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W. DIENGDOH
Star Cement Limited – Appellant
Versus
Union of India – Respondent
JUDGMENT
1. The petitioner company is engaged in the business of manufacturing cement and for this purpose had entered into an agreement with the respondent No. 3 - North Eastern Coalfields for purchase of coal. In furtherance of this purpose, the parties have entered into a Coal Supply Agreement (CSA) (termed as Fuel Supply Agreement in this petition, which term shall be used interchangeably herein) under the terms and conditions set therein.
2. The petitioner on being asked by the respondent No. 4 to furnish a bank guarantee for an amount equal to 10% of the notified based price of the annual coal requirement for issuance of Letter of Assurance (LOA) has furnished a bank guarantee for an amount of Rs.1,03,86,000/- (Rupees one crore, three lakhs, eighty-six thousand) only in favour of respondent No. 3 vide guarantee dated 27.03.2012 issued by the State Bank of India, Commercial Branch, Kolkata.
3. Vide letter dated 27.02.2011 the respondent No. 5 informed the petitioner of the notification dated 26.02.2011 issued by the Coal India Limited notifying to the effect that the coal produced by the respondent No. 3 has increased in value and if the petitioner wants its coal to be delivered,
The demand for compensation for short lifting of coal was impermissible as no loss was incurred by the respondent. The court restrained the respondent from encashing the bank guarantee, as it would r....
The court held that the respondent's demand for compensation was unjustified as no loss was incurred due to short lifting of coal. The court restrained the respondent from invoking the bank guarantee....
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 wr....
Liquidated damages under contract law must be justified by actual loss; mere failure to complete work does not suffice without quantification of damages.
Bank guarantees are enforceable independent contracts, subject to invocation conditions; courts refrain from interference unless fraud or injustice is evidenced.
Proper adherence to termination clauses in contracts is essential; refusal to act on notices can validate claim for refunds.
Writ jurisdiction can be invoked in contractual matters involving public law elements. Principles of natural justice apply to contracts with public law elements. The penalty mentioned in the agreemen....
The obligation of the state to act fairly and reasonably in contractual disputes, and the importance of respecting the specific terms of a contract.
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