Jharkhand High Court
M/S Domco Smokeless Fuel Pvt. vs Bharat Coking Coal Limited & A on 1 April, 2014
Author: Narendra Nath Tiwari
Bench: Narendra Nath Tiwari
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W. P. (C). No. 2102 of 2011
M/S Domco Smokeless Fuels Pvt. Ltd., through its Director, Birendra Kumar Singh,
Bokaro ..... petitioner
Versus
Bharat Coking Coal Limited, through its Chairman-cum-Managing Director, Dhanbad
& Another ..... Respondents
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CORAM: HON'BLE MR. JUSTICE NARENDRA NATH TIWARI
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For the Petitioner - M/s A. K. Sinha (Sr. Adv.), Rajendra Krishna, V. K.
Tiwari, Amit Sinha
For the B.C.C.L - Mr. A. K. Mehta
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6/1.4.2014In this writ petition, the petitioner has prayed for quashing the Letter No. BCCL;S&M;C;F-Linkage/1224 dated 9.11.2010, whereby the respondent-BCCL has terminated the petitioner's Fuel Supply Agreement (FSA). The petitioner has also prayed for a direction on the respondents to release the agreed quantity of coal.
2. The short facts giving rise to the instant writ petition is that the Coal India Ltd. took a decision to invite private entrepreneurs to start industry for manufacturing soft smokeless fuels and to supply the raw materials of different grades of coal to the factories. For the said purpose, the Coal India Ltd. published notice inviting applications from the industries intending to manufacture Special Smokeless Fuels (SSF). Inspired by the said invitation with the assurance of supply of coal (raw material), the petitioner established its industry for manufacturing SSF and applied for coal linkage for the unit. The same was recommended by the concerned authorities of the Coal India. Ltd. on due satisfaction and proper scrutiny. The petitioner was, thereafter, granted coal linkage to the extent of 5000 MT of a particular grade of coal as a raw material from Muraidih Colliery of BCCL. In course of time, in the year 2008, the BCCL compelled the petitioner to execute the Fuel Supply Agreement in terms of the New Coal Distribution Policy. In the light of the purported terms of the said Fuel Supply Agreement, the respondent issued a notice by Letter No. 5613 dated 3.2.2010 asking the petitioner to show the end use of coal lifted during the current financial year with documentary proof - authenticated by the District Officials. The petitioner submitted reply to the notice dated 3.2.2010 and submitted all the requisite documents. Though all the required documents were submitted within time before the authorities of the BCCL and the petitioner went on submitting end use return of every month, the petitioner's supply was suddenly stopped w.e.f 1.7.2010. The said arbitrary step was protested and the matter was taken up by the Association up to the Hon'ble Supreme Court in Special Leave Petition (C) No. 21959/2010. The respondents, thereafter, resumed supply of coal to the petitioner's unit in view of the judicial order. Only after few days, the respondent-BCCL hastened to issue the impugned Letter No. 1224 dated 9.11.2010 terminating the Fuel Supply Agreement with the petitioner. The supply of coal to the petitioner was also stopped.
3. Mr. A. K. Sinha, learned Sr. Counsel for the petitioner, submitted that the impugned termination order is wholly arbitrary, unfair and illegal and the same is vitiated on account of violation of the principle of natural justice. No notice was served on the petitioner informing the reason and giving opportunity to properly represent before the concerned authorities, before issuing the impugned termination order.
4. Learned counsel further submitted that the impugned termination order is said to have been issued on the alleged violation of Clause 15.1.5 of the Fuel Supply Agreement. That clause stipulates that in the event of resale or diverting the coal purchased by the purchaser, the seller shall have right to terminate the FSA. But from the impugned letter, it would be evident that there is no such allegation or finding of reselling or diverting the coal purchased by the petitioner. On the contrary, on physical verification held by the Central Bureau of Investigation, it was found that the plant is in existence with continued production. The said letter and order of termination are, thus, wholly unfounded and perverse on that ground as well.
5. The writ petition has been opposed by the respondent-BCCL by filing two counter affidavits. It has been stated, inter alia, that two notices dated 3.2.2010 (Annexure - 6 to the writ petition) and dated 8.6.2010 (Annexure - E series to the supplementary counter affidavit) were issued to the petitioner and it is not correct to contend that no notice was served on the petitioner before issuing the order of termination of the agreement. By the said notices dated 3.2.2010 and 8.6.2010, the petitioner was asked to produce the documents to show the end use of coal.
6. Mr. A. K. Mehta, learned counsel appearing on behalf of the respondent-BCCL, however, admitted that no notice was issued to the petitioner asking the petitioner to show cause as to why the Fuel Supply Agreement be not terminated.
7. Having heard learned counsel for the parties and perused the documents and material on record, I find that the termination of the Fuel Supply Agreement is based on the allegation of violation of Clause 15.1.5 of the Fuel Supply Agreement, which provides for termination of the FSA in the event of reselling or diverting the coal by the purchaser. The notices, on the other hand, mentioned that proper utilization and end use of coal lifted by the petitioner could not be proved to the full satisfaction of the BCCL on the basis of the documents submitted by the petitioner.
8. I, therefore, find substance in the submissions of learned counsel for the petitioner that on the one hand the impugned termination order is based on non- existent ground and on the other the same has been issued without giving any notice and opportunity of representation / hearing to the petitioner and as such the impugned termination of the petitioner's FSA is wholly perverse and vitiated on account of violation of the principle of natural justice.
9. In view of the above discussions, the impugned termination order issued by the respondents by Letter No. 1224 dated 9.11.2010 (Annexure - 9) cannot sustain and is, accordingly, quashed. The writ petition is allowed.
10. The respondents are directed to resume the coal supply to the petitioner as per the Fuel Supply Agreement forthwith.
11. There is no order as to costs.
S.K (NARENDRA NATH TIWARI, J)