Meghalaya High Court
Meghalaya Cements Limited vs Union Of India And Ors on 26 November, 2013
Author: Sr Sen
Bench: Sr Sen
IN THE HIGH COURT OF MEGHALAYA
WP(C) No. 243 of 2012
Meghalaya Cements Limited
A Company incorporated under the
Provisions of the Companies Act, 1956
and having its registered office & works
at MCL Campus, Thangskai, Lumshnong,
situated in the District of Jaintia Hills,
Meghalaya and represented by Sri. Bajrang
Lohia an authorized representative of the
Petitioner company and resident of
Rehabari, Guwahati-8, Assam.
...... Petitioner
- versus -
1. Union of India
Represented by the Secretary,
Ministry of Coal, New Delhi.
2. The Chairman, Coal India Ltd.
Coal Bhavan, 10, S.N. Road,
Kolkata- 700001.
3. North Eastern Coalfields,
Coal India Ltd., P.O. Margherita,
Assam-786181 represented by the
Chairman.
4. General Manager, North Eastern
Coalfields, Coal India Ltd., P.O.
Margherita, Assam-786181.
5. Area Sales Manager, North Eastern
Coalfields, Coal India Ltd., P.O.
Margherita, Assam-786181.
...... Respondents
BEFORE THE HON'BLE MR JUSTICE SR SEN Advocate for the Petitioner : Mr. A. Saraf Advocate for the Respondent : Mr. MZ Ahmed Date of Hearing : 19.11.2013 Date of Judgment and Order : 26.11.2013 WP(C) No. 243 of 2012 Page 1 of 6 JUDGMENT AND ORDER This writ petition is directed against the impugned letter dated 11.05.12 No. SC/NCDF/FSA/LOA/08/247 which is at Annexure-XI (Page-93).
2. The petitioner's case in nut shell is that "an application under Article-226 of the Constitution of India for a Writ in the nature of certiorari and/or a writ in the nature of mandamus and/or any other appropriate writ, direction or order challenging the Clauses 4.5, 9.1, 9.2 and 15 of the contract agreement dated 18.07.2008 as well as the impugned invoice dated 10.05.2012 for payment of compensation and impugned Notice of Termination dated 29.05.2012.
3. The petitioner vide this impugned writ petition is challenging the impugned Clause 4.5 (for compensation for short lifting), Clauses 9.1, 9.2 (price of coal) of the contract agreement and Clause 15 (for Termination of agreement) dated 18.07.2008 entered into between the petitioner and the respondent No. 3 for the supply of coal for the period of 5(five) years from the first delivery date. The petitioner vide this instant writ petition is also challenging the impugned invoice No. C-3-4/12-13/003, dated 10.05.2012 for payment of compensation for short lifting of coal for the year 2011-12 and the Notice for Termination of contract issued by the respondent No. 4 for supply of coal by the respondent No. 3 which was agreed vide agreement dated 18.07.2008 for the reason of short lifting of coal for the year 2011-12. The petitioner vide this instant writ petition is also challenging the impugned action of the respondent authorities in increasing the price of coal by more than 55% w.e.f. 27.02.2011 putting high economic pressure on the petitioner making the purchase unviable.
4. It is the case of the petitioner that a reading of various Clauses of the contract agreement would also show that the contract WP(C) No. 243 of 2012 Page 2 of 6 agreement is nothing but a devise to favour the respondent No. 3 as per each and every Clause. In case the petitioner fails to fulfil its obligation, strict penalty compensation and termination is prescribed and even the respondent No. 3 is permitted to hike the prices of coal as per its whims and fancy. Further, the agreement is a standard format of contract agreement as devised by the respondent No. 3. No party whatsoever is allowed to impose any conditions of its own in the agreement and has to accept the agreement as it is. There is no scope for the petitioner or any other person entering into contract with the respondent No. 3 to disagree with any of the terms of the contract, otherwise the contract cannot be entered into which shows the superior bargaining power of the respondent No. 3 in entering into the terms of the agreement. It is the contention of the petitioner that the impugned Clauses of the contract agreement are absolutely illegal, without justification, not tenable in law and thereby all actions undertaken pursuant there to are liable to be set aside and quashed."
5. Mr. A Saraf, the learned senior counsel appearing for on behalf of the petitioner submitted that the petitioner and the respondent entered into agreement. Though there was a Clause to revise the rate from time to time but the revised rate was too high and went to 55%, hence the petitioner could not lift the coal as desired by the respondent. As a result, the respondent issued an impugned letter demanding compensation for a sum of Rs. 57, 09,500/- and the petitioner to pay the same within a period of 90(ninety) days from the date of receipt of the letter.
6. The learned senior counsel further contended that the rate revised was purely arbitrary, one sided and without considering the welfare of the petitioner and needs to be set aside. In support of his submissions, the learned senior counsel relied on (1995) 5 SCC 482 LIC of India and Another versus Consumer Education research Centre and Others. The learned senior counsel further contended WP(C) No. 243 of 2012 Page 3 of 6 that, when the petitioner failed to lift the coal from the site, the respondent subsequently sold the same, so there was no loss to the respondent. Hence the question of compensation is unwanted, so the petition may be allowed.
7. On the other hand, Mr. MZ Ahmed, the learned senior counsel appearing for on behalf of the respondent submitted that the petitioner is bound by the contract agreement and further contended that the price of coal had increased and revised due to the scarcity and other factors which were beyond the control of respondent.
8. The learned senior counsel also contended that since the petitioner failed to lift the coal, the respondent sold the same and argued further that the petitioner is barred by the principle of estoppel. In support of his submission, the learned senior counsel relied on (2003) 2 SCC 355 B.L. Shreedhar Others vrs K.M. Munireddy (Dead) and Others and (2010) 12 SCC 458 H.R. Basavaraj (Dead) and Another vrs Canara Bank and Others.
9. After hearing the submissions advanced by the learned counsel for the parties, it is clear that there was an agreement between the parties for supply of coal by the respondent and the petitioner to lift the same. It is also apparent that, there was a Clause in the agreement that the price may be revised from time to time. In the case of LIC of India and Another versus Consumer Education research Centre and Others reported in (1995) 5 SCC 482 (Clauses 33 &
34), it is observed that :
"33. In Lloyds Bank Ltd v Bundy inequality of the bargaining power was enunciated by Lord Denning, M.R. and held that one enters into a contract on terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity.... The one who stipulates for an unfair advantage may be moved solely by his own self- interest, unconscious of the distress he is bring to other... One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the strains in which he finds himself. It would WP(C) No. 243 of 2012 Page 4 of 6 not be meant to suggest that every transaction is saved by independent advice. But the absence of it may be fatal.
34. In A. Schroeder Music Publishing Co. Ltd. V Macaulay (formerly Instone) House of Lords considered and held that a party to a contract would be relieved from the terms of the contract. In the course of his speech learned Lord Diplock outlined the theory of unreasonableness or unfairness of the bargain to relieve a party from the contract when the relative bargaining power of the parties was not equal. In that case the song writer had contracted with the publisher the terms more onerous to him favourable to the publisher. The song writer was relieved from the bargain of the contract on the theory of restraint trade opposed to public policy. The distinction was made even in respect of standard forms of contract emphasising that when the parties in a commercial transaction having equal bargaining power have adopted the standard form of contract, it was intended to be binding on the parties. The court would not relieve the party from such a contract but the contracts are between the parties to it, or approved by any organisation representing the interests of the weaker party, they have been directed by that party whose bargaining power, either exercised alone or in conjunction with others providing similar goods or services, enables him to say: "If you want these goods or services at all, these are the only terms on which they are obtainable. Take it or leave it."
10. After perusal of the above observation given by the Apex Court keeping in mind that the bargaining power is solely in the hand of the respondent, I am of the opinion that, it is not proper to revise the rate to such an extent which may cause difficulty to other parties to comply with the agreement, exactly what had happened in this instant case. However, it also remained open that, since the petitioner had entered into an agreement, he is bound by the contract agreement and to come out from the agreement by giving proper notice.
11. The most important question involved in this instant case which is an admitted fact as submitted by both the learned counsel for the parties is that, when the petitioner failed to lift the coal allotted to him as per the agreement and the same was subsequently sold. If it is so, I am of the opinion that the respondent has not incurred any loss, WP(C) No. 243 of 2012 Page 5 of 6 therefore, just to slap notice of demand upon the petitioner to pay Rs. 57,09,500/- as compensation has no logic and not proper.
12. Therefore, in my view the impugned order dated 11.05.12 and subsequent demand notice for compensation cannot survive, hence, the same is set aside.
13. Accordingly, the petition is allowed and the matter stands disposed of.
JUDGE V. Lyndem WP(C) No. 243 of 2012 Page 6 of 6