M/S Meta Coke Corporation Having ... vs Central Coalfields Ltd.
2021 Latest Caselaw 4399 Jhar

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IN THE HIGH COURT OF JHARKHAND AT RANCHI
                   W.P.(C) No. 3489 of 2013
M/s Meta Coke Corporation having its unit located at Naisarai Ramgarh
Cant, Ramgarh, Jharkhand through one of its partner, Arun Kumar Agarwal,
son of Dasrath Prasad Agarwal, presently residing at Near Bihari Durga
Mandir, P.O. & P.S. Sadar, Dist-Hazaribagh, Jharkhand.
                                              .......                   Petitioner
                          Versus
1. Central Coalfields Ltd., a subsidiary of Coal India Ltd., Darbhanga House,
P.S. Kotwali, Dist. Ranchi through its Chairman-cum-Managing Director.
2.The Chairman-cum-Managing Director, Central Coalfields Ltd.,
Darbhanga House, P.S. Kotwali, Dist. Ranchi.
3.The Director Technical, Central Coalfields Ltd., Darbhanga House, P.S.
Kotwali, Dist. Ranchi.
4. The General Manager (Sales & Marketing), Central Coalfields Ltd.,
Darbhanga House, P.S. Kotwali, Dist. Ranchi.
5.The Deputy Chief Sales Manager (RS) Sales and Marketing Division,
Central Coalfields Ltd., Darbhanga House, P.S. Kotwali, Dist. Ranchi.
6.The SOM (RS), Sales and Marketing Division, Central Coalfields Ltd.,
Darbhanga House, P.S. Kotwali, Dist. Ranchi.
                                              ......                  Respondents
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CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD

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For the Petitioner : Mr. Mukesh Kumar Sinha, Advocate : Mr. Debarsi Mondal, Advocate For the Respondents : Mr. Anoop Kumar Mehta, Advocate

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th 8/Dated: 25 November, 2021

1. The writ petition is under Article 226 of the Constitution of India

whereby and whereunder the following relief has been sought for:

"(i) For quashing the letter dated 30.04.2013 as contained in letter no.CCL/HQ/C-4/FSA/termination/ MCC/5193-5203 and issued under the signature of G.M (S & M), CCL, whereby the said authority in a most mechanical manner and without considering the replies of the petitioner to the show cause terminated the Fuel Supply Agreement executed between CCL and the petitioner in terms of clause 15.1.5 and further the bank guarantee furnished by the petitioner as per FSA has been sought to be forfeited in terms of clause 3.6 of the Coal Supply Agreement in utter disregard to the fact that in the facts and circumstances of the case both the clauses of the FSA are not attracted.

(ii) The petitioner further prays for issuance of appropriate direction upon the Respondent authorities restraining them from encashing/forfeiting the bank guarantees submitted as security deposit by the petitioner while considering the fact that in almost identical situation this Hon'ble Court with regard to FSA consumers of BCCL and against whom also C.B.I. registered cases like the petitioner has granted relief on the issue relating to forfeiture of bank guarantee.

(iii) The petitioner further prays for issuance of appropriate directions upon the Respondent authorities to resume the coal supply in favour of the petitioner which was arbitrarily and illegally stopped on account of institution of an FIR by C.B.I.

(iv) The petitioner further prays for issuance of appropriate direction upon the Respondent authorities not to take any coercive steps against the petitioner upon an F.I.R. instituted with the CBI, while considering the fact that any such action would be violative of the new Coal Distribution Policy and the bilateral agreement having executed between the petitioner and Respondent CCL concerning coal supply.

(v) The petitioner further prays for issuance of appropriate direction upon the Respondent authorities to release/refund the coal value i.e. Rs.16,72,580/- together with interest @ 12% to be calculated from the date the amount is lying with CCL and which comes to Rs.11,59,149/- the total comets to Rs.21,31,729/- after getting the same across checked from their record, while considering the fact that though deposit of the principle amount was accepted but release of coal was not done on account of an FIR lodged by CBI."

2. The brief facts of the case, which has been pleaded in the writ petition

is that the petitioner had been granted coal linkage under the New Coal

Distribution Policy formulated by Ministry of Coal, Govt. of India vide

office memorandum dated 18.10.2007. The petitioner entered into Fuel

Supply Agreement on 30.04.2008 for a total yearly quantity of 8,766 MT,

for which, the petitioner furnished bank guarantee of Rs.12,00,000/- issued

on 29.04.2008 which was subsequently validated and in terms of letter dated

19.04.2011 an additional bank guarantee of Rs.10,000/- had been furnished

by the writ petitioner. A raid was conducted and in pursuance thereto, F.I.R

was instituted against the petitioner company for alleged diversion of the

allotted quantity of coal which was agreed in between the petitioner and the

respondent-CCL as per the aforesaid coal linkage. The respondents-CCL

based upon the aforesaid F.I.R, issued show cause to the petitioner as to why

the Fuel Supply Agreement be not cancelled. The writ petitioner responded

to the aforesaid show cause denying the allegations made in the show cause

on the ground that the entire documents have been seized by the

investigating agency and therefore, he is not in a position to submit reply to

the show cause. The respondent-CCL has subsequently cancelled the Fuel

Supply Agreement vide order dated 30.04.2013.

3. The petitioner has approached to this Court by filing writ petition

inter alia on the ground that the show cause is to be issued on physical

verification of the premises on the direction of the Chairman-cum-Managing

Director but in the instant case without physical verification and without

verifying the document, the F.I.R has been lodged and the show cause has

been issued and as such, the order of termination is not based upon the

proposition laid down by Hon'ble 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, hence the same is not sustainable.

4. Mr. Mukesh Kumar Sinha, learned counsel for the petitioner in

support of his argument has relied upon a judgment of the Division Bench of

this Court passed in L.P.A No.623 of 2018 (Central Coalfields Limited vs.

M/s Swastika Smokeless Coke Company Private Limited) disposed of on

07.04.2020. According to him similar issue has been raised in the aforesaid

case wherein the Division Bench, after taking into consideration the fact that

the show cause has been issued without any physical verification, as has

been laid down by the Hon'ble Apex Court in the case of Ashoka Smokeless

Coal India (P) Ltd. and Others (supra), quashed and set aside the order of

termination based upon the show cause which has been issued without

physical verification of the premises. However, the matter was remitted

before the concerned competent authority to take decision afresh, therefore,

submission has been made that in the instant case also, the fact is almost

similar wherein also the show cause has not been issued after physical

verification of the premises rather the show cause notice is based upon the

institution of an F.I.R and hence the show cause is bad in the eyes of law i.e.

in the teeth of the judgment passed in the case of Ashoka Smokeless Coal

India (P) Ltd. and Others (supra) and since the termination is based upon

the aforesaid show cause notice, the same is not sustainable in the eyes of

law.

5. Per contra, Mr. Anoop Kumar Mehta, learned counsel appearing for

the respondents-CCL has submitted that the order passed by Division Bench

of this Court in L.P.A. No.623 of 2018 (Central Coalfields Limited vs. M/s

Swastika Smokeless) is not applicable in the facts of the instant case since

the fact leading to interfere with the order passed by the Division Bench of

this Court in the case of Central Coalfields Limited vs. M/s Swastika

Smokeless (Supra), wherein the investigation was going on and hence this

Court interfered in the order of termination taking into consideration the fact

that the investigating agency has not reached to any conclusion and

therefore, the matter was remitted before the concerned authority. But

herein, since the investigation is complete and charge sheet has been

submitted as also cognizance has been taken by the competent court of

criminal jurisdiction and hence, at this stage even if the matter would be

remitted, the writ petitioner is not in a position to dispute the allegation as

has been levelled against him, therefore, remitting the matter would be

nothing and empty formality and futile exercise and in that view of the

matter, the order passed by the Division Bench of this Court is not

applicable in this case.

He further submits that even on merit, when the show cause notice has

been issued, instead of giving proper reply to the show cause, he simply filed

reply to the show cause taking the ground of non-availability of documents

since the documents have been seized by the investigating agency and

prayed for time to procure documents from the investigating agency for

giving suitable reply, therefore, submission has made that once the writ

petitioner has failed to dispute the allegations he now cannot avail the said

opportunity. Moreover, even as on date, the writ petitioner has no document

with him to deny the allegation as has been levelled in the show cause

notice.

6. In response to such submission, learned counsel for the petitioner has

submitted that since cognizance has been taken by the competent court of

jurisdiction, therefore, the relevant document which is part of the charge

sheet now becomes the public document and, therefore, the same can well be

obtained from the court of criminal jurisdiction and whatever allegation has

been made will be denied based upon the said document and what has been

submitted by the learned counsel for the respondents as even on date the

petitioner has no document is not correct since it is the stand of the

respondents-CCL that the charge-sheet has been submitted and cognizance

has been taken by the competent court of criminal jurisdiction which itself

suggest that the documents can be obtained by the petitioner by making

requisition before the competent court of jurisdiction to defend his case.

7. This Court after having heard learned counsel for the parties and on

perusal of the document available on record has found therefrom that the

writ petition has been filed questioning the issuance of show cause as also

the termination of Fuel Supply Agreement. The ground has been taken by

the writ petitioner about the jurisdiction of the authority who has issued the

show cause notice. The jurisdictional issue has been raised since show cause

has been issued mainly on the basis of institution of the F.I.R., while as has

been held by the Hon'ble Apex Court in the case of Ashoka Smokeless Coal

India (P) Ltd. and Others (supra) wherein at para 189, it has been laid down

that the show cause is required to be issued in case of any deviation of terms

and conditions of the Fuel Supply Agreement by the order of the Chairman-

cum-Managing Director on physical verification of the premises of the

company concerned. According to the writ petitioner since show cause has

been issued on the basis of the institution of the F.I.R, therefore, the ratio

laid down by the Apex Court in Ashoka Smokeless Coal India (P) Ltd. and

Others (supra) has admittedly been flouted and hence, the show cause

cannot be said to be within the jurisdiction of the issuing authority.

However, the reply has been submitted informing the respondents-CCL

about non-availability of the document and after its receipt the respondents-

CCL has issued the order of termination of Fuel Supply Agreement, being

aggrieved with the said decision of the authority, the instant writ petition has

been filed.

8. This Court, therefore, is required to see about the sustainability of the

show cause notice as well as the termination of the Fuel Supply Agreement.

This Court in order to look into the sustainability of the show cause,

has considered the order passed by the Hon'ble Apex Court in the case of

Ashoka Smokeless Coal India (P) Ltd. and Others (supra) wherein at

paragraph 189 it has been held, which reads as hereunder:

"189. Before us most of the consumers, with a view to obtain supply of coal had filed documents to prove their genuineness. The said documents must be scrutinized by the authorities of the coal companies. In the event, they have any suspicion, inspection should be carried out by officers appointed by the Chairman-cum-Managing Director of the company concerned within whose jurisdiction the unit is situated."

This Court, after having gone through the factual aspects involved in

this case has found therefrom that the show cause has not been issued on the

direction of the Chairman-cum-Managing Director rather, it has been issued

after institution of the F.I.R., therefore, the foremost question which is to be

looked into by this Court, is as to whether the direction passed by the

Hon'ble Apex Court has been flouted by the concerned respondent or not?

9. It is admitted case of the respondents that the show cause has been

issued mainly on the basis of F.I.R, therefore, the said show cause cannot be

said to be in terms of the ratio laid down by the Hon'ble Apex Court in the

case of Ashoka Smokeless Coal India (P) Ltd. and Others (supra).

However, the issue has been raised that once the writ petitioner has failed to

respond denying the said allegation as has been alleged in the show cause, at

this stage he is not entitled for any relief. But, this Court is not in agreement

with such submission, it is for the reason that when the issue of jurisdiction

has been raised based upon the ratio laid down by the Hon'ble Apex Court

which goes to its root and when the root is incorrect, its offshoot cannot be

expected to be correct.

The same view has been taken by the Division Bench of this Court in

L.P.A No.623 of 2018 wherein the show cause has been found to suffer from

jurisdictional error since the same was issued on the basis of institution of

the F.I.R and, therefore, the order passed by the appellant terminating the

Fuel Supply Agreement has been quashed and set aside by remanding the

matter before the authority to take decision afresh as appears from paragraph

26, which reads as hereunder:

"26. Accordingly, the matter is remitted before the competent authority to take a fresh decision after issuing show cause containing therein the content of allegation to be issued to the respondent/writ petitioner within a period of three months from the date of receipt of copy of this order.

The respondent/writ petitioner, in turn, is directed to furnish due reply within a further period of three months.

The appellants/respondents are directed to take decision by passing an speaking order within a further period of eight weeks."

10. It requires to refer herein that the argument advanced by the learned

counsel for the petitioner to the effect that when the F.I.R has been instituted

and charge sheet has been submitted based upon the cognizance, meaning

thereby, the allegation levelled by the respondent in the show cause against

the writ petitioner has been found to be correct in course of investigation,

therefore, even if it would be remitted at this stage, the writ petitioner will

not be in a position to dispute the said allegation, therefore, remitting the

matter would be nothing but an empty formality and futile exercise.

This Court after hearing such submission has found it to be lucrative

but the question is, if the foundation is wrong, it cannot be expected that the

result would be in accordance with law. The wrong committed in its

inception cannot be corrected due to subsequent development as has been

held by the Hon'ble Apex Court in the case of State of Orissa and Anr. vs.

Mamata Mohanty reported in (2011) 3 SCC 436.

Therefore, discarding the said argument, this Court is of the view that

if any order suffers from jurisdictional error, it has to go and taking similar

view, the Division Bench of this Court in L.P.A No.623 of 2018 has

interfered with the show cause notice, by remitting the matter before the

competent authority to take fresh decision. The proposition laid down by the

Hon'ble Apex Court about empty formality and futile exercise cannot be

disputed but the said fact is to be looked into in the facts of the given case,

herein, since the Hon'ble Apex Court has given the guideline in such matter

for issuance of show cause after physical verification of the premises in

question directing the respondent to take decision therefore, if there will be

any violation to the said proposition/guideline laid down by the Hon'ble

Apex Court in the case of Ashoka Smokeless Coal India (P) Ltd. and

Others (supra), the same will be nothing but lead to accelerating the

illegality. Therefore, this Court is of the view that there is no reason to take

contrary view as has been taken by the Division Bench of this Court in

L.P.A No.623 of 2018 and, therefore, deems it fit and proper to interfere

with the order by which the Fuel Supply Agreement has been cancelled and

accordingly, the order of termination dated 30.04.2013 is quashed and set

aside.

11. This Court after taking into consideration the fact that it is not a case

where the show cause has not been issued rather show cause has been issued

after institution of F.I.R and therefore, there is no need to pass a direction

upon C.C.L. to issue fresh show cause notice rather it would be apt to direct

the writ petitioner to give reply to the show cause within a period of two

weeks from the date of receipt of copy of the order.

In turn thereof, the respondents-CCL is directed to take fresh decision

within a period of two weeks from the date of receipt of such reply to the

show cause.

Let entire exercise be completed within a period of four weeks.

12. With the aforesaid observation and direction the writ petition stands

disposed of.

13. Consequently, I.A. No.4788 of 2013 also stands disposed of.

It goes without saying that this Court has not gone into the merit of

the case rather the authority is directed to take decision on its own merit.

(Sujit Narayan Prasad, J.) Saket/-