Jharkhand State Mineral ... vs M/S Tirupati Niryat Private ...
2022 Latest Caselaw 2641 Jhar

      IN THE HIGH COURT OF JHARKHAND AT RANCHI
                (Letters Patent Appellate Jurisdiction)
                             LPA No. 229 of 2022

Jharkhand State Mineral Development Corporation Limited and another
                                                         ......Appellants
                                    Versus

M/s Tirupati Niryat Private Limited and another                ..... Respondents
                              ---------------

CORAM: HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR HON'BLE MR. JUSTICE RATNAKER BHENGRA

For the Appellants : Mr. Sumeet Gadodia, Advocate For the Respondent No.1 : Mr. Indrajit Sinha, Advocate

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Order No. 05/ Dated: 14th July 2022

I.A No. 4732 of 2022

This application has been filed by the Jharkhand State Mineral Development Corporation Limited (in short, Corporation) seeking condonation of delay in filing LPA No. 229 of 2022.

2. WP(C) No. 1024 of 2022 was preferred by M/s Tirupati Niryat Private Limited which is the respondent no. 1 before us for a direction upon the Corporation to issue delivery orders permitting the Company to lift 75,800 MT coal allotted to it in e-Auction held on 14th December 2020.

3. This Letters Patent Appeal has been filed taking exception to the order dated 7th April 2022 by which the writ Court issued a direction to the Corporation to permit the respondent no.1 to lift 75,800 MT coal within 45 days and till that time the Corporation shall not conduct any e-Auction of coal.

4. On 29th June 2022 time was granted to the respondent no. 1 to file its reply to I.A No. 4732 of 2022.

5. In the affidavit dated 4th July 2022 sworn by Sanjay Agarwal claiming himself authorised signatory of respondent no. 1, it is stated that the statements made by the Corporation in the application seeking condonation of delay are vague and, therefore, on the basis of the explanation offered by the Corporation delay of 22 days cannot be condoned. Another plea which seems to have been taken by the respondent no. 1 in opposition to I.A No. 4732 of 2022 is that the Corporation was not serious in preferring the present Letters

Patent Appeal, because in terms of the undertaking given by the Chief Secretary, Government of Jharkhand before the contempt Court it was contemplating to comply with the direction of the writ Court.

6. In support of the aforesaid plea, the order dated 13 th May 2022 passed in Contempt Case (Civil) No. 252 of 2022 and the letters dated 18 th May 2022 and 25th May 2022 have been produced. These communications also indicate undertaking of the Chief Secretary, Government of Jharkhand, and the meetings between the Company and Corporation.

7. From the aforesaid, we gather that there is no serious opposition by the respondent no. 1 to the application seeking condonation of delay vide I.A No. 4732 of 2022. It seems to us that the affidavit dated 4 th July 2022 has been filed by the respondent no. 1 merely for the sake of opposition. The issue raised by the appellant-Corporation in the present Letters Patent Appeal is a contentious issue pertaining to powers of the writ Court to issue mandamus in contractual matters and, that too, seeking compliance of its own order by stopping the entire e-Auction process till the time 75,800 MT coal is released in favour of the respondent no. 1 within 45 days' period.

8. Therefore, we are inclined to condone the delay in filing the present Letters Patent Appeal and, accordingly, I.A No. 4732 of 2022 is allowed.

I.A No. 4734 of 2022 and I.A No. 5699 of 2022

9. I.A No. 4734 of 2022 for stay and I.A No. 5699 of 2022 for direction upon the Corporation to issue delivery order for 50,000 MT coal are taken up together.

10. In support of the application for stay, Mr. Sumeet Gadodia, the learned counsel for the appellant-Corporation submits that (i) there is prima-facie case in favour of the Corporation (ii) balance of convenience is in favour of the Corporation and (iii) irreparable loss would visit the Corporation if direction issued by the writ Court vide order dated 7 th April 2022 is not stayed during pendency of the present Letters Patent Appeal.

11. The learned counsel for the appellant-Corporation would submit that the writ Court exceeded its jurisdiction in granting specific performance of contract between the parties and inspite of disputed questions of fact involved in the matter proceeded to interfere in contractual matter by directing the

Corporation to issue delivery order for 75,800 MT coal in favour of the respondent no. 1.

12. In support of the aforesaid submissions, reliance has been placed upon the judgments in "Municipal Council Gondia v. Divi Works & Suppliers, HUF and Others" 2022 SCC OnLine SC 247; "Surjeet Singh Sahni v. State of UP and Others" 2022 SCC OnLine SC 249 and; "Union of India and Others v. Puna Hinda" (2021) 10 SCC 690.

13. Opposing the application for stay, Mr. Indrajit Sinha, the learned counsel for the respondent no. 1 takes us through the findings recorded by the writ Court to the effect that action of the Corporation in not releasing the balance quantity of coal after realizing the entire amount for 1,00,000 MT coal was arbitrary, and the plea of financial loss taken by the Corporation is of no consequence in as much as the respondent no. 1 also suffered financial losses.

14. It is further submitted that on account of illegal withholding of release of balance quantity of coal the respondent no. 1 has suffered so much that today it is on the brinks of financial collapse and it is not able to pay even the statutory dues and taxes. With reference to the communication dated 10 th May 2021, a plea has been raised that the Corporation on its own admitted that it was not capable of producing such huge quantity of coal so as to honour its contractual commitments to supply 1,00,000 MT coal within 45 days.

15. The writ Court in the order dated 7 th April 2022 has observed as under:

"Considering the submissions made by learned counsel for the petitioner, learned counsel for the State as well as the judgments relied upon by the learned counsel for the parties, it appears that petitioner was successful in e-Auction No. 94 / e-auction of coal /JSMDC / 2020, Ranchi dated 14.12.2020 with respect of lifting of 1,00,000 MT of coal and petitioner has already deposited entire amount of Rs. 21,15,60,000/- by 05.01.2021 and lifted initially 12,340.23 MT of coal. In the meantime, a writ petition vide W.P. (C) No. 271/2021 was filed and there was an interim order, which was an ex-parte. Thereafter, petitioner appeared and filed an application under Article 226 (3) of the Constitution of India for vacating the stay. Thereafter, the Coordinate Bench of this Court has directed the petitioner to lift coal to the tune of 12,000 MT. Thus, petitioner has lifted only 24,200 MT of coal till now. Thereafter, W.P. (C) No. 271/2021 was dismissed on 14.12.2021. The interim order was also vacated.

Thus, it was duty of Jharkhand State Mineral Development Corporation Ltd. to issue delivery order in favour of the petitioner with regard to balance amount of coal to the

tune of 75,800 MT, for which the petitioner has already deposited the amount, but instead of issuing delivery order, the Jharkhand State Mineral Development Corporation Ltd. has issued three auction notice No. 99 / e-Auction of coal / JSMDC / 2022, Ranchi dated 06.01.2022, 101 / e-Auction of coal / JSMDC / 2022, Ranchi dated 03.03.2022 and No. 102 / e- auction of coal / JSMDC / 2022, Ranchi dated 15.03.2022, which shows that respondents - Jharkhand State Mineral Corporation Ltd. has not acted as a model litigant in view of the judgment passed by the Apex Court in the case of ITC Limited Vs. State of Uttar Pradesh and others (Supra), ABL International Ltd. and Another Vs. Export Credit Guarantee Corporation of India Ltd. and Another (Supra) and Popatrao Vyankatrao Patil V. State of Maharastra and Others (Supra).

This Court is of the opinion that it would be proper for the State of Jharkhand to issue delivery order for lifting 75,800 MT of coal in favour of petitioner as coal is limited in Sikni Mines under Jharkhand State Mineral Development Corporation Ltd, as there is no fault on the part of the petitioner, rather petitioner has already performed part of obligation by depositing Rs. 21,1560,000/- as on 22.12.2020 and 05.01.2021 and thus Jharkhand State Mineral Development Corporation Ltd earned their amount and interest thereon, as such the entire matter lingered on part of Respondent Jharkhand State Mineral Development Corporation Ltd. for performance of their obligation. The Respondent was also not at fault because of pendency of the writ petition i.e. W.P.(C) No. 271/2021. But after dismissal of the writ petition, it was incumbent upon the Respondent Jharkhand State Mineral Development Corporation to fulfill, the part of their obligation, which they have failed, before issuing three e-auction notices, as there is no fault on part of the petitioner in performing his part of obligation rather petitioner has also suffered, as his money has been blocked for such a long time.

It is incumbent upon the parties to maintain the legal sanctity entered into for the contractual obligation and the parties acting upon the policy of the state government cannot be left in the lurch, in view of the judgement rendered by the Apex Court in the case of Indsil Hydro Power & Manganese Ltd. v. State of Kerala, reported in (2020) 16 SCC 276, relevant Para is profitably quoted herein -

43. The order of the State Government dated 7-2- 2001 shows that there was no deliberate act or default on the part of KSEB. Indeed, it has not been seriously disputed that at the material time, there were agitations on the part of the farmers and certain other circumstances which caused delay in the construction of the transmission lines. However as significant as these reasons are, it should not lead to a situation where a private investor who has acted upon the policy of the State Government being left in the lurch as a result of supervening circumstances which have resulted in the power not being evacuated into the grid due to the non-commissioning of the transmission lines at the material time by KSEB. It is imperative that contractual obligations entered into

by the State have legal sanctity. A legal regime where the sanctity of contracts is respected and commercial contracts are enforced is essential to the maintenance of the rule of law. Trade and commerce can be freely conducted in a stable legal order which provides remedies for enforcement.

So far contention of the State about the price escalation is not worthwhile for consideration as the price escalation should not be the part of obligation until it reflects from the circumstances, that it has happened due to the negligence of one of the parties. The price allocated in the auction for the coal has already been deposited in full and total by the petitioner, in compliance of the terms and conditions of the auction process and the same has not been disputed by the Respondent, Jharkhand State Mineral Development Corporation Ltd.

It appears that there is no fault on the part of petitioner for the price of the coal, as the same was already paid, as such, it was incumbent upon the Respondent to issue Delivery Order for lifting the coal from the said mines. Rather, pendency of the writ petition i.e., W.P. (C) No. 271/2021, debarred the petitioner to lift the coal. Thus, the contention of the State about the price escalation is hereby negated.

Accordingly, the writ petition is allowed.

The petitioner shall lift 75,800 MT of coal left with the respondent Jharkhand State Mineral Development Corporation Ltd, within stipulated time of 45 days as per the delivery order, failing which consequences shall be taken.

Respondent - Jharkhand State Mineral Development Corporation Ltd is directed to not issue fresh e-auction notice till the remaining coal of the petitioner is released. I.A. No. 1882/2022 and I.A. No. 2362/2022 stand closed."

16. Briefly stated, in e-Auction of coal pursuant to notice dated 14th December 2020 the respondent no. 1 was allotted 1,00,000 MT coal @ Rs. 1,225/- per MT. It is a matter of record that by 21 st February 2021 the respondent no. 1 lifted 12,340 MT coal within 17 days, before an order was passed by the writ Court in WP(C) No. 271 of 2021 (which was filed by Lal Amarnath Shahdeo and Govind Agrawal) on 22 nd February 2021 restraining the respondent no.1 from lifting the remaining quantity of coal. This ex-parte order was modified by the writ Court on 22 nd March 2021 by which the respondent no.1 was permitted to lift 12,000 MT coal. Therefore, the appellant-Corporation granted 15 days' extension of time to the respondent no.1 for lifting the said quantity of coal. There is no dispute that further extensions of time for 7 days and 15 days were granted to the respondent no. 1 which could lift 12,000 MT coal only by 29 th December 2021 - in the meantime, huge price escalation happened.

17. To controvert the argument by the learned counsel for the

respondent no. 1 that clear 45 days' time was available to lift the coal against each delivery order, our attention has been drawn by the learned counsel for the appellant-Corporation to the statements made in paragraph no. 7 by the respondent no. 1 in WP(C) No. 1024 of 2022 wherein it is admitted that delivery order for whole 1,00,000 MT coal was issued by the Corporation. It is stated that on 25th March 2021 the period of 45 days' allowed to the respondent no. 1 expired and, therefore, acting upon direction of the writ Court separate delivery order for 12,000 MT coal was issued on 7th April 2021.

18. The arguments raised by both the parties criticising conduct of each other and other factual aspects of the matter cannot be gone into at this stage, but, the least we can observe is that the appellant-Corporation has been able to make out a strong prima-facie case in its favour and if its interests are not secured at this stage irreparable loss would be suffered by the Corporation. The observation of the writ Court, that the Company also suffered because its money was blocked for a long time and therefore the appellant-Corporation must issue delivery order(s) and permit the Company to lift 75,800 MT coal, prima-facie appears to be flawed - in the meantime, 15 months had passed.

19. The learned counsel for the appellant-Corporation would submit that the Corporation would suffer huge loss of public money which it would have secured through e-Auction of the remaining quantity of 75,800 MT coal, in as much as, e-Auction held on 25 th March 2022 fetched minimum price of Rs. 6,300/- per MT and average price of Rs. 6,911/- per MT. We may also indicate that clause-11.12 contains arbitration clause under which the contractor could have raised its grievances before the Arbitrator. In our opinion, on this issue the judgment in "State of U.P. v. Bridge & Roof Co. (India) Ltd." (1996) 6 SCC 22 shall also have some bearing on the final outcome of this case.

20. After having examined all aspects of the matter with a view to satisfy ourselves whether or not to entertain I.A No. 4734 of 2022, we have come to a conclusion that operation of the order dated 7 th April 2022 passed by the writ Court is required to be stayed.

21. Ordered accordingly.

22. I.A No. 4734 of 2022 is allowed and, consequently, I.A No. 5699 of 2022 is dismissed.

LPA No. 229 of 2022

23. Let counter-affidavit be filed within a period of 4 weeks.

24. Rejoinder affidavit within next 2 weeks.

25. Post the matter on 29th August 2022.

(Shree Chandrashekhar, J.)

(Ratnaker Bhengra, J.) Tanuj/-