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IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Arup Kumar Goswami, Parth Prateem Sahu, JJ.
Prakash Industries Limited Through Its Assistant Vice President (Corporate Affairs) Shri Arun Kumar Singh, S/o Late Shri Shiv Dayal Singh - Appellant
Versus
South Eastern Coalfields Limited Through Its Chairman - Cum Managing Director - Respondents
WA No. 310 of 2022
Decided On : 10-08-2022
Coal Supply - Fuel Supply Agreements - Companies Act, 1956 - Clause 17.3, Clauses 8.2.2, 8.2.3, and 8.2.4 - Scheme for coal supply - Appellant's entitlement to lift coal under the Scheme - Termination of FSAs - Accrued rights and obligations - Optional nature of the Scheme
Fact of the Case:
The appellant, a company registered under the Companies Act, 1956, entered into three Fuel Supply Agreements (FSAs) for a period of five years with a locking period of two years. The appellant submitted notice of termination for all three FSAs. The respondents terminated the FSAs with effect from 30.09.2020. The appellant sought to lift coal for the period April – June, 2020, under the Scheme circulated by Coal India Limited, but the respondents rejected the request.
Finding of the Court:
The court found that the appellant did not have an accrued right to book and lift the coal for the period April – June, 2020, as it did not exercise the option to avail the benefit during the period when the FSAs were in force. The Scheme was optional in nature and applicable only to willing consumers. The court dismissed the writ appeal.
Issues: The main issue was whether the appellant had an accrued right to lift coal under the Scheme during the validity of the FSAs.
Ratio Decidendi: The court held that the appellant did not have an accrued right to book and lift the coal for the period April – June, 2020, as it did not exercise the option to avail the benefit during the period when the FSAs were in force. The Scheme was optional in nature and applicable only to willing consumers.
Final Decision: The writ appeal was dismissed with no cost.
JUDGMENT :
Arup Kumar Goswami, J.
1. Heard Mr. Shashank Thakur, learned counsel for the appellant. Also heard Mr. Vaibhav Shukla, learned counsel, appearing for the respondents.
2. This appeal is presented against an order dated 29.03.2022 passed by the learned Single Judge in Writ Petition (C) No.1811 of 2021, dismissing the writ petition.
3. The appellant is a Company registered under the Companies Act, 1956. For supply of Grade G6 category coal, the appellant had entered into three Fuel Supply Agreements (‘FSA’) being No. FSA No.A-276, executed on 08.08.2017, FSA No. A-368, executed on 29.12.2017 and FSA No. A-370, executed on 29.12.2017. As per Clause 2.2 of the FSAs, the agreements were for a period of five years Under Clause 17.1, there is a locking period of two years. Notice of 90 days for termination could be given as per Clause 17.2. The appellant submitted notice of termination in respect of all the three FSAs on 01.07.2020. Pursuant to the decision of 232nd Functional Directors meeting held on 27.06.2020 on dispensation of Non-power sector consumers to re-validate shortfall quantity and lift coal to the extent of Annual Contracted Quantity (for short, ACQ) under FSAs, a letter dated 03.07.2020, containing a ‘Scheme’, was issued by the Coal India Limited to all the coal companies including the South Eastern Coalfields Limited, the respondent No. 1 herein. The same was notified on 09.07.2020.
4. At this juncture, it will be appropriate to extract the relevant portion of the Scheme:
2. The willing consumers has to submit an undertaking stating that the coal taken under this relaxation shall be utilized against requirement of their EUP and they shall not procure the coal to the extent of such shortfall quantity through import during current FY.
3. The above dispensation of carry over of unlifted/unbooked quantity in a particular month shall be allowed for the entire FY subject to availability of coal at the coal company and within the ceiling of ACQ.
4. The same dispensation may also be extended for the willing non power FSA consumers other than NRS Linkage auction also to the extent of their ACQ irrespective of Import component under FSA. However, the same shall be allowed subject to fulfillment of all commercial obligation including performance security as per FSA provision.
5. The above dispensation shall be optional in nature. It was decided that the above “relaxations shall be given upto March’ 2021 without affecting the committed supply”. Coal companies are requested to take needful action for implementing the above.”
5. By an order dated 07.09.2020, the respondents, in terms of Clauses 17.1 and 17.2, terminated all the three FSAs with effect from 30.09.2020.
6. The appellant had submitted applications on 22.12.2020 to lift coal for the period April – June, 2020 in respect of FSA No.A-276 and FSA No. A-368 and had made necessary payment. However, as no decision was taken by the respondents, the appellant preferred a writ petition, registered as Writ Petition (C) No.1363 of 2021, which was disposed of by an order dated 08.03.2021, directing the respondents to consider the representation submitted by the appellant and to decide the same within a period of three weeks.
7. Subsequently, by an order dated 19.03.2021, the respondents rejected the representation and it is in that circumstance, the appellant had preferred the present writ petition, out of which this appeal arises.
8. The appellant had made the following prayers in the writ petition :
The main legal point established in the judgment is that the appellant did not have an accrued right to lift coal under the Scheme as it did not exercise the option to avail the benefit during the pe....
The respondent-CCL must satisfy itself regarding the authenticity of the end use of coal by calling for/inspecting the documents and by physical verification as per Clause 4.4 of the FSA. The princip....
Retrospective termination of Fuel Supply Agreements is lawful under the Indian Contract Act, provided it follows the terms of the agreement, and contractual disputes are generally not suitable for wr....
Parties must comply with court orders regarding coal supply agreements, with confirmed entitlements based on established judicial mandates rather than disputed interpretations.
Approval by the Ministry of Coal for modification and change in coal distribution policy influenced the court's decision to direct the return of the bank guarantee amount to the petitioner.
The demand for compensation for short lifting of coal was impermissible as no loss was incurred by the respondent. The court restrained the respondent from encashing the bank guarantee, as it would r....
The main legal point established in the judgment is that physical verification of the factory premises is not mandatory under Clause 4.4 of the FSA to conclude whether the coal is being diverted.
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