Jharkhand High Court
M/S Satyam Iron And Steel Co. (P) Ltd. (A ... vs Central Coalfields Limited Through Its ... on 3 March, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P(C) No. 6807 of 2016
M/s Satyam Iron and Steel Co. (P) Ltd. (a company incorporated under
Companies Act, 1956) having its Director Mr.Shiva Kumar Dalmia, S/o
late Vikham Chand Dalmia, R/o Rambagan, Raniganj, PO-Searsoir, PS-
Raniganj, District-Burdwan (W.B) through its authorized Signatory
Mr. Sunil Chaudhary, S/o Sri Babban Chaudhary R/o Punjabi More,
Rambagar, Raniganj PO-Searsoir, PS- Raniganj, Dist.- Burdwan, West
Bengal having registered office at 20B, Abdul Hamid Street, 7 th Floor,
Block 7A, Kolkata-700069 .......... Petitioner
Versus
1. Central Coalfields Limited through its Chief Managing Director having
its Office at Darbhanga House Ranchi PO-G P O PS- Kotwali, Dist.-
Ranchi, Jharkhand
2. General Manager (S & M), Central Coalfields Limited, having its Office
at Darbhanga House, Ranchi PO-G P O PS- Kotwali, Dist.-Ranchi
......Respondents
CORAM: HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
HON'BLE MR. JUSTICE PRADEEP KUMAR SRIVASTAVA
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For the Petitioners : Mr. Rajendra Krishna, Advocate
Mr. Pratyush Shounikya, Advocate
Mr. Manish Kumar, Advocate
For the Respondent-CCL: Mr. Amit Kumar Das, Advocate
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rd
Order No.08/Dated: 3 March, 2025
Per, Sujit Narayan Prasad, J.
Prayer
1. The present writ petition under Article 226 of Constitution of
India has been filed seeking therein the following reliefs:
(i) For issuance of an appropriate writ(s)/order (s)/direction(s) or
a writ in nature of mandamus commanding upon the respondents
to refund/return the bank guarantee amounting to Rs.36,50,000/-
(Rupees Thirty-Six lakhs Fifty thousand) forthwith which the
petitioner has submitted as security money while executing the
Fuel Supply Agreement with the respondent CCL along with
18% interest.
(ii) For issuance of an appropriate writ(s)/
order(s)/ direction(s) or a writ in nature of mandamus
commanding upon the respondents release/refund forthwith a
sum of Rs. 4,69,656.36/- (Rupees four lakhs, Sixty nine
thousand, six hundred fifty six and thirty six paise) which has
been deducted from the credit balance of the petitioner
maintained with the CCL for Rs.1,21,81,611.64/- (Rupees One
crore, Twenty one lakhs, Eighty one thousand, Six hundred
eleven and sixty four paise), out of which only a sum of Rs.
1,17,11,955.28/-(Rupees One crore, Seventeen lakhs, Eleven
thousand, Nine hundred fifty five and twenty eight paise) was
refunded to the petitioner withholding the aforesaid amount i.e.
Rs.4,69,656.36/- (Rupees Four lakhs, Sixty nine thousand, Six
hundred fifty six and thirty six paise) along with interest at the
rate of 18% per annum.
(iii) For issuance of an appropriate writ(s)/order
(s)/direction(s) or a writ in nature of mandamus commanding
upon the respondents to treat the Fuel Supply Agreement (FSA)
terminated/cancel since the petitioner has invoked the provision
of Clause 15 of the Fuel Supply Agreement (FSA) and defaulting
period i.e. C.C.L. failed to cure/rectify the breach within the
prescribed thirty days' time rendering the F.S.A. terminated.
(iv) For issuance of an appropriate writ(s)/order
(s)/direction(s) or a writ in nature of certiorari for quashing of the
letter dated 27.4.2016 bearing Reference No. CCL/HQ/C-
4/2016/4272-74 Annexure-13) issued under the signature of
Senior Manager (S&M), C.C.L. whereby and whereunder it has
been informed by the CCL to the petitioner that the matter in
regard to suspension of coal to the petitioner's unit has been
considered by the respondent authorities and the matter has been
resolved, and therefore it was requested by the respondents to
start the lifting of coal immediately in terms of Fuel Supply
Agreement (FSA) which is nonest in the eyes of law taking into
consideration the fact that at the time of issuance of this
letter/communication, no Fuel Supply Agreement (FSA) was
existence in between the petitioner and the respondent CCL as
the Fuel Supply Agreement (FSA) dated 16.8.2013 stands
terminated at the instance of the petitioner by invoking the
Clause 15.1.8 of the Fuel Supply Agreement (FSA).
(v) For further issuance of an appropriate writ(s)/order(s)/
direction(s) as Your Lordships may deem fit and proper in the
facts and circumstances of the case and in the interest of justice.
Factual Matrix
2. The brief facts of the case as per the pleading made in the writ
petition needs to refer herein which reads as under:
3. The petitioner is a company incorporated under the Company'
Act, 1956 carries on the business as manufacturer of Sponge Iron and
having its factory inter-alia at Raniganj, Dist- Burdwan in the State of
West Bengal.
4. It is stated that the New Coal Distribution Policy implemented
in the year 2007. The Fuel Supply Agreement (FSA)) was executed in
between the petitioner and the CCL on 30.4.2008 and the facility of
the aforesaid FSA was up to 29.4.2013.
5. During the subsistence of the said agreement, the petitioner
has executed the Fuel Supply Agreement with the CCL on 28.2.2012
and the period of this agreement will continue for five years from the
execution of the previous agreement executed on 30.4.2008.
Therefore, this agreement was remained in force upto 29.4.2013 and
during the subsistence of the agreement, the CCL was to supply the
coal to the petitioner.
6. The petitioner while executing a fresh FSA with the CCL has
furnished the Bank Guarantee to the extent of Rs. 36,50,000/- (Rupees
Thirty-Six Lakhs Fifty Thousand Only) as security money, and
accordingly the petitioner started lifting the agreed quantity of coal as
stipulated in the FSA. The CCL has again extended the FSA dated
28.2.2012 till 30.6.2013 by a fresh extension of FSA executed on
25.4.2013. It was further renewing upto 31.7.2013. It is pertinent to
mention here that the petitioner altogether deposited Bank Guarantee
to the tune of Rs. 36,50,000/- in favour of G.M., CCL, Ranchi which
is evident from Bank Guarantee dated 8.2.2014 amounting to Rs.
13,50,000/-, Bank Guarantee dated 22.10.2013 amounting to Rs.
2,00,000/-, Bank Guarantee dated 28.6.2013 amount to Rs.21,00,000/-
issued by the Oriental Bank of Commerce.
7. The FSA executed in between the petitioner and the CCL has
further been extended till 30.4.2018 by the renewal of coal supply
agreement executed on 16.8.2013.
8. It is the case of the petitioner that the CCL has suddenly
discontinued the supply of coal to the petitioner's company since
07.05.2015 for want of purported D.I. Certificate from the Director of
Industries, West Bengal.
9. Thereafter, the petitioner made several representations for
release/supply of coal but unfortunately the same was not supplied for
want of D.I. Certificate. It is also stated that the respondents have even
refused to supply the coal to the petitioner on the strength of the
Monthly Excise Returns/ Electricity Bills which unequivocally
establish the operational status of the petitioner's plant.
10. It is stated that under Clause-13 of the FSA, the supply of coal
can only be suspended due to non-payment of any dues. The
requirement for getting certificate by the Department of Industries
regarding existence and operational status of the unit, has not been
accepted by the Directorate of Industries which is evident from the
communication made by the Director of Industries, West Bengal vide
letters dated 7.9.2015, 7.12.2015 and 14.1.2016.
11. It has further been stated that the aforesaid communication
from the Director of Industries, West Bengal has been made pursuant
to the letter written by the General Manager (S&M), CCL on 1.7.2015
requesting the Director of Industries, West Bengal for providing
certification of existence and operational status of unit in the State on
month-to-month basis for release of coal.
12. It is the case of the writ petitioner non-supply of D.I.
Certificate from the Director of Industries, West Bengal cannot be a
valid reason for discontinuation of supply of coal under the FSA. The
petitioner's company is submitting all other statutory requirement but
in spite of that the CCL has stopped the supply of coal for want of
certificate from the Director of Industries. Although the Director of
Industries was unwilling to provide such certificate.
13. Subsequently, the petitioner has requested the Deputy Director
of Industries regarding issuance of the existence/operational
certificate vide its letters dated 20.8.2015, 1.9.2015 and 23.9.2015 but
unfortunately the said certificate was not issued to the petitioner.
14. It is stated that vide letter dated 16.10.2015, the petitioner
requested the General Manager (S&M) for resumption of coal supply
with a specific statement that the supply of coal was stopped
unilaterally since 22.4.2015 due to non-submission of the Certificate
from the Director of Industries. It has further been stated that the
Director of Industries, West Bengal refused to oblige the request of the
petitioner for issuance of such certificate to the CCL. The petitioner,
therefore, requested to resume the supply of coal immediately or
arrange to refund the advance payment so that the petitioner can
arrange coal from some other source.
15. The petitioner again vide letter dated 16.12.2015 has written
to the General Manager (S&M), CCL for resumption of supply of coal
and if supply is not resumed the Bank Guarantee as well as advance
payment made by the petitioner must be refunded forthwith.
16. When the CCL has failed to resume the supply of coal to the
petitioner's industry in spite of several requests made by the petitioner,
the petitioner has sent legal notices dated 11.1.2016, 11.2.2016,
17.2.2016 and 22.2.2016 to the General Manager (S&M), CCL under
clause 15.1.8 of the FSA with a request to refund the Bank Guarantee
as well as the advance amount along with the interest.
17. It is stated that the respondent-CCL should have dispute under
clause 14 of the FSA since the respondent-CCL received complaint by
the petitioner, but from the facts stated here-in-before, it is quite
evident that the respondent-CCL did not try at all to resolve the dispute
in spite of several requests made by the petitioner. Therefore, the
petitioner was compelled to send the legal notice under clause 15.1.8
which is also enclosed here-in-before.
18. It has further stated that from the perusal of the said provision
under Clause 15.1.8 it transpires that non-defaulting party like the
petitioner shall have the right to terminate the agreement (FSA) after
providing the defaulting period thirty days prior notice and the fact
has not been cured or rectified to the satisfaction of non-defaulting
party within the said period. Therefore, in the instant case, the
petitioner being non-defaulting party has already given a notice and
after thirty days of the notice, the said FSA stands terminated at the
instance of the petitioner and therefore the petitioner is liable to
get/refund the security money as well as the other money lying with
the respondent CCL.
19. Further, the CCL vide its letter dated 27.4.2016 has informed
the petitioner finally that the requirement of submission of certificate
from the Director/Secretary, Department of Industries, West Bengal
has been waived and, therefore, the petitioner may start lifting of coal
immediately in terms of FSA.
20. It is the case of the petitioner that the aforesaid letter dated
27.4.2016, now cannot be issued in view of the fact that the FSA
already stands terminated, because the notice given by the petitioner
under clause 15.1.8 after expiry of 30 days. Therefore, the CCL now
can not issue any letter asking the petitioner to start lifting of coal in
terms of FSA and as of now there is no FSA agreement in between the
petitioner and the CCL therefore, the petitioner is entitled for rest of
the money along with the interest.
21. It has been stated that the respondent authorities are bound to
be guided by the terms and conditions enumerated in the Fuel Supply
Agreement (FSA) entered into between the parties, thus, the action of
the respondent authorities suspending the supply of coal on the basis
of frivolous ground and thereby causing huge loss to the petitioner is
arbitrary, malafide and bad in the eyes of law.
22. Further case of the writ petitioner is that the respondent
authorities are duty bound to refund the amount to the tune of Rs.
Rs.36,50,000/- which has been deposited by the petitioner pursuant to
the Fuel Supply Agreement (FSA) towards security money taking into
consideration the fact that due to the fault on the part of the respondent
authorities the petitioner suffered a lot and, hence, the present writ
petition.
Submission made on behalf of the petitioner:
23. The learned counsel appearing for the petitioner has submitted
that it is a case where the security deposit amounting to Rs.
36,50,000/-, the bank guarantee amounting to Rs. 4,69,656.36/- and
other admissible amount which has been kept by the respondent-CCL
without any authority of law.
24. It has been contended by referring to the Fuel Supply
Agreement (in short, referred as the Agreement) wherein the
mechanism has been provided as under Clause 3.6, with respect to the
issue of termination, i.e., in the event of termination of the agreement
by the seller in accordance with Clause 15.1.4 to 15.1.8, the seller shall
be entitled to forfeit the security deposit of the purchaser in addition
to any other rights vested with the Seller upon such termination.
25. The ground has been agitated that although in the counter
affidavit as under paragraph no.10 it has been stated that the
respondent-CCL has resorted to the condition as stipulated under
Clause 15.1.4, but the same cannot be said to be acceptable reason
being that Clause 15.1.4 stipulates that the purchaser or the seller, as
the case may be, shall have the right to terminate the Agreement,
within 60 days of the end of the relevant year after providing the other
party with prior written notice of not less than 30 days.
26. It has been contended that in absence of the requirement
having not been followed with respect to the issue of notice as
provided under Clause 15.1.4 it cannot be said that the respondent-
CCL has taken recourse in view of the provision of Clause 15.1.4 for
termination of the Agreement. The case of the petitioner, rather, is that
the notice has been given in terms of Clause 15.1.8 whereas the
parties, either, the defaulting or the non-defaulting shall have the right
to terminate the agreement after providing the defaulting party 30 days
prior notice and the breach has not been cured or rectified to the
satisfaction of non-defaulting party within the said period of 30 days.
27. It has been contended by referring to the Annexure-9 wherein
steps have been taken for resumption of coal supply vide
representation dated 16.10.2015, again on 28.10.2015 and thereafter
on 16.12.2015 but no coal was supplied, therefore, the petitioner
having no option has taken recourse by issuance of notice under
Clause 15.1.8 of the Agreement by giving a notice on 11.01.2016
addressed to the General Manager (S&M), CCL, Ranchi.
28. It has been contended that the said notice is in terms of Clause
15.1.8, but no response has come at the end of the respondent-CCL
and thereafter on 11.02.2016 and thereafter on 17.02.2016 again
notices have been given under Clause 15.1.8. It has been contended
by referring to page No.-20 that even the said notice has been taken
cognizance thereof as would be evident from the communication
made by the Senior Manager to the petitioner-Company wherein the
petitioner has been invited for resolution of dispute under Clause 15
and taking a considered view of the matter the dispute has been
resolved as mentioned above.
29. It has been submitted that the dispute as would appear from
Annexure-13 is with respect to the general decision of having
requirement of the certificate which was to be issued by the
Directorate of Industries, West Bengal. But that is in no way concern
with the initiation which was to be taken and in terms of the condition
stipulated under Clause 15.1.8.
30. The learned counsel has submitted that since the recourse has
been taken in view of the Clause 15.1.8 in pursuance to the steps
having been taken for termination of the Agreement as provided under
Clause 3.6 which having not been responded and, as such, the
Agreement having been said to be terminated entire money which is
being kept by the respondent-CCL is said to be keeping the same
without any authority under law, hence, the present writ petition.
Submission made on behalf of the respondent:
31. Per-contra, Mr. Amit Kumar Das, the learned counsel
appearing for the respondent-CCL on the strength of the counter
affidavit filed on behalf of the respondent-CCL, on the other hand, has
submitted that it is a case not of the applicability of Clause 15.1.8 of
the Agreement, rather the case is of applicability of Clause 15.1.4. It
has been contended that Clause 15.1.4 provides by conferring
authority to either of the party as the seller or the purchaser to have
the right to terminate the agreement, and in pursuance thereto the
action has been taken by terminating the contract.
32. The learned counsel for the respondent-CCL has submitted by
referring to paragraph Nos.9 and 10 to the counter affidavit. It has
been contended that since it is the fault lies on the part of the writ
petitioner in not making demand of the coal and, as such, it is not
available for the writ petitioner to have the amount refunded in his
favour when the laches lies on his part. Therefore, according to the
learned counsel for the respondent-CCL, the present writ petition is fit
to be dismissed.
Analysis
33. We have heard the learned counsel appearing for the parties
and gone through the pleadings made in the affidavit along with the
annexures appended thereto as also the statement made in the counter
affidavit.
34. This Court before appreciating the arguments advanced on
behalf of the parties needs to refer herein certain relevant conditions
of the Agreement which is the basis of core to adjudicate the present
lis. The issue is how the Agreement will be terminated and what
mechanism for the same is provided under the Agreement.
35. Further, how the amount said to be entitled to be paid in favour
of the seller is to be forfeited or it is to be refunded. The mechanism
for the same has been carved out by putting a condition in the
Agreement as under Clause 3.6, for ready reference, the Clause 3.6 is
being referred herein as:
"In the event of termination of the Agreement by the Seller in
accordance with Clause 15.1.4 to 15.1.8, the Seller shall be
entitled to forfeit the Security Deposit of the Purchaser in
addition to any other rights vested with the Seller upon such
termination."
36. It is evident from the Clause 3.6 that the issue of termination
of the Agreement by the seller, i.e., the respondent-CCL herein is in
accordance with Clause 15.1.4 to 15.1.8, by which the seller has been
given authority to forfeit the security deposit of the purchaser in
addition to any other rights vested with the seller upon such
termination.
37. The termination of Agreement has been referred in Clause
No.15, for ready reference, the entire conditions as stipulated under
Clause No.15 is being referred herein as:
15.1.1 In the event that either Party is rendered wholly or partially
unable to perform its obligations under this Agreement ("Affected
Party") because of a Force Majeure Act, as described in Clause
16 below, and such inability to perform lasts for not less than a
total of ninety (90) days in any continuous period of one hundred
eighty (180) days, and in the considered assessment of the other
Party ("Non-Affected Party") there is no reasonable likelihood of
the Force Majeure Act coming to an end in the near future, such
Party shall have the right to terminate this Agreement, by giving
at least ninety (90) days prior written notice to the Affected Party
of the intention to so terminate this Agreement. In such event, the
termination shall take effect on expiry of the notice period or
ninety (90) days whichever is later, and the Parties shall be
absolved of all rights/obligations under this Agreement, save those
that had already accrued as on the effective date of termination.
15.1.2 In the event that the Purchaser is prevented /disabled under
law from using Coal, for reasons beyond their control, owing to
changes in applicable environmental and/or statutory norms,
howsoever brought into force; the Purchaser shall have the right
to terminate this Agreement, subject to a prior written Notice to
the Seller of not less than thirty (30) days.
15.1.3 In the event of any material change in the Coal distribution
system of Seller due to a Government directive/ notification, at any
time after the execution of this Agreement, the Seller may
terminate this Agreement without any obligation/liability after
providing the Purchaser with prior written notice to the Purchaser
of not less than thirty (30) days.
15.1.4 In the event that the Level of Delivery (LD) falls below
thirty percent (30%) or the Level of Lifting (LL) falls below thirty
percent (30%), the Purchaser or the Seller as the case may be,
shall have the right to terminate this Agreement, within sixty (60)
days of the end of the relevant Year after providing the other Party
with prior written notice of not less than thirty (30) days.
15.1.5 In the event that the Purchaser resales or diverts the coal
purchased pursuant to this Agreement, the Seller shall have the
right to terminate this Agreement forthwith.
15.1.6 In the event of encashment of Security Deposit or the
Financial Coverage or suspension of Coal supplies pursuant to
Clause 13.1, the Seller shall have the right to terminate this
Agreement by providing prior written notice of thirty (30) days
provided the Purchaser has not replenished the Security Deposit
Financial Coverage within the aforesaid said notice period of
thirty (30) days.
15.1.7 In the event that either Party suffers insolvency,
appointment of liquidator (provisional or final), appointment of
receiver of any of material assets, levy of any order of attachment
of the material assets, or any order or injunction restraining the
Party from or disposing of its assets sixty (60) days, the other
Party shall be entitled to terminate this Agreement.
15.1.8 In the event that any Party commits a breach of term or
condition of this Agreement ("Defaulting Party") not otherwise
specified under this clause 15.1, the other Party ("Non-Defaulting
Party"), shall have the right to terminate this Agreement after
providing the Defaulting Party thirty (30) days prior notice and
the breach has not been cured or rectified-to satisfaction of the
Non-Defaulting Party within the said period of thirty (30) days.
38. The respondent-CCL since has taken the ground in the counter
affidavit that in pursuance to the condition stipulated under Clause
15.1.4 the petitioner is not entitled to get the amount in question
refunded. Therefore, the provision of Clause 15.1.4 needs to be
interpreted as quoted and referred hereinabove and as per which it is
evident that in the event that the level of delivery (LD) falls below 30
per cent or level of lifting falls below 30 per cent, the purchaser, i.e.,
the petitioner herein, or the seller, i.e., the respondent-CCL herein, as
the case may be, shall have the right to terminate this Agreement, but
prior to taking recourse under Clause 15.1.4 either of the parties who
are willing to terminate the Agreement is to give prior written notice
of not less than 30 days which will be within 60 days of the end of
the relevant year.
39. The aforesaid condition, thus, stipulates that either of the
parties can take recourse of the aforesaid condition, but in order to
follow the principle of natural justice the condition has been stipulated
to give the notice of not less than 30 days which will be within 60 days
of the end of the relevant year.
40. The petitioner, since, has relied upon the applicability of
condition under Clause 15.1.8 and, as such, the same has been referred
and quoted hereinabove.
41. We, after going through the same, have found that in the event
that any party commits breach of term or condition of this Agreement
(defaulting party) not otherwise specified under this Clause 15.1, the
other party (non-defaulting party), shall have the right to terminate this
Agreement after providing the defaulting party 30 days prior notice
and the breach has not been cured or rectified to the satisfaction of the
non-defaulting party within the said period of 30 days.
42. The aforesaid condition, thus, stipulates that both the parties,
either defaulting party or non-defaulting party if wants to commit the
breach of terms and conditions of the Agreement, the Agreement can
be terminated, but again by following the principle of natural justice
to have the notice given to the party concerned within a period of 30
days for the purpose of curing or rectifying which will be said to be
satisfaction of non-defaulting party within the said period of 30 days.
43. Herein, in the present context, the defaulting party, as per the
petitioner is the respondent-CCL and the petitioner claims to be non-
defaulting party.
44. This Court, in view of the interpretation of the aforesaid
provision is now proceeding to examine regarding the applicability of
the terms and conditions as to whether the condition stipulated under
Clause 15.1.4 will be applicable or Clause 15.1.8 will be applicable.
45. So far as the condition provided under Clause 15.1.4 is
concerned, the mandatory condition is that the notice of not less than
30 days is to be given. Therefore, the said fact has also been admitted
by Mr. Amit Kumar Das, the learned counsel appearing for the
respondent-CCL.
46. We, in order to consider as to whether the condition which has
been said to be applicable as per the respondent-CCL as provided
under Clause 15.1.4 has strictly been followed or not, have gone
through the counter affidavit, particularly, paragraph Nos.9 and 10.
47. Paragraph No.9 of the counter affidavit states regarding the
steps taken for the purpose of non-production of the certificate which
was to be produced after obtaining it from the Directorate of
Industries, West Bengal from all Sponge Iron and Captive Power
Plants for the purpose of release of coal, however, on the request
having been made by the respondent-CCL the same was waived vide
communication made in this regard dated 19.03.2016. For ready
reference paragraph 9 of the counter affidavit is being quoted as under:
"9. That it is stated that it is relevant to mention herein that
this notice dated 03.12.2011 was ratified by the Functional
Directors of the respondents-Company in their 34th meeting
held on 05.12.2011. The Functional Directors had ratified that
erstwhile non-core sector consumers will have to submit the
requisite information/document from January 2012 onwards.
This certificate is in addition to the documents required as per
the CIL's guidelines circulated vide letter No.
CIL/CMO/47223/874 dated 22.12.2012. Non-Power FSA
Industrial Units of all the States since then had been
submitting the documents including certificates issued by the
Directorate of Industries of the respective States on monthly
basis. Since July 2015, some of the industrial units of the West
Bengal including the present petitioner stopped submitting
certificates issued by the Directorate of Industries and as such,
the said units were not supplied coal. A plea was raised that
the Government of West Bengal is not issuing any certificate,
though, as a matter of fact, previously, all the units of located
in West Bengal were regularly submitting the certificates
issued by Directorate of Industries on monthly basis and
accordingly coal was being released in their favour. On such
representation, the respondents-Company took up the matter
with Directorate of Industries, West Bengal, and subsequent
thereto, three letters were received from the Directorate of
Industries dated 07.09.2015, 07.12.2015 and 14.01.2016,
whereby a request was made to the respondents-Company to
exempt the industrial units of West Bengal from obtaining such
certificates of existence and operational status. On such
request, the respondents-Company decided to exempt the
production of certificate from Directorate of Industries from
all Sponge Iron and Captive Power Plants for the purpose of
release of coal. This decision was communicated by the
respondents-Company to their Office located at Kolkata on
19.03.2016 instructing them not to insist for production of DI
certificates from non-erstwhile coal sectors which includes
sponge iron and captive power plants."
48. Further The statement made in paragraph No.10 is with respect
to the references of legal notices, i.e., dated 11.01.2016 and
17.02.2016.
49. The respondent-CCL has taken note of the terms of the
condition as stipulated under Clause 15.1.4 of the Agreement.
50. We have gone through the said paragraphs in its entirety and
have found that although a reference of the applicability of Clause
15.1.4 has been said to be there showing the authority by the
respondent-CCL in withholding the amount as is being claimed in the
present writ petition, but we have not found any assertion to the effect
that the part of the condition stipulated under Clause 15.1.4 to the
effect of giving prior notice of not less than 30 days find mentioned,
even no such notice has been appended in the counter affidavit.
51. We need to refer herein that the conditions stipulated in the
Agreement by the party and to that effect if any condition has been
made with specific stipulation to take the action in any manner of any
nature whatsoever, the condition/manner as provided in the terms and
conditions of the Agreement is necessarily to be followed.
52. This Court, therefore, is of the view that Clause 15.1.4 is to be
read out in its entirety and not in piece-meal. The consideration to be
taken with respect to applicability of Clause 15.1.4 will be said to be
proper, if the requirement, as stipulated therein, has been followed,
i.e., giving prior notice of not less than 30 days within 60 days of the
end of the relevant year. The aforesaid aspect of the matter having not
been found in the counter affidavit, as such, this Court is of the view
that it is not a case of applicability of Clause 15.1.4 of the Agreement.
53. Now proceeding further regarding the applicability of
condition of Clause 15.1.8 we have found that therein also two words
have been referred one is the 'defaulting party' and another is 'non-
defaulting party'. If a party claims to be defaulting, i.e, the breach of
the terms of the contract and such party have right to terminate the
Agreement but after providing defaulting party 30 days prior notice
and the breach, if not cured or rectified to the satisfaction of the non-
defaulting party within the said period of 30 days.
54. This Court, in order to examine the issue of applicability of
Clause 15.1.8, as the writ petitioner claims, has gone through the
pleadings made in the writ petition as under paragraph no.18 onward
wherein the reference of request having been made for resumption of
coal supply with specific statement, i.e, the supply of coal was stopped
unilaterally since 22.04.2015 due to non-submission of the certificate
from the Director of Industries, West Bengal. The said statement is
appended with the letter dated 16.10.2015.
55. It further appears from paragraph No.19 of the writ petition
that a letter was issued addressed to the General Manager (S&M),
CCL for resumption of supply of coal including all the relevant
documents vide letter dated 22.09.2015. Again, on 16.12.2015
reminder was given by the writ petitioner. The relevant letter is also
appended as Annexure-11.
56. Further, it has been stated in paragraph No.21 that the
respondent-CCL has failed to take positive response on the letters
dated 22.09.2015 and dated 16.12.2015, then the petitioner has taken
recourse as provided under Clause 15.1.8 by making several
correspondences in this regard, i.e., letter dated 27.04.2016 as
appended to Annexure-13 to the writ petition. The statement has been
made at paragraph No.23 that after expiry of period of 30 days, due to
non-curing or rectifying the defect, to the satisfaction of the non-
defaulting party, the Agreement will stand terminated which would be
terminated.
57. We have further gone through the counter affidavit in order to
assess with respect to the response of the respondent-CCL of the
paragraph Nos.18, 19, 20, 21 of the writ petition, but we have found
that there is no denial in the counter affidavit.
58. The paragraph No.18 of the writ petition has been responded
in the paragraph No.23, but there is no denial rather the reference of
Clause 15.1.4 of the Agreement has been made.
59. The statement made at paragraph No.19 of the writ petition
has been admitted by saying that they are matter of records.
60. The statement has been made at paragraph No.25 that fault lies
on the part of the petitioner since it is the petitioner who stopped lifting
coal despite grant of exemption from production of certificate from
Directorate of Industries.
61. This Court in no way in concern with the issue of taking
general decision of exemption of the certificate which was to be
produced being obtained from the Directorate of Industries,
Government of West Bengal for the purpose of making supply of coal,
rather we are concern regarding the applicability of Clause 15.1.4 or
Clause 15.1.8.
62. Since we have already taken a view as above that issuance of
notice is required to be issued under Clause 15.1.4 by the respondent-
CCL, the said clause cannot be allowed to be taken back by the
respondent-CCL.
63. We on consideration of the legal notices issued on 11.01.2016,
11.02.2016, 17.02.2016 and 22.02.2016 and the same having not been
denied is of the view that the same is bearing the specific reference of
Clause 15.1.8 of the Agreement and, as such, the action ought to have
been taken by the respondent-CCL in terms of Clause 15.1.8 by curing
or rectifying the same even by making a communication to that effect.
But there is no communication in response to notices issued in view
of the provision of Clause 15.1.8 of the Agreement and when the
litigation by way of the present writ petition has been filed, then the
ground is being taken that the petitioner has not made any demand for
lifting of the coal.
64. The question is that when a party claiming to be non-
defaulting is making correspondence to a party to the Agreement
(claiming the said party to 'defaulting party', then it is the bounded
duty of the party concern, the respondent-CCL herein, to act in terms
of Clause 15.1.8 by making response but no response has been made
either way as nothing has been stated in the counter affidavit.
65. We also need to refer herein that the decision of exemption of
production of certificate which was to be issued by the Directorate of
Industries, West Bengal has been waived vide communication dated
19.03.2016 and the general order to that effect was issued vide letter
dated 27.04.2016. But we are dealing with the period prior to
19.03.2016 or 27.04.2016. Therefore, what endeavour has been taken
by the respondent-CCL as has been stated in the counter affidavit is
with respect to waiver of relevancy requirement. But the same is not
relevant for the purpose of deciding the issue of the present writ
petition. The relevant is the applicability of Clause 15.1.4 or Clause
15.1.8.
66. Since we have already came to a conclusion that Clause 15.1.4
cannot be said to be followed due to non-compliance of the part of the
condition stipulated therein. Rather, we are of the view, based upon
the aforesaid discussion that the Clause 15.1.8 will have its
application.
67. We, therefore, is of the view that the notice of termination of
the Agreement has been given under Clause 15.1.8 of the contract, but
the same has not been responded and, as such, as per the condition
required there, as stipulated in Clause 15.1.8, if the defect will not be
cured or rectified to the satisfaction of the 'non-defaulting party'
within a period of 30 days, then such Agreement will be deemed to be
terminated.
68. Herein, exactly the same position is since the writ petitioner
has made a specific assertion in the writ petition that of giving notice
under Clause 15.1.8 of the Agreement, but the same has not been
responded.
69. Since there is no assertion to that effect in the counter affidavit,
this Court has also posed a pin pointed question to Mr. Amit Kumar
Das, the learned counsel appearing on behalf of the respondent-CCL
on this issue of making response by the respondent-CCL in terms of
the notice issued by the petitioner claiming to be 'non-defaulting
party' to the respondent-CCL to be 'defaulting party'.
70. Mr. Amit Kumar Das, the learned counsel appearing for the
respondent-CCL has submitted that the statement which has been
made in paragraph nos. 9 and 10 to the counter affidavit, he cannot
make any addition thereto.
71. This Court, considering the aforesaid, is of the view that it is a
case of applicability of a situation falling under Clause 15.1.8.
72. This Court, therefore, further is of the view that the moment
the Agreement has been deemed to be terminated in view of the
provision of Clause 15.1.8, then the question of making demand for
lifting of the coal, as the ground is being taken on behalf of the
respondent-CCL, cannot come in the way of the relief sought for on
behalf of the petitioner.
73. Accordingly, this Court is of the view that the present writ
petition needs to be allowed.
74. Accordingly, the present writ petition stands allowed.
75. Mr. Amit Kumar Das, the learned counsel appearing for the
respondent-CCL at this juncture has submitted that one of the Bank
Guarantee has not been revoked due to expiry of the period and, as
such, the respondent-CCL cannot refund the said amount pertaining to
the Bank Guarantee which has already been revoked.
76. On this, Mr. Rajendra Krishna, the learned counsel appearing
for the petitioner has submitted that the appropriate would be if the
petitioner is given liberty to give a representation showing therein the
entire claim which the petitioner is legally entitled to get it for the
purpose of refund of the admissible amount.
77. The learned counsel appearing for the respondent-CCL is
having no objection to that.
78. This Court, therefore, is of the view that for the purpose of
appropriate decision, it would be apt and proper to grant liberty to the
petitioner to make detail representation by giving the details of the
claims head wise within a period of three weeks from the date of
receipt of a copy of this order, the competent authority, i.e., the
General Manager (S&M), CCL, Ranchi is directed to refund the
admissible amount along with statutory interest within a further period
of eight weeks from the date of receipt of such representation.
79. So far as the issue of rate of interest is concerned, the claim
has been made for disbursement of admissible amount along with the
interest @ 18% per annum.
80. The issue of interest has also been referred in the Agreement
as under Clause 12, the same is being quoted hereinbelow as:
12. INTEREST ON DELAYED PAYMENT:
"With respect to default in making any payment due in terms
of this Agreement by one Party to the other, the defaulting
Party shall be liable to pay interest at PLR on the total sum
outstanding and for the period the payment has remained over
due. Without prejudice to the foregoing, in the event the
Purchaser fails to pay the overdue amount along with the
interest within such thirty (30) days, the Seller shall be entitled
to encash the Security Deposit and/or the Financial Coverage
BG and suspend Coal supplies in accordance with Clause 13.
For removal of doubts, it is clarified that it shall be permissible
for the Seller to adjust or recover the interest due in terms of
this Clause from the Security Deposit and/or the
Financial Coverage BG".
81. It is evident from the aforesaid Clause that the defaulting party
shall be liable to pay interest at PLR on the total sum outstanding.
82. This Court, considering the admissible amount which has been
kept by the respondent-CCL since has been directed to be refunded as
per the direction as above, is of the view that the same is required to
be refunded along with the interest, but what would be the quantum of
interest, it requires consideration.
83. It needs to refer herein that Section 3 of the Interest Act, 1978,
inter alia, provided that in any proceedings for the recovery of any
debt or damages the court may, if it thinks fit, allow interest to the
person entitled to the debt or damages at a rate not exceeding the
current rate of interest for the whole or part of the period from the date
mentioned in any written notice given by the person making a claim
to the person liable that interest would be claimed from the date of
institution of the proceedings.
84. Apart from the provisions of the Interest Act, Section 34 of the
Civil Procedure Code also empowers the court to order interest on a
decree for payment of money. For ready reference same is being
quoted as under:
"34. Interest.--(1) Where and insofar as a decree is for the
payment of money, the court may, in the decree, order interest
at such rate as the court deems reasonable to be paid on the
principal sum adjudged, from the date of the suit to the date of
the decree, in addition to any interest adjudged on such
principal sum for any period prior to the institution of the suit,
with further interest at such rate not exceeding six per cent per
annum as the court deems reasonable on such principal sum,
from the date of the decree to the date of payment, or to such
earlier date as the court thinks fit:
Provided that where the liability in relation to the sum so
adjudged had arisen out of a commercial transaction, the rate
of such further interest may exceed six per cent per annum, but
shall not exceed the contractual rate of interest or where there
is no contractual rate, the rate at which moneys are lent or
advanced by nationalised banks in relation to commercial
transactions.
Explanation I.--In this sub-section, 'nationalised bank' means
a corresponding new bank as defined in the Banking
Companies (Acquisition and Transfer of Undertakings) Act,
1970 (5 of 1970). Explanation II.--For the purposes of this
section, a transaction is a commercial transaction, if it is
connected with the industry, trade or business of the party
incurring the liability.
(2) Where such a decree is silent with respect to the payment
of further interest on such principal sum from the date of the
decree to the date of payment or other earlier date, the court
shall be deemed to have refused such interest, and a separate
suit therefor shall not lie."
85. The Hon'ble Apex Court in the case of Central Bank of India
v. Ravindra, (2002) 1 SCC 367 while referring the judgment rendered
by the Constitution Bench of the Hon'ble Apex Court in the case of
Secy., Irrigation Deptt., Govt. of Orissa v. G.C. Roy [(1992) 1 SCC
508 has opined that a person deprived of the use of money to which
he is legitimately entitled has a right to be compensated for the
deprivation, call it by any name. It may be called interest,
compensation or damages ... this is the principle of Section 34 of the
Civil Procedure Code. For ready reference the relevant paragraph of
the aforesaid judgment is being quoted as under:
"Interest and its classes
37.Black's Law Dictionary (7th Edn.) defines "interest" inter
alia as the compensation fixed by agreement or allowed by law
for the use or detention of money, or for the loss of money by
one who is entitled to its use; especially, the amount owed to a
lender in return for the use of the borrowed money. According
to Stroud's Judicial Dictionary of Words And Phrases (5th
Edn.) interest means, inter alia, compensation paid by the
borrower to the lender for deprivation of the use of his money.
In Secy., Irrigation Deptt., Govt. of Orissa v. G.C. Roy [(1992)
1 SCC 508] the Constitution Bench opined that a person
deprived of the use of money to which he is legitimately
entitled has a right to be compensated for the deprivation, call
it by any name. It may be called interest, compensation or
damages ... this is the principle of Section 34 of the Civil
Procedure Code. In Sham Lal Narula (Dr) v. CIT [AIR 1964
SC 1878 : (1964) 7 SCR 668] this Court held that interest is
paid for the deprivation of the use of the money. The essence
of interest in the opinion of Lord Wright,
in Riches v. Westminster Bank Ltd. [(1947) 1 All ER 469 :
1947 AC 390 (HL)] All ER at p. 472 is that it is a payment
which becomes due because the creditor has not had his money
at the due date. It may be regarded either as representing the
profit he might have made if he had had the use of the money,
or, conversely, the loss he suffered because he had not that use.
The general idea is that he is entitled to compensation for the
deprivation; the money due to the creditor was not paid, or, in
other words, was withheld from him by the debtor after the
time when payment should have been made, in breach of his
legal rights, and interest was a compensation whether the
compensation was liquidated under an agreement or statute. A
Division Bench of the High Court of Punjab speaking through
Tek Chand, J. in CIT v. Dr Sham Lal Narula [AIR 1963 Punj
411 : (1963) 50 ITR 513] thus articulated the concept of
interest: (AIR p. 414, para 8)
"8. The words 'interest' and 'compensation' are sometimes
used interchangeably and on other occasions they have distinct
connotation. 'Interest' in general terms is the return or
compensation for the use or retention by one person of a sum
of money belonging to or owed to another. In its narrow sense,
'interest' is understood to mean the amount which one has
contracted to pay for use of borrowed money. ... In whatever
category 'interest' in a particular case may be put, it is a
consideration paid either for the use of money or for
forbearance in demanding it, after it has fallen due, and thus,
it is a charge for the use or forbearance of money. In this sense,
it is a compensation allowed by law or fixed by parties, or
permitted by custom or usage, for use of money, belonging to
another, or for the delay in paying money after it has become
payable."
It is the appeal against this decision of the Punjab High Court
which was dismissed by the Supreme Court in Dr Sham Lal
Narula case [AIR 1964 SC 1878 : (1964) 7 SCR 668] .
86. Further, the principle of interest as has been accepted to be
paid in favour of one of the parties concerned by way of compensatory
measure on the principle of "doctrine of restitution". The Hon'ble
Apex Court in the case of Dr. Poornima Advani v. State (NCT of
Delhi), 2025 SCC OnLine SC 419 while considering the aforesaid
principle has made an observation that when a person is deprived of
getting money to which he is legitimately entitled, he has a right to be
compensated for deprivation which may be called interest or
compensation and the interest is to be paid on the principle of
"doctrine of restitution", the relevant paragraph is being quoted
hereinbelow as:
25. If on facts of a case, the doctrine of restitution is attracted,
interest should follow. Restitution in its etymological sense
means restoring to a party on the modification, variation or
reversal of a decree or order what has been lost to him in
execution of decree or order of the Court or in direct
consequence of a decree or order. The term "restitution" is
used in three senses, firstly, return or restoration of some
specific thing to its rightful owner or status, secondly, the
compensation for benefits derived from wrong done to another
and, thirdly, compensation or reparation for the loss caused to
another.
27. In the case of O.N.G.C. Ltd. v. Commissioner of Customs
Mumbai, JT (2007) 10 SC 76, (para 6), the facts were that the
assessment orders passed in the Customs Act creating huge
demands were ultimately set aside by this Court. However,
during pendency of appeals, a sum of Rs. 54,72,87,536/- was
realized by way of custom duties and interest thereon. In such
circumstances, an application was filed before this Court to
direct the respondent to pay interest on the aforesaid amount
w.e.f. the date of recovery till the date of payment. The
appellants relied upon the judgment in the case of South
Eastern Coal Field Ltd. v. State of M.P., (2003) 8 SCC 648.
This Court explained the principles of restitution in the case
of O.N.G.C. Ltd. (supra) as under:--
"Appellant is a public sector undertaking. Respondent is the
Central Government. We agree that in principle as also in
equity the appellant is entitled to interest on the amount
deposited on application of principle of restitution. In the facts
and circumstances of this case and particularly having regard
to the fact that the amount paid by the appellant has already
been refunded, we direct that the amount deposited by the
appellant shall carry interest at the rate of 6% per annum.
Reference in this connection may be made to Pure Helium
Indian (P) Ltd. v. Oil & Natural Gas Commission, JT 2003
Supp (2) SC 596 and Mcdermott International Inc. v. Burn
Standard Co. Ltd. JT (2006) 11 SC 376."
87. This Court has held the writ petitioner entitled for the
admissible amount to be paid as per the discussion made hereinabove,
therefore, the said admissible amount once has been held to be the
entitlement of the present writ petitioner, then applying the principle
of "doctrine of restitution" as discussed herein above the interest is
required to be paid in favour of the petitioner over the admissible
amount.
88. The only question now remains that what would be the rate of
the interest.
89. The petitioner has made prayer that the amount to be paid
along with interest is to be of 18% per annum.
90. We, for the purpose of the claim of 18% of interest to be paid,
have considered the RBI guidelines in this regard as also the prevalent
interest rate in one or the other Banks which is being given in the term
deposit, have found that the maximum interest is in between 7-8% per
annum.
91. This Court, therefore, even accepting the plea of the petitioner
that he is entitled for the disbursement of the admissible amount along
with the interest, the same is only for the purpose to fulfill the
"doctrine of restitution".
92. Further, if as per the petitioner the aforesaid amount having
lying with the respondent-CCL that must be in the banking sector so
far as the amount of Security Money and Earnest Money is concerned
and if the petitioner would have got the amount during the relevant
time, then he would have been said to get the interest as per the
prevalent bank rate.
93. This Court, considering the aforesaid, is of the view that the
interest of 18% per annum cannot be said to be appropriate quantum
of interest, rather, according to our considered view, the quantum of
interest is to be ascertained on the basis of the prevalent bank rate
which is being carried out by one or the other banks under the RBI
guidelines, in the term deposit which is in between 7-8% per annum
as such, the interest @ 7% per annum will be appropriate in order to
fulfill the principle of "doctrine of restitution".
94. Accordingly, the respondent-CCL is directed to release the
admissible amount, after the calculation as per the claim agitated by
the petitioner by way of detailed representation, as directed
hereinabove, along with the interest @ 7% per annum.
95. With the aforesaid direction, the instant writ petition stands
allowed and disposed of as such.
96. Pending Interlocutory Application(s), if any, stands disposed
of.
(Sujit Narayan Prasad, J.)
(Pradeep Kumar Srivastava, J.)
Sudhir
AFR
