on the spot to corroborate the report. For this purpose, the Sub-Judge of the district Palamau or if the Sub-Judge, Palamau is not available for any reason, another civil Judicial Officer to be nominated on or before 10.12.2009 by the District Judge, Palamau is hereby appointed for the above purpose. The petitioners will produce a certified copy of this order along with a list of names and complete addresses of each industry involved in these petitions before the District Judge, Palamau on or before 9th December, 2009 to enable him to issue necessary direction to the concerned Civil Judicial Officer. Because on 12.12.2009 there are elections in the district of Palamau, therefore, the Judicial Officer will conduct his inspection on 13.12.2009 and if the inspection cannot be completed on 13.12.2009 he may continue the same on 14.12.2009. If the inspection is continued on 4 14.12.2009 the Officer will be treated to be on duty for that day. The report will be sent through the District Judge, Palamau in sealed cover via special messenger so as to reach this Court by 16.12.2009. The photographs taken by a digital camera may be sent in the form of a memory card which is normally used in such cameras so that time is not wasted in getting them printed in Palamau.
The Deputy Commissioner, Palamau will for this purpose arrange a proper vehicle with appropriate security escort for the Judicial Officer at 9.00 A.M. on 13.12.2009 at the residence of the Judicial Officer. The learned counsel for the State will intimate this order to the Deputy Commissioner, Palamau by FAX by 09.12.2009.
The learned counsel for the petitioners undertakes to supply a good quality digital camera to the Judicial Officer for this purpose along with a photographer for the period of two days.
A certified copy of this order will be issued on payment of requisite charges by 05.12.2009"
6. Pursuant to the said order a report from Sub Judge-1, Palamau, Daltonganj dated 15.12.2009 sent through the learned District Judge was received. The Sub Judge opined that the industries were in existence and were able to run upon supply of fuel and they were found in running condition. Along with report photographs and other documents were enclosed.
7. On 27.1.2010, the parties were given photo copies of the relevant documents/ reports for filing their objections if any.
8. Thereafter, when the matters were taken up on 24.2.2010, counsel for the petitioners submitted that in view of the said reports, the writ petitions should be allowed and JSMDC be directed to resume coal supply.
9. On the other hand, learned counsel for the respondents submitted that as per the said order passed on 4.12.2009, the inspections were conducted on 13/14.12.2009, and within these 9-10 days the petitioners got time to manage the show by window dressing, which will find support from the stereotyped report of learned Sub Judge.
10. On being prima facie satisfied with the said submissions of the respondents, I thought it proper to get a confidential inquiry done through the Vigilance Department, 5 without indicating anything in the court. Accordingly only this order was passed on 24.2.2010-
"Heard the parties. Order is reserved."
11. Accordingly a confidential letter dated 19th March, 2010 was issued to the Director General of Police, Vigilance Bureau, Jharkhand, Ranchi. One inquiry report for 14 units was received. But when these cases were got listed on 7.4.2010, it was noticed by this Court that writ petitions of 3 more units were tagged with these writ petitions. Accordingly, reports with regard to these 3 units were also asked, confidentially, and simply this order was passed-
"Put up for orders on 17.4.2010."
12. Then on 17.4.2010, the following was passed:-
"Pursuant to the order dated 4.12.2009, reports were received. On 27.1.2010, the parties were given copies of relevant reports for their objection, if any. On 24.2.2010, State counsel objected to the reports, saying that the petitioners got time to manage the show by window dressing and therefore, the stereotyped reports have come.
In the circumstances, I thought it proper to get an inquiry done, confidentially, without indicating anything in the order. A confidential letter dated 19.3.2010 was sent to the Director General of Police, Vigilance Bureau, Jharkhand. One inquiry report was received for 14 units, but when the cases were listed on 7.4.2010, it was noticed that writ petition of three more units were tagged with these writ petitions. Accordingly, the matter was simply adjourned for 17.4.2010 and a report was called for, confidentially about the remaining three units.
The two sealed covers, containing the said reports, were opened in Court.
Let copies of the reports be supplied to the parties. Objections, if any, by the parties may be filed by 27.4.2010.
Put up on 30.4.2010 under the same heading for disposal, if possible.
Let a copy of this order be handed over the State Counsel, as prayed."
The parties were given liberty to look into the reports and raise their objection, if any.
13. On 30.4.2010, the parties were heard at length. Mr. Sinha, appearing for the petitioners objected to the said confidential reports on the following grounds. The judicial 6 officer correctly reported that the units of the petitioners exist. The respondents did not file written objections to such reports and without rejecting such reports; no further enquiry should have been done by this Court. The confidential enquiry has been done by the Vigilance behind the back of the petitioners. A big unit Kalawati Coal Company has been compared with the tiny units of the petitioners. The vigilance enquiry also shows that the units of the petitioners exists.
14. In reply it was submitted that decision was taken in a high level meeting to cancel/suspend the agreements when the coal utilization reports were asked but the letters returned and the petitioners, did not submit such reports, which showed that they have not utilized coal for specified purpose and have disposed off coal otherwise. Now this position finds support from the vigilance report. The Judicial Officer held enquiry after about 9-10 days from the order of this court and between this period, the petitioners managed the show, which is apparent form the stereotyped reports. It is further argued on behalf of the respondents that in such circumstances it cannot be said that the enquiry reports of the Judicial Officer should be believed and not the Vigilance enquiry. Moreover, both the reports are part of these proceedings. When the vigilance enquiry is confidential, it cannot be said that it was behind the back of the petitioners. It is also submitted on behalf of respondents that even if the observations about Kalawati Coal Company and other observations, in the vigilance report are kept aside for the sake of argument, petitioners' claim-that their units functioned for about 4-6 months, before they were closed in October, 2009, does not find support form the vigilance report. It was also said that the committee has recommended action against the General Manager, District Industry Centre, Medninagar, Palamau. It was lastly said that the petitioners have set up their units only for getting quota of coal for selling it at premium price.
15. The impugned letter dated 17.11.2009, issued to the petitioner in the first writ petition (W.P.C. No. 5385 of 2009 ) reads as follows:-
7"To M/s Mahalaxmi Enterprises Nimia, Sudana Palamau (Jharkhand) Sub: Order terminating Agreement No. 131 dated 10.08.2009 for sale of coal between M/s Jharkhand State Mineral Development Corporation Ltd., Doranda, Ranchi and M/s Mahalaxmi Enterprises District Palamau.
Sir, M/s Jharkhand State Mineral Development Corporation Ltd., Doranda, Ranchi has been entrusted with the duty of sale and distribution of coal to small/medium scale industrial units on the recommendation of District Level Committee and State Level Committee under New Coal Distribution Policy, 2007 vide resolution of the Dept. of Mines & Geology dated 13.05.2008 published in Jharkhand Gazette No. 395 dated 15.05.2008.
In the Jharkhand Gazette No. 395 dated 15.05.2008, it has been clarified that the District Level Committee is to verify the consumption and utilization of coal allocated to these units and the State Level Committee will examine the utilization of coal on the report by the District Level Committee.
The Director of Industries, Jharkhand, Ranchi vide its letter No. 1653 dated 6.7.08 sought for utilization report in the prescribed format from 181 industrial units. As per the report received from the Dept. of Industries it was found that 64 units are working while 14 units have not been established. Letters sent by the Industries Department in respect to 62 units have returned undelivered while in respect to 41 units no utilization report could be received by the Industries Department as in evident from the above mentioned letter.
The Secretary, Dept. of Industries, Govt. of Jharkhand, Ranchi has therefore directed the Managing Director JSMDC Lt. to cancel the allotment of coal if being made in respect to 62 units whose where about are not known.
The Director Industries Govt. of Jharkhand by her letter no. 2633 dated 11.11.09 has forwarded a list containing names of 62 units with a direction to comply with the decision taken in the meeting held on 15.10.09 and communicated to the Corporation vide letter No. 2492 dated 22.10.09 where by the Managing Director JSMDC Ltd. has been directed to cancel/terminate allotment of coal and report compliance to the said Directorate.
Now, therefore, in view of the orders and the directions passed by the Secretary, Industries Department. The Director of Industries, Govt. of Jharkhand, Ranchi and clause II(V) of the Coal Supply Agreement No. 131 Dated 10.08.2009 is hereby terminated.8
You are directed to collect amount if any, due to you from the Corporation, upon reconciliation of account within a period of 15 days from the date of receipt of this order.
By order of the competent authority.
Yours faithfully, (Pravir Kumar) I/c Coal Trading Cell"
16. Clause 10 and 11 and 12(iv) of the agreements entered between the petitioners and JSMDC, reads as follows:-
"10. End User Clause:
(i) The purchase hereby declares that the CIL coal to be purchased by them from the Seller in pursuance of this agreement shall not be diverted for any use other than the end-use as mentioned herein or traded in any other way and that the same will be used only for the purpose indicated in this agreement. In other words all coal to be supplied to the Purchaser shall be utilized as fuel/raw material for further processing in Mahalaxmi Enterprises Company/plant of the purchaser situated at Nimia, Sudna, Aurangabad, Medinagar, Palamau, Jharkhand.
(ii) The Purchaser has submitted/undertakes to submit an affidavit to the effect that the coal to be supplied to them shall be used only for the purpose specified herein.
(iii) The Seller, the Government of Jhakrhand or any of their authorised officer shall be free to visit the Purchaser's plant for verification of end-use of coal and the Purchaser shall be bound to facilitate the same extend all help and assistance and produce all documents and records which may be necessary for the purpose of such verification.
(iv) The Purchaser also hereby undertakes to furnish periodical certificates, as may be required by the Seller, from a practicing Chartered Accountant/Cost Accountant certifying end-use of coal to be supplied to them in terms of this agreement. The Purchaser further undertakes to supply such other information, and/or certificate as may be required by the Seller, during the term of this agreement.
11. Termination of Agreement:-
This agreement shall be liable to be terminated by the Seller on the occurrence of the following events. However, such termination shall be without prejudice to the accrued rights or obligations of the either party as it stood 9 immediately prior to the termination. The termination shall be dully communicated to the Purchaser in writing. The Seller shall bear no liability on account of such termination.
(i) If a material information furnished by the Purchaser before or after signing of this Agreement is found to be not true. This would also cause the security deposit to be forfeited.
(ii) On permanent closure of the end-use plant of the Purchaser or on shifting or relocating the same outside the State of Jharkhand.
(iii) If the Seller on its own motion or on the information furnished by others finds and is satisfied that the coal supplied under this agreement is put to a use other than the end-use specified in this agreement or is disposed of otherwise. This would also lead to forfeiture of the security deposit.
(iv) In the event of non payment of compensation for short-lifting of coal by the Purchaser within the permitted time or extension thereof if any. The security deposit would also be liable to be forfeited.
(v) On receipt of any order or direction of the State Government to that effect."
12 Miscellaneous:
(iv) Arbitration:-
In the event of any differences or dispute between the Seller and the Purchaser with reference to any matter arising out of this agreement such disputes or differences will be referred for arbitration to a Sole Arbitrator who will be nominated by the Manging Director, JSMDC in terms of the provisions of the Arbitration and Conciliation Act, 1996.
17. Thus it appears that the quota of coal was allotted with clear stipulation that it will be used only for the specified purpose and if it appeared to JSMDC that the coal supplied has not been used for the specified purpose, and it has been disposed off, otherwise, it could terminate/suspend the agreements. The impugned action cannot be said to be without any basis. Petitioners are claiming coal supply under the contract. Respondents are denying such claim on the basis of the contract. Actually, both the parties are alleging violation of contract, against each other. Such disputes cannot be decided in these writ petitions. Moreover, it is settled position that in such type of non-statutory contracts, petitioners cannot allege that there has been violation of the principles of natural justice. Further there appears to be an 10 arbitration clause.
18 In the facts and circumstances noticed above and for the reasons aforesaid, these writ petitions are dismissed. However, no costs.
(R. K. Merathia, J.) MK