Nafr High Court · 2025
Case Details
1 SOURABH BHILWAR Digitally signed by SOURABH BHILWAR Date: 2025.07.31 10:39:46 +0530 2025:CGHC:37131-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WA No. 546 of 2025 South Eastern Coalfields Limited, Through The General Manager (Sales And Marketing) South Eastern Coalfields Limited Seepat Road Bilaspur Dist- Bilaspur C.G. 495006 ... Petitioner versus 1 - M/s Shubham Minerals Private Limited, A Private Limited Company Registered Under The Companies Act Having Its Registered Office At Jagatpur Dhimrapur Road Raigarh C.G. 496001, Through Its Director Pratish Kumar Goyal Aged About 44 Years Son Of Shri Hari Kishan Goyal, Resident Of H.No.-03, Magneto Signature Home -Li, Labhandi, Raipur Dist- Raipur C.G. Pin-492001 2 - ICICI Bank Limited Through Branch Manager Vyapar Vihar Branch Surya Chambers Vyapar Vihar, Bilaspur Dist- Bilaspur C.G. 495001 3 - Punjab National Bank Through Branch Manager Raigarh Branch Near Telegraph Office Raigarh Dist- Raigarh- C.G. 496001 4 - M/s M Junction Services Ltd. Through Its Managing Director, Godrej 2 Water Side 3rd Floor, Block Dp, Sector V, Salt Lake Kolkata West Bengal , 700091 (Cause title is taken from CIS) ... Respondents For Appellant For Respective Respondents
Legal Reasoning
: Mr. Palash Tiwari, Advocate : Mr. Siddharth Dubey, Mr. Pankaj Singh and Mr. Devendra Patel, Advocates. Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Bibhu Datta Guru , Judge Per Ramesh Sinha , Chief Justice
Decision
Order on Board 30 .07.2025 1. Heard Mr. Palash Tiwari, learned counsel for the appellant/ SECL. Also heard Mr. Siddharth Dubey, Mr. Pankaj Singh and Mr. Devendra Patel, learned counsel for their respective respondents. 2. The present writ appeal preferred by the appellant/SECL (respondent in WPC) against the order dated 20.05.2025 passed by the learned Single Judge of this Court in WPC No.2068/2024 (M/s. Shubham Minerals Pvt. Ltd. vs. SECL & Ors.), whereby the learned Single Judge has allowed the writ petition. For the sake of convenience, the parties would be referred as per their status before the writ Court. 3. Learned counsel for the appellant would submit that the appellant/SECL preferred this appeal challenging the order whereby the learned Single Judge has allowed the writ petition 3 filed by the writ petitioner directing the SECL to release the Earnest money Deposit (EMD) of Rs. 20,00,000/- (Rupees Twenty Lakh Only) to writ petitioner within two months. The Court also overlooked the fact that, the writ petitioner has categorically acknowledged that it could not deposit the said amount as it was not being transferred "as it was from bank account which was not registered/designated for transfer". Hence, it could not be ruled out that delay in deposit of the Coal/ Product was solely attributable on part of writ petitioner making the forfeiture justifiable. Further, the Appellant has followed the terms and conditions of the CIL E-Auction related to the forfeiture of Earnest Money Deposit (EMD), which was duly Acknowledged and accepted by respondent No.1 herein. The findings of the learned Single Bench in the order dated 20.05.2025 are erroneous and are liable to be set aside. In support of his contention, he placed reliance upon the judgment passed by the Hon’ble Supreme Court in the matter of K. R. Suresh vs. R. Poornima & Ors. reported in (2025) 6 SCR 22 (Civil Appeal No.5822 of 2025 decided on 2-2-2025). 4. Learned counsel appearing for the respondent/writ petitioner opposed the submission made by the counsel for the appellant and submit that the learned Single Judge has rightly passed the order dated 20/05/2025 and the same is warranting no interference of this Court. 4 5. We have heard learned counsel for the parties and perused the documents appended herein. 6. The said writ petition was allowed by the impugned order observing as follows :- “13. From perusal of the conditions as stipulated in the intimation letter dated 13.09.2023, it is apparent that the petitioner company has to pay the requisite payment of Rs. 77,57,257.34/- within 10 working days in accordance with the CIL E-auction scheme. According to the petitioner, he has tried his level best but the amount was not transferred and as such he was unable to deposit the same. It was condition precedent that the amount has to be deposited and if the said amount is not deposited the EMD would be forefeited. There is no provision in the said CIL E- auction that in case of failure of depositing the requisite amount, the earnest money would be refunded. On the contrary, in the terms and conditions of the CIL E-auction scheme, it has been categorically stated that EMD amount is deposited as security deposit would be forfeited in the event of non-payment of value of coal or failure to lift the coal as the terms of the agreement. 14. For the sake of convenience, the relevant clause is quoted hereinbelow:- 5 "6. Terms of Payment 6.1 The coal value to be deposited in advance by the successful bidders shall be computed and deposited after making provision for the EMD amount for the successful bid quantity already transferred by the service provider to the subsidiary company. In other words, the coal value to be deposited and EMD amount together, shall be equivalent to the 100% coal value. 6.2 EMD amount shall not be treated as adjustment towards the coal value but would stand converted into a 'Security Deposit' for performance of the bidders towards the completion of the said transaction. 6.3 The above security deposit (as converted from the EMD amount) would be adjusted as coal value, only after completion of lifting of coal covered under coal value paid, excluding security deposit. However, in the event of default in performance by the bidder, the provision of the Security Deposit (as converted from the EMD) as stipulated, would be applicable…. 9. Forfeiture of EMD The EMD submitted by the successful Bidders will be liable for forfeiture in the following cases:- 9.1 If after completion of e-auction, a successful bidder fails to make payment for the coal value including all other charges within the stipulated time, the proportionate EMD equivalent to the failed quantity shall be 6 forfeited subject to the provisions at clause 6.4 and/or clause 6.5 of this document, and/or 9.2 If the successful bidders does not lift the booked quantity within the stipulated validity period, the proportionate Security Deposit at @ 500 or 400 per tonne(as converted from the EMD amount) for the unlifted quantity is equal or more than a truckload i.e 9 or 10 tonnes as applicable. Such forfeiture, however, would not take place if the coal company has failed to offer full or part of the successful bid quantity within the validity period. In such cases again, no forfeiture take place if the balance quantity is less than a truckload/rake load. 9.3 If the buyer cancels the order/rake after booking, the EMD @₹500 ₹400 per tonne (as the case may be) shall be forfeited for the rake cancelled." 15. From the terms and conditions of spot E-auction scheme 2007, it is evident that the EMD amount stood as security deposit and in the event of non- payment of the coal value or the failure to lift the coal as per the terms of agreement, the said deposit stood could forfeited. 16. A contract is concluded on acceptance of offer. The petitioner was declared a successful bidder and therefore, the contract stood concluded. There was a breach in the contract on the part of the petitioner for 7 not making payment from the designated account as per the terms agreed upon. Technically there can be forfeiture of earnest money where the agreement has a forfeiture clause and breach is committed on the part of the purchaser. 17. The Hon’ble Supreme Court in the matter of NTPC Ltd. v. Ashok Kumar Singh, reported in (2015) 4 SCC 252 has held that such a forfeiture can be even in case of withdrawal of an offer before it was accepted if the offer is itself subject to the condition that the earnest money will be forfeited for not entering into contract or if some other act is not performed, then, even though he may have a right to withdraw his offer he will have no right to claim the refund of the earnest money. The purpose of such a Clause providing for forfeiture of the earnest money clearly was to see that only genuine bids are received. 18. Further, the Hon'ble Supreme Court in the matter of Jagmohan Singh v. State of Punjab reported in (2008) 7 SCC has held that:- “38. that justice, equity and fair play cannot be given a go by while forfeiting the earnest money. It was observed 16. In Teri Oat [(2004) 2 SCC 130] it was opined that the power of forfeiture should be taken 8 recourse to as a last resort and the action of the statutory authority is required to be judged on the touchstone of Article 14 of the Constitution of India. The High Court in its judgment failed to consider this aspect of the matter. It is furthermore evident that Order 47 Rule 1 of the Code of Civil Procedure does not preclude the High Court or a court to take into consideration any subsequent event. If imparting of justice in a given situation is the goal of the judiciary, the court may take into consideration (of course on rare occasions) the subsequent events.”(Emphasis supplied) 19. Furthermore, the Hon'ble Supreme Court in the matter of LIC v. Consumer Education & Research Centre reported in (1995) 5 SCC 482 has held that:- “27. In the sphere of contractual relations the State, its instrumentality, public authorities or those whose acts bear insignia of public element, action to public duty or obligation are enjoined to act in a manner i.e. fair, just and equitable, after taking objectively all the relevant options into consideration and in a manner that is reasonable, relevant and germane to effectuate the purpose for public good and in general public interest and it must not take any irrelevant or irrational factors into consideration or appear arbitrary 9 in its decision. Duty to act fairly is part of fair procedure envisaged under Articles 14 and 21. Every activity of the public authority or those under public duty or obligation must be informed by reason and guided by the public interest.” 20. Also, the Hon’ble Supreme Court, in the matter of Silppi Construction Contractors vs. Union of India reported in (2020) 16 SCC 489 has held that:- “20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent 10 arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.” 21. In the present matter, the petitioner contended that he made every possible effort to deposit the amount required for the coal to be lifted. However, the transaction could not be completed successfully due to technical glitches, and therefore, the amount could not be deposited. He submitted certificates from Punjab National Bank and ICICI Bank, along with a Gmail communication sent to SECL regarding the issue. These documents indicate that the petitioner was not at fault, as the failure to deposit the amount was due to technical reasons. As such, the petitioner cannot be held responsible. Moreover, before the forfeiture of the Earnest Money Deposit (EMD), no opportunity was given to the petitioner to explain or rectify the situation. Since the company did not suffer any loss, the forfeiture of the EMD is unjustified. 22. Though there should be minimal interference in the matter of tender by the Courts but where there is arbitrariness and irrationality, the Courts can interfere even in the matter of tenders. In the present case, no notice or opportunity was provided to rectify this error by making payment through the designated account. 11 There is no evidence on record that the respondent company suffered any loss due to the non-payment through the designated account. 23. Considering the facts and circumstances of the case, various laws laid down by the Hon’ble Supreme Court and for the reasons discussed hereinabove, this Court is of the opinion that the forfeiture of the earnest money was arbitrary which was done without any actual loss being suffered, and not in accordance with the principles of fair play and equity. Such forfeiture is indefensible. 24. Accordingly, the respondent company is directed to release the earnest money of the petitioner within two months from the date of this order. 25. With the aforesaid direction/ observation, the writ petition stands allowed to the above extent.” 7. Bare perusal of the order impugned and the pleadings and documents it is manifest that before forfeiture of the Earnest Money Deposit (EMD), no opportunity was given to the writ petitioner to explain or rectify the situation. Even the SECL did not suffer any loss, the forfeiture of the EMD is unjustified. Albeit there should be minimal interference in the matter of tender by the Courts but where there is arbitrariness and irrationality, the Courts can interfere even in the matter of tenders. In the 12 present case, no notice or opportunity was provided to rectify this error by making payment through the designated account. There is no evidence on record that the respondent company suffered any loss due to non-payment through the designated account. In fact, the forfeiture of the earnest money was arbitrary which was done without any actual loss being suffered, and not in accordance with the principles of fair play and equity. Such forfeiture is indefensible. 8. On due appreciation of the facts and material available on record, in the opinion of this Court, the reliance placed by the appellant upon the decision rendered by the Supreme Court in the matter of K. R. Suresh (supra) would not be applicable to the facts of the case at hand. 9. Considering the entire facts and circumstances of the case, we are of the considered view that the learned Single Judge has not committed any illegality, irregularity or jurisdictional error, warranting interference of this Court. 10. Accordingly, the writ appeal being devoid of merit is liable to be and is hereby dismissed at the motion stage itself. Sd/- Sd/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice S.Bhilwar/ Jyoti