Bombay High Court
M/S. Arunodaya Coal Agency, Thr. ... vs Western Coalfields Ltd., Thr. Chairman ... on 5 March, 2025
Author: Nitin W. Sambre
Bench: Nitin W. Sambre
2025:BHC-NAG:2849-DB
0503WP5868-24.odt 1 Judgment
IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
NAGPUR BENCH, NAGPUR.
WRIT PETITION NO. 5868 OF 2024
M/s Arunodaya Coal Agency, Through its Proprietor
Koshor Sankhala, A MSME, duly registered under
M.S.M.E. Act having its office at Jamuna Tower, Plot
No.C-152/1, Near Dakshin Mukhi Hanuman Mandir,
Pachpedi, Raipur, email [email protected]. PETITIONER
VERSUS
1. Western Coalfields Ltd., Through its Chairman
and Managing Director (CMD), Coal Estate,
Civil Lines, Nagpur.
2. Western Coalfields Limited, Through its General
Manager (CMC), Coal Estate, Civil Lines, Nagpur.
3. Western Coalfields Limited, Through its Area
General Manager, Majri Area, Kuchana,
Tq. Bhadrawati, District Chandrapur. RESPONDENTS
______________________________________________________________
Shri M.G. Bhangde, Senior Advocate with Shri R.M. Bhangde, Counsel for the
petitioner.
Shri A.S. Jaiswal, Senior Advocate with Shri N.G. Moharir, Counsel for the
respondents.
______________________________________________________________
CORAM : NITIN W. SAMBRE AND MRS.VRUSHALI V.JOSHI, JJ.
DATE ON WHICH ARGUMENTS WERE CONCLUDED: MARCH 04, 2025
DATE ON WHICH JUDGMENT IS PRONOUNCED : MARCH 05 , 2025
JUDGMENT (PER : NITIN W. SAMBRE, J.)
RULE. Rule made returnable forthwith and the writ petition is
heard finally with consent of the learned counsel for the parties.
2. The petitioner has questioned the impugned decision dated September
26, 2024 whereby the contract dated May 02, 2022 for transportation of
coal so also for removal of overburden came to be terminated. The
petitioner is also debarred from participating in the future tenders of the
Western Coalfields Limited in individual capacity or as partner in
partnership firm or Joint Venture for a period of two years from the date
0503WP5868-24.odt 2 Judgment
of issuance of the impugned order as per the terms and conditions of the
contract. The petitioner's security deposit, performance guarantee and
additional performance security at the disposal of the respondents also
came to be forfeited.
3. The facts necessary for deciding the writ petition are as under:-
The petitioner is a proprietary concern, claiming to be registered as
a small scale enterprise under the Micro, Small, Medium Enterprise Act on
on October 09, 2023. The respondent-Western Coalfields Limited, is a
company registered under the Indian Companies Act, 1956 entered into
an agreement/contract for execution of job viz. Removal of all type of
materials (Hard OB) in all kinds of strata by hiring of equipments,
removal of all type of materials (BC soil/Soft OB), removal of all type of
materials (OB Rehandling), evacuation of coal from quarry face and
transportation to surface by hiring of equipments as per instruction of
Engineer-in-charge at Amalgamated Yekona-I and II OCM (Yekona-I
Quarry) of Majri area for an approximate amount of Rs.103 Crores.
4. It is claimed that by this time the petitioner has excavated more
than 40% of the allotted work. On March 10, 2024, the staff from the
security squad of the respondents lodged a police complaint which has
resulted into registration of Crime No.225 of 2024 for an offence
punishable under Sections 379, 511 of the Indian Penal Code based on an
incident of theft. In the said First Information Report, it is alleged that
during the patrolling on March 10, 2024 at about 3.00 a.m. in Yekona
0503WP5868-24.odt 3 Judgment
mine, a Hyva truck and a poclain machine were found to be used for
commission of an offence of theft of coal. A truck bearing registration
No.MH-40-CD-6911 and the said poclain were noticed at the spot. It was
noticed that instead of stocking the coal at the designated place
earmarked by the respondents, the coal extracted from the mine was
dumped at the dumping yard. The poclain machine was used for loading
the coal from the dumping yard on the said Hyva truck which was not
registered with the respondents in matter of contract in question. During
investigation, the coal stock of capacity of two Hyva trucks was noticed at
the dumping yard and the poclain machine was used for loading the said
stolen coal. It is also narrated in the First Information Report that the
moment the security personnel including the complainant reached the
spot, the poclain machine operator as well as driver of the Hyva truck ran
away and around forty tonne of stolen coal was detected.
Subsequent thereto, on March 12, 2024 the respondents advised
the petitioner to remove its representative Ankit Yaduvanshi from the
work site within three hours as he has failed to avoid the aforesaid
criminal incident of theft of coal. The petitioner thereafter removed its
said employee from the site and also caused an enquiry.
5. On March 18, 2024 the show cause notice based on the aforesaid
incident of theft came to be issued to the petitioner, calling upon him as to
why the contract awarded to him on May 02, 2022 shall not be
terminated, as to why the petitioner shall not be debarred from
0503WP5868-24.odt 4 Judgment
participating in future tenders of Western Coalfields Limited in individual
capacity, as partner in partnership firm or as a member of the Joint
Venture for a period of two years and as to why the security deposit shall
not be forfeited or 20% of the value of the incomplete work shall not be
recovered from the security deposit. The said show cause notice is
claimed to have been based on the above incident of theft. The petitioner
submitted its reply to the show cause notice on March 27, 2024 requesting
the respondents to allow it to complete the work in hand during the
pendency of the investigation by the Investigating Officer in the interest
and benefit of both the petitioner and the respondents. It appears that
based on the show cause notice a communication offering personal
hearing was issued on April 04, 2024 and the hearing appears to have
been conducted on April 12, 2024. After hearing was concluded, vide
order impugned dated September 26, 2024, penal action of termination of
contract dated May 02, 2022, debarring the petitioner from participating
in future tenders of Western Coalfields Limited in all the capacities and
also recovery of an amount was ordered.
6. While assailing the above decision, Shri M.G. Bhangde, learned
Senior Advocate for the petitioner would urge that the petitioner is
required to operate pursuant to the terms of contract in question at
Yekona-I mine. According to him, the nature of work to be executed
involves the equipments to be used viz. Poclain machine, Hyva truck etc.
According to him all the vehicles of the petitioner are registered with the
0503WP5868-24.odt 5 Judgment
respondents. For security reasons, only registered vehicles are permitted
entry in the area of mine including that of the stock yard. He would claim
that no vehicle other than the registered vehicles with the respondents are
permitted by the security agencies to enter in the mine area. He would
claim that since the petitioner is operating Yekona-I mine, there is
intersection of Yekona-II mine. The presence of Hyva truck bearing
registration no.MH-40-CD-6911 which was not registered with the
respondents can lead to the only inference that it was the failure of the
respondents to regulate the entry of the registered vehicles which has
resulted into the alleged act of theft.
7. The learned Senior Advocate would further urge that the
investigation in the offence being Crime No.225 of 2024 is in progress and
till this date it cannot be inferred that the petitioner is involved in the said
offence of theft. The learned Senior Advocate would invite our attention
to the show cause notice dated March 18, 2024 to claim that the show
cause notice speaks of deployment of tippers in the route that is not
approved for excavation of coal from quarry face and transportation to
surface and dumped the coal in BC Soil Dump.
According to him, the order impugned though refers to the reply
dated March 27, 2024 and the hearing dated April 12, 2024, the order is
based on a vehicle bearing registration no.KA-01-AM-3667 which was
neither registered with the respondents nor was a part of the show cause
notice. According to him, there is no reference to vehicle KA-01-AM-3667
0503WP5868-24.odt 6 Judgment
being involved in the alleged offence of theft or for illegal transportation
of coal in the show cause notice, however the same is formed to be the
basis for passing the order impugned. As such, he would urge that the
tangible material formed to be the basis for passing the impugned order is
not provided and the order impugned is based on such material which
was not part of the show cause notice. He would claim that the order
impugned is based on general and vague observations for which neither
an opportunity to show cause nor hearing was offered. As such, his
contentions are, the order impugned is beyond the scope of the show
cause notice and suffers from unreasonableness. The learned Senior
Advocate so as to substantiate his aforesaid contention that the entire area
is under the scanner of the security, would draw support from paragraph
15 of the rejoinder affidavit of the petitioner which reads thus:-
"15. The petitioner then transports coal to the coal stock
yard by the specified route. There is a way bridge on this
route, which is managed by the officials of the WCL. There is
CCTV camera installed at the way bridge for twenty four by
seven surveillance of the activities on the said route. After
weighment, the tipper of the petitioner filled with coal
proceeds to the coal stock yard/crusher where coal is
emptied. The empty tipper then either goes back to the mine
for refilling of coal, by the same route (except the portion
where the way bridge is installed) or, if not required, to the
camp of the petitioner by the same specified route which is
ahead of Coal Stock Yard. Besides the CCTV camera, the
security personnel patrol the mine area 24/7. Thus, no coal
can be carried by the vehicle of the petitioner to any place
except the coal stock year/crusher."
0503WP5868-24.odt 7 Judgment
8. The learned Senior Advocate for the petitioner would claim that
paragraph 23 of the rejoinder demonstrates that there was lacunae in the
matter of operation of the mines by the respondents and such lacunae are
redressed by them on March 09 and 10, 2024. He would draw support
from the pleadings in paragraph 23 of the rejoinder which reads thus:
"23. That, after the alleged incident, that took place in the
night between 09.03.2024 and 10.03.2024, the respondents have
realised this fact, though belatedly. Therefore, as a preventive
measure, the respondents have erected barrier/check post (like the
one at toll gates) at the aforesaid intersection of the routes. The
official of the respondents manages the said barrier. In view of
the barrier now put in place by the respondents, the vehicle
carrying coal supplied by WCL to the purchaser from "Yekona II"
mine cannot enter the route/road from "Yekona I" mine to the
OB dump of the said mine."
9. The learned Senior Advocate for the petitioner would urge that
Clause 9 of the tender document deals with termination, suspension,
cancellation and foreclosure of contract which reads thus:-
"9. Termination, Suspension, Cancellation & foreclosure of contract:
The company shall, in addition to other remedial steps to
be taken as provided in the conditions of contract be entitled to
cancel/terminate the contract in full or in part, if the contractor
a. .......... or
b. .......... or
c. commits default/breach in complying with any of the
terms and conditions of the contract and does not remedy it or
fails to take effective steps for the remedy to the satisfaction of
the Engineer-in-charge, then on the expiry of the period as may
be specified by the Engineer-in-charge in a notice in writing, or
d. .......... or
e. .......... or
f. .......... or
g. .......... or"
0503WP5868-24.odt 8 Judgment
Drawing support from the language of Clause 9(C), it is urged that the
respondents initially issued directions to the petitioner to remove its
representative Ankit Yaduvanshi from the site which they have responded
forthwith by taking corrective measures. According to him, even before the
issuance of the show cause notice, the respondents should have given an
opportunity to the petitioner to take effective steps to remedy the shortfall or
default to the satisfaction of the respondents and upon failure to do so
within a reasonable period as prescribed under Clause 9(1), the show
cause notice could have been issued. As such, the learned Senior
Advocate would urge that the impugned order goes contrary to the very
mandate provided under Clause 9(C) of the tender conditions.
10. So as to substantiate the aforesaid contentions, the learned Senior
Advocate for the petitioner would invite our attention to paragraphs 10 and
26 of the judgment of the Apex Court in State of Uttar Pradesh Versus
Sudhir Kumar Singh & Others [(2021) 19 SCC 706] so as to claim that in
case of breach of fundamental rights which contain public law element, a
plea of breach or non-compliance of the principles of natural justice is made
against the State and if such plea is found to be sustainable and sound in
constitutional law, the writ Court can exercise the jurisdiction based on the
principle of 'Public Law Element'. According to the learned Senior Advocate
for the petitioner, violation of principles of natural justice can be ex-facie
inferred from the aforesaid submissions as the order impugned is not
based on the events which are forming to be the basis for issuance of the
show cause notice.
0503WP5868-24.odt 9 Judgment
11. According to the learned Senior Advocate for the petitioner, the
respondents' plea that the alternate remedy of arbitration cannot be said
to be available as the respondents in the facts and circumstances of the
case in hand should have referred the matter to arbitration the moment
the petitioner has disputed the claim made in the show cause notice.
According to him, the respondents cannot be a judge in their own cause
and try to substantiate the contentions from the judgment of the Apex
Court in State of Karnataka Versus Shree Rameshwara Rice Mills
Thirthahalli [(1987) 2 SCC 160], particularly paragraph 7 thereof which
reads thus:-
"7. On a consideration of the matter we find ourselves
unable to accept the contentions of Mr.Iyenger. The terms of
Clauses 12 do not afford scope for a liberal construction being
made regarding the powers of the Deputy Commissioner to
adjudicate upon a disputed question of breach as well as to
assess the damages arising from the breach. The crucial
words in Clause 12 are "and for any breach of conditions set
forth hereinbefore, the first party shall be liable to pay
damages to the second party as may be assessed by the
second party". On a plain reading of the words it is clear that
the right of the second party to assess damages would arise
only if the breach of conditions is admitted or if no issue is
made of it. If it was the intention of the parties that the
officer acting on behalf of the State was also entitled to
adjudicate upon a dispute regarding the breach of conditions
the wording of Clause 12 would have been entirely different.
It cannot also be argued that a right to adjudicate upon an
issue relating to a breach of conditions of the contract would
flow from or is inhered in the right conferred to assess
damages, as pointed out by the Full Bench, is a subsidiary and
consequential power and not the primary power. Even
assuming for argument's sake that the terms of Clause 12
afford scope for being construed as empowering the officer of
0503WP5868-24.odt 10 Judgment
the State to decide upon the question of breach as well as
assess the quantum of damages, we do not think that
adjudication by the officer regarding the breach of the
contract can be sustained under law because a party to the
agreement cannot be an arbiter in his own cause. Interests of
justice and equity require that where a party to a contract
disputes the committing of any breach of conditions the
adjudication should be by an independent person or body and
not by the other party to the contract. The position will,
however, be different where there is no dispute or there is
consensus between the contracting parties regarding the
breach of conditions. In such a case the officer of the State,
even though a party to the contract will be well within his
rights in assessing the damages occasioned by the breach in
view of the specific terms of Clause 12."
According to the learned Senior Advocate for the petitioner the said
judgment was further followed by the Apex Court in J.G. Engineers
Private Limited Versus Union of India & Another [(2011) 5 SCC 758],
paragraphs 19 and 20 of which reads thus :-
"19. In fact the question whether the other party committed
breach cannot be decided by the party alleging breach. A
contract cannot provide that one party will be the arbiter to
decide whether he committed breach or the other party
committed breach. That question can only be decided by only
an adjudicatory forum, that is, a court or an Arbitral Tribunal.
20. In State of Karnataka v. Shree Rameshwara Rice Mills
[(1987) 2 SCC 160] this Court held that adjudication upon
the issue relating to a breach of condition of contract and
adjudication of assessing damages arising out of the breach
are two different and distinct concepts and the right to assess
damages arising out of a breach would not include a right to
adjudicate upon as to whether there was any breach at all.
This Court held that one of the parties to an agreement
cannot reserve to himself the power to adjudicate whether the
other party has committed breach. This Court held:(SCC
p.164, paras 7-8)
0503WP5868-24.odt 11 Judgment
"7. ... Even assuming for argument's sake that the
terms of Clause 12 afford scope for being construed as
empowering the officer of the State to decide upon the
question of breach as well as assess the quantum of
damages, we do not think that adjudication by the officer
regarding the breach of the contract can be sustained
under law because a party to the agreement cannot be
an arbiter in his own cause. Interests of justice and
equity require that where a party to a contract disputes
the committing of any breach of conditions the
adjudication should be by an independent person or
body and not by the other party to the contract. The
position will, however, be different where there is no
dispute or there is consensus between the contracting
parties regarding the breach of conditions. In such a
case the officer of the State, even though a party to the
contract will be well within his rights in assessing the
damages occasioned by the breach in view of the specific
terms of Clause 12.
8. We are, therefore, in agreement with the view of the
Full Bench that the powers of the State under an
agreement entered into by it with a private person
providing for assessment of damages for breach of
conditions and recovery of the damages will stand
confined only to those cases where the breach of
conditions is admitted or it is not disputed."
The judgment in Shree Rameshwara Rice Mills Thirthahalli (supra) was
further followed by this Court in Municipal Corporation of city of
Amravati Versus Chhugram Lahorimal Khatri [First Appeal No. 596 of
2004] decided on September 24, 2008.
12. According to the learned Senior Advocate for the petitioner, in case
if the respondents are coming out with a case of alleged default against
the petitioner, the respondents should have conducted themselves in terms
of contract, particularly Clause 9(C) of the tender document which deals
0503WP5868-24.odt 12 Judgment
with termination, suspension, cancellation and foreclosure. He would
claim that such clause of granting an opportunity to address the grievance
made by the respondents by granting reasonable time is mandatory. He
would claim that in support of the aforesaid submissions reliance can be
placed on the judgment of the Apex Court in M.P. Power Management
Company Limited, Jabalpur Versus Sky Power Southeast Solar India
Private Limited & Others [(2023) 2 SCC 703]. He would claim that
paragraphs 150 and 174 of the said judgment would justify his
submissions, which read as under:-
"150. Article 9 deals with events of default and remedies.
Article 9.1 is relevant and it deals as follows:
"9.1 Defaults and termination.- In case of default, the non-
defaulting party shall issue a default notice to the
defaulting party. If the default is not fully set right within
three months from the date of issue of the default notice,
then in case of default by the seller, the MPPMCL by giving
seven days' termination notice in writing, may terminate
the agreement. In case of default by MPPMCL, the seller
may in the same way terminate the agreement."
174. Continuing with the analysis of Article 9.1, what was
expected of the appellant was, as the non-defaulting party, to
issue a default notice to the defaulting party viz. the seller, which
in this case is the first respondent. Article 9.1 further clearly
contemplates that if the default is not fully set right within three
months from the date of issue of the default notice, then, in the
case of default by the seller, the appellant was to serve a seven
days' notice of termination. The notice was, undoubtedly, to be
in writing. It is by the second notice, which is to be of the
duration of seven days that the appellant could validly terminate
the agreement. Thus, PPA clearly indicates the issuance of a
default notice when seller commits an act of default. Without
issuing the first default notice, giving three months' time from
the date of issue of the notice, the second notice, which would be
a notice of termination, cannot be issued."
0503WP5868-24.odt 13 Judgment
As such, the learned Senior Advocate for the petitioner would urge that the
order impugned is not sustainable and is liable to be quashed and set aside
by overruling the objection of the respondents of non-maintainability of
the writ petition in view of existence of an arbitration clause.
13. The learned Senior Advocate for the petitioner would invite
attention of this Court to Clause 16 of the tender conditions. According to
him, the same provides for guidelines for banning of business. By relying
on Clause 16(1) of the tender conditions, he would claim that before
passing of the order of banning the business dealing with any contracting
entity, it is mandated that the principles of natural justice are observed.
According to him, the reasons for proposed removal are required to be
made available to the petitioner so as to enable it to furnish explanation
about its adverse conduct viz. An act or omission which is likely to be
formed to be the basis for passing an adverse order. As such, according to
him, such facts which are considered for forming an accusation or charge
should not only be communicated but also the grounds providing reasons
for proposed removal. He would claim that the authority i.e. the
respondents herein are required to apply its mind to the explanation
tendered by the person proceeded against. So as to substantiate his
contentions, he has drawn support from paragraph 12 of the judgment of
the Apex Court in Tarlochan Dev Sharma Versus State of Punjab & Others
[(2001) 6 SCC 260], which reads as under:-
0503WP5868-24.odt 14 Judgment
"12. One of the requirements of the principles of natural justice,
as incorporated in second proviso to Section 22, is that the
reasons for the proposed removal have to be communicated to
the person proceeded against. The purpose of such
communication is to enable him to furnish an explanation of
his conduct or his act or omission which is likely to be
construed as an abuse of power. It is clear that the facts
constituting gravamen of the charge have to be communicated.
It follows as a necessary corollary therefrom that what has not
been communicated or not relied on in the show-cause notice
as a ground providing reason for the proposed removal cannot
be relied upon as furnishing basis for the order of removal.
The person proceeded against under Section 22 of the Act has
to be made aware of the precise charge which he is required to
meet and therefore he must be apprised of the exact content of
the abuse of power attributed to him. The authority taking
decision must apply its mind also to the explanation furnished
by the person proceeded against and this must appear from the
order passed under Section 22."
As such, he would claim that the order of blacklisting since goes contrary
to the established principles of natural justice, the same has to be
rendered illegal and contrary to the fundamental right guaranteed under
Article 14 of the Constitution of India.
14. As against above, Shri A.S. Jaiswal, learned Senior Advocate for the
respondents would oppose the prayers made in the writ petition. While
resisting the claim made by the petitioner, he would invite the attention of
this Court to the contents of the First Information Report. According to
him, the complaint came to be lodged on March 10, 2024 by the security
in-charge. He would claim that it is an admitted position on record that
the poclain machine involved in the offence of theft is owned by the
petitioner. A specific attribution is made against the petitioner about the
0503WP5868-24.odt 15 Judgment
use of poclain machine in the matter of commission of the offence in
question. According to him, there was no cause as to why the coal extracted
from the face of mine to be transported and stocked at the assigned Stock
Yard was lying in the dumping yard which is used for dumping of
overburden. According to him, even if Hyva truck bearing registration
no.MH-40-CD-6911 is claimed to be not owned by the petitioner still the
poclain machine belonging to the petitioner was actively found involved
in the aforesaid offence as the said machine was into live operation for
loading the stolen coal in the Hyva truck. The offence of theft prima-facie
appears to be committed with the aid of the machines belonging to the
petitioner. According to him, the aforesaid material is sufficient enough to
infer involvement of the petitioner in the illegal act of theft of coal and to
facilitate the transportation by use of its own machines.
The learned Senior Advocate for the respondents would urge that
immediately on March 10, 2024, i.e. the date on which the offence was
registered, a communication was issued to the petitioner informing about
the aforesaid act that the poclain machine was in live operation in the
matter of commission of theft of coal from the dumping yard. An
explanation was called from the petitioner as to why an action should not
be initiated against him as per the Rules. According to him, the said
communication was responded to by the petitioner on March 12, 2024.
The petitioner denied the said activity as it was claimed in the explanation
that the poclain machine was deputed and operated under the supervision
of the security staff of the respondents. In addition to above, the learned
0503WP5868-24.odt 16 Judgment
Senior Advocate for the respondents would invite our attention to the
terms of the contract particularly Clause 12 of the tender document which
provides for the responsibility of the contractor. According to the learned
Senior Advocate for the respondents, it is for the contractor to make own
arrangements of all the equipments for the execution of the work
including that of its maintenance.
15. The learned Senior Advocate for the respondents would further urge
that the petitioner is asserting his rights under the contract. The terms of
contract also provide for the remedy in case if there exists a dispute.
Drawing support from Clause 13 of the General Terms & Conditions
appended to the agreement dated January 13, 2023, it is urged that it is
open for the petitioner to take recourse to the remedies which are
expressly provided and to which the petitioner has agreed in the
agreement based on the dispute which is sought to be canvassed through
the present writ petition.
The learned Senior Advocate for the respondents would further
urge that the petitioner, in view of the aforesaid, has an alternate remedy
of taking recourse to the arbitration and in such an eventuality, since the
present writ petition involves disputed questions of fact is liable to be
dismissed.
16. We have considered the rival submissions.
17. The petitioner has entered into a contract with the respondents for
following works.
0503WP5868-24.odt 17 Judgment
"Job No.(1) : Removal of all type of materials (Hard OB) in all kinds
of strata by hiring of equipment such as HEMM, excavators, tippers,
drills, dozers, graders and water sprinklers including its drilling,
excavation, loading, transportation, dumping, spreading, dozing,
grading and water sprinkling at specified places as per instruction
of Engineer in-charge at Amalgamated Yekona I & II OCM (Yekona 1
Quarry) of Majri Area. Job No.(2) : Removal of all type of materials
(BC soil/Soft OB) in all kind of strata by hiring of equipment such as
HEMM, excavator, tippers, dozers, graders and water sprinklers
including its excavation, loading, transportation, dumping,
spreading, dozing, grading and water sprinkling at specified places
as per instruction of Engineer in-charge at Amalgamated Yekona I &
II OCM (Yekona 1 Quarry) of Majri Area. Job No.(3) : Removal of all
type of materials (OB Rehandling) in all kinds of strata by hiring of
equipment such as HEMM, excavator, tippers, dozers, graders and
water sprinkler including its excavation, loading, transportation,
dumping, spreading, dozing, grading and water sprinkling at
specified places as per instruction of Engineer in-charge at
Amalgamated Yekona I & II OCM (Yekona 1 Quarry) of Majri Area.
Job No.(4): Evacuation of coal from quarry face and transportation to
surface by hiring of equipment such as pay-loader and tippers,
dozers, graders & water sprinklers including loading, transportation,
dumping, spreading, dozing, grading & water sprinkling at specified
places as per instruction of Engineer-in-charge at Amalgamated
Yekona I & II OCM (Yekona 1 Quarry) of Majri Area."
18. The contract was to be executed in terms of the agreement and work
order dated December 05, 2022. The agreement dated January 13, 2023 is
also not in dispute. Clause 9 of the General Terms & Conditions
contemplates termination, suspension, cancellation and foreclosure of
contract. Clause 12 contemplates responsibilities of the contractor viz. the
petitioner. Amongst others, the obligation under Clause 12 (xii) provides
for the responsibility of the contractor like the petitioner to make
necessary security arrangements to prevent theft of coal from the project
premises, during transportation and also at coal dumps. Clause 13
0503WP5868-24.odt 18 Judgment
provides for settlement of disputes and Clause 16 contemplates guidelines
for banning of business.
19. On March 10, 2024, the security in-charge of Yekona mine received
an information about the involvement of a poclain machine and a Hyva
truck in theft of coal which resulted in lodging a complaint with Police
Station Warora. An offence punishable under Section 379 and 511 of the
Indian Penal Code vide Crime No.0225 of 2024 came to be registered
against unknown persons. During investigation of the spot of theft, it is
noticed that the Hyva Truck and Poclain Machine used in commission of
offence was found parked at the dumping yard. Forty Tonnes of extracted
coal which should have been taken to an appropriate place of stock yard
was found dumped over black cotton soil dump at the yard which can be
assessed to be of two Hyva Truck load. The said coal stock which was
illegally dumped at overburden yard was sought to be loaded through
Poclain machine in Hyva truck. The truck and the machine as such were
found to be used in the commission of offence of theft of stock of coal.
The moment security team arrived at the spot, the driver and operator of
both the vehicles fled away from the spot. At the relevant time, the Hyva
truck was found to be loaded with coal.
It appears that immediately after registration of the aforesaid
offence, the fact was brought to the notice of the petitioner vide
communication dated March 10, 2024 and it was informed to submit
explanation and the proposed steps to be taken at its end. The petitioner
submitted its explanation on March 12, 2024 stating that the petitioner
0503WP5868-24.odt 19 Judgment
was carrying out removal of overburden and coal shifting under the
supervision of the employees of the respondents. The petitioner
specifically denied the use of Poclain machine and the Hyva truck for
loading the stolen coal and as such the entire incident was denied.
20. The respondents on March 12, 2024 issued another communication
thereby informing the petitioner that the petitioner has violated the
assigned route for excavation from quarry face as the vehicles of the
petitioner were not plying on the assigned route. It is specifically intimated
that the petitioner has attempted theft of coal by engaging Poclain machine
owned by it to which the representative of the petitioner Ankit Yaduvanshi
was a party to. Accordingly, as per Clause 12 of the General Terms &
Conditions the said employee was directed to be removed from the spot
which was responded to by the petitioner by doing so. The aforesaid
incident has led to issuance of a show cause notice to the petitioner on
March 18, 2024 whereby entire incident of theft of coal, involvement of
Poclain machine and Hyva truck was brought to its notice. Through the
said show cause notice, the petitioner was asked as to why the
termination of work awarded vide LOA dated May 02, 2022, debarring
from participating in future bids/tenders of WCL for a period of two years,
forfeiture of security deposit or recovery of 20% of value of incomplete
work shall not be ordered. The said show cause notice was replied by the
petitioner on March 27, 2024. The said reply read as under:-
0503WP5868-24.odt 20 Judgment
"With due regards and utmost polity we beg to submit in reply to
the Show Cause Notice served upon us that we categorically deny
all the allegations levelled against us in the above referred Show
Cause Notice and further submit as under:
1. That we are a reputed contractor firm and have unblemished
record of service in your organization as well as in some other
subsidiaries of Coal India Ltd.
2. That there cannot be raised any finger of doubt regarding our
integrity and loyalty towards the organizations we serve to.
3. That this is specifically denied that 'we have deployed our
tippers in the rout that is not approved for evacuation of coal from
quarry face and transportation to surface and dumped the coal in
BC Soft Dump.'
4. That this is vehemently denied that 'on dated 3rd shift of 09-03-
2024 in Yekona I quarry of amulgamated Yekona I and II OCM,
that attempt of theft of coal in BC Soil Dump was being done by
any truck belonging to us or deployed by us and which was half
loaded by our Hydraulic Ex-310 D 3 Caterpillar make.'
5. That this is further to clarify that dated 09-03-2024 in 3rd shift
our Hydraulic Ex-310 D 3 was kept idle and no workman
belonging to our firm was sent to run that equipment.
6. That our men and machinery employed in your mine are under
constant surveillance of CCTV camera fixed in the mine premises
and under the patrolling done by Security agencies deployed in
your mine for 24X7 days basis.
7. That we have learnt that this matter has already been referred
to local police for investigation also.
Sir, this may kindly be considered that we have not
violated any clause of the contract agreement and are doing our
work sincerely to the full satisfaction of your officials; hence
imposition of penalty and debarment from work at this stage is
not warranted.
Your authority is therefore requested to allow us to
continue and complete the work in hand for the benefit of both
the parties; till the investigation in the incident completes. For
this act of yours we shall remain obliged forever.
We assure our fill cooperation in conducting such
enquiries. Thanking you."
0503WP5868-24.odt 21 Judgment
21. The respondents thereafter issued another communication dated
April 04, 2024 to the petitioner calling upon it to attend the personal
hearing consequent to the show cause notice dated March 18, 2024 and
the reply submitted by the petitioner on March 27, 2024. Vide reasoned
impugned order dated September 26, 2024, the contract awarded to the
petitioner came to be terminated and the petitioner has been debarred
from participating in future bids/tenders of WCL for a period of two years
from the date of issuance of the impugned order. Vide impugned order, it
is ordered to forfeit the security deposit comprising of performance
guarantee, retention money and additional performance security, if any or
in alternate 20% of the value of the incomplete work.
22. Though it is claimed by the learned Senior Advocate for the
petitioner that the show cause notice was in relation to only alleged incident
of theft of coal with the help of Poclain machine and Hyva truck, the
respondent no.3 has placed reliance on the movement (GPS Tracking) of
the vehicle bearing registration no.KA-01-AM-3667 in the impugned order.
Though it is claimed by the learned Senior Advocate for the petitioner that
the tangible material viz. GPS tracking in relation to vehicle KA-01-AM-3667
was not provided to the petitioner, the aforesaid observation in the
impugned order can be substantiated from the conduct of the petitioner.
In the writ petition, the petitioner has come out with following
pleadings in relation to excavation and dumping of coal in paragraphs 19,
23 and 32. The same read as under:-
0503WP5868-24.odt 22 Judgment
"19. The petitioner categorically states that no coal from
Yekona mine has been taken by the petitioner and that the entire
coal mined from Yekona mine has been dumped by the petitioner
only at the area designated by the respondents for stocking the
coal. This can be very well verified by the respondents from the
quantity of coal mined and quantity of coal stocked by the
petitioner at the designated areas. The respondents are aware
about the same and, therefore, have not placed any material in
that regard.
23. In the Show Cause Notice as well as impugned order,
reference has been made to clause 6 of the Special Terms &
Conditions for Hiring Contracts Excavation, Removal of
Overburden, Extraction of Coal and Transportation, clause 9.2 of
the General terms and conditions of the NIT, clause 16(2)(xiii)
and 16(4) of the Guidelines for Banning of Business of General
Terms and Conditions of contract. However, it is not all
determined as to how the petitioner has committed breach of the
aforesaid clauses. There is absolutely no material on record to
show that any tipper of the petitioner was plying on a route
which was not approved or that hydraulic Ex-310 D3 Caterpillar
vehicle was run by an employee of petitioner for the purpose of
loading coal in truck no.MH40CD6911 or that any attempt was
made by any employee of the petitioner to make an attempt of
theft of coal. In absence of aforesaid material, the clauses relied
upon are not at all attracted. The impugned order is therefore,
arbitrary, unreasonable and violative of Article 14, 19(1)(g) and
21 of the Constitution of India.
32. It is further submitted that the respondents have alleged
in the impugned communication that in an attempt of theft of
coal, the petitioner's hydraulic Ex-310 D3 Caterpillar vehicle was
used to load the coal in the truck bearing no.MH 40 CD 6911. In
this behalf, the petitioner submits that the petitioner has never
attempted any theft and the said vehicle of the petitioner was
never used for theft of coal. The respondents have not based
their allegations on any material therefore the same are baseless
and fallacious. It is submitted that as stated earlier the petitioner
has already completed 50% work of the subject contract and has
been completed many such projects successfully in the past,
therefore, there was no occasion for the petitioner to indulge into
such petty thefts as alleged by the respondents."
0503WP5868-24.odt 23 Judgment
23. As stated earlier, under Clause 12 of the General Terms & Conditions,
certain responsibilities of the contractor like the petitioner are mentioned
which includes precautions to be taken by the petitioner at all times for
protection of persons (including employees) and property. Its sub-Clause
(xii) as reproduced hereinabove mandates the petitioner to make necessary
arrangements to prevent theft of coal from project premises during
transportation and also at coal dumpings. Clause 6 of Special Terms &
Conditions for Hiring Contracts Excavation and Removal of Overburden
reads as under:-
"6.00 Contractor's dumper/tipping truck should ply only on
specified routes/roads. In case, plying of the dumper/tipping
truck on any other route/road become necessary, due to any
reason, prior approval for the same shall be taken by the
contractor from the Project Officer/General Manager. In case of
violation of this provision penalty may be imposed on the
contractor and/or the contract terminated."
24. In this background, the conjoint reading of the contents of the First
Information Report referred above, the response of the petitioner to the
communication dated March 12, 2024 by removing its employee from the
site, simplicitor denial of the incident of theft and the opportunity of
hearing offered to the petitioner sufficiently establishes that it was the
failure of the petitioner to protect the property of the respondents of
which it was a custodian. The admission given by the petitioner in
communication dated March 12, 2024 that the Poclain machine was
available 24X7 for working at the site where it was detected sufficiently
speaks of the machinery of the petitioner being involved in the offence.
0503WP5868-24.odt 24 Judgment
Not only the fact of the machinery being involved, the petitioner owes an
explanation for the coal of around forty tonne being found at the
overburden dumping site which was within the reach and control of the
petitioner. The fact about ownership of the Poclain machine being not
denied by the petitioner and Hyva truck being plied on irregular routes
viz. the route which was not assigned, sufficiently establishes the conduct
of the petitioner of being involved in the act of theft of coal.
25. The show cause notice dated March 18, 2024 in categorical terms
refers to the act of the petitioner of dumping the coal at black cotton soil
dump, the deployment of tippers at an unapproved route and involvement
of both the vehicles, viz. Poclain machine and Hyva truck in the
commission of offence. The conduct of the petitioner of indulging in the
theft of coal amounts to violation of the General Terms and Conditions of
the agreement and also the Special Terms and Conditions for Hiring
Contracts Excavation and Removal of Overburden. The reply given by the
petitioner, which is reproduced hereinabove, simplicitor speaks of denial.
The fact that the Poclain machine and the Hyva truck being found on the
spot of theft with forty tonne of coal which otherwise should have been
dumped by the petitioner at the coal dump yard and not black cotton soil
yard is a clear pointer to the involvement in the theft. The Poclain
machine being made operational 24X7 by the employees of the petitioner
sufficiently speaks of the violation of the terms and conditions (General as
well as Special) mentioned in the notice inviting tender.
0503WP5868-24.odt 25 Judgment
26. The petitioner has come up with a case that he was executing the
work in question under the supervision of the staff of the respondents and
as such it was for the respondents to come out with the explanation as to
how the Hywa Truck, Poclain Machine of the petitioner and another
vehicle bearing registration no.KA-01-AM-3667 was noticed at the spot of
the incident. So as to substantiate the said contention, the petitioner has
relied on the spot of incident which has intersection of Yekona-I and
Yekona-II mines. The petitioner has also claimed that after the incident in
question, having noticed the security breach, the respondents have
installed the security barriers. As such, the learned Senior Advocate for
the petitioner has sought to impress upon this Court to claim that the fact
of theft of coal was within the knowledge of the respondents as the work
in question was being executed under their supervision and as such, they
themselves owe an explanation.
The aforesaid contentions are required to be rejected in the light of
Clause 12 of the General Terms and Conditions. Apart from above, the
operation of a poclain machine owned by the petitioner in the matter of
loading of stolen coal which was caught red-handed and abandoning of
the machine and the vehicles owned by the petitioner, sufficiently speaks
of the prima-facie involvement of the petitioner in the matter of theft of
coal. It is not the case of the petitioner that it has taken any criminal or
otherwise action against the employees who have conducted themselves
contrary to the terms of the agreement. It is only upon the ultimatum
given by the respondents, the petitioner has removed its authorized
0503WP5868-24.odt 26 Judgment
person Ankit Yaduwanshi from the spot. Had it been its case that the said
employee was not involved in the crime, the petitioner would have
resisted the directions of the respondents of removing its authorized
person from the spot. The petitioner has tried to shift the burden qua the
security breach on the respondents. Perhaps, while doing so, the
petitioner should have been sensitive to the terms of the agreement, viz.
plying of the Poclain Machine and the Hywa Truck only on the allocated
route and not at the spot where Poclain Machine was traced while loading
the stolen coal. It is indeed a serious offence that the public property is
sought to be stolen from the authorized custody by the contractor like the
petitioner under the garb of execution of some other work, viz. removal of
overburden. Even otherwise, the petitioner has not come with any cogent
explanation for dumping the coal on black soil dumping yard when such
authorization was not at all given. If the staff of the petitioner was not
involved in the offence, then there would have been no occasion for the
operators to abandon the Poclain Machine before fleeing away from the
spot of offence. All these questions are not at all answered by the
petitioner.
27. The petitioner in our opinion cannot travel beyond the reply given
by it to the show cause notice dated March 18, 2024 while questioning the
impugned order, particularly when the impugned order is based on the
facts which are informed to the petitioner before passing the impugned
order. In this background, the claim put forth by the learned Senior
0503WP5868-24.odt 27 Judgment
Advocate appearing for the petitioner by drawing support from the
judgment of the Apex Court in M.P. Power Management Company Limited,
Jabalpur (supra), particularly paragraph 174 will hardly be of any
assistance.
28. The petitioner has claimed that post the incident in question, the
respondents have undertaken the job of installing the security barriers at
the intersection of Yekona-I and Yekona-II mines. Of course, even if such
steps are taken by the respondents that by itself would not help the
petitioner in coming out of the case when the same has formed to be the
basis for passing the impugned order. Such security barriers installed by
the respondents were with an intention to strengthen their security and
not to cover up any lacuna on their part in the matter of alleged theft of
the coal.
29. Apart from above, even if the unregistered vehicle entered the mine
area, the coal was being loaded in it from the Poclain Machine belonging
to the petitioner. If the petitioner's Poclain Machine which was authorized
to operate in the mine area was being used for loading the unregistered
vehicles, the respondents rightly inferred that the petitioner through its
employees having involved in the theft of coal, has failed to give any
explanation in response to the show cause notice issued to it. In such an
eventuality, even if the alleged role of Truck registration no.KA-01-
AM-3667 is ignored, still the other material in our opinion is sufficient
enough to sustain the impugned order of blacklisting.
0503WP5868-24.odt 28 Judgment
30. In the investigation of the offence, it is revealed that the stolen coal
quantity was to the extent of Forty Tonnes and a Hywa truck bearing
registration No.MH-40-CD-6911 which was not registered with the
respondents and the Poclain Machine belonging to the petitioner were
noticed on the spot. The driver of Hywa Truck was arrested whereas the
operator of the Poclain Machine was reported to be absconding. In this
background, even if the petitioner has disputed about the theft of coal,
still the fact remains that the vehicles were seized from the spot, the
operator of the Poclain Machine had fled the spot taking advantage of
darkness, and the driver of the Truck was subsequently apprehended. As
such, the respondents were within their powers under the agreement and
the terms and conditions of the contract to proceed against the petitioner
and after hearing the representative of the petitioner, the impugned order
came to be passed. It has to be as such inferred that the order was passed
by the respondents as per the powers conferred under the agreement qua
the contract in question and as such, it cannot be said that the
respondents cannot adjudicate the claim. As such, support drawn from
from the judgment of the Apex Court in Shree Rameshwara Rice Mills
Thirthahalli (supra) is wholly misplaced.
31. Further contention of the petitioner that the respondents should
have referred the matter to the Arbitrator having noticed the breach of
terms and conditions of the contract and the agreement is concerned, we
are required to be sensitive to the fact that once we have held that the
0503WP5868-24.odt 29 Judgment
respondents were authorized under the law to pass the order impugned, it
cannot be said that they were duty bound to take recourse to the
arbitration proceedings. It is for the petitioner, if it is aggrieved by the
impugned decision to take recourse to the arbitration proceedings, if so
desired. Therefore, the support drawn from the judgment of the Apex
Court in J.G. Engineers Private Limited (supra) by the learned Senior
Advocate for the petitioner is of hardly any relevance.
Similarly, the support drawn by the learned Senior Advocate for
the petitioner from the judgment of the Apex Court in Sudhir Kumar
Singh & Others so as to claim that the impugned order is passed in
violation of the provisions of Article 14 of the Constitution of India as the
material which was not the subject matter of the show cause notice was
taken basis of, we have ignored such material which was not made
available to the petitioner. We have recorded a finding that for the
remaining part of the show cause notice, the petitioner owes an
explanation so as to satisfy that the impugned order was not sustainable.
No doubt, there is a 'Public Law Element' in the case in hand. However,
not only the fact about the issuance of show cause notice but also the
petitioner's explanation to the same was considered after granting an
opportunity of hearing, can be inferred from the impugned order and in
such an eventuality, it cannot be said that there is a breach of the
principles of natural justice. As such, the aforecited judgment will also
not be helpful to the case of the petitioner.
0503WP5868-24.odt 30 Judgment
32. The impugned order rather speaks of the non-arbitrary approach on
the part of the respondents in a contractual matter and as such it has to be
inferred that the respondents being public authorities acted within the
four corners of law in passing the impugned order. It cannot be said from
the perusal of the impugned order that the respondents in any manner
acted arbitrarily, unreasonably or violated the mandate of Article 14 of the
Constitution of India thereby passing the impugned order to the detriment
of the petitioner.
33. In any case, if the petitioner is aggrieved, it has the remedy of
taking recourse to the arbitration proceedings, if it has suffered any
damages because of the impugned order passed by the respondents. In
our opinion, no case for causing indulgence is made out. As such, since
the writ petition lacks merit, the same stands dismissed. In the facts of
the case, there shall be no order as to costs.
(MRS.VRUSHALI V. JOSHI, J.) (NITIN W. SAMBRE, J.)
APTE
Shri M.G. Bhangde, Senior Advocate for the petitioner seeks
continuation of the interim arrangement.
His prayer is objected by Shri N.G. Moharir, counsel appearing for
the respondents.
0503WP5868-24.odt 31 Judgment
However, since the interim arrangement, as agreed between the
parties, is in operation for last six months, we deem it appropriate to
continue the same for a period of four weeks from today.
(MRS.VRUSHALI V. JOSHI, J.) (NITIN W. SAMBRE, J.)
APTE
Signed by: Apte
Designation: PS To Honourable Judge
Date: 21/03/2025 17:44:11
