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IN THE HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR
NITIN W. SAMBRE, VRUSHALI V. JOSHI, JJ.
M/s Arunodaya Coal Agency, Through its Proprietor Koshor Sankhala – Petitioner
Versus
Western Coalfields Ltd., Through its Chairman and Managing Director (CMD), Coal Estate, Civil Lines, Nagpur and Ors. – Respondents
Writ Petition No. 5868 Of 2024
Decided On : 05-03-2025
(A) Micro, Small and Medium Enterprises Development Act, 2006 - Contractual obligations - Termination of contract for transportation of coal and forfeiture of security deposit due to alleged theft involving contractor's machinery - The petitioner, a small scale enterprise, challenged the termination of contract dated May 02, 2022, and debarment from future tenders for two years based on a police complaint regarding theft of coal. The court found that the petitioner failed to prevent theft and violated contract terms. (Paras 2, 4, 5, 24, 33)
(B) Principles of Natural Justice - The court held that the petitioner was given an opportunity to respond to the show cause notice and was heard before the impugned order was passed, thus upholding the procedural fairness. (Paras 10, 32)
(C) Contractual Terms - The court emphasized that the contractor is responsible for ensuring compliance with the terms of the contract, including preventing theft and using only registered vehicles. (Paras 12, 24)
Facts of the case:
The petitioner was awarded a contract for coal transportation but was accused of theft involving its machinery. A police complaint led to the termination of the contract and forfeiture of the security deposit.
Findings of Court:
The court upheld the termination of the contract, stating the petitioner failed to prevent theft and violated contract terms.
Issues: The main issues included whether the petitioner was involved in the theft and whether the termination was justified.
Ratio Decidendi: The court ruled that the petitioner’s machinery was involved in the theft, and the failure to comply with contract terms justified the termination.
Result: Writ petition dismissed.
JUDGMENT :
(PER : NITIN W. SAMBRE , J.)
RULE. Rule made returnable forthwith and the writ petition is heard finally with consent of the learned counsel for the parties.
2. The petitioner has questioned the impugned decision dated September 26, 2024 whereby the contract dated May 02, 2022 for transportation of coal so also for removal of overburden came to be terminated. The petitioner is also debarred from participating in the future tenders of the Western Coalfields Limited in individual capacity or as partner in partnership firm or Joint Venture for a period of two years from the date of issuance of the impugned order as per the terms and conditions of the contract. The petitioner’s security deposit, performance guarantee and additional performance security at the disposal of the respondents also came to be forfeited.
3. The facts necessary for deciding the writ petition are as under:-
The petitioner is a proprietary concern, claiming to be registered as a small scale enterprise under the Micro, Small, Medium Enterprise Act on on October 09, 2023. The respondent-Western Coalfields Limited, is a company registered under the Indian Companies Act, 1956 entered into an agreement/contract for execution of job viz. Removal of all type of materials (Hard OB) in all kinds of strata by hiring of equipments, removal of all type of materials (BC soil/Soft OB), removal of all type of materials (OB Rehandling), evacuation of coal from quarry face and transportation to surface by hiring of equipments as per instruction of Engineer-in-charge at Amalgamated Yekona-I and II OCM (Yekona-I Quarry) of Majri area for an approximate amount of Rs.103 Crores.
4. It is claimed that by this time the petitioner has excavated more than 40% of the allotted work. On March 10, 2024, the staff from the security squad of the respondents lodged a police complaint which has resulted into registration of Crime No.225 of 2024 for an offence punishable under Sections 379, 511 of the Indian Penal Code based on an incident of theft. In the said First Information Report, it is alleged that during the patrolling on March 10, 2024 at about 3.00 a.m. in Yekona mine, a Hyva truck and a poclain machine were found to be used for commission of an offence of theft of coal. A truck bearing registration No.MH-40-CD-6911 and the said poclain were noticed at the spot. It was noticed that instead of stocking the coal at the designated place earmarked by the respondents, the coal extracted from the mine was dumped at the dumping yard. The poclain machine was used for loading the coal from the dumping yard on the said Hyva truck which was not registered with the respondents in matter of contract in question. During investigation, the coal stock of capacity of two Hyva trucks was noticed at the dumping yard and the poclain machine was used for loading the said stolen coal. It is also narrated in the First Information Report that the moment the security personnel including the complainant reached the spot, the poclain machine operator as well as driver of the Hyva truck ran away and around forty tonne of stolen coal was detected.
Subsequent thereto, on March 12, 2024 the respondents advised the petitioner to remove its representative Ankit Yaduvanshi from the work site within three hours as he has failed to avoid the aforesaid criminal incident of theft of coal. The petitioner thereafter removed its said employee from the site and also caused an enquiry.
5. On March 18, 2024 the show cause notice based on the aforesaid incident of theft came to be issued to the petitioner, calling upon him as to why the contract awarded to him on May 02, 2022 shall not be terminated, as to why the petitioner shall not be debarred from participating in future tenders of Western Coalfields Limited in individual capacity, as partner in partnership firm or as a member of the Joint Venture for a period of two years and as to why the security deposit shall not be forfeited or 20% of the value of the incomplete w
The contractor is responsible for preventing theft and complying with contract terms; failure to do so justifies termination of the contract.
The obligation of the state to act fairly and reasonably in contractual disputes, and the importance of respecting the specific terms of a contract.
The power of judicial review is not normally exercised in contractual obligations, and parties may be relegated to adjudication of their rights by resorting to remedies provided for adjudication of p....
Corporation must evolve a mechanism for testing of veracity and validity of order passed by lowest or lower authority/officer by higher authority/officer with adherence of norms of Natural Justice.
The judgment establishes that the exercise of unfettered discretion by the Authorities, without complying with the Principles of Natural Justice, renders their decision illegal and subject to judicia....
Justification for issuing the impugned order cannot be permitted to be raised in the counter affidavit.
The court emphasized the necessity for timely action regarding seized property and the obligation of the learned C.J.M. to follow statutory provisions for disposal post-trial.
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