Calcutta High Court (Appellete Side)
M/S Essal-Rre Enterprises (Jv) vs The Coal India Limited & Ors on 29 May, 2023
1 IN THE HIGH COURT AT CALCUTTA
29.05.2023 CONSTITUTIONAL WRIT JURISDICTION
n.b/Ali
VB/ Ct 8 APPELLATE SIDE
MAT 941 of 2023
IA No.: CAN/1/2023
M/s Essal-Rre Enterprises (JV)
Vs.
The Coal India Limited & Ors.
Mr. Kishore Datta, Sr. Advocate
Ms. Sumita Show,
Mr. Rahul Kumar Siingh
... For the appellant.
Mr. Aniruddha Chatterjee,
Mr. Syed Nurul Arefin,
Mr. S. Mal.
.... For the respondents (ECL)
By a letter of agreement for the work of extraction
of Coal from Coal mine and back filling by way of re-
handling of OB from the New Kenda OC Patch quarry
Nos. 1 and 2 of Kendra area, the appellant obtained the
work order of the above mentioned job to be concluded
by 4745 days. Subsequently, on 2 nd November, 2016 the
formal work order was issued in favour of the appellant.
In the mean time, a writ petition was filed against the
ECL over the said work in the nature of Public Interest
Litigation. Subsequently, by an order passed by the
Division Bench presided over by the Hon'ble The Chief
Justice, the said writ petition was transferred to
National Green Tribunal. The learned National Green
Tribunal, Kolkata initially extended the order of
injunction passed by this court in the aforementioned
writ petition No 2161(W) of 2016 and subsequently the
interim order was vacated. All such incidents happened
during 2016-2017.
The appellant filed WPA 28663 of 2022 assailing
an order of banning and termination dated 2 nd
December, 2022 issued by the ECL for poor performance
and continuous failure to perform despite several letters
issued by ECL by the appellant/petitioner.
On due consideration of rival submissions and
materials on record the writ court dismissed WPA 28663
of 2022.
Hence the instant appeal.
It is submitted by Mr. Kishore Datta, learned
Senior advocate on behalf of the appellant/petitioner
that after execution of the contract the petitioner wrote
series of letter dated 18th June, 2016, 1st March, 2017,
2nd March, 2017, 3rd March, 2017, 1st April, 2017 and 8th
April, 2017 stating inter alia, that the appellant
company could not commence with the quarry work of
Coal due to non supply of the land, obstruction by
villagers, and also several other grounds which were in
the hands of ECL authority to address, but the ECL did
not provide the appellant congenial provision for
execution of such work. Subsequently, on 17 th May,
2022 and 5th/7th April, 2022 the respondent issued two
show cause notices regarding poor performance against
the targeted OB of Coal production, non commissioning
of work and overall poor financial condition of the
company resulting in heavy loss to ECL. No reply was
given to such show cause notices by the petitioner. It is
submitted by Mr. Datta, learned advocate for the
appellant that the appellant did not receive the show
cause notices dated 17th May, 2022 and 5th/7th April,
2022. Again on 21st August, 2022 another show cause
notice was issued to the appellant directing him to show
cause as to why an order of banning of business of the
said company would not be issued. The petitioner made
a detailed reply on 29th August, 2022 stating inter alia,
that with regard to mining operation of quarry the
company is ready to deploy the excavanger for removal
of over burden and coal extraction purpose immediately.
Subsequently, on 2nd February, 2022 the impugned
notice was issued terminating the contract and imposing
banning order which was impugned in the writ petition.
Mr. Datta submits that when a contractor is
banned from taking part in any tender process, such
black listing tarnishes his reputation. The state cannot
ban the impugned contract arbitrarily without
objectively considering the facts and circumstances of
the case of the appellant. On this point, he also refers to
another decision of the Hon'ble Supreme Court in M/s
Erusian Equipment & Chemicals Ltd. Versus State of
West Bengal and Another reported in (1975) 1 SCC 70
and Kulja Industries Limited Versus Chief General
Manager, Western Telecom Project Bharat Sanchar
Nigam Limited and Others reported in (2014) 14 SCC
731.
It is submitted by the learned senior counsel on
behalf of the appellant that the impugned order is devoid
of any reason, the Hon'ble Writ Court failed to
appreciate such aspect and dismissed the writ petition.
Hence, it is prayed on behalf of the appellant that the
instant appeal may be admitted and impugned order
dated 2nd December, 2022 may be stayed. It is also
submitted by Mr. Datta that there is extreme urgency of
the matter because the ECL authority has already
floated tender and the date is fixed today at 3.00 p.m.
for opening of the tender.
Mr. Aniruddha Chatterjee, learned advocate for
the ECL/respondent, on the other hand submits that
the letter dated 19th August, 2022 issued by the ECL in
favour of the petitioner is for all practical purpose the
letter of termination the petitioner did not challenge the
said letter by filing any writ petition. Subsequent letter
dated 2nd December, 2022 is practically banning order
and not the letter of termination. With the letter of
termination not being challenged, the petitioner had no
right to challenge the impugned order dated 2 nd
December, 2022 and the learned Writ court rightly
passed the impugned order. Mr. Chatterjee next has
placed a minute of the meeting between respondents
and the appellant held on 7 th September, 2022, i.e. after
issuance of the so called letter of termination dated 19 th
August, 2022. In the said meeting the appellant clearly
and unequivocally admitted that they failed to carry out
the order and for such purposes no responsibility was
placed upon the ECL.
According to Mr. Chatterjee that the order dated
2nd December, 2022 was passed as the follow up action
of the meeting dated 7th September, 2022.
Mr. Chatterjee next takes us to the General Terms
and Condition (GTC) of ECL. Rules 6.2 States as
follows:-
"6.2. In the event of the contractor's
failure to comply with the required progress in terms
of the agreed time and progress chart or to complete
the work and clear the site on or before the date of
completion of contractor or extended date of
completion, he shall without prejudice to any other
right or remedy available under the law to the
company on account of such breach, shall become
liable to pay for penalty as under
a) If the average daily progress of work during
the calendar months is less than the
stipulated rate indicated in the detail tender
notice penalty as detailed below will be
levied.
i) If the average daily progress of
work executed during the calendar
month is more than 80% and less
than 100% of stipulated rate of
progress, penalty equal to 10% of
the contract value of the short fall
in work shall be levied.
ii) If the average daily progress of
work executed during the calendar
month is less than 80% of
stipulated rate, penalty equal to
20% of contract value of the short
fall in work shall be levied.
iii) The aggregate of the penalties so
levied shall not exceed 10% of the
total contract value.
Penalty will be calculated every month and withheld.
The contractor shall be allowed to makeup the
shortfall in the succeeding months within the
stipulated time of completion.
The company may waive the payment of
compensation, depending upon merit of the case, on
request received from the contractor if the entire
work is complete within the date as specified in the
contract or as validity extended without stipulating
any penalty."
He also refers to clause 10 which is quoted below:-
"10. Termination, suspension, Cancellation and
Foreclosure of the contract.
The company shall, in addition to other remedial
steps to be taken as provided in the conditions of
contract, be entitled to cancel the contract in full or
in part, if the contractor:-
a) makes default in proceeding with the works
with due diligence and continues to do so even
after a notice in writing from the Engineer-in-
charge, then on the expiry of the period as
specified in the notice.
OR
b) 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
c) Fails to complete the work or items of work
with individual dates of completion, on or
before the date/dates of completion or as
extended by the company, then on the expiry
of the period as may be specified by the
Engineer-in-charge in a notice in writing."
Mr. Datta, on the other hand refers to
Clause 10.1 (a) of the GTC and submits that as per the
said clause a contract may be terminated only on the
ground of the contractor being insolvent or under
liquidation etc. and for no other purpose the contract
can be terminated. It is also contended by Mr. Datta that
the documents filed on behalf of ECL today cannot be
looked into as it was not supported by an affidavit in
support of his contention. He refers to a decision of
Bharat Singh & Ors. Vs. State of Haryana & Ors.
reported in (1988) 4 SCC 534.
We have duly considered the submissions made
by the learned counsel for the parties. We have also
considered the impugned judgment passed by the Writ
Court. On factual score, it is asserted that after
execution of the contract there was initially some
problem with regard to land excavation work and filling
of OB upto 2017 due to pendency of some cases.
Subsequently, it is asserted from the minutes of the
meeting dated 17th September, 2022 that all such
glitches were duly taken care of by the ECL and there
was no responsibility for the ECL to carry out its part of
performance. On the contrary it was the obligation of the
appellant to commence the work. From the report of the
ECL. It is found that the appellant failed to perform his
part. The Hon'ble Writ court correctly found that even
after issuance of notice dated 19th August, 2022 the
petitioner was given opportunity of hearing and bipartite
meeting was held on 7th September, 2022 where the
appellant admitted his failure. The ECL letter dated 22 nd
July, 2022 clearly states that 21.47 acres of land was
made available to the appellant in quarry No. 1 for
deployment et of machine. None performance or failure
to perform his part is admitted by the petitioner and,
therefore, we are not in a position to Spil ink poses over
the judgment passed by the Writ Court.
In view of the above discussion, the instant appeal
being devoid of any merit is dismissed.
(Bibek Chaudhuri, J.)
I have perused the judgment/order of my learned
brother and have agreed with the decision taken except
the issue of banning the writ petitioner/appellant of
business for a period of three years as per Clause 2 (V)
(b) of guideline for banning of business. It appears from
Clause 6.25 of General Terms and Conditions where
defaulting contractors may be banned from participating
in future tenders for a minimum period of one year, and
there is no mention of outer limit. Although by the said
Clause ECL Authority may ban a contractor from
participating in future tenders but it is to be kept in
mind that as banning is a penalty which deprives a
contractor to participate in tender process and tarnishes
his reputation abundant caution should be taken and
special reasons should be cited if the ban order is to be
imposed for a considerable period. First of all
Administrative authority should be slow in passing ban
orders/black listing orders and secondly sufficient
grounds should be there if the ban order is more than
the minimum period as provided in the rules.
The Hon'ble Supreme Court in the case of M/s
Erusian Equipment & Chemicals Ltd. Versus State of
West Bengal and Another (1975) 1 SCC 70 the
Hon'ble Supreme court observed as follows:-
"17. The Government is a Government of laws and
not of men. It is true that neither the petitioner nor
the respondent has any right to enter into a contract
but they are entitled to equal treatment with others
who offer tender or quotations for the purchase of
the goods. This privilege arises because it is the
Government which is trading with the public and the
democratic form of Government demands equality
and absence of arbitrariness and discrimination inn
such transactions. Hohfeld treats privileges as a
form of liberty as opposed to a duty. The activities of
the Government have a public element and,
therefore, there should be fairness and equality. The
State need not enter into any contract with any one
but if it does so, it must do so fairly without
discrimination and without unfair procedure.
Reputation is a part of a person's character and
personality. Blacklisting tarnishes one's reputation."
Upon considering the decision of the Hon'ble
Supreme Court and the facts of the case it appears to
me that the order of ban for three years debarring the
writ petitioner/appellant is excessive. No special reason
is cited as to what prompted the ECL Authority to
impose a ban of three years which is thrice the
minimum punishment. Although ECL Authority is to act
in the interest of public with regard to coal but as it is
'State' within meaning of Article 12 of the Constitution of
India it should not be harsh. It should allow
organizations to participate in the tender process and do
business in accordance with the rules and give
reasonable chance to rectify if mistake is made.
In the facts and circumstances, I am of the view
that the period of ban order issued by respondent/ECL
with regard to appellant should be reduced. Although
the usual process is to remit the matter back to
Respondent Authority to reconsider the period of ban
and reduce the same but as considerable period has
passed from the date of such ban order and the
Appellant/Writ Petitioner has already suffered to some
extent with regard to participation in tender such
reference will further delay the matter. Hence in the
interest of justice the period of ban imposed upon the
Appellant/Writ Petitioner with regard to participation in
tender is reduced to one year. I however concur with
other contents of the order of my learned brother.
(Biswaroop Chowdhury, J)
As there is a difference of opinion between us
with regard to a particular issue the matter is
referred to the Hon'ble The Chief Justice for
assigning the case to a learned third Judge.
(Biswaroop Chowdhury, J) (Bibek Chaudhuri, J.)
