M/S Goyal Trading Company vs Central Coalfields Limited & ...
2021 Latest Caselaw 4652 Jhar

IN THE HIGH COURT OF JHARKHAND AT RANCHI
                  (Civil Writ Jurisdiction)
                 W.P. (C) No. 3415 of 2008
                         ........

M/s Goyal Trading Company .... ..... Petitioner Versus Central Coalfields Limited & Others .... ..... Respondents

CORAM: HON'BLE MR. JUSTICE KAILASH PRASAD DEO ............

For the Petitioner : Mr. Pandey Neeraj Rai, Advocate.

Mr. Pradum Poddar, Advocate.

For the Respondents - CCL : Mr. Amit Kr. Das, Advocate.

........

10/07.12.2021.

Heard, learned counsel for the petitioner, Mr. Pandey Neeraj Rai assisted by learned counsel, Mr. Pradum Poddar and learned counsel for the respondents - CCL, Mr. Amit Kumar Das.

The present writ petition has been filed for a direction upon the respondents to hold and declare that the demand of land rent at the enhanced rate of Rs. 1.35 per square feet per annum made by the respondent - Central Coalfields Limited is arbitrary and illegal, as condition has been imposed vide offer letter dated 12.10.2006, which was signed by the petitioner under compelling circumstances as "love it or leave it" situation as the entire investment of the petitioner was at stake at that time.

Learned counsel for the petitioner, Mr. Pandey Neeraj Rai assisted by learned counsel, Mr. Pradum Poddar has submitted that rent has been enhanced up to about four times, that too without any notice or without any consent, with retrospective effect and petitioner was under obligation to sign the contract, unless the said contract is signed, the work order will not be issued and also vide letter dated 12.10.2006, petitioner was intimated that "This letter is being issued in quadruplicate and you are advised to return three copies duly signed and accepted by you, one to the Project Officer, Area Finance Manager and one copy to this office.", as such, under obligation to sign such document, petitioner has signed the document, but the same was not acceptable to the petitioner, as such, he has filed representation before the respondent authority on 22.11.2006, which was rejected on 19.12.2006.

Learned counsel for the petitioner has further submitted that the said offer was unconscionable and oppressive. Petitioner was seriously aggrieved by the unreasonably and exorbitantly increased rate of land rent as Rs. 1.35 per sq. ft. per year which amounts to being 400% of the originally fixed land rent of Rs.0.37 per sq.ft. per year. But the petitioner was not in a position to decline the offer because it would have meant suffering severe losses. Petitioner's briquette manufacturing unit was dependent on supply of raw material (slurry) by CCL. Heavy expenditure and obligations had already been incurred in establishing the said unit and in running the same. Such expenditures & obligations had been borne by the petitioner relying upon the approval granted by the respondents vide their latter dated 1.1.2001 (Annexure-1), which postulated levy of land rent at extremely lesser rate (of Rs.0.37). This unilateral offer to pay such higher land rent against petitioner is oppressive, but at the same time, petitioner was left with no option but succumb to the disproportionately larger bargaining power of the respondents. There were only two options, viz. either to take it or to leave it. No scope for negotiation and to reach a fair consensus at idem was left. Petitioner's unconditional acceptance was also printed in the said offer letter with only a dotted line left for putting signature and seal of the acceptor. The signature & seal were accordingly put on behalf of the petitioner, so as to lead to execution of an unconscionable dotted line contract. The petitioner humbly submits that is not fit to be enforced to the extent of the unreasonableness, arbitrariness and oppression inherent in it, as such may be quashed.

Learned counsel for the petitioner has placed reliance upon the judgment passed by the Apex Court in the case of Ashoka Smokeless Coal India (P) Ltd. and others Vs. Union of India and others reported in (2007) 2 SCC 640. Para-115, 120, 124, 125, 126, 161 & 167 of the said judgment may profitably be quoted hereunder:

115. Coal companies are monopolies within the meaning of the provisions of the Nationalization Act. They would be deemed to be monopolies within the provisions of clause (6) of Article 19 of the Constitution of India. Our attention has been drawn to the two decisions of this Court in Akadasi Pradhan v. State of

Orissa [1963 (Supp) 2 SCR 691 at 715], and State of Rajasthan v.

Mohan Lal Vyas [(1971) 3 SCC 705].

120. The Union of India and the coal companies do not deny that they have a monopoly. They do not deny or dispute that they are ''State'' within the meaning of Article 12 of the Constitution of India. They have also not raised any contention that the constitutional obligations in terms of Article 39(b) are not required to be complied with.

124. Coal is an essential commodity in terms of Section 3(1) of the Essential Commodities Act. The Colliery Control Order was made, inter alia, for securing equitable distribution and availability of higher price of essential commodity. The coal companies as also the Central Government, therefore, have a constitutional and statutory obligation to fulfill. Coal companies exercising monopolistic power, thus, were required to distribute coal equitably and at a fair price.

125. In Tara Prasad Singh [(1980) 4 SCC 179], this Court has categorically considered as to why Parliament thought it fit to enact the Nationalisation Act i.e. to distribute the resources vested in the State to subserve the common good. The State, it is trite, while fixing the price for the purpose of equitable distribution or otherwise cannot be actuated purely by a profit motive. It should not discharge its functions in such a way as to aspire to earn huge profit specially at the cost of those who are fully dependent upon them for supply of a monopoly item like coal. It cannot be the law that the public sector undertakings while selling essential commodities must suffer loss. It is also not the law that public sector undertakings must distribute subsidy, but what is required in terms of the constitutional scheme adumbrated under Article 39(b) and Article 14 of the Constitution of India is to make the said essential commodity available at a fair price. However, for the purpose of this case, it may not be necessary for us to dilate on the principle of fixation of price, of coal as an essential commodity or otherwise.

126. Before us the learned counsel for the parties relied upon various decisions of this Court as regards the mode and manner in which deliberations were made on fixation of price of essential commodities over which the monopoly right is exercised. We have also been taken through a recent decision of this Court in Pallavi Refractories [(2205) 2 SCC 227]. By reason of e-auction no price is fixed as it would vary from bid to bid. The coal is sold

through e-auction at least twice a month. There will be various places where e-auction would be conducted simultaneously. In e- auction, the quantity and quality of coal depending upon its grade, size, colliery from which the same has been extracted, are specified. In such a situation invariably the price for same quality of coal would greatly vary as the bidders would bid having regard to their own requirement. By allowing repeated bids, a person who may be requiring the essential commodity would not be able to prove the same and its non-availability may result in stoppage of production which would lead to various complications. He would, therefore, be driven to a desperate situation. The only price which is fixed for e-auction is the reserved price which is 25% above the notified price.

161. The effect is that today, while the core sector (92%) on its own and non-core non-linked SSI/tiny units (through the NCCF/other agencies) (1%) are being supplied coal at a fixed price, on the other hand, the non-core linked SSI/tiny units (4%) are being subjected to differential treatment, without any rational classification, by supplying the coal to the latter on the price to be ascertained by the trader-controlled process of e-auction and thereby putting the petitioner units on a par with the trader. The scheme of e- auction is, therefore, ultra vires Article 14 of the Constitution of India.

167. In fact the decisions of this Court on price fixation also point out that although a reasonable profit may be permissible, profiteering would not be.

Learned counsel for the petitioner has further placed reliance upon the judgment passed by the Apex Court in the case of Central Inland Water Transport Corporation Ltd. and another Vs. Brojo Nath Ganguly and Another reported in AIR 1986 SC 1571. Para-90, 94 & 101 of the said judgment may profitably be quoted hereunder:

90. Should then our courts not advance with the times?

Should they still continue to cling to outmoded concepts and outworn ideologies? Should we not adjust our thinking caps to match the fashion of the day? Should all jurisprudential development pass us by, leaving us floundering in the sloughs of nineteenth-century theories? Should the strong be permitted to push the weak to the wall? Should they be allowed to ride roughshod over the weak? Should the courts sit back and watch supinely while the strong trample under foot the rights of the

weak? We have a Constitution for our country. Our judges are bound by their oath to "uphold the Constitution and the laws". The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and the equal protection of the laws. The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article 14. This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. In today's complex world of giant corporations with their vast infra-structural organizations and with the State through its instrumentalities and agencies entering into almost every branch of industry and commerce, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances.

94. The normal rule of Common Law has been that a party who seeks to enforce an agreement which is opposed to public policy will be non-suited. The case of A. Schroeder Music Publishing Co. Ltd. v. Macaulay (1974 1 WLR 1308), however, establishes that where a contract is vitiated as being contrary to public policy, the party adversely affected by it can sue to have it declared void. The case may be different where the purpose of the contract is illegal or immoral. In Kedar Nath Motani and others v. Prahlad Rai and others, (1960) 1 S.C.R. 861: (AIR 1960 SC 213) reversing the High Court and restoring the decree passed by the trial court declaring the appellants' title to the lands in suit and directing the respondents who were the appellants' benamidars to restore possession, this Court, after discussing the English and Indian law on the subject, said (at page 873) (of SCR) : (at Pp. 218-219 of AIR) :

"The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Willistone and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff's conduct, and he should not be allowed to circumvent the illegality by restoring to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail."

The types of contracts to which the principle formulated by us above applies are not contracts which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the court. They are opposed to public policy and require to be adjudged void.

101. The Corporation is a large organization. It has offices in various parts of West Bengal, Bihar and Assam, as shown by the said Rules, and possibly in other States also. The said Rules form part of the contract of employment between the Corporation and

its employees who are not workmen. These employees had no powerful workmen's Union to support them. They had no voice in the framing of the said Rules. They had no choice but to accept the said Rules as part of their contract of employment. There is gross disparity between the Corporation and its employees, whether they be workmen or officers. The Corporation can afford to dispense with the services of an officer. It will find hundreds of others to take his place but an officer cannot afford to lose his job because if he does so, there are not hundreds of jobs waiting for him. A clause such as clause (i) of Rule 9 is against right and reason. It is wholly unconscionable. It has been entered into between parties between whom there is gross inequality of bargaining power. Rule 9(i) is a term of the contract between the Corporation and all its officers. It affects a large number of persons and it squarely falls within the principle formulated by us above. Several statutory authorities have a clause similar to Rule 9(i) in their contracts of employment. As appears from the decided cases, the West Bengal State Electricity Board and Air India International have it. Several Government companies apart from the Corporation (which is the First Appellant before us) must be having it. There are 970 Government companies with paid-up capital of Rs.16,414.9 crores as stated in the written arguments submitted on behalf of the Union of India. The Government and its agencies and instrumentalities constitute the largest employer in the country. A clause such as Rule 9(i) in a contract of employment affecting large sections of the public is harmful and injurious to the public interest for it tends to create a sense of insecurity in the minds of those to whom it applies and consequently it is against public good. Such a clause, therefore, is opposed to public policy and being opposed to public policy, it is void under section 23 of the Indian Contract Act. Learned counsel for the petitioner has thus submitted that writ petition may be allowed and the excess amount taken by the respondents may be refunded or adjusted in favour of the petitioner.

Learned counsel for the respondents - CCL, Mr. Amit Kumar Das has submitted that it is a contractual obligation between the parties. The judgments placed by the learned counsel for the petitioner are not relevant for the present case. It is a dispute between the CCL and petitioner - M/s Goyal Trading Company, who was manufacturing briquettes from the slurry and was earning profits.

Learned counsel for the respondents - CCL has further submitted that similar matter came before the Coordinate Bench of this Court vide W.P. (C) No. 6417 of 2008, which was disposed of by the Coordinate Bench of this Court on 03.12.2018 with the liberty to the petitioner to get his grievance redressed through competent court of civil jurisdiction.

Learned counsel for the respondents - CCL has further submitted that it is wrong to state that petitioner was under obligation or compulsion to accept such terms and conditions, rather from the signatures made in document dated 12.10.2006 at page-34 & 41, it is clear that he has categorically stated "accepted" and "agree", as such, petitioner is not free to agitate the issue, which he has accepted, by filing a writ petition in such manner, as such, the Coordinate Bench of this Court has rightly passed an order giving liberty to the petitioner to agitate the issue before the competent court of civil jurisdiction.

After hearing the learned counsel for the parties and on the basis of material available on record, this Court, under Article 226 of the Constitution of India, cannot adjudicate whether the acceptance made by the petitioner on 12.10.2006 was under some compulsion or not, as it is a disputed question of facts which can be decided by competent court of civil jurisdiction.

Accordingly, this writ petition is disposed of. However, if petitioner has any grievance, he may redressed his grievance through competent court of civil jurisdiction.

(Kailash Prasad Deo, J.) Sunil/-