2020 Supreme(Del) 482

IN THE HIGH COURT OF DELHI AT NEW DELHI
Suresh Kumar Kait, J.
Indrajit Power Private Limited - Petitioner
Versus
Union of India & Ors. - Respondents
W.P.(C) 2957 of 2020 & Cm Nos.10268-70 of 2020 (Urgent)
Decided On : 28-04-2020

Headnote:

COAL MINES - SPECIAL PROVISIONS ACT - APPROPRIATION OF BANK GUARANTEE - [KEYWORD] - The instant writ petition under Article 226/227 of the Constitution of India has been filed praying for issuance of a writ of Certiorari for quashing the email dated 04.04.2020 received by the petitioner company on 06.04.2020 whereby the respondent no.1 has passed a decision to appropriate the Bank Guarantee No. 0018215IPG000019 dated 13.04.2015. Consequently, a writ of Mandamus for direction to the respondent no.1 to refrain from appropriating the Bank Guarantee dated 13.04.2015. Further, a writ of Mandamus directing the respondent no.5 to renew the Bank Guarantee dated 13.04.2015 which is due to expire on 12.04.2020 and a writ of Mandamus for direction to the respondent no.1 to grant extension to time to complete the pending 17% milestones to make the mine operational at Nerad Malegaon Coal Mine, Maharashtra.

Fact of the Case:

Petitioner is a company incorporated on 20.09.1994 which was formed to generate thermal and green power. At present, petitioner has a 80 MW coal based thermal power plant based at Wardha, Maharashtra. Respondent no.1 is the Union of India. The respondent no.2 is the nominated authority, Ministry of Coal, represented through Secretary, that regulates and deals with availability of coal to meet the demand of various sectors of the economy in an eco-friendly, sustainable and cost effective manner. Respondent no.1 also regulates the Coal Mines in the territory of India. The respondent no.3 is the Scrutiny Committee set up by the Ministry of Coal. The respondent no.4 is the office of the Coal Controller i.e. subordinate office of the respondent no.1. The respondent no.5 is Allahabad Bank which issued the Bank Guarantee on behalf of the petitioner company. On 21.10.2014, respondent no.1 introduced the Coal Mines (Special) Provisions Ordinance, which provided for allocation of Coal Mines and vesting right, title and interest in and over the land mine infrastructure together with mining leases to successful bidders and allottees with a view of ensure continuity in coal mining operations and production of coal, and for promoting optimum utilisation of coal resources consistent with the requirement of the country in national interest and for matters connected therewith or incidental thereto. It was vide this Ordinance, permission for commercial mining had been permitted in India and therefore, the bids were to be invited for re allotment of the mines, after the cancellation of coal blocks by the Hon’ble Supreme Court of India vide its judgment dated 25.08.2014 in Manohar Lal Sharma vs. Principal Secretary: (2014) 9 SCC 516. On 02.03.2015, the petitioner became the technically qualified bidder, alongwith 4 other bidders, and on 13.03.2015, the petitioner was declared as a successful bidder of the electronic auction conducted by the respondent no. 1 for Nerad Malegaon Coal Mine. Thereafter, a Coal Mine Development and Production Agreement ("CMDPA") dated 16.03.2015 was entered into by the petitioner and respondent no.1. On 03.03.2015, the Coal Mine (Special Provisions) Act, 2015 was notified. The CMDPA, laid down the post vesting obligations under Clause 5, which is being reproduced as under:-

Finding of the Court:

The petitioner failed to comply with the Efficiency Parameters, therefore, the Nominated Authority was constrained to issue 1st Show Cause Notice 24.07.2018 for non-compliance with the timelines of various Milestones listed in Schedule E of CMDPA in respect of Nerad Malegaon Coal mine, as detailed below: Sl No Milestones Time Limit from Zero Date (in months) Due date of Completion Date of Completion (only in Date format) Weightage assigned for the appropriation of Performance Security 1 Land Acquisition (to reach rated capacity) 36 22.04.2018 Still Pending 5% 2 Opening of Escrow Account 37 22.05.2018 Still Pending 8% 3 Application of Opening Permission 37 22.05.2018 Still Pending 2% 4 Grant of Opening Permission 38 22.06.2018 Still Pending 2% The petitioner replied to the above said show cause vide reply dated 02.08.2016 stating that the delay in meeting parameters was beyond its control and requested to withdraw the show cause and grant an extension of 12 months w.e.f. 21.06.2018 to commence the Mine Operation. However, petitioner’s said request was accepted. As the petitioner continued to be in the breach of Efficiency Parameters despite lapse of more than a year, the Nominated Authority issued 2nd Show cause dt. 26.07.2019. The petitioner replied to the show cause vide letter dated 05.08.2019 and again sought an extension of 12 months. Accordingly, a Scrutiny Committee under the Chairmanship of Ex- Chairman, Coal India Limited comprising of Officers from the Nominated Authority/Ministry of Coal has been constituted to consider/examine the submissions/replies made by the Successful Bidders/ Parameter as mentioned in the Coal Mine Development and Production Agreement. The reply to the said Show Cause Notice(s) submitted by the various Allocates including the petitioner were placed before the Scrutiny Committee Meeting held on 05.02.2020 & 06.02.2020. The petitioner was also given the opportunity to present its case before the Committee and was represented through its E.D., V.P. & Manager on 06.02.2020. After due deliberations of the submissions in respect of the said coal mine, the observation of the Committee for non compliance with the Milestones in respect of Nerad Malegaon is as follows:- S. No Show Cause Reason Observation of the Committee 1. Land Acquisition (to reach rated capacity) Allocattee stated that partial acquisition of land has been done and 75 Hectare land is yet to be acquired and mine working is to start from this left out land. Allocattee also mentioned that one of its partner company having 36% shareholding is under NCLT. Committee member are not satisfied with the reply given by the Allocattee and find lack of seriousness of effort of Allocatee and observes that due penalty should be imposed on them.  2. Opening of Escrow Account 3. Application for grant of opening permission Committee members are not satisfied with the reply given by the Allocattee and is of the view that serious effort has not been done by the Allocattee and observes that due penalty should be imposed on them.

Issues: None

Ratio Decidendi: The law relating to invocation of bank guarantees is well settled and the same cannot be interdicted on account of any contractual disputes. It is an admitted case that the petitioner has not achieved the efficiency norms. The only question to be examined is whether the petitioner’s failure to do so is for justifiable reasons beyond the control of the petitioner.

Final Decision: Accordingly, the writ petition is dismissed with no order as to costs.