Madras High Court
M/S.Tungabadra Minerals Private ... vs The Chennai Port Trust on 31 January, 2022
Judgment dated 31.01.2022
in O.S.A.No.57 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 31.01.2022
Coram:
THE HONOURABLE MR.JUSTICE T.RAJA
and
THE HONOURABLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
O.S.A.No.57 of 2017
M/s.Tungabadra Minerals Private Limited,
No.322/3, II Floor, Sree Sapthagiri Enclave,
College Road, Hospet-583 201,
Bellary District,
Karnataka. .. Appellant/plaintiff
Vs.
1. The Chennai Port Trust,
Represented by its Chairman,
No.1, Rajaji Salai,
Chennai-600 001.
2. Chief Mechanical Engineer,
Chennai Port Trust,
No.1, Rajaji Salai,
Chennai-600 001. ..
Respondents/defendants
Original Side Appeal filed under Order 36 Rule 1 of the Original Side Rules
of Madras High Court, read with Clause 15 of the Letters Patent, against the
judgment and decree, dated 12.01.2017 passed by the learned Single Judge, in
Civil Suit No.1050 of 2010 on the file of this Court.
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For appellant : Mr.Yashod Vardhan, Senior Counsel for M/s.Vinod Kumar
For respondents : Mr.R.Sankaranarayanan, Addl. Solicitor General of India
JUDGMENT
(The Judgment of the Court was delivered by T.Raja, J)
This Original Side Appeal has been filed against the judgment and decree,
dated 12.01.2017 passed by the learned Single Judge, in Civil Suit No.1050 of
2010 on the file of this Court, in and by which, the learned Single Judge had
dismissed the said Civil Suit, with costs.
2. Learned Senior Counsel appearing for the appellant/plaintiff Company
would argue that the appellant/plaintiff filed Civil Suit No.1050 of 2010 for a
declaration that the contract between the plaintiff and the defendants pursuant
to the issuance of the iron-ore stacking area transit license, vide allotment order
No.5/2010 dated 31.01.2010 and allotment order No.15/2010 dated 05.02.2010
has become void as on 28.07.2010, with a consequential relief of permanent
injunction restraining the defendants from in any manner recovering any
amounts from the plaintiff under the allotment orders for the alleged shortfall in
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the minimum guaranteed throughput during the allotment period from
01.02.2010 to 31.12.2010, and also for mandatory injunction directing the
defendants to return the Bank Guarantees dated 17.03.2009 of the Bank of India
and dated 24.02.2010 of the Bank of Baroda issued in favour of the first
defendant with an alternative prayer. As the appellant/plaintiff is using the
Chennai Port as the transit port for export of the iron-ore extracted from the
mines in Karnataka, the iron-ore is required to be stacked within the premises of
the Chennai Port, once it reaches the Chennai Port. Therefore, the Chennai Port
also has provided the stacking area within its premises, subject to certain terms
and conditions stipulated by the respondents/defendants in the license/allotment
orders. The appellant/plaintiff has also deposited a sum of Rs.27,75,000/- being
50% of the charges of total open area capacity reserved for the
appellant/plaintiff in terms of Clause 9 of the allotment order and also furnished
Bank Guarantees in favour of the respondents/defendants for a sum of
Rs.6,09,03,480/- which was valid till 28.02.2011. On account of various
complaints from across the State regarding the illegal mining and misuse of
mineral transport permits and export of iron-ore from the Ports in Karnataka by
some companies, the Government of Karnataka also issued a Government Order
dated 26.07.2010 prohibiting the export of iron-ore with immediate effect. In
view of the said Government Order, none of the exporters of iron-ore in
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Karnataka were able to carry on their export and therefore, the said Government
Order came to be challenged before the High Court of Karnataka in a batch of
writ petitions filed by the exporters of iron-ore and the High Court of Karnataka
also, in its order dated 19.11.2010, disposed of the writ petitions and upheld the
Government Order. The appellant/plaintiff was also unable to export iron-ore
from the Chennai Port consequent to the above mentioned order issued by the
Government of Karnataka banning the export of iron-ore. Therefore, for the
period from 01.02.2010 till 31.12.2010, the contract between the parties has
become impossible of performance. Therefore, the appellant/plaintiff, in letter
dated 10.12.2010, addressed to the respondents/defendants, requested that the
period prohibiting the issuance of the mineral dispatch permit be excluded under
the "force majeure" clause, while reckoning the minimum guaranteed
throughput, because the performance of the obligation to export the minimum
guaranteed throughput, had become impossible of performance, and
consequently, the respondents/defendants were requested to treat the contract
as void since 28.07.2010, considering the appellant/plaintiff being absolved of all
the obligations under the contract and therefore, the Bank Guarantees should be
returned and the security deposit also to be refunded. Since the contract with
the respondents/defendants stipulating the Minimum Guaranteed Throughput
(MGT) has become impossible of performance, the appellant/plaintiff was
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constrained to file the suit for the reliefs as mentioned supra.
3. Opposing the claim, the respondents/defendants filed a detailed written
statement, inter-alia stating that the agreement between the appellant and the
respondents is not to be treated as void and cannot be brought under the "force
majeure" event, for the reason that the appellant had not achieved the
stipulated MGT, in view of the fact that the iron-ore companies including the
appellant, have committed illegal mining, for which they were banned.
4. After hearing both sides, the learned Single Judge, accepting the case
of the defendants, dismissed the suit, as against which the present appeal has
been filed by the plaintiff.
5. Arguing further, learned Senior Counsel appearing for the appellant
would submit that the conditions mentioned in the allotment order relating to the
export of the Minimum Guaranteed Throughput during the relevant period, could
not be complied with by the appellant only on account of the ban imposed by
the State of Karnataka, prohibiting the issuance of the mineral dispatch permits
for transportation of the iron-ore from the State, and therefore, the case of the
appellant should be brought under the "force-majeure" event.
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6. Mr.R.Sankaranarayanan, learned Additional Solicitor General appearing
for the respondents/defendants, refuting the arguments advanced by the
learned Senior Counsel for the appellant, submitted that the appellant/plaintiff
cannot take the ground of "force majeure", due to the export ban imposed by
the State of Karnataka, for the reason that when the Government of Karnataka
had appointed Hon'ble Mr.Justice N.Santhosh Hegde, Lokayukta, to investigate
into the illegal mining under the Karnataka Lokayukta Act as early as 12.03.2007
and 09.09.2007, the same cannot be disputed by the appellant. Moreover, the
appellant-Company has become the subject matter of enquiry. Therefore, the
learned Single Judge has rightly come to the conclusion that the appellant had
miserably failed to explain that the ban was not self-induced and that they
involved exclusively only in legally acceptable mining processes. Further, the
Apex Court also, while examining the Government Orders, has categorized the
mines of the appellant as 'B' and 'C' and it was admitted by the learned counsel
appearing for the appellant before the Apex Court that the appellant had two
existing mines coming under the 'C' category, and therefore, it was held that the
respondents are entitled to invoke the Bank Guarantee.
7. We are also able to see that the appellant/plaintiff is having two
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existing mines under the 'C' category. When the appellant-Company have also
become the subject matter of enquiry held by Hon'ble Mr.Justice N.Santhosh
Hegde, Lokayukta, appointed by the Government of Karnataka to investigate
into the illegal mining under the Karnataka Loyayukta Act on 12.03.2007 and
09.09.2007, in our considered opinion, unless the appellant/plaintiff substantiates
that they have come out from the enquiry successfully, the plea advanced by the
learned Senior Counsel appearing for the appellant that the case of the appellant
should be brought under the "force-majeure" event, is far from acceptance, as
rightly held by the learned Single Judge. Therefore, we do not find any merit in
the appeal.
8. Moreover, learned Senior Counsel appearing for the appellant/plaintiff-
Company, soliciting our notice to the decree passed by the learned Single Judge,
stated that the decree impugned says clearly that the respondents/defendants
(Chennai Port Trust) are entitled to quantify their loss suffered owing to their
short-fall quantifying to 4,81,780/- MTS, but in the written statement, the
defendants had quantified the same at Rs.5,54,04,700/-. The learned Senior
Counsel further submitted that the defendants/Chennai Port Trust are not
entitled to keep the huge amount of Rs.82,73,780/- being the excess amount
held by the first defendant, as stated in the Table, dated 31.01.2022 filed today
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by the appellant-Company, showing the excess amount. It is useful to extract
the said Table, as follows:
"TABLE SHOWING THE EXCESS AMOUNT HELD BY THE FIRST RESPONDENT
Sl. Particulars Amount Total (in
No. (in Rs.) Rs.)
(C + D)
Bank Guarantee furnished by the 6,09,03,480 -
A Appellant as per Allotment Order
and encashed by the First
Respondent
Amount granted in Decree passed
B by the Hon'ble Single Judge in (5,54,04,700) -
C.S.No.1050 of 2010
C Excess Amount held by First
Respondent after encashment of 54,98,780 54,98,780
Bank Guarantee (A-B)
D Amount deposited by the Appellant
towards Security Deposit as per 27,75,000 27,75,000
Allotment Order and held by the
First Respondent
Total Excess Amount held by the First Respondent (C+D) 82,73,780
Dated at Chennai this the 31st Day of January 2022."
9. Learned Additional Solicitor General, appearing for the
respondents/defendants/Chennai Port Trust, in reply, while inviting the attention
of this Court to the letter dated 03.01.2011 (as found in page No.133 of the
typed set Vol.II, dated 06.02.2017, filed by the appellant-Company) addressed
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by the Chief Mechanical Engineer of the Chennai Port Trust to the appellant-
plaintiff-Company, stated that the Chennai Port Trust had requested the
appellant-Company to make arrangements to remit the short-fall charges of
Rs.5,54,04,700/- (Rupees five crores, fifty four lakhs, four thousand and seven
hundred only) @ Rs.115/- per Metric Tons, along with applicable Service Tax as
per the conditions laid down in the allotment order within ten Trust Working
days from the date of receipt of the said letter, dated 03.01.2011. Thus, the
learned Additional Solicitor General submitted that the plaintiff-Company is liable
to pay the Service Tax @ Rs.115/- per Metric Tons as stated above, and the so-
called excess amount said to have been retained by the respondents-Chennai
Port Turst, cannot be released.
10. Though the learned Additional Solicitor General sought time to file
affidavit explaining as to how the defendants-Chennai Port Trust are entitled to
claim Service Tax, but, in the impugned decree dated 12.01.2017 passed by the
learned Single Judge in C.S.No.1050 of 2010, it is specifically mentioned as
follows:
"That the defendants herein be and are hereby
entitled to invoke the Bank Guarantee
2) That the defendants herein be and hereby
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entitled to quantify their loss suffered owing to
shortfall of quantity of 4,81,780/- mts which in the
written statement they had quantified at
Rs.5,54,04,700/- (Rupees Five crores fifty four lakhs
four thousand and seven hundred only) and the
plaintiff has to make good the same
3) That the suit C.S.No.1050 of 2010 do stand
dismissed.
4) That the plaintiff herein do pay to the
defendants herein the costs of this suit as and when
taxed by the taxing officer of this court and noted in
the margin thereof."
11. Taking into consideration the submissions made on either side and in
view of the impugned decree passed by the learned Single Judge, coupled with
the above extracted Table relied on by the learned Senior Counsel appearing for
the appellant-Company, it is for the parties to work out their remedy in the
manner known to law, in the Executing Court, if they are so advised.
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12. Thus, while we do not find any infirmity in the conclusions/findings
arrived at by the learned Single Jude, the present O.S.A. is dismissed with the
above said liberty to the parties. There shall be no order as to costs in the
present appeal.
(T.R.J) (D.B.C.J)
31.01.2022
Speaking Order: Yes/no
ss/cs
To
1. The Chennai Port Trust,
Represented by its Chairman,
No.1, Rajaji Salai,
Chennai-600 001.
2. Chief Mechanical Engineer,
Chennai Port Trust,
No.1, Rajaji Salai,
Chennai-600 001.
3. The Sub-Assistant Registrar,
Original Side,
High Court, Madras.
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T.RAJA, J
and
D.BHARATHA CHAKRAVARTHY, J
cs
O.S.A.No.57 of 2017
31.01.2022
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