M/S Shaurya Coal Carriers Pvt. Ltd vs Union Of India & Ors
2015 Latest Caselaw 8077 Del

           *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                        Date of decision: 20th October, 2015

+              W.P.(C) 10030/2015 & CM No.24548/2015 (for stay).

       M/S SHAURYA COAL CARRIERS PVT. LTD...... Petitioner
                    Through: Mr. Anunaya Mehta, Adv.

                                 Versus

       UNION OF INDIA & ORS                                 ..... Respondents

Through: Mr. Dev P. Bhardwaj, CGSC for R-

1&2/UOI with Col. Lamba.

CORAM :-

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

CM No.24549/2015 (for exemption)

1. Allowed, subject to just exceptions.

2. The application is disposed of.

W.P.(C) 10030/2015 & CM No.24548/2015 (for stay)

3. The petition (i) impugns the letter dated 5 th October, 2015 of the

respondent No.2 Directorate General of Resettlement (DGR), Ministry of

Defence to the respondent No.3 Mahanadi Coalfields Ltd. (MCL) requiring

the respondent No.3 MCL to confirm the termination of the contract with the

petitioner and to withhold all payments to the petitioner till clearance from

the respondent No.2 DGR; (ii) impugns the letter dated 24 th April, 2015 of

the respondent No.2 DGR to the petitioner to submit parawise comments to

the earlier letter dated 6th April, 2015 of respondent No.3 MCL to the

respondent No.2 DGR; (iii) seeks a direction to the respondents to "refund

all amounts withheld from the petitioner" including the amount of

approximately Rs.91 lakhs withheld earlier as also the amount of

approximately Rs.50 lakhs withheld in terms of the letter dated 5 th October,

2015; and, (iv) seeks to restrain the respondents from withholding any

amounts of the petitioner and from taking any coercive action against the

petitioner without first issuing a proper show cause notice to the petitioner.

4. Having prima facie not found the petition entertainable, the counsel

for the petitioner has been heard at length. He has argued:

(a) that the petitioner is an Ex-Serviceman (ESM) company;

(b) that the respondent No.2 DGR has been set up to rehabilitate

the ESM ;

(c) that the respondent No.2 DGR has signed a Memorandum of

Understanding (MoU) with the respondent No.3 MCL of sponsorship

of ESM companies for transportation of coal;

(d) that the petitioner company was so sponsored by the respondent

No.2 DGR;

(e) that the petitioner company, instead of signing a fresh

agreement with the respondent No.3 MCL, merely ratified the MoU

aforesaid which governs the relationship between the petitioner and

the respondent No.3 MCL;

(f) that Clause 20 of the said MoU deals with "Termination of

Contract" and inter alia provides that if an ESM company is not

adhering to the conditions of MoU and/or is found indulging in any

malpractice, MCL/Coal Subsidiary may initiate action for termination

of contract, withholding of payment of bills, forfeiture of security

deposit but, after issuing a show cause notice to the ESM company

under intimation to DGR and after affording opportunity to ESM

company to initiate corrective / remedial measure;

(g) that the respondent No.2 DGR has issued a show cause notice

to the petitioner and which the petitioner could not place before this

Court owing to the extreme urgency in which this petition has been

filed but there has been no compliance of Clause 20 of the MoU

aforesaid which governs the contract of transportation of coal under

which the petitioner has been performing;

(h) that the respondent No.2 DGR has on the contrary directed the

respondent No.3 MCL to terminate the contract of the petitioner in

non-compliance with Clause 20 of the MoU;

(i) that in response to the various show cause notices issued by the

respondent No.2 DGR, the petitioner has submitted its replies and has

fully satisfied the respondent No.2 DGR of being in compliance of all

the terms and conditions and has also remedied / ratified the violations

which had occurred inadvertently and owing to be misguided from the

actions of the respondent No.2 DGR.

5. I have at the outset enquired from the counsel for the petitioner, as to

how the writ remedy under Article 226 of the Constitution of India is

available to the petitioner, the dispute subject matter of petition being in the

realm of private contract and having no public law character and whether not

the appropriate remedy for the petitioner is a remedy under the civil law or

of arbitration, if agreed to.

6. The counsel for the petitioner, well prepared to answer the said query,

has at the outset stated that there is no arbitration clause in the agreement

between the parties and the only other remedy available to the petitioner

would be by way of a civil suit. Else on law, he has invited attention to ABL

International Ltd. Vs. Export Credit Guarantee Corporation of India Ltd.

(2004) 3 SCC 553, Whirlpool Corporation Vs. Registrar of Trade Marks

(1998) 8 SCC 1 and to the latest dicta in Joshi Technologies International

Inc. Vs. Union of India (2015) 7 SCC 728.

7. The Supreme Court in Joshi Technologies International Inc. supra

having dealt also with the other two judgments cited as well as a host of

other judgments and having inter alia observed that the summarisation of the

legal position in paras 27 & 28 of ABL International Ltd. has to be

understood in the context of discussion that preceded and noted in the said

judgment, I have heard the counsel for the petitioner further with respect to

Joshi Technologies International Inc. supra only and have enquired from

him, how the present petition can be said to be having any public law

character attached to it and whether not the present petition is inter alia for

enforcing a money claim per se arising out of contractual obligations and

which have been held to be normally not entertainable, except in the

exceptional circumstances.

8. The counsel for the petitioner has attached the public law character to

the present action by contending that the act of the respondents No.1 & 2

Union of India (UOI) and DGR of sponsoring ESM companies for coal

transportation is a rehabilitative and welfare measure for the ESM and thus

is not purely a matter of contract but has a public law element to it.

9. I have further enquired from the counsel, whether not all actions of

the State are in a way for welfare of the citizens or for some section/s of the

society or the other and that if that were to be the test, whether not it would

tantamount to writ remedy being available against the State, including in

matter of contract and which otherwise in the judgment supra has been held

to be not.

10. The counsel for the petitioner has then contended that the writ petition

should be entertained because the respondent No.2 DGR is asking the

respondent No.3 MCL to act in violation of the terms and conditions of the

MoU which was entered into by the respondent No.2 DGR itself with the

respondent No.3 MCL.

11. I am afraid, the matter would still be in the realm of the contract.

Moreover, all that the respondent No.2 DGR did vide the impugned letter

dated 5th October, 2015 was to ask the respondent No.3 MCL to confirm the

termination of the contract of the petitioner. If the respondent No.3 MCL

before affecting the said termination is required to follow a procedure, I am

sure the said procedure shall be followed, if not already followed and there

is nothing to suggest that it will not be.

12. Notice in this regard may however be taken of the letter dated 6 th

April, 2015 of the respondent No.3 MCL to the respondent No.2 DGR. The

respondent No.3 MCL in the said letter informed (i) that during verification

of documents of the Pay Loaders deployed by the petitioner, it was found

that the ownership of one of the Pay Loaders was not as per the norms of the

MoU; (ii) that the petitioner in response thereto had stated that the said Pay

Loader may not be allowed to operate; (iii) that on re-scrutiny of documents,

it was further found that another Pay Loader also did not fulfil the terms of

the MoU and therefore the deployment of that Pay Loader also was stopped;

(iv) that thus the work done by the aforesaid two Pay Loaders was not as per

the guidelines for deployment of fleet, in the MoU; therefore an amount of

Rs.91.29 lakhs had been withheld from the payment to the petitioner, based

on the calculation of difference of ESM loading rate to civilian rate of the

contemporaneous time; (v) that the issue of wrongful deployment of the Pay

Loaders by the petitioner and withholding of payment was examined by a

committee constituted at the headquarter which had also opined to recover

the amount for differential rate of loading for ESM and civilian contract; (vi)

that since a violation of Para 8 of the MoU had been committed by the ESM

company, the case file was being forwarded for further scrutiny and

recommendation.

13. The aforesaid is suggestive of, response of the petitioner having been

called for to each and every violation.

14. This Court in writ jurisdiction cannot entertain the dispute, whether

the petitioner was in breach or not and if not whether the contract has been

wrongfully terminated and if so to what relief the petitioner is entitled to.

Suffice it is to state that the contract by its nature was terminable and not

specifically enforceable.

15. The counsel for the respondents No.1&2 appearing on advance notice

has also contended that in fact the petitioner is in default of payment to its

manpower and which is also making a claim against the respondents and

which claim will have to be satisfied by the respondents.

16. The counsel for the petitioner, though not disputing, states that the

petitioner would clear the said payments when its own monies are released

by the respondents.

17. The counsel for the respondents No.1&2 has also handed over a

booklet titled "Guidelines on Formation and Running of Ex-Servicemen

Coal Transport Companies" published by the Self Employment Directorate

of DGR, Ministry of Defence in June / July, 2007 and which in its Appendix

D contains "Clauses to be Incorporated in the Memorandum and Articles of

Association" of ESM company and Clause 11 whereof requires an ESM

Coal Transport Company sponsored by DGR to submit various reports and

returns as directed by the DGR from time to time and provides that non-

submission of specified reports or incorrect facts and figures may result in

cancellation of sponsorship / non-renewal of contract; Clause 13 similarly

provides that violating or non-compliance of all the clauses may lead to

withholding of payments by coal subsidiary or cancellation of sponsorship

by the DGR. Needless to state, once the sponsorship of the petitioner is

withdrawn by the respondent No.2 DGR, the question of the respondent

No.3 MCL dealing with the petitioner does not arise.

18. The counsel for the respondents No.1&2 has from the departmental

file brought by Col. Lamba to the Court also shown a letter dated 6th August,

2015 of the respondent No.2 DGR to respondent No.3 MCL detailing as

many as 12 show cause notices issued to the petitioner, right from 13 th July,

2009 till 8th July, 2015 and the replies thereto of the petitioner and stating

that since the petitioner "has been constantly violating the provisions of the

MoU" and the Guidelines on Formation and Running of Coal Transportation

Company, 2007 vide which the petitioner company is governed, immediate

action under para 20(a) of MoU was recommended against the petitioner.

19. The aforesaid also takes care of the grievance of the petitioner of the

respondent No.2 DGR having directed the respondent No.3 MCL to act in

violation of the said guidelines.

20. The aforesaid file also contains the notice dated 21st July, 2015 issued

by the respondent No.2 DGR to the petitioner and its three Directors asking

them to visit the DGR on 4th August, 2015 for meeting, as their previous

replies to the show cause notices issued earlier had not been found

satisfactory.

21. I am therefore satisfied that it cannot also be said that there is any

violation of the principles of natural justice as is also pleaded in the petition.

22. No case for entertaining the writ petition is thus made out.

23. Dismissed.

24. I however clarify that the observations contained herein are merely for

the purpose of adjudicating the maintainability of the writ petition and in the

event of any civil proceedings being undertaking by the petitioner would

have no binding effect in adjudication thereof.

No costs.

RAJIV SAHAI ENDLAW, J.

OCTOBER 20, 2015 „bs‟..

(corrected and released on 21st November, 2015)