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2023 Supreme(Mad) 697
HIGH COURT OF JUDICATURE AT MADRAS
S.M. SUBRAMANIAM, J.
M/s. Ultra Tech Cement Ltd., Reddipalayam Cement Works (Previously Known as Samruddhi Cement Ltd., & Prior to that as Grasim Industries Ltd.,) Represented by its Senior Vice President (F&C), Perambalur - Appellant
Versus
The Tamil Nadu Electricity Board, Rep. by its Chairman, Chennai & Others - Respondents
W.P. No. 25917 of 2010 & M.P. Nos. 2 & 3 of 2010
Decided On : 21-03-2023
For the Petitioner:Rahul Balaji, Advocate. For the Respondents:R1 & R2, No Appearance, R3, K. Arun Prasad, Advocate.
Disputed contractual obligations should be resolved in a civil court, and the principles of natural justice may not always apply to contractual obligations.
Headnote:
Memorandum of Understanding - Dispute on Penalty for Short Collection of Fly Ash - Clause 5 of the MOU - [Article 226] - [Memorandum of Understanding] - [Clause 5]
Fact of the Case:
The petitioner, a cement manufacturer, entered into a Memorandum of Understanding (MOU) with the respondent TANGEDCO for the collection of fly ash. The respondent issued demand notices and imposed penalties for alleged short collection of fly ash, which the petitioner disputed.
Finding of the Court:
The court held that disputed facts regarding the penalty and short collection of fly ash cannot be adjudicated in a writ proceeding. It emphasized that contractual disputes should be resolved in a civil court, and the principles of natural justice may not always apply to contractual obligations.
Issues: The main issue was whether the disputed penalty and short collection of fly ash could be adjudicated in a writ proceeding, and whether the principles of natural justice applied to contractual obligations.
Ratio Decidendi: The court ruled that disputed contractual obligations should be resolved in a civil court, and the principles of natural justice may not always apply. It emphasized that disputed facts in a contractual dispute require an elaborate examination of records and evidences, which is not suitable for a writ proceeding.
Final Decision: The writ petition was dismissed, and the petitioner was advised to approach the competent civil court for resolution of the contractual disputes.
JUDGMENT
(Prayer: Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorarified Mandamus, calling for the entire records of the 3rd respondent in Lr.No.CE/SE/M.II/EE/O&AHS/MTPS-I/F shortcolle / D.No.957/10 dated 20.10.2010 being the consolidated order levying a penalty of Rs.34,77,608/- for the alleged short collection of fly ash for the period between April 2008 and August 2010 as also the prior demand Lr.No.CE/SE/M.II/EE/O&AHS/MTPS/F.Shortcolle/D.No.669/09 dated 05.08.2009 for April 2008 to July 2009, Lr. No. CE/SE/M. II/EE /O&AHS /MTPS /F.Short Colle/D.No. 839/09 dated 29.09.2009 for August 2009, Lr. No. CE/SE/M.II/EE /O&AHS/MTPS /F.ShortColle /D.No.780/10 dated 23.08.2010 for July 2010 and Lr. No. CE/SE/M. II/EE/O&AHS /MTPS /F.ShortColle/D.No.874/10 dated 23.09.2010 for August 2010 all of which were confirmed and formed part of the final impugned demand dated 20.10.2010 of the 3rd respondent and quash the same as illegal and arbitrary and consequently direct the 1st respondent to issue appropriate instructions to the 3rd respondent to strictly comply with the terms of the agreement between parties and not a levy and penalty for short collection.)
1. The demand notice issued by the respondent / TANGEDCO invoking the terms and conditions of Memorandum of Understanding executed at Headquarters / TNEB with the petitioner company and the TANGEDCO is under challenge in the present writ petition.
2. The petitioner is a company and the manufacturer of cement. The petitioner states that they produce cement of high quality and manufacture of cement involves several raw materials including gypsum and fly ash. In this regard, admittedly, the contract was signed between the petitioner company and the respondent TANGEDCO. Based on the Memorandum of Understanding between the parties, the petitioner has to install, erect and maintain collection system and storage of fly ash with its cost at MTPS and thereafter to collect fly ash for a period of nine years from the date of commissioning of the system.
3. In pursuance of the said MOU, which has a validity period of 9 years from the date of commissioning, the petitioner has been diligently carrying out its obligations in collecting the fly ash. While so, the 3rd respondent issued impugned communications dated 05.08.2009, 23.08.2010 and 23.09.2010 stating that the alleged percentage of collection of fly ash is lesser than the stipulated 100% in terms of the MOU and thereby levying a penalty for the said period.
4. The petitioner submitted representations specifically pointed out that the reasons for alleged non-collection of the possible quantities was because of the ESP installed by the respondent / Board were ineffective that some of them are not functioning and due to such reasons. However, the 3rd respondent without rectifying their instruments and the representations submitted by the petitioner issued impugned communications and imposed penalty, which was subsequently confirmed by the impugned order dated 20.10.2010.
5. The petitioner further states that the method in which the original quantity that would become available in not known. It appears from the various communications that the petitioner received from the respondent, that the respondent board is merely following theoretical formulae for determining the total ash that ought to be generated and collected.
6. The learned counsel for the petitioner is of an opinion that the respondent Board''s calculations for short collection are based on the amount of fly ash collected. But the same has been done without actual weighments in as much as weigh bridge was installed in the 3rd respondent thermal station only in April 2010. Therefore, the very basis for determining the penalty and the calculations are not reliable and the impugned communications was issued based on the unilateral decision taken by the respondent / Board.
7. In support of the said contention, the learned counsel for the petitioner
