Chattisgarh High Court
Prakash Industries Limited vs South Eastern Coalfields Limited on 10 August, 2022
1
AFR
HIGH COURT OF CHHATTISGARH BILASPUR
WA No. 310 of 2022
Prakash Industries Limited Through Its Assistant Vice President
(Corporate Affairs) Shri Arun Kumar Singh, S/o Late Shri Shiv
Dayal Singh, Aged About 53 Years, Having Office At Champa,
District Janjgir Champa Chhattisgarh.
---- Appellant
Versus
1. South Eastern Coalfields Limited Through Its Chairman
Cum Managing Director, Seepat Road, Bilaspur , District
Bilaspur Chhattisgarh.
2. Coal India Limited Through Its Director (Marketing) Coal
Bhawan, Campus No. 04 Mar , Plot No. Af Iii, Action Area
1a, New Town , Rajarhat Kolkata 700156
3. Director Technical (Operations) South Eastern Coalfields
Limited, Seepat Road, Bilaspur , District Bilaspur
Chhattisgarh.
4. General Manager (Marketing And Sales) South Eastern
Coalfields Limited, Seepat Road, Bilaspur, District Bilaspur
Chhattisgarh.
---- Respondents
For Appellant : Mr. Shashank Thakur, Advocate
For Respondents : Mr. Vaibhav Shukla, Advocate
Date of hearing : 12.07.2022
Date of Judgment : 10.08.2022
Hon'ble Shri Arup Kumar Goswami, Chief Justice
Hon'ble Shri Parth Prateem Sahu, Judge
C A V Judgment
Per Arup Kumar Goswami, Chief Justice
Heard Mr. Shashank Thakur, learned counsel for the
appellant. Also heard Mr. Vaibhav Shukla, learned counsel, appearing
for the respondents.
2. This appeal is presented against an order dated 29.03.2022
passed by the learned Single Judge in Writ Petition (C) No.1811 of
2021, dismissing the writ petition.
3. The appellant is a Company registered under the Companies
Act, 1956. For supply of Grade G6 category coal, the appellant had
entered into three Fuel Supply Agreements ('FSA') being No.FSA
No.A-276, executed on 08.08.2017, FSA No. A-368, executed on
29.12.2017 and FSA No. A-370, executed on 29.12.2017. As per
Clause 2.2 of the FSAs, the agreements were for a period of five years
Under Clause 17.1, there is a locking period of two years. Notice of 90
days for termination could be given as per Clause 17.2. The appellant
submitted notice of termination in respect of all the three FSAs on
01.07.2020. Pursuant to the decision of 232 nd Functional Directors
meeting held on 27.06.2020 on dispensation of Non-power sector
consumers to re-validate shortfall quantity and lift coal to the extent of
Annual Contracted Quantity (for short, ACQ) under FSAs, a letter
dated 03.07.2020, containing a 'Scheme', was issued by the Coal
India Limited to all the coal companies including the South Eastern
Coalfields Limited, the respondent No. 1 herein. The same was notified
on 09.07.2020.
4. At this juncture, it will be appropriate to extract the relevant
portion of the Scheme:
"1. Purchasers who could not off-take the
MSQ quantity (Scheduled quantity or SQ as per
FSA) during Apr-June 20 under NRS Linkage
auction FSA for any reason whatsoever may be
allowed to book the unlifted / unbooked quantity in
the subsequent months of current FY subject to
availability of the coal at the coal company.
2. The willing consumers has to submit an
undertaking stating that the coal taken under this
relaxation shall be utilized against requirement of
their EUP and they shall not procure the coal to
the extent of such shortfall quantity through import
during current FY.
3. The above dispensation of carry over of
unlifted / unbooked quantity in a particular month
shall be allowed for the entire FY subject to
availability of coal at the coal company and within
the ceiling of ACQ.
4. The same dispensation may also be
extended for the willing non power FSA
consumers other than NRS Linkage auction also
to the extent of their ACQ irrespective of Import
component under FSA. However, the same shall
be allowed subject to fulfillment of all commercial
obligation including performance security as per
FSA provision.
5. The above dispensation shall be optional
in nature.
It was decided that the above "relaxations shall be
given upto March' 2021 without affecting the
committed supply".
Coal companies are requested to take needful
action for implementing the above."
5. By an order dated 07.09.2020, the respondents, in terms of
Clauses 17.1 and 17.2, terminated all the three FSAs with effect from
30.09.2020.
6. The appellant had submitted applications on 22.12.2020 to lift
coal for the period April - June, 2020 in respect of FSA No.A-276 and
FSA No. A-368 and had made necessary payment. However, as no
decision was taken by the respondents, the appellant preferred a writ
petition, registered as Writ Petition (C) No.1363 of 2021, which was
disposed of by an order dated 08.03.2021, directing the respondents
to consider the representation submitted by the appellant and to
decide the same within a period of three weeks.
7. Subsequently, by an order dated 19.03.2021, the respondents
rejected the representation and it is in that circumstance, the appellant
had preferred the present writ petition, out of which this appeal arises.
8. The appellant had made the following prayers in the writ
petition :
"10.1 It is most respectfully prayed that this
Hon'ble Court may kindly be pleased to issue
appropriate writ/order/direction setting aside/
quashing the order dated 19-03-2021 (Annexure
P-1A) issued by respondent no. 4.
10.2 It is most respectfully prayed this Hon'ble
Court may kindly be pleased to issue appropriate
writ/order/direction to declare the petitioner as
entitled to lift coal in terms of the scheme
circulated by the CIL vide its letter dated 03-07-
2020 and notified by SECL on 09-07-2020 and
further be pleased to direct the respondents to
deliver the said coal for April to June 2020 to the
petitioner with immediate effect. In alternative this
Hon'ble Court may be pleased to direct that ;
10.3 It is most respectfully prayed this Hon'ble
Court may kindly be pleased to issue appropriate
writ/order/direction to the respondents that in the
event of failure to supply the coal in terms of the
CIL scheme announced on 03-07-2020 and
notified by SECL on 09-07-2020 by the last date
i.e., 31-03-2021 the respondents may be directed
by this Hon'ble Court to reckon the said quantity
of coal as having been lifted by the petitioner
towards satisfaction of the Annual Contracted
Quantity (ACQ) of coal; and consequently the
respondents may further be directed to not
impose any penalty(s) and/or make any
deduction(s) for short lifting of the Annual
Contracted Quantity of coal. This Hon'ble Court
may also direct the respondents to suitably and
adequately compensate the petitioner in
equivalent value to amount of coal due to be
supplied for the months of April to June 2020.
10.4 It is most respectfully prayed that this
Hon'ble Court may kindly be pleased to direct the
respondents to refund in toto, without any
deduction, without imposing any penalty
whatsoever, the performance security guarantees
towards the three respective FSAs and also to
refund in toto the amount deposited towards lifting
of coal by RTGS on 22.12.2020.
10.5 It is most respectfully prayed that this
Hon'ble Court may kindly be pleased to grant
costs of the writ petition in favour of the petitioner.
10.6 Any other relief(s) that this Hon'ble Court
deems fit in the facts and circumstances of the
case."
9. Mr. Shashank Thakur, learned counsel for the appellant
submits that the learned Single Judge erroneously held the appellant
to be a non-willing consumer and that no right had accrued in terms of
Clause 17.3 of the FSAs in favour the appellant to avail the benefit of
the Scheme. It is submitted by him that the appellant is entitled to the
dispensation provided for by the letter dated 03.07.2020 in view of the
FSAs being in force at the time of issuance of letter dated 03.07.2020
as also when the same was notified on 09.07.2020. Accordingly, he
submits that appropriate directions may be issued to the respondents
to hold that the appellant is entitled to lift coal in terms of the Scheme
and to direct the respondents to deliver coal for the period April -
June, 2020, as prayed for by the appellant, after quashing the order
dated 19.03.2021.
10. Mr. Vaibhav Shukla, learned counsel, appearing for the
respondents, submits that an option was given to the consumers to
avail the benefits in terms of letter dated 03.07.2020 and during the
currency of the FSAs, the appellant did not exercise any option, and
therefore, no right having accrued to the appellant during the currency
of the FSAs, the learned Single Judge was justified in rejecting the writ
petition. It is further submitted that as the Scheme was available only
to willing consumers, the appellant could not have been considered to
be a consumer when the applications to avail the benefit of the
Scheme, spelt out by the letter dated 03.07.2020, was made.
Accordingly, he submits that there is no merit in the writ appeal and the
same is liable to be dismissed.
11. We have considered the submissions of the learned counsel
for the parties and have perused the materials on record.
12. Having regard to the controversy, it will be appropriate to take
note of Clause 17.3 of the FSAs :
"17.3 Accrued rights to survive termination
Termination of this Agreement shall be without
prejudice to the accrued rights and obligations of
either Party arising immediately prior to the
termination. In the event of termination of this
Agreement, the Purchaser shall return all the
Confidential Information in its possession to the
Seller or destroy such information in accordance
with the instructions of the Seller."
13. It will also be appropriate to quote Clauses 8.2.2, 8.2.3 and
8.2.4, which are reproduced below :
"8.2 Order Booking by Road.
8.2.1 x x x x x
8.2.2 The Purchaser shall place orders with
the Seller for the Scheduled Quantity by making
advance payment of the full value of the respective
order ("Advance Payment"), within the period as
notified by the Seller. The Advance Payment may
also be made in 3 (three installments each of 10
(ten) days value of the Contracted Grade of Coal in
accordance with the terms and conditions including
the time periods of depositing the installments, as
stipulated in the monthly notice issued by the Seller
under Clause 8.2.1.
8.2.3 Subject to the receipt of the Advance
Payment along with the costs for third party
sampling, if applicable, the Seller shall arrange to
issue sale order (s)/delivery order(s) and shall
also issue necessary loading programme/
schedule from time to time. The purchaser shall
arrange to place the required number/type of
trucks to lift the Contracted Grade of Coal as per
such loading programme/schedule. The Seller
shall ensure that the sale order/delivery order in
favour of the Purchaser is prepared promptly upon
receipt of a notice in this regard from the
Purchaser and that the same reaches the Delivery
Point/weighbridge within 5 (Five) working days of
the last day specified in the notice for booking
orders in terms of Clause 8.2.1.
8.2.4 The Seller shall ensure delivery and the
Purchaser shall ensure lifting of the Contracted
Grade of Coal against the sale order/delivery
order of any month within the validity period of 45
(forty five) days, as mentioned in the sale
order/delivery order."
14. The request of the petitioner to lift coal for the period of
April - June 2020 was turned down by order dated 19.03.2021,
holding as follows:
"1) The notice dated 03.07.2020 / 09.07.2020
gave only, an option to the consumers which
was required to be exercised by them. First,
within a prescribed time frame, to avail the
opportunity, to lift coal as per the said
scheme / notice. However the said option, as
per our records, has not been availed by you
during the subsistence of your FSA(s) which
expired on 30.09.2020. Thus there is an
apparent waiver of right from your end.
2) Furthermore, vide your notice dated
01.07.2020, a clear intent to cease the
contractual relations was communicated to us
which, finally was given effect to as per your
request and all contractual relations between
the parties ended w.e.f. 30.09.2020.
3) From (1) and (2) above, it is inferred that
no rights could be generated due to self
waiver from your end and consequently
nothing accrued in respect of the scheme,
which can be availed under clause 17.3, post
expiry of the FSA.
4) Moreover, the scheme / notice is only
applicable to willing consumers and on the
date of your aforementioned representations,
you were no longer a consumer of SECL vis-
a-vis the FSA.
Hence, since your request / claim for lifting
coal under the dispensation scheme / notice
is not based on any subsisting legal
agreement, the same is not permitted."
15. The learned Single Judge at paragraphs-11 and 12 observed
as follows :
"11. In view of the above clauses, it appears to be
clear that the petitioner had not placed any order
during the currency of the FSAs for the month of
April to June, 2020. Therefore, there was neither
any proposal from the petitioner side nor any
acceptance from the respondents side. The
orders have been placed by the petitioner
subsequently on 18.12.2020 after the termination
of the FSAs and payment for the same was also
made subsequently in the month of December,
2020. It was a proposal given by the petitioner,
which has not been accepted by the respondents
side. The fuel supply agreement has to be
understood in broader sense. It is the terms and
conditions, which are agreed on by the purchaser
and the seller according to which the fuel supply
has to be regulated. Termination of the
agreements on the request of the petitioner by
acceptance of the notice of termination on
07.09.2020 does not leave the petitioner in a
position of a purchaser, therefore, another
proposal made by the purchaser subsequent to
such termination and without there being any
FSAs existing between the petitioner and the
respondents, has to be deemed as the proposal
out of bounds of the FSAs and the respondent is
under no compulsion to accept the same as the
FSA that existed is no longer in force. Therefore, I
am of this view that the petitioner though had
entitled for lifting of the coal during the currency of
FSAs, but petitioner did not place any order as
required under Clause 8.2.2 of the agreement and
therefore, there is no question of granting
acceptance by the respondents as required under
Clause 8.2.3 of the FSAs agreement. Hence,
there is no reason to hold that any right has
accrued in favour of the petitioner. The reference
of the policy decision of the Coal India Limited
dated 03.07.2020 (Annexure P-9) is necessary.
The quoted points in the letter dated 03.07.2020
(Annexure P-9) are as follows.:-
"Quotes:-
1. Purchasers who could not offtake the
MSQ quantity (Scheduled quantity or SQ as
per FSA) during Apr-June 20 under NRS
Linkage auction FSA for any reason
whatsoever may be allowed to book the
unlifted/unbooked quantity in the subsequent
months of current FY subject to availability of
the coal at the coal company.
2. The willing consumers has to submit an
undertaking stating that the coal taken under
this relaxation shall be utilized against
requirement of their EUP and they shall not
procure the coal to the extent of such shortfall
quantity through import during current FY.
3. The above dispensation of carryover of
unlifted/unbooked quantity in a particular
month shall be allowed for the entire FY
subject to availability of coal at the coal
company and within the ceiling of ACQ.
4. The same dispensation may also be
extended for the willing non power FSA
consumers other than NRS Linkage auction
also to the extent of their ACQ irrespective of
Important component under FSA. However,
the same shall be allowed subject to
fulfillment of all commercial obligation
including performance security as per FSA
provision.
5. The above dispensation shall be optional
in nature."
12.The word purchaser and willing consumer is
very specific in this letter and it is also specific that
the dispensation was to be implemented under
the FSAs existing between the parties. In the
present case, the FSAs were not existing between
the petitioner and the respondents on the date,
the petitioner has made request for the release of
the coal and deposited the price for the same.
Hence, under these circumstances, I am of this
view that the present petition is without any
substance, which is dismissed and disposed off
accordingly."
16. We are unable to agree with the view taken by the learned
Single Judge that though the appellant was entitled to lift the coal
during the currency of FSAs, but as it did not place any order as
required under Clause 8.2.2 of the FSAs, no right had accrued in
favour of the appellant in terms of Clause 17.3.
17. The Scheme at paragraph-1 provides that the purchasers who
could not off-take the Monthly Schedule Quantity ('MSQ') during April -
June, 2020 under NRS Linage Auction FSA for any reason whatsoever
may be allowed to book the unlifted / unbooked quantity in the
subsequent months of the Financial Year subject to availability of coal
with the coal company.
18. Thus, whether coal was booked or not during April - June,
2020 was not a relevant consideration for grant of benefit in terms of
the Scheme in question.
19. The crucial question is whether any right had accrued in favour
of the appellant during the validity of the FSAs as Clause 17.3 saved
the accrued rights and obligations of either party arising immediately
prior to termination. Though the appellant had sent notice of
termination dated 01.07.2020, it is already noticed that the same was
accepted by an order dated 07.09.2020 with effect from 30.09.2020.
Thus, when the Scheme was floated by the letter dated 03.07.2020
and notified on 09.07.2020, notwithstanding the letter giving notice of
termination on 01.07.2020, FSAs continued to be in existence till their
termination on 30.09.2020, and therefore, the appellant certainly could
have availed the benefit in terms of the letter dated 03.07.2020.
20. It is to be noticed that the dispensation as laid out by the letter
dated 03.07.2020 is optional in nature, which, in other words, means
one has to exercise an option to avail the benefit given under the
Scheme. No right gets automatically vested on entities having FSAs
with the respondents. The appellant did not exercise the option to avail
the benefit during the period when the FSAs were in force, and
therefore, it cannot be said that any right had accrued to the appellant
prior to termination of the FSAs. If the appellant had exercised its
option during the period from 03.07.2020 to 30.09.2020 to lift the
unlifted / unbooked quantity, matter could have been seen in a
different perspective. When the appellant had applied to avail the
benefit of the Scheme, it was no longer a consumer of the respondent
No. 1. The Scheme specifically lays down that the same is applicable
only to willing consumers.
21. Though we had not entirely agreed with the reasoning given by
the learned Single Judge as indicated in the present judgment, in view
the reasons assigned by us that the appellant did not have an accrued
right to book and lift the coal for the period April - June, 2020, no
interference is called for with the order of the learned Single Judge.
22. Accordingly, the writ appeal is dismissed. No cost.
Sd/- Sd/-
(Arup Kumar Goswami) (Parth Prateem Sahu)
Chief Justice Judge
Anu/Hem
