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2006 Supreme(Cal) 98
High Court Of Calcutta
V. S. Sirpurkar, Arun Kumar Mitra
COAL INDIA LTD. - Appellant
Versus
INDIAN EXPLOSIVE LTD. - Respondent
W. P. 1924 Of 2005
Decided On : 02/21/2006
K.MOUDAL, P.C.Sen, P.K.MALLICK, P.P.BANERJI, PRANAB KUMAR DUTTA, RAJESH UPADHYA, S.Ghosh, S.S.RAY
Headnote:
CONTRACT - Non-statutory Contract - Introduction of Supplementary Clause - Public Law Element - Arbitrariness - Unreasonableness - Maintainability of Writ Petition - Tenability of Writ Appeals - Jurisdiction of Court.
Fact of the Case:
Coal India, a state-owned company, entered into contracts with explosive companies for the supply of explosives for coal mining. A supplementary clause was added to the contracts, which the explosive companies challenged as an arbitrary and unreasonable exercise of power by Coal India. The explosive companies filed writ petitions, which were allowed by the single judge, granting an injunction against Coal India from incorporating the supplementary clause.
Finding of the Court:
1. The contract between Coal India and the explosive companies was a non-statutory contract of a purely private nature. 2. There was no public law element involved in the matter, and the controversy was purely between the two parties to the contract. 3. The unilateral introduction of a clause, claimed to be of a clarificatory nature and not a variation in the contract, could not by itself become an unreasonable, unfair, and arbitrary exercise of power. 4. The question of whether Coal India could introduce a supplementary clause depended on the correct interpretation of the original clause and the supplementary clause, which required evidence and could not be attempted in a writ petition. 5. The writ petitions should not have been entertained as they involved disputed questions of fact that could only be resolved by leading evidence.
Issues: 1. Whether the introduction of a supplementary clause to a non-statutory contract by Coal India, a state-owned company, amounted to an arbitrary and unreasonable exercise of power. 2. Whether the writ petitions filed by the explosive companies were maintainable, considering the nature of the contract and the absence of a public law element. 3. Whether the writ appeals filed by Coal India were tenable, given that the single judge had not decided any rights between the parties.
Ratio Decidendi: 1. The introduction of a supplementary clause to a non-statutory contract, in the absence of a public law element, did not constitute an arbitrary or unreasonable exercise of power. 2. Writ petitions are not maintainable for resolving disputes arising from non-statutory contracts between the state and private individuals, unless such actions have a public law character or violate Article 14 of the Constitution. 3. Writ appeals are maintainable even if the single judge has not decided any rights between the parties, as the question of jurisdiction in entertaining the writ petitions can always be argued in an appeal.
Final Decision: The writ appeals filed by Coal India were allowed. The interim orders passed by the single judge were set aside, and the writ petitions were directed to be dismissed.
( 1 ) THE judgment will dispose of the following four appeals, they being APOT No. 646 of 2005, APOT No. 647 of 2005, APOT No. 648 of 2005 and APOT No. 649 of 2005. The questions of law and the issues involved in these appeals are almost identical. All the above appeals are filed by Coal India Limited, which is a company registered under the Companies act, 1956 and being the Government company, is a State. In all these appeals, the interim orders passed by the learned Single Judge of this Court in writ petitions filed by the respondent explosive companies are impugned. By that order, the learned Single Judge has issued an injunction restraining the Coal india from incorporating a supplementary clause in the principal contract. The following factual matrix would be necessary to appreciate the" controversies and the issues involved.
( 2 ) APPELLANT Coal India Limited owns and operates coal mines. All the coal mines were nationalized by Coal Mines Nationalization Act and that is how, the private ownership of the coal mines was brought to an end. Blasting is a necessary operation for excavating coal from the mines and for that Coal India needs explosives from the manufacturers. The respondent explosive companies in all the four appeals are the manufacturers of the explosives. Coal India procures the explosives through a process of floating tender whereby offers are invited from the various manufacturers of explosives. One such tender notice was floated on 11th January. 2005 inviting offers for supply of bulk loading explosives, cartidge explosives and initiating accessories to the various units of Coal India for the period of 2005-2006. The respondent explosive companies took part in the tender process individually and all the respondent explosive companies were the successful tenderers. Negotiations took place in respect of the price offered by these respondent explosive companies and ultimately formal contract was entered into by and between the appellant Coal India on one hand and the respondent explosive companies of the other. For the sake of convenience, we shall be referring to the facts from APOT No. 646 of 2005 wherein the respondent No. 1, Indian Explosive Ltd. is involved. It seems that formal contracts were entered into and on the basis of the same, the supplies of the bulk explosives began and the explosive companies also raised the bills. Even some part payment of the bills were made by the Coal India. A communication dated 5. 8. 2005 was addressed by Coal India. By this communication, the Chief General Manager of Coal India intimated that one supplementary clause was incorporated to clause XV (Performance Clause) of the subject contract. The proposed supplementary clause was as under :"the weighted average powder Factor, separately for Coal and OB for 10 (ten) years commencing from 2004-05 to 1995-96 and that of 2004-05 shall be worked out mine-wise. The higher of weighted average Powder Factor for 10 (ten) years (from 2004-05 to 1995-96) and that of 2004-05 shall be hereinafter referred to as the minimum yield. The mine-wise achievement of Powder Factor should not be less than the minimum yield referred to above. For every 1% (one per cent) or part thereof decrease in Powder Factor of Coal/ob compared to the minimum yield as above, commensurate deduction of the cost of explosives and accessories shall be made. Such computation for deduction shall be made on monthly basis. "it was also informed that the said supplementary clause would have the retrospective effect from 01. 03. 2005.
( 3 ) CLAUSE XV to which the aforementioned clause was to be added as a supplementary clause is to be found in the running contract which was accepted by the letter of Coal India dated 18. 05. 2005. By that letter the offers of the explosive companies were accepted and the terms of the running contract for supply of bulk loading explosives were set out. In the said letter, the following are mentioned as the refere
