Prakash Industries Limited Through Its Authorized Signatory, Mr. Arun Kumar Singh, S/o Late Shiv v. 1 South Easter
Case Details
1 JYOTI SHARMA Digitally signed by JYOTI SHARMA Date: 2025.08.14 19:13:41 +0530 2025:CGHC:41017-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 4339 of 2025 Prakash Industries Limited Through Its Authorized Signatory, Mr. Arun Kumar Singh, S/o Late Shiv Dayal Singh, Aged About 58 Years, Presently Working As Assistant Vice President, Having Its Head Office At - Srivan Near I.O.C.L. Crossing, Main Najafgarh Bijwasan Main Road, New Delhi-61 And Plant Address Inter-Alia At Village Hathneora, Tehsil - Champa, District Janjgir-Champa Chhattisgarh 495671 ... Petitioner(s) versus 1 South Eastern Coalfields Limited Through Its Chairman Cum Managing Director, Registered Office At Seepat Road Bilaspur Chhattisgarh 495006 2 - The General Manager (M And S) South Eastern Coal Fields Limited, Having Its Office At Seepat Road, Bilaspur Chhattisgarh 3 - The Chief Manager (Finance) South Eastern Coal Fields Limited, Having Its Office At Seepat Road, Bilaspur Chhattisgarh 4 - Union Of India Through Secretary, Ministry Of Coal, Shastri Bhavan, New Delhi - 110001, India 5 - Coal India Limited Through Its Cmd, Coal Bhawan, Premise No. 04 2 Mar, Plot No. Af-Iii, Auction Area-1a, New Town, Rajarhat, Kolkata - 700156, West Bengal ... Respondent(s) For Petitioner For Respondent/SECL For UOI : Mr. Vivek Chopda, Advocate : Mr. Pankaj Singh, Advocate : Mr. R.K. Mishra, DSG Hon’ble Shri Ramesh Sinha, Chief Justice Hon’ble Shri Bibhu Datta Guru, Judge Judgment on Board Per Ramesh Sinha, Chief Justice 14/08/2025 1. The present writ petition has been filled for following reliefs:- “10.1 Compensation Bill(s) No. C083701819000483 and C083701920000484, both dated 19.08.2023, whereby amounts of Rs. 3,69,941/- and Rs. 46,89,056/- respectively have been claimed as compensation on account of alleged short lifting of coal for the financial years 2018-19 and 2019-20 under Fuel Supply Agreement (FSA) No. A-370 (ANNEXURE P/1 ANNEXURE P/2 respectively) be quashed/set aside. & 10.2 Bank guarantee submitted by the petitioner as performance security Rs. 85,30,000/- be returned by the respondents. 10.3 Any other relief which this Hon'ble Court may deem fit in the facts & circumstances of case. 10.4 Cost of the petition may also be awarded.”
Legal Reasoning
2. (A) Learned counsel for the petitioner submits that the petitioner is a company registered under the relevant provisions of the 3 Companies Act. He further submits that a letter was issued by respondent no. 3 a letter No. 23011/51/2015-CPD (Pt-1) dated 15.02.2016, according to which the coal to non-regulated sectors, the category under which the Petitioner fall, shall henceforth be allotted coal through a competitive bidding process and thus a Scheme document (Policy) has been prepared by the CIL for conducting the auction process on 18.09.2017. According to the "policy", respondent no. 5, inter-alia, was entrusted the detailed with the of working procedure/methodology for conducting the auction process. Accordingly, the respondent no. 5 framed, inter- alia, the format of FSA and directed its subsidiary companies including respondent no. 1 to execute the FSAS with successful bidders from time to time in pursuance to the auctions to be conducted in different tranches. (B) Petitioner company participated in the bidding conducted on behalf of respondent no. 1 under Tranche-III for the Sponge Iron Sector Petitioner company is engaged inter-alia, into the business of manufacturing MISS Sponge iron, steel billets, ferro alloys etc. and having TUPIA manufacturing unit at Village Hathneora, Tehsil Champa, District Janjgir Champa for which coal is required as raw material/fuel. It is submitted that consequent to being declared the successful bidder, pursuant thereto the Respondents issued a Letter of Intent (LOI) dated 01.11.2017, Reference No. SECL /BSP /M&S/FSA/TIII/SIP/75024/LO1/28/PIL/2285. (C) It is further submitted that, subsequent to the completion of all 4 requisite formalities and prerequisites, a Fuel Supply Agreement (FSA), Agreement No. A-370, was subsequently executed between the Petitioner and the Respondent on 29.12.2017, allocating 56,300 MT of G-6 Grade coal per annum from the Amadand Colliery (C.G.) mine of Respondent No.1 with a term of five years and a lock-in period of two years. Under the said FSA as per the requirements of Clause 3.5.4 of the Scheme Document, the Petitioner had submitted various documents with the Respondent SECL in accordance with the timelines stipulated therein including an unconditional and irrevocable Bank Guarantee dated 07.11.2017 from Corporation Bank, for an amount of Rs. 77,10,000/- towards performance security which was subsequently enhanced to Rs. 85,30,000/-. It is submitted that as per Clause 2.2 the subject FSA was to remain in force until a period of Five years from the signature date which was 29.12.2017 subject to clause 17.1 & 17.2. It is submitted that as on today a total Bank Guarantee to the tune of Rs. 85,30,000.00/- is lying with 198 the Respondent SECL. It is submitted that, from the inception of the agreement, the contracted quantity and quality of coal were not Consistently available at Amadand OC mine. Barely months after the FSA commenced i.e., around July 2018, respondent SECL began defaulting on coal supply. It is apparent from the face of the record for the Financial Year 2018-19 and 2019-2020, that the Respondents were not able to supply the agreed quantity and quality of coal as per the Agreement dated 5 29.12.2017 as the same was not available with the Respondent in the Amadand OC mine. It is further submitted that non availability of Coal and low quality of coal was the reason for such non supply of contracted quantity as agreed by the parties vide FSA dated 29.12.2017. (D) It is submitted that, from the initial period of supplies i.c., since July 2018 onwards, the contracted quality and quantity of coal were not readily available at Amadand OC mine. It is further submitted that the supply problems persisted at the Amadand OC mine for Financial Year 2019-2020 and the DOs were being issued after lapse of 3-4 months which was severely hampering the production and outputs of the Petitioner as the running of plant was entirely dependent on the supply of coal. It is further submitted that the said delay and non-supply of the agreed quantities as per the FSA were solely attributable to the Respondents and the same was in clear violation of Clause 1.2(n) of the Fuel Supply Agreement (FSA), which explicitly states that "time is the essence in the performance of the parties." Since the supply problems persisted at the Amadand OC mine, the coal consumers were being compelled to MMISS book the coal from secondary and tertiary sources. It is further submitted that during the said period, the non-availability of coal was not only the issue, but the issue was also with respect to the quality and grade of coal. It is further submitted that a request was made by the Petitioner to the Respondent Authorities vide letter dated 6 11.05.2020, requesting the Respondent Authorities to carry forward the coal quantity against linkage auction for the period from February-June 2020, to next 5 months i.e., from July-October 2020 along with existing quantity of those months and extension of time to deposit coal value due to the outbreak of the coronavirus pandemic, which had brought to halt, the entire business and related activities to a standstill around the globe. It is further submitted that the business activities of the Petitioner also suffered setbacks owing to the covid 19 pandemic and thus such legitimate requests were made by the Petitioner to carry forward the coal quantity and extension of time to deposit coal value due. It is further submitted that such circumstances were well covered under Force Majeure Clause as mentioned in the clause 18 of the FSA wherein it has been specifically stated that the Party suffered by such Force Majeure Act, shall be excused from whatever performance is affected by the Force Majeure Act, and thus no liability could have been attributed to the Petitioner under such covid 19 pandemic outbreak. (E) It is further submitted that with regard to the said periods as mentioned hereinabove, the respondent authorities have issued the impugned compensation bill(s) to the petitioner. However, no fault or liability can be attributed to the petitioner in this regard. These penalty bills are arbitrary, not showing any computation as per the formula given in the FSA. The correct calculations show that it is the respondent, who is liable to pay penalty for short delivery and not the Petitioner. 7 (F) The above facts had forced the petitioner to give notice for exit from the FSA after lock-in period in terms of clause 17.1 & 17.2 vide their letter dated 01.07.2020 which was duly received by Respondent SECL on 01.07.2020. On receipt of the said letter the Respondent SECL terminated the contract vide their letter dated 07.09.2020 with effect from 30.09.2020 wherein the Respondent SECL have stated that performance security will be refunded subject to settlement of all the dues, penalties and pending bookings if any. It is submitted that as per the facts clearly stated herein above there were no dues or penalties as on the termination date because it was only the fault of the Respondent SECL because of which the petitioner could not lift the Coal, as per Annual Contracted quantity (ACQ) PUR. And no fault can be attributed to the petitioner, hence there were no dues payable to the Respondent SECL. (G) However, it is submitted that surprisingly enough the Respondent SECL, unjustifiably issued penalty bills for alleged short lifting for the years 2019-20 and 2020-21, after more than three years since the termination of the FSA, even though the less delivery of coal was due to failure on the part of Respondent SECL itself to make available requisite quantity of coal. These penalty demands, as communicated via letters, are baseless, unwarranted, and unacceptable and completely illegal and arbitrary, not showing any computation as per the formula given in 8 the FSA. It is further submitted that the Respondent SECL, failed to adhere to their contractual obligations during the FSA validity Despite an ACQ commitment, corresponding quantity of coal was not supplied through road mode, and the supplies fell below agreed ACQ for the year. Instead of addressing this default, the Respondent SECL unilaterally imposed penalties, contrary to the provisions of the FSA. It is submitted that, the FSA provides for penalties to be paid by the defaulting Party in the event of failure to lift or deliver, as the case may be, at least 75% of the annual contracted quantity. Here, though, the default lies with SECL in not meeting 75% of Level of Delivery (LD) as per clause 5.6.1 of the FSA, for the Years 2018-2019 & 2019-2020, the impugned penalty bills were arbitrarily raised by SECL against the petitioner alleging level of lifting (LL) to be below 75%. (H) He further submits that the penalty bills raised by Respondent No. 1 are arbitrary, without showing any computation as per the formula given in clause 5.6.2 for level of lifting in the FSA. The correct calculations show that it is the respondent, who is liable to pay penalty for short delivery and not the Petitioner. Thus, this petition. 3. On the other hand, learned respondents counsel oppose the submissions made by the learned counsel for the petitioner and submits that the writ petition as framed and filed is not maintainable as the disputed question of facts cannot be adjudicated in writ petition under Article 226 of the Constitution 9 of India. 4. We have learned counsel for the parties, perused the impugned order and other documents appended with writ petition. 5. It is settled law that the High Court should not exercise its jurisdiction under Article 226 of the Constitution of India when it raises disputed question of facts. 6. The Hon'ble Supreme Court in the case of Chairman, Grid Corpornation of Orissa Ltd. (GRIDCO) and others v. Sukamani Das (Smt.) and another, (1999) 7 SCC 298 was dealing with the question of whether the High Court had made an error in entertaining a writ petition filed seeking compensation for the death of a person due to electrocution, which had allegedly been caused due to the negligence of the authorities. The Supreme Court in the said case observed as under: "6. In our opinion, the High Court committed an
Decision
error in entertaining the writ petitions even though they were not fit cases for exercising power under Article 226 of the Constitution. The High Court went wrong in proceeding on the basis that as the deaths had taken place because of electrocution as a result of the deceased coming into contact with snapped live wires of the electric transmission lines of the appellants, that "admittedly/prima facie amounted to negligence on the part of the appellants". The High Court failed to appreciate that all these cases were actions in tort and negligence was required to be established firstly by 10 the claimants. The mere fact that the wire of the electric transmission line belonging to Appellant 1 had snapped and the deceased had come in contact with it and had died was not by itself sufficient for awarding compensation. It also required to be examined whether the wire had snapped as a result of any negligence of the appellants and under which circumstances the deceased had come in contact with the wire. In view of the specific defences raised by the appellants in each of these cases they deserved an opportunity to prove that proper care and precautions were taken in maintaining the transmission lines and yet the wires had snapped because of circumstances beyond their control or unauthorised intervention of third parties or that the deceased had not died in the manner stated by the petitioners. These questions could not have been decided properly on the basis of affidavits only. It is the settled legal position that where disputed questions of facts are involved a petition under Article 226 of the Constitution is not a proper remedy. The High Court has not and could not have held that the disputes in these cases were raised for the sake of raising them and that there was no substance therein. The High Court should have directed the writ petitioners to approach the civil court as it was done in OJC No. 5229 of 1995." (emphasis supplied) 11 7. The aforesaid judgment has been relied/ reiterated by the Supreme Court in S.P.S. Rathore v. State of Haryana and others, (2005) 10 SCC 1 wherein it observed as follows: "16. In Chairman, Grid Corpn. of Orissa Ltd. (Gridco) v. Sukamani Das [(1999) 7 SCC 298] the question which arose for consideration was, can the High Court under Article 226 of the Constitution award compensation for death caused due to electrocution on account of negligence, when the liability was emphatically denied on the ground that the death had not occurred as a result of negligence, but because of an act of God or of acts of some other persons. The Court held that it is the settled legal position that where disputed questions of facts are involved, a petition under Article 226 of the Constitution is not a proper remedy. Therefore, questions as to whether death occurred due to negligence or due to act of God or of some third person could not be decided properly on the basis of affidavits only, but should be decided by the civil court after appreciating the evidence adduced by the parties. In T.N. Electricity Board v. Sumathi [(2000) 4 SCC 543] it was held that when a disputed question of fact arises and there is clear denial of any tortious liability, remedy under Article 226 of the Constitution may not be proper. The Court carved out exception to this general rule by observing that, it should not be understood that in every case of tortious liability, recourse must be had to a suit. When there is negligence on the face of it and infringement of Article 21 is there, it cannot be said that there will be any bar to 12 proceed under Article 226 of the Constitution." (emphasis supplied) 8. Similarly, the Hon'ble Supreme Court in Shubhas Jain v. Rajeshwari Shivam, 2021 SCC OnLine SC 562 has held as under: "26. It is well settled that the High Court exercising its extraordinary writ jurisdiction under Article 226 of the Constitution of India, does not adjudicate hotly disputed questions of facts. It is not for the High Court to make a comparative assessment of conflicting technical reports and decide which one is acceptable." 9. Subsequently, in Union of India Vs. Puna Hinda, (2021) 10 SCC 690, the Hon'ble Supreme Court has observed: "24. Therefore, the dispute could not be raised by way of a writ petition on the disputed questions of fact. Though, the jurisdiction of the High Court is wide but in respect of pure contractual matters in the field of private law, having no statutory flavour, are better adjudicated upon by the forum agreed to by the parties. The dispute as to whether the amount is payable or not and/or how much amount is payable are disputed questions of facts. There is no admission on the part of the appellants to infer that the amount stands crystallised. Therefore, in the absence of any acceptance of joint survey report by the competent authority, no right would accrue to the writ petitioner only because measurements cannot be undertaken after passage of time. Maybe, the resurvey cannot take place but the measurement books of the work 13 executed from time to time would form a reasonable basis for assessing the amount due and payable to the writ petitioner, but such process could be undertaken only by the agreed forum i.e. arbitration and not by the writ court as it does not have the expertise in respect of measurements or construction of roads." 10. Recently, the Hon'ble Supreme Court in the case of M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (P) Ltd., (2023) 2 SCC 703, while dealing with the issue of exercise of writ jurisdiction by a Court in matters arising out of a contract, has stated: "82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit." (emphasis supplied) 11. A reading of the aforesaid judgments makes it clear that it is 14 well settled proposition of law that when there are disputed question of facts involved in a case, the High Court should not exercise its jurisdiction under Article 226 of the Constitution of India. It has been held that the remedy under Article 226 of the Constitution of India may not be proper. 12. From perusal of the pleadings, it appears that the petitioner has prayed for quashment of compensation of Bill(s) No. C083701819000483 and C083701920000484, both dated 19.08.2023, whereby amounts of Rs. 3,69,941/- and Rs. 46,89,056/-respectively and refunding the bank guarantee submitted by the petitioner as performance security Rs. 85,30,000/-. 13. In the instant case, the relief of issuance of direction to quash the compensation bills and to release the bank guarantee submitted by the petitioner, the petitioner is contingent upon the resolution of the disputed question of facts raised, and these questions cannot be adjudicated under Article 226 of the Constitution of India. In view of the aforesaid, it would not be appropriate for this Court to entertain the instant writ petition as there are disputed questions of fact involved. 14. Considering the submissions advanced by learned counsel for the parties, further considering the disputed questions of law involved in this writ petition, the relief sought by the petitioner and in view of law laid down by the Supreme Court in the 15 above-stated judgments (supra), we do not find any good ground to entertain this writ petition. 15. Accordingly, the writ petition being devoid of merit is liable to be and is hereby dismissed. However, liberty is reserved in favour of the petitioner to take recourse to other alternate remedies available to him under the law. No cost(s). Sd/- Sd/- SD/- SD/- (Bibhu Datta Guru) Judge (Ramesh Sinha) Chief Justice Jyoti