Karnataka High Court
M/S Karam Chand Thapar vs Karnataka Power Corporation Limited on 12 November, 2025
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WP No. 12853 of 2018
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF NOVEMBER, 2025
BEFORE
THE HON'BLE MR. JUSTICE E.S.INDIRESH
WRIT PETITION NO.12853 OF 2018 (GM-RES)
BETWEEN:
M/S. KARAM CHAND THAPAR
AND BROTHERS (COAL SALES)
LIMITED A COMPANY INCORPORATED
UNDER THE PROVISIONS OF
THE COMPANIES ACT, 1956
HAVING ITS LOCAL HEAD OFFICE
AT BUX RANKA HOUSE, N.R. SQUARE
OTC ROAD, BENGALURU - 560002.
REPRESENTED BY ITS
DEPUTY GENERAL MANAGER.
...PETITIONER
(BY SRI. DHYAN CHINNAPPA, SENIOR COUNSEL FOR
SRI. PUTTEGOWDA K., ADVOCATE &
SMT. M.L. SUVARNA LAKSHMI, ADVOCATE)
Digitally signed by AND:
ARUNKUMAR M S
Location: HIGH
COURT OF KARNATAKA POWER CORPORATION LIMITED
KARNATAKA
SHAKTHI BHAVAN, 3RD FLOOR
BENGALURU - 560 001
REPRESENTED BY ITS
MANAGING DIRECTOR.
...RESPONDENT
(BY SRI. AJAY J. NANDALIKE, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA PRAYING TO QUASH
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COMMUNICATIONS ISSUED BY THE RESPONDENT IN (I) NO.A1
M1 B3/KCT/1367 DATED 23.01.2018 (UNDER ANNEXURE-D TO
THE WRIT PETITION) (II) NO.CE(FM)/MCL-RSR-KCT/309
DATED 10.02.2018 (UNDER ANNEXURE-F TO THE WRIT
PETITION) AND (III) NO.A1 M1 B3/KCT/1476 DATED
14.02.2018 (UNDER ANNEXURE-G TO THE WRIT PETITION) BY
ISSUE OF A WRIT IN THE NATURE OF CERTIORARI AND GRANT
ALL CONSEQUENTIAL BENEFITS.
THIS WRIT PETITION HAVING BEEN RESERVED FOR
ORDERS, COMING FOR PRONOUNCEMENT THIS DAY,
E.S. INDIRESH J., MADE THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE E.S. INDIRESH
CAV ORDER
1. In this Writ Petition, petitioner is assailing the
communications dated 23.01.2018 (Annexure-D), 10.02.2018
(Annexure-F) and 14.02.2018 (Annexure-G), issued by the
respondent.
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2. The facts in nutshell for the purpose of adjudication are
that, the petitioner claims to be in the business of liaisoning,
movement, handling and delivery of raw coal from coal fields to
thermal power stations and has been awarded with several
contracts by the respondent - Corporation. In this regard, the
petitioner and the respondent - Corporation had entered into a
contract agreement dated 05.02.2016 (Annexure-A) for a
period of one year and thereafter, the contract was extended
on 06.02.2017 (Annexure-B). It is also stated that, the
aforementioned contract agreement was extended for further
six months as per letter dated 05.02.2018 (Annexure-C). It is
further stated in the writ petition that, as per the terms and
conditions mentioned in Clause 3.0.1, the coal transportation
agency - petitioner herein shall supply raw coal as invoiced by
the Mahanadi Coalfields Limited, Talcher, Odisha and same has
to be carried out at the Raichur Thermal Power Station by the
respondent - Corporation and the petitioner - agency. It is
further stated that if the Grade/Gross Calorific Value (for short,
'GCV') band of coal falls below invoice grade, the difference of
cost of coal between the invoice Grade and the Grade
determined in sample and analysis at Raichur Thermal Power
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Station by the respondent was to be deducted from the coal
transportation agency bills i.e., the bill raised by the petitioner.
It is also stated that, the aforementioned method was adopted
to process the bill of the petitioner by recording the results at
the loading point and the end point of unloading. It is also
stated that, the respondent - Corporation has entered into an
agreement with the Central Institute of Mining and Fuel
Research (CIMFR), on 20.07.2017 to carryout the sampling and
analysis, on behalf of the respondent - Corporation as per the
communication addressed to the petitioner dated 23.01.2018
(Annexure-D). In this regard, the petitioner has addressed
letter dated 07.02.2018 (Annexure-E) to the respondent
informing that the results of CIMFR are not binding on the
petitioner as the agreement by the respondent with the CIMFR
was subsequent to the contract agreement with the petitioner
as per Annexure-A. It is stated in the writ petition that, the
petitioner has received the communication dated 10.02.2018
(Annexure-F), wherein, the respondent - Corporation has
stated that based on the report of the CIMFR, the bills of the
petitioner would be reviewed retrospectively. It is further stated
in the writ petition that the respondent - Corporation, with
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reference to the letter of the petitioner dated
07.02.2018(Annexure-E), has also addressed the
communication dated 14.02.2018 (Annexure-G), informing that
the respondent - Corporation has appointed CIMFR as its agent
to carryout sampling and analysis as per ASTM/BIS standards
and therefore, informed the petitioner to co-operate with
CIMFR accordingly. Being aggrieved by the said
communications as at Annexures - D, F and G, the petitioner
has presented this Writ Petition.
3. I have heard Sri. Dhyan Chinnappa, learned Senior
Counsel appearing for the petitioner and Sri. Ajay J.
Nanadalike, learned counsel for the respondent.
4. Sri. Dhyan Chinnappa, learned Senior Counsel appearing
for the petitioner invited the attention of the Court to Clause
17.0.0 of Annexure-A and submitted that, since the agreement
at Annexure-A was entered into between the petitioner and the
respondent - Corporation much before the agreement between
the respondent with CIMFR on 20.07.2017, in so far as testing
the sample and analysis of the coal received at unloading end
of the respondent - Thermal Plants and therefore, the reviewing
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of the bills raised much before the agreement of the
respondent-Corporation with the CIMFR is not justifiable and
accordingly, sought for interference of this Court. It is further
argued by the learned Senior Counsel appearing for the
petitioner that, the imposition of reviewing of the bills
retrospectively as per the communication dated 10.02.2018
(Annexure-F) is bad in law and accordingly, sought for
interference of this Court.
5. It is further argued by the learned Senior Counsel for the
petitioner by referring to the Judgment of the Hon'ble Supreme
Court in the case of ABL International Ltd. and Another Vs.
Export Credit Guarantee Corporation of India Ltd. and
Others, reported in (2004) 3 SCC 553 and in the case of
Subodh Kumar Singh Rathour Vs. Chief Executive Officer
and Others, reported in 2024 SCC OnLine SC 1682, that the
writ petition is maintainable under Article 226 of the
Constitution of India, as the respondent being an
instrumentality of the State under Article 12 of the Constitution
of India and the actions of the State instrumentality in
contractual matters must conform to Article 14 of the
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Constitution of India and therefore, sought for interference of
this Court.
6. Per contra, Sri. Ajay J. Nandalike, learned counsel
appearing for the respondent - Corporation, submitted that the
writ petition requires to be dismissed on the ground that, the
cause of action for the petitioner is based on the contractual
obligation between the parties and accordingly, sought for
dismissal of the petition.
7. It is further argued by the learned counsel appearing for
the respondent that, in order to determine the quality of coal,
as per the parameters, there is a requirement to conduct
sampling of the coal as per ASTM/BIS standards. Emphasising
on these aspects, it is argued that, the respondent -
Corporation was informed by the Ministry of Coal that, the
collieries have appointed CIMFR for sampling of coal at the
loading end and indicated that the very same agency be used
for sampling at the unloading end and as such, the respondent
- Corporation has appointed the same agency to carryout
sampling in terms of the contract agreement at Annexure-A
and as such, there is no material change in the contractual
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obligations and therefore, sought for dismissal of the petition.
It is further argued by the learned counsel for the respondent
by referring to paragraph 7 of the statement of objections
stating that, the CIMFR is not an external agency and
therefore, the said agency has to complete the quality as well
as quantity checking at both starting and end points of loading
and unloading of coal and therefore, sought to justify the action
of the respondent - Corporation.
8. In the light of the submissions made by the learned
counsel appearing for the parties, it is not in dispute that the
petitioner and the respondent - Corporation had entered into an
Agreement dated 05.02.2016 (Annexure-A) for effective
transportation of coal to Raichur Thermal Power Station
through various modes of transportation from Mahanadi Coal
Fields Limited, Odisha and such other places. Clause 3.0.0. of
the Agreement at Annexure-A provides for quality of coal to be
checked and verified at the time of loading as well as during
unloading coal at the end point. Clause 17.0.0 provides for
basis of payment and price adjustment between the parties. It
is not in dispute that the aforesaid process of transportation
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was being made as per the terms and conditions at Annexure-
A, however, dispute between the parties arose on account of
the entry of CIMFR into the affairs of the petitioner and the
respondent - Corporation. The respondent has entered into an
Agreement dated 20.07.2017 with CIMFR for sampling and
analysis of coal received at unloading ends of respondent -
Thermal Plants and in this regard, any agreement entered into
between the respondent - Corporation with the CIMFR at the
instance of Ministry of Coal should not be made applicable to
the petitioner retrospectively as per the agreement at
Annexure-A, between the petitioner and the respondent -
Corporation. It is obvious that, any entry of a third party
agency with the agreement between the petitioner and the
respondent - Corporation at the instance of either of the parties
to the Agreement at Annexure-A shall always be prospective in
nature and cannot be made applicable from the date of the
agreement as per Annexure-A. In this regard, I find force in the
submission made by the learned Senior Counsel for the
petitioner that, the respondent - Corporation being an
authority/agency/instrumentality of the State under Article 12
of the Constitution of India, must conform to the fairness and
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has to act reasonably. In this regard, it is relevant to note the
observation made by the Hon'ble Supreme Court in the case of
Subodh Kumar Singh Rathour (supra), (see paragraph
Nos.34 to 65) with regard to interference of the writ court
under Article 226 of the Constitution of India while exercising
judicial review in contractual matters.
9. Emphasising on the exercise of judicial review by this
Court under Article 226 of the Constitution of India in
contractual matters, it is relevant to emphasise on the
Judgment of the Hon'ble Supreme Court in the case of M.P.
POWER MANAGEMENT COMPANY LIMITED, JABALPUR Vs.
SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED
AND OTHERS, reported in (2023) 2 SCC 703, (see
Paragraph Nos. 53 to 82.15).
10. Following the declaration of law made by the Hon'ble
Supreme Court in the above decisions, I am of the view that,
the respondent being an instrumentality of the State and the
scope of judicial review in respect of the disputes falling within
the domain of contractual obligation must conform to Article 14
of the Constitution of India and therefore, there shall not be
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any arbitrariness on the part of the State instrumentalities to
breach the tenets of Article 14 of the Constitution of India.
Hence, applying the principles to the case on hand, wherein the
respondent - Corporation retrospectively applied the consensus
of agreement between itself with CIMFR on 20.07.2017 to the
functioning of the petitioner in terms of the Agreement at
Annexure-A is manifestly arbitrary in nature and the said action
of the respondent - Corporation is hereby deprecated.
Therefore, taking into consideration the factual aspects on
record, enforcing the agreement between the respondent -
Corporation and the CIMFR on 20.07.2017 retrospectively to
the sampling and analysis of coal received at unloading ends of
respondent - Corporation Plants is in violation of Article 14 of
the Constitution of India.
11. In the result, I pass the following:
ORDER
(i) The Writ Petition is allowed.
(ii) The Communications issued by the respondent bearing No.A1 M1 B3/KCT/1367 dated
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SD/-
(E.S.INDIRESH) JUDGE sac List No.: 1 Sl No.: 49