The obligation of the state to act fairly and reasonably in contractual disputes, and the importance of respecting the specific terms of a contract.

ORDER PURUSHAINDRA KUMAR KAURAV, J. : – The instant writ petition has been filed by the petitioners seeking issuance of a writ of certiorari to quash the impugned order dated 19-5-2005 (Annexure-P-6) (wrongly mentioned in the prayer clause as Annexure-P-5). The petitioners have further prayed for directions to refund the security amount and deductions carried by the respondents from the running bill of the petitioners together with interest @ 24% p.a. till the date of its payment.

2. Short facts of the case are that the petitioner No. 1 is a Private Limited Company duly incorporated under the provisions of the Companies Act, 1956. The petitioner No. 1 is involved in the business of transportation of coal. Petitioner No. 2 is the Director of petitioner No. 1. The respondents invited tender from reputed and experienced transport contractors for the work of transportation of coal from Satpura II Mines of M/s WCL to Satpura Thermal Power Station, Madhya Pradesh Electricity Board, Sarni, by road through the contractors own tippers/dumpers and uploading it at Courtyard of the power station for a period of one year. In pursuance to the Notice Inviting Tender (hereinafter referred to as ‘NIT’ for short), the offer of the petitioners was found to be acceptable and, accordingly, award of contract for transportation of coal was issued in favour of the petitioners on 12-10-1998. The period of contract was for 12 months i.e. upto 24-10-1999. However, the same was extended by further three months i.e. upto 24-1-2000. The petitioners have successfully completed the work. However, the running bills of the petitioners were not paid. The security deposit of Rs. 7,61,327/- and Rs. 5,65,618/- was also not refunded. Therefore, various representations were made. The petitioners were served with the order dated 29-4-2005 and 19-5-2005, whereby, a penalty for less coal transportation was levied against the petitioners stating therein that petitioners were to transport 8,33,059.865 MT of coal against which 7,71,747.240 MT of coal was transported. Therefore, a penalty of Rs. 30,238.49 was imposed. It has also been alleged that at the risk and cost of petitioners, the deficit coal was lifted through other agencies @ 26.95 and @ 32.70 per MT and, accordingly, a sum of Rs. 7,17, 864.83 was claimed from the petitioners on account of loss suffered by the respondents.

3. Learned Senior Counsel Shri Brian Da Silva, assisted by Shri S. S. Oberoi, Advocate appearing for the petitioners submits that the order dated 19-5-2005 (Annexure-P-6) is illegal and improper. The same has been issued beyond the terms of the contract. According to him, the terms of the contract are very specific which provides under Clause (5) of the award of contract dated 12-10-1998 that the total quantity of coal to be transported during the contract period of one year shall be 6.50 (+ -20%) Lakhs MT. He submits that even while extending the period of contract for three months more, the factor of + - 20% has been taken into consideration and it has been specifically mentioned therein that the extra quantity to be transported was 1.30 Lakh MT, which is 20% plus of the original quantity 6.5 Lakh MT on the same rates. It is, thus, his submission that the total quantity which was to be transported was 7.80 MT upto 24-1-2000. He, therefore, criticized the impugned order on the ground that the respondents have erred in holding that the petitioners were required to transport 8,33,059.865 MT of coal. Learned Senior Counsel appearing on behalf of the petitioners placed reliance on the decisions of Hon’ble Apex Court in the case of Century Spinning and Manufacturing Company Ltd. and another vs. Ulhasnagar Municipal Council and another, (1970) 1 SCC 582, Surya Constructions vs. State of U. P. and others, (2019) 16 SCC 794 and Food Corporation of India and another vs. Seil Ltd. and others, (2008)