Writ Petition Nos. 2995 to 2996 of 2016 and Writ Petition Nos. 2997 to 2998 of 2016 are taken up for consideration together as similar questions of facts and law are involved in both the matters.

2. By filing these writ petitions, the writ petitioners challenge the adverse decisions against them by the Karnataka Power Corporation Limited (‘KPCL’ in short) concerning procurement of coal for the thermal power projects of KPCL in the State of Karnataka.

3. The facts relevant for consideration for deciding these writ petitions are summarised as under:

(a) KPCL was allotted certain coal mines by the Union of India for the captive consumption of coal in its thermal power projects in the State of Karnataka.

(b) By virtue of a tender process in the year 2002, KPCL selected EMTA Coal Limited (‘EMTA’ in short) for formation of joint venture for the development of the captive mines and, also, for supply of coal from the said captive mines to its thermal power projects in the State.

(c) On September 13, 2002, a joint venture agreement was executed by and between KPCL and EMTA, with a special purpose of mining of coal from the coal mines. Thus, Karnataka EMTA Coal Mines Limited (‘KEMTA’ in short) was formed.

(d) Subsequent to the allotment of the captive coal blocks to KPCL in the year 2003 and upon obtaining various clearances, a fuel supply agreement was executed by and between KPCL and KEMTA on May 9, 2007.

(e) The purpose of entering into such fuel supply agreement was for supply and delivery of coal from the captive coal blocks to the thermal power stations of KPCL in the State.

(f) On the said May 9, 2007, yet another agreement was executed between EMTA and KEMTA to implement the provisions of the joint venture agreement dated September 13, 2002, as aforesaid.

(g) Consequently, a tripartite relationship was established between KPCL, EMTA and KEMTA, inter-alia, for development of captive coal blocks and for supply of coal to KPCL exclusively for the consumption by its thermal power stations in the State of Karnataka.

(h) EMTA in furtherance to such contracts executed multiple bank guarantees covering various sums of money to guarantee the obligation of EMTA and KEMTA in terms of the aforesaid tripartite agreement.

(i) All the parties to the tripartite agreement substantially and successfully performed their obligations under the various contracts leading to supply of coal to KPCL from the captive coal blocks.

(j) From the records it does not appear to us that ever any dispute cropped up between the parties until Comptroller and Auditor General of India (‘CAG’ in short) submitted a report for the year ending March, 2013.

(k) CAG observed in the said report that the total production of coal from one of the open cast mines between 2008-09 and June, 2012 was 82.78 lakh metric tones (‘MTS’ in short). It was, further, observed that a minimum quantity of coal rejects ought to be 10% per centum of the total production amounting to 8.28 lakh MTS.

(l) The quantification was arrived by the CAG relying upon the memorandum of understanding executed between KEMTA and Gupta Coalfields and Washeries Limited. The said washery provided the service of washing coal extracted from the mines.

(m) CAG noticed that the memorandum of understanding contained a stipulation that there could be rejection up to 10% per centum of the total coal washed and on that basis CAG arrived at a quantification of 8.28 lakh MTS. CAG valued it at Rs. 52,37,00,000/- (Rupees fifty two crore thirty seven lakh) only.

(n) Against the report of the CAG, KPCL submitted its audit objections on December 17, 2013. In the said objections dated December 17, 2013, KPCL asserted that the valuation of the rejects was erroneous. It was specifically contended that the assessment of washery rejects did not have any co-relation with the quantity of coal produced at the open cast mines. KPCL maintained that the rejects ought to have been assessed based on the quantity of coal sent to the washery from the