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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAYA KUMAR MISHRA, ANANDA SEN, JJ.
Gautam Coal Works Private Limited – Appellant
Versus
Central Coalfields Limited (CCL) –Respondent
W.P.(C) No. 2818 of 2022
Decided on : 21-12-2023
Physical Verification - Fuel Supply Agreement - Section 133(A) (2A) of the Income Tax Act 1961, Clause 4.4 of the FSA - The court held 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. The court also found that the impugned order of termination by the respondent-CCL was well reasoned and backed by analysis of documents, and therefore, declined to interfere with the order.
Fact of the Case:
The petitioner, engaged in manufacturing Special Smokeless Fuel, had its Fuel Supply Agreement terminated by the respondent-CCL due to alleged diversion of coal. The petitioner sought refund of the security deposit and challenged the termination.
Finding of the Court:
The court held 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. The court also found that the impugned order of termination by the respondent-CCL was well reasoned and backed by analysis of documents, and therefore, declined to interfere with the order.
Issues: The main issues were whether physical verification of the factory premises was mandatory under Clause 4.4 of the FSA and whether the impugned order of termination could be interfered with by invoking jurisdiction under Writ of Certiorari.
Ratio Decidendi: The court held 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. The court also emphasized the limited scope of certiorari jurisdiction and declined to interfere with the impugned order.
Final Decision: The writ petition was dismissed, and the impugned order of termination was not interfered with. The court declined to give direction for the refund of the security deposit.
JUDGMENT :
Ananda Sen, J.
In this writ petition, the petitioner has prayed for quashing the office order dated 28.5.2022 contained in reference No. CCL/HQ/C-4/2022-23/1142 (Annexure-19) whereby the respondent reiterated their decision to terminate the Fuel Supply Agreement dated 30.4.2008 and also to forfeit the security deposit. A further prayer has also been made to direct the respondents to not to treat the order of termination of agreement and order of forfeiture of security deposit as stigma upon the petitioner.
2. We have heard learned counsel appearing for the petitioner through Video Conferencing and learned counsel for the respondent-CCL, who was present in the Court. The learned lawyers had no objection with regard to the proceeding, which has been held through hybrid mode on 08.12.2023. They had no complaint in respect to the audio and video clarity and quality.
3. During course of argument, learned counsel for the petitioner submits that his client is only interested in refund of the security deposit, which has been illegality forfeited and his client does not seek revival of the Fuel Supply Agreement.
4. To consider whether petitioner is entitled for the refund of security deposit or not, we have to decide whether termination of the Fuel Supply Agreement is justified or not. If the termination is unjust, then only the petitioner is entitled for the relief.
FACTS OF THIS CASE.
5. The petitioner is in the business of manufacturing of Special Smokeless Fuel situated in the Industrial Unit at Tape, Ormanjhi, in the District of Ranchi. One of the raw materials of the petitioner is coal, which was supplied to the petitioner by Central Coal Fields Limited (hereinafter to be referred as CCL), a subsidiary of Coal India Limited. By virtue of agreement known as Fuel Supply Agreement (hereinafter to be referred as FSA), which was entered into between the parties pursuant to the Coal Distribution Policy of 2007 of Coal India Limited, which was framed in the light of judgment passed by the Hon'ble Supreme Court of India. A Survey under Section 133(A) (2A) of the Income Tax Act 1961 was conducted in the premises of the petitioner. During the said survey, it was alleged by the Income Tax Department that the petitioner-company only had a capacity to process 0.05% of the total quantity of coal, sold by CCL to the petitioner. A communication to that effect was also issued by the Income Tax Department. Pursuant to the aforesaid communication dated 31.10.2017, M/s CCL suspended supply of the coal to the petitioner on the ground of violation of the various clause of FSA. Be it noted that there is a clause in the agreement that Fuel, which is being supplied to the unit pursuant to the agreement, cannot be diverted. After supply of coal was suspended, the petitioner represented before the Income Tax Department, who clarified that they had not directed for stoppage of supply of coal and the same can be resumed, at the discretion of M/s CCL.
6. The petitioner thereafter represented before the CCL. CCL sought clarification from the Income Tax Department, but no clarification was provided. M/s CCL requested the General Manager, Directorate of Industries, Govt. of Jharkhand and sought clarification about the operational status of the petitioner unit. The General Manager informed, that the factory is in working condition. Supply of coal was resumed on 23.2.2018 but on 24.4.2018 in the 40th meeting of the Regional Economic Intelligence Council (REIC), it was resolved that the supply of coal to the Company using Form 27 be stopped and asked the members of Central Bureau of Investigation (CBI) and Enforcement of Directorate (ED) to investigate into the matter.
7. Vide letter dated 19.5.2018, the Income Tax Department, considering the aforesaid resolution of 40th meeting of REIC, directed M/s CCL to suspend the supply of coal to the petitioner. Consequently, the coal supply of the petitioner under the FSA was terminated. The petitioner challenged the afor
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