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 writ jurisdiction.

Order :

(Ramesh Sinha, CJ.)

Heard Mr. Ankit Singhal, learned counsel for the petitioner. Also heard Ms. Astha Shukla, learned counsel appearing on behalf of respondents No.1 to 6 as well as Mr. Ramakant Mishra, learned Deputy Solicitor General, appearing on behalf of respondent No.7.

2. By way of this writ petition, the petitioner has prayed for following reliefs:

“10.1 Issue a writ of certiorari to quash and set aside the impugned order dated 13.10.2023 (Annexure P-1) passed by Respondent No. 1, which rejected the Petitioner's representations concerning the (refund of bank guarantees, advance payments, the illegal retrospective termination of the Fuel Supply Agreements (FSAs), and related matters.

10.2 Issue a writ of mandamus or certiorari, or any other writ, order or direction of like nature and direct the respondents to complete the financial reconciliation proceedings entered into with the petitioner, in terms of their undertaking provided on 13.07.2022, and thus inclusive of the dispute raised by the petitioner vide its letter dated 15.12.2021; and direct the respondents not to impose any penalties on petitioner on account of seller' fault.

10.3 Issue a writ of mandamus or certiorari, or any other writ, order or direction of like nature and direct the respondents to refund the subject bank guarantees deposited by the Petitioner and the advance payments made by the Petitioner in accordance with the terms of the FSAs, without any further delay.

10.4 Any other relief or relief(s) which this Hon'ble Court may deem fit and proper in view of the facts and circumstances of the case may also kindly be granted.

10.5 Cost of the petition.”

3. Brief facts of the case, are that, the petitioner is a Company registered under Companies Act, having its registered office at PachPahar Road, Bhawani Mandi, Rajasthan and engaged in manufacturing of textiles and to meet the power requirements for running its industry, the petitioner set up a 12 MW Captive Power Plant (for short, ‘CPP’) in their premises as well as for running of the Plant, the petitioner had obtained coal linkage for procuring coal from respondent No.1, i.e. South Eastern Coalfields Limited (a subsidiary of Coal India Limited) (for short, ‘SECL’) through Linkage and under the linkage system of supply of coal, the respondents considering the nature of the consumption and requirement of coal, used to grant coal linkage to the concerned unit. Accordingly, the Petitioner was also granted coal linkage and the required coal was being supplied on demand in intervals of 3-4 months. Subsequently, the respondents initiated e-auctioning of coal in the year 2017 and the petitioner entered into and executed two separate Fuel Supply Agreement (for short, ‘FSA’) with the respondents for supply of coal bearing FSA No. A-328 dated 21.11.2017 for 17,000 MT coal and FSA No.A-1025 dated 08.03.2019 for 9,200 MT coal. The period of each agreement was 5 years. After introduction of e-auction system, the petitioner executed the Fuel Supply Agreement for getting supply of coal from the respondents and since there are no alternative sellers of coal available, the petitioner was constrained to accept the terms and conditions fixed by the SECL. As per Clause 12.2.1 of the FSA, the petitioner had to furnish bank guarantee against financial coverage. The amount of bank guarantee is equivalent to estimated coal value of one rack/MSQ and accordingly, the petitioner submitted the following bank guarantee to the respondents by way of financial coverage. In terms of Clause 7.1.1 of the FSA, the petitioner has also submitted Performance security by way of bank guarantee, which was equivalent to 6% of the notified price of the Allocated Coal Quantity (for short, ‘ACQ’). The petitioner petitioner had applied for allotment of coal and paid for the same in advance and respondents received as well as approved the application and allotted the coal to the petitioner. However, allotted coal was not supplied to the petitioner i