Karnataka High Court
M/S Indo Unique Flame Ltd vs M/S Karnataka Power Corporation Ltd on 16 January, 2021
Equivalent citations: AIRONLINE 2021 KAR 482
Author: P.S.Dinesh Kumar
Bench: P.S. Dinesh Kumar
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF JANUARY, 2021
BEFORE
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
WRIT PETITION No.54186 OF 2018
C/W
WRIT PETITION No.349 OF 2018 (GM-RES)
IN W.P. NO.54186 OF 2018
BETWEEN :
M/S INDO UNIQUE FLAME LTD
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT 1ST FLOOR, 301, KOTHARI BUILDING
NEAR SUDAMA CINEMA
WEST HIGH COURT ROAD
DHARAMPETH
NAGPUR-440 010
ACTING THROUGH ITS DULY
AUTHORIZED SIGNATORY
MR. PRASHANT RAMESHCHANDRA BADNORE ... PETITIONER
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
SHRI. CHINTAN CHINNAPPA, ADVOCATE)
AND :
M/S KARNATAKA POWER CORPORATION LTD
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956
AND STATE GOVERNMENT UNDERTAKING
HAVING ITS REGISTERED AND
CORPORATE OFFICE AT
SHAKTI BHAWAN, 82
RACE COURSE ROAD
BANGALORE-562 201
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REPRESENED BY ITS
LAW OFFICER
MR. D.GANGE GOWDA ... RESPONDENT
(BY SHRI. PRASAD NAIR, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE
RESPONDENT TO CARRY OUT A JOINT RECONCILIATION WITH THE
PETITIONER OF THE QUANTITY AND QUALITY OF COAL WASHED AND
SUPPLIED, STRICTLY IN TERMS OF THE AGREEMENT DATED OCTOBER
14, 2015 (ANNEXURE-A) AND AS REQUESTED BY THE PETITIONER IN
ITS REPRESENTATIONS DATED 08/09/2017 (ANNEXURE-D),
15/09/2017 (ANNEXURE-E), 11/03/2018 (ANNEXURE-H) AND
16.10.2018 (ANNEXURE-J).
IN W.P. NO.349 OF 2018
BETWEEN :
M/S INDO UNIQUE FLAME LTD
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT 1ST FLOOR, 301, KOTHARI BUILDING
NEAR SUDAMA CINEMA
WEST HIGH COURT ROAD
DHARAMPETH
NAGPUR-440 010
ACTING THROUGH ITS DULY
AUTHORIZED SIGNATORY
PRESIDENT, MARKETING
MR. PRASHANT RAMESHCHANDRA BADNORE ... PETITIONER
(BY SHRI. S.S. NAGANAND, SENIOR ADVOCATE FOR
SHRI. CHINTAN CHINNAPPA, ADVOCATE)
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AND :
KARNATAKA POWER CORPORATION LTD
A COMPANY REGISTERED UNDER THE
COMPANIES ACT, 1956
HAVING ITS REGISTERED AND
CORPORATE OFFICE AT
SHAKTI BHAWAN, 82
RACE COURSE ROAD
BANGALORE-562 201
REPRESENED BY ITS
MANAGING DIRECTOR ... RESPONDENT
(BY SHRI. PRASAD NAIR, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE DECISION
OF THE RESPONDENT VIDE MEETING DTD.06.12.2017 VIDE ANNX-A
AND ALL CONSEQUENT PROCEEDING IN RELATION THERETO ETC.
THESE WRIT PETITIONS, HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 06.01.2021, COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:-
ORDER
These two writ petitions are filed by M/s. Indo Unique Flame Ltd., against M/s. Karnataka Power Corporation Limited ('KPCL' for short).
2. The subject matter of these writ petitions are substantially common and therefore, by consent of learned Advocates on both sides, they are disposed of by this common order.
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3. Heard Shri. S.S. Naganand, learned Senior Advocate for petitioner and Shri. Pramod Nair, learned Advocate for respondent.
4. Briefly stated the facts of the case set out in the writ petition are, petitioner is a Coal Washery Operator. Respondent is a Power Generating Company. It requires coal as a basic raw material. It enters into agreements with suppliers of coal and gets coal washed prior to delivery to remove mud, dust and other impurities.
5. KPCL invited for tenders on 12.11.2014 for beneficiation (washing) of raw coal from Western Coal Fields Ltd., area for Raichur Thermal Power Station. Petitioner was awarded the Contract. Parties have entered into an agreement dated 14.10.2015. In terms of the agreement, two lakhs MT of raw coal was required to be washed per month. The term of contract was for a period of one year from the date of commencement of supply extendable for another two years. As per the agreement, 5 petitioner has furnished security deposit of Rs.4.06 crores and four Bank guarantees in all for Rs.25.23 crores towards raw coal deposit.
6. The salient features of the agreement are, petitioner was required to determine the specification and source of raw coal available from Western Coal Fields for washing. Petitioner was required to lift 2 lakh MT raw coal quantity by road from collieries to the washery. The weighment at colliery would be witnessed by the petitioner on behalf of the respondent and weighment sheets are required to be signed by petitioner's authorized signatory and presented to KPCL while raising monthly Invoices. Petitioner would wash and transport coal to the railway siding for dispatch to KPCL. Petitioner was required to supply washed coal quantity having yield of 80% of the raw coal.
7. During the process of washing, certain portion of raw coal gets rejected. In terms of Clause 5 of the 6 agreement, petitioner was permitted to sell the rejected coal at the rate of Rs.650/- per MT and adjust the same in the running Bills.
8. M/s. Elegant Enterprises was appointed by KPCL to draw sample coal at the Coal Fields at the time of lifting. KPCL removed M/s. Elegant Enterprises and appointed Central Institute of Mining and Fuel Research ('CIMFR' for short) for that purpose. At the washery end, M/s.K.C. Sharma & Company was appointed for certification. Petitioner made several requests for Joint reconciliation of accounts. Instead of undertaking the exercise of joint reconciliation, KPCL was compelling the petitioner to sign reconciliation statement prepared unilaterally by KPCL without sharing any details. Petitioner raised its objection on 20.09.2017. Petitioner was entitled to receive Rs.36,40,04,584/-. It has recovered sale proceeds of Rs.30,49,43,620/- by sale of rejected coal. Thus, KPCL is due and liable to pay a sum of Rs.5,90,60,964/- to the petitioner.
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9. While petitioner's claim was pending, KPCL on 06.12.2017 wrote to State Bank of India, Nagpur invoking the Bank Guarantees to the tune of Rs.29.29 crores.
10. Petitioner filed O.S. No.8433/2017 before City Civil Court, Bengaluru for permanent injunction to restrain SBI from complying with KPCL's request to pay money by invoking five Bank guarantees. The City Civil Court granted an ex parte interim order on 08.12.2017.
11. Petitioner also filed O.S. No.8544/2017 before City Civil Court, Bengaluru to recover Rs.5,90,60,964/-
12. In its Statement of Objections filed in O.S. No.8433/2017, KPCL has contended that a meeting was convened on 06.12.2017 to reconcile the accounts and based on the reports of K.C. Sharma and CIMFR, KPCL had determined that a sum of Rs.57.02 crores was payable by the petitioner to KPCL. On the basis of said decision, KPCL had decided to invoke Bank guarantees.
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13. Petitioner was not informed about the said meeting nor a copy of the Minutes of the meeting shared with the petitioner prior to taking steps to invoke the Bank guarantees.
14. On 26.12.2017, petitioner has submitted a representation to KPCL and requested to appoint a neutral third party agency for reconciliation of quantity of coal, calculation of penalty etc. KPCL has not replied. In this background, petitioner has filed W.P. No.349/2018 with a prayer to issue a writ of certiorari and to quash KPCL's decision taken in Meeting held on 06.12.2017 and all consequent proceedings; and to direct KPCL to consider petitioner's representation dated 26.12.2017 to appoint a neutral third party agency.
15. During pendency of W.P. No.349/2018, petitioner has filed W.P. No.54186/2018 on 03.12.2018 with a prayer for a writ of mandamus and to direct KPCL to carry out Joint reconciliation of quantity and quality of coal 9 washed and supplied as requested in its representations as per Annexures - D, E & H.
16. Shri. Naganand, after presenting elaborate arguments, has presented summary of arguments summing up the arguments as follows:
x KPCL being an instrumentality of State ought to have acted in a fair and reasonable manner;
x Since it is a clear case of arbitrariness, this Court may exercise its powers under Articles 226 and 227 of the Constitution of India and direct the respondent to act in a fair manner; and x petitioner's two suits are independent of these writ petitions. Petitioner is not resorting to forum shopping and Doctrine of election or res judicata are inapplicable in this case.
17. Shri. Pramod Nair, learned Advocate for KPCL, opposing the writ petitions has, in substance, submitted:
x that petitioner has filed two suits and two writ petitions essentially on the same subject matter and thus indulged in forum shopping;10
x that petitioner has elected to avail alternate contractual remedies by filing two suits and therefore, these writ petitions are not maintainable on the principle of 'constructive res judicata'.
18. I have carefully considered rival contentions and perused the records.
19. The dispute between the parties has stemmed out of the decision taken by KPCL in the meeting held on 06.12.2017 wherein KPCL has determined the sum payable by petitioner to the KPCL and invoked the Bank guarantees.
20. On 08.12.2017, petitioner has filed O.S. No.8433/2017 for injunction against State Bank of India from complying with KPCL's request for payment by invoking the Bank guarantees. On 02.01.2018, W.P. No.349/2018 was presented. This Court vide order dated 05.01.2018 granted an interim order of stay of recovery pursuant to quantification made in the record of proceedings of the Meeting dated 06.12.2017. 11
21. On 29.01.2018, this Court after considering the application I.A. No.1/2018, has vacated the interim order by recording thus:
" ... It could be true that the decision as assailed in this petition had not been communicated to the petitioner as on the date of filing of the suit. Even if that position is accepted, when it is noticed that the petitioner herein was before the Court below in the first suit making out an apprehension with regard to the likelihood of the respondent invoking the Bank guarantee and at present, through the impugned decision when the respondent has considered the invocation of Bank guarantee towards part of their claim, if at all any further consideration in that regard is required, certainly the same could also be raised as an issue before the Court below in the said suit and seek for appropriate relief and in that circumstance, it cannot be stated herein that the decision at Annexure-A is independent of the contract between the parties, so as to grant an interim order in the instant petition. At this stage more particularly, when the petitioner has approached the Court below to restrain the respondent from invoking the Bank guarantee and the ad-interim order granted has been vacated."
22. Thereafter, on 09.02.2018, petitioner has amended plaint in O.S. No.8433/2017 and added following prayer:
"(i)(a) Declare that the decision of defendant No.1 vide Meeting dated 06.12.2017 is void, ultravires the agreement dated 14.10.2015 and non-est in the eye of law.12
23. As recorded hereinabove, prayer clause (A) in W.P. No.349/2018 is to quash the decision taken by KPCL in the meeting held on 06.12.2017. No sooner this Court vacated the interim order on 29.01.2018, petitioner has moved an application and amended the plaint in O.S. No.8433/2017 on 09.02.2018 incorporating prayer clause (i)(a). In view of petitioner accepting the order of this Court vacating the stay and electing to seek the said relief before the City Civil Court, prayer clause (A) is liable to be rejected.
24. Prayer clauses (B) & (C) are for a direction against KPCL to appoint a neutral third party agency, as requested in petitioner's letter dated 26.12.2017.
25. The solitary prayer in W.P. No.54186/2018 is for a direction to KPCL to carry out Joint reconciliation of quantity and quality of coal as requested in petitioner's representations vide Annexures - D, E and H. 13
26. Thus, the prayers for appointment of third party agency and Joint reconciliation can be considered only if KPCL's decision taken in the meeting held on 06.12.2017 is declared void as prayed in O.S. No.8433/2017.
27. Undubitably, the dispute is with regard to the quantity of washed coal and settlement of accounts. This involves disputed questions of fact and can be resolved by appreciation of evidence. Parties are already before the Civil Court. If the prayer for appointment of neutral third party agency or reconciliation is to be considered, it amounts to pre-empting the decision of the Civil Court in O.S. No.8433/2017 without appreciation of evidence. Therefore, Shri. Pramod Nair is right in his submission that petitioners having elected to file Civil suit seeking a declaration that the decision taken by KPCL in the meeting held on 06.12.2017 as nonest in the eye of law, cannot be permitted to agitate the same cause in these writ petitions. 14
28. Though learned Advocates on both sides have relied upon several authorities, in view of undisputed facts and the election of petitioner to seek redressal before the City Civil Court, it is apposite to advert to the relevant authorities. In Radhakrishna Agarwal Vs. State of Bihar1,relied upon by Shri. Pramod Nair, it is held that after State or its agents have entered into the field of ordinary Contract, the relations are no longer governed by the Constitutional provisions but by the legally valid Contract which determines rights and obligations of the parties inter se. No question arises of violation of Article 14 or of any other Constitutional provision when the State or its agents perform any act. In this sphere, they can only claim rights conferred upon them by Contract and are bound by the terms of Contract only, unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from the Contract.
1 (1977)3 SCC 457 15
29. On facts, it is not in dispute that after this Court vacated the interim order in W.P. No.349/2018, petitioner amended its prayer in the suit and sought a declaration that the decision taken by KPCL in meeting held on 06.12.2017 is void. In National Insurance Company Ltd. Vs. Mastan and Another2, it is held that the 'doctrine of election' is a branch of 'rule of estoppel', in terms whereof a person may be precluded by his actions from asserting a right which he otherwise would have had. The 'doctrine of election' postulates that when two remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both.
30. Even after electing to seek a declaration that KPTCL's decision is void from the Civil Court, petitioner is prosecuting these writ petitions and seeking the very same relief.
2 (2006)2 SCC 641 16
31. In State of UP Vs. Nawab Hussain3, it is held that the principle of constructive res judicata is applicable to writ petitions also.
32. In view of the above, these writ petitions fail and they are accordingly dismissed.
33. In view of dismissal of these petitions, I.A. No.2/2018 in W.P. No.349/2018 does not survive for consideration and the same is disposed of.
No costs.
Sd/-
JUDGE SPS 3 (1977)2 SCC 806