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2013 DIGILAW 167 (CAL)

Neo Metaliks Ltd. v. Union of India

2013-03-21

JOYMALYA BAGCHI

body2013
ORDER : 1. The petitioners are manufacturers of pig iron and require LAM coke as a raw material for such manufacturing process. Respondent No. 2 is a Government company, which carries on manufacturing LAM Coke and periodically place its excess stock, after captive consumption, for sale in the open market. 2. On 23rd December, 2009 respondent No. 3, the General Manager of respondent No. 2 company issued a price circular relating to sell of LAM coke in the domestic market subject to the following conditions:- "The price of LAM Coke for sale in the domestic market has been fixed as under:- upto 1000 MT Rs. 16400 PMT ex-plant upto 1001 MT - 2500 MT Rs. 16300 PMT ex-plant upto 2500 MT - 5000 MT Rs. 15900 PMT ex-plant upto 10000 MT and above Rs. 15500 PMT ex-plant The above prices are on ex-plant basis and is exclusive of Excise Duty, Sales Tax, freight and other statutory duties. Payment has to be made within 3 workings days. Delay in depositing the payment by the prospective buyer will attract a penalty @ Rs. 50 per MT per day. Delivery will be made against 100 % advance payment. The above prices are valid up to 04.01.2010." 3. In response to such circular, the petitioner company by a letter dated 24th December, 2009 expressed its desire to purchase 30000 MT of LAM coke and sought confirmation of the same. 4. By another letter dated 28th December, 2009, the petitioner company again reiterated the same subject to the price and terms as quoted in the price circular dated 23.11.2009. In the said letter, the petitioners company stated that they were ready and willing to make the payment within three working days from receipt of confirmation at the end of the respondent No. 2 company. Respondent No. 2 company by letter dated 04.01.2010 stated that since the petitioners company had failed to make 100 per cent advance payment of the required quantity in terms of the aforesaid price circular they were not entitled to receive the said amount. 5. As a result, the petitioner company approached this Court, inter-alia, praying for cancellation of the aforesaid letter dated 4th January, 2010 and for a direction upon respondent No. 2 to supply 30000 MT LAM Coke at the rate quoted in the price circular dated 23rd December, 2009. 6. 5. As a result, the petitioner company approached this Court, inter-alia, praying for cancellation of the aforesaid letter dated 4th January, 2010 and for a direction upon respondent No. 2 to supply 30000 MT LAM Coke at the rate quoted in the price circular dated 23rd December, 2009. 6. At the stage of admission a learned Single Judge was pleased to direct the respondents to supply 3000 MT to the petitioners company on condition that the petitioners shall make necessary payment in respect of aforesaid LAM coke at the rate quoted in the price circular dated 23rd December, 2009 and shall secure by way of bank guarantee the difference between the price quoted in the said circular and the prevailing price in respect of the said LAM coke. 7. Both the parties appealed against such order. The appeals were disposed of by the Hon'ble Division Bench recording that the writ petitioners were not in a position to purchase the LAM coke at the prevailing price. 8. While disposing of the appeal, the Hon'ble Division Bench observed as follows:- "The matter is at large before the learned Single Judge and the learned Single Judge shall consider the controversy between the parties after taking into consideration the intervening events including the orders passed by this Court which were in the nature of interlocutory orders without prejudice to the rights and contentions of the parties." 9. Respondent No. 2 has filed affidavit-in-opposition stating that it is policy of the State respondent company was to place for sale extract of LAM coke available after captive consumption in its own plant. 10. Pursuant to such policy, on 23rd December, 2009 respondent No. 2 issued circular fixing price of LAM coke for sale in domestic market subject to delivery of such coke against 100 per cent advance payment. Respondent No. 2 has pleaded that at that material point of time MMTC had 69524 MT of LAM coke and received orders of 12000 MT of LAM coke from Rashmi Metalicks, 10000 MT from Rourkella Steel Plant, 2999 MT from Maheshwari Ispat, 2500 MT from IDCOL, 5000 MT from SAIL, Vadrabati, totalling 32499 MT against 100 per cent advance payment leaving behind a stock of 37025 MT of LAM coke which was required for its captive consumption. 11. 11. As in respect of aforesaid requisitions 100 per cent advance payment were made the said consignments was accordingly sold to the aforesaid parties. The requisition made by the writ petitioners was not accompanied by 100 per cent advance payment, on the other hand, the writ petitioners sought confirmation of delivery. On 4th January, 2010 the writ petitioners were informed that since they had not made 100 per cent advance payment against their requisition of 30000 MT LAM coke, the said amount could not be sold to them. Respondents have also pleaded that no cause of action has arisen within the territorial jurisdiction of this Court. 12. As the matter was pending before this Court for more than 3 years and as correspondences were exchanged between the parties within the territorial jurisdiction of this Court, I am of the opinion that interest of justice deserves that the issues be dealt with on merits as the same would not occasion any failure of justice to either of the parties. 13. The learned counsel appearing for the writ petitioners has argued that price circular dated 23rd December, 2009 was in the nature of offer for sale and the requisition made on behalf of the writ petitioners amounted to an acceptance thereof evidencing a concluded contract for sale of 30000 MT of LAM coke at the quoted price. 14. In support of his contention, he relied on the provisions of the Sales of Goods Act. He also relied on AIR 1979 (2) SCC 17 that in respect of a concluded contract time cannot be said to be essence of the contract when consequence in the form of penalty or fine were stipulated in the conditions itself. 15. The learned counsel on the behalf of the writ petitioners has also relied on (2010) 14 SCC 334 (State of Uttaranchal & Ors. v. Khurana Brothers) and (2004) 3 SCC 553 (ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation o India & Ors.). He submitted that a contract may be a conditional one. He also submitted that the writ petition may be entertained in respect of questions of fact relating to the contractual field. 16. Learned counsel for the respondents submitted that no concluded contract of sale had been entered into. He further submitted that the respondent authorities did not act in an arbitrary, unreasonable, whimsical or unfair manner even in the contractual field. 16. Learned counsel for the respondents submitted that no concluded contract of sale had been entered into. He further submitted that the respondent authorities did not act in an arbitrary, unreasonable, whimsical or unfair manner even in the contractual field. It was the writ petitioners who were unwilling to purchase the LAM coke at the prevailing price in terms of the interim order. He further submitted that, assuming though not admitting, a concluded contract had come into effect, specific performance thereof cannot be directed in writ jurisdiction. It was submitted that public interest is of supervening importance and the Government company in the instant transaction had acted in a fair, bona fide and reasonable manner and bearing in mind such public interest no mandamus may be issued to supply LAM coke at the earlier rate to the writ petitioners. 17. I have considered the rival submissions of the parties. One of the conditions of the price circular was that the requisition in terms thereof must be accompanied by 100 per cent advance payment. Admittedly, in the instant case, the requisition of the writ petition was not accompanied by 100 per cent advance payment. On the other hand, the writ petitioners sought confirmation of their requisition for purchase of 30000 MT LAM Coke. From the affidavit-in-opposition filed by the respondents company it appears that other buyers had made their requisitions along with 100 per cent advance payment and therefore they were given precedence resulting in exhaustion of the entire stock. 18. In view of such facts, it cannot be said that the respondents company acted in a manner which was arbitrary, unreasonable and unjust in the matter of sale of LAM coke in the open market. 19. It is true that even in the contractual field the State is required to act in a fair and non-arbitrary manner and in the event it fails to do so the extraordinary writ jurisdiction of this Court may be invoked in appropriate cases. 20. However, in the factual matrix of the case I am unable to come to a conclusion that the conduct of the respondents company was either arbitrary, unreasonable or whimsical in any manner whatsoever. The writ petitioner company dithered at the inception of the transaction and did not show requisite promptitude in making 100 per cent advance payment. 20. However, in the factual matrix of the case I am unable to come to a conclusion that the conduct of the respondents company was either arbitrary, unreasonable or whimsical in any manner whatsoever. The writ petitioner company dithered at the inception of the transaction and did not show requisite promptitude in making 100 per cent advance payment. On the other hand, other purchasers were prompt in making such advance payment and the State respondent chose to sell excess stock to them. Such conduct of the State therefore by no stretch of imagination can be said to be illegal, arbitrary or unreasonable so as to invoke the extraordinary writ jurisdiction of this Court. 21. The question as to whether a concluded contract of sale has been entered in the instant case is a mixed question of fact and law which cannot be said to be decided in the writ jurisdiction. Even if such contention is accepted, to allow a prayer for specific performance of sale, as sought for in the public law realm, is wholly unsustainable in the facts and circumstances of the case. 22. No direction for specific performance of contract can be made in the public law realm if the same operates against public interest at large and causes undue hardship as the excess stock put up on sale by respondent No. 2 company in terms of the price circular had been exhausted and the petitioners were unwilling to purchase fresh stock at prevailing rate. Refusal on the part of the respondent company to sell excess stock to the petitioners cannot be said to be arbitrary, unreasonable or discriminatory as the other requisitionists had made 100 per cent advance payment in terms of the price circular while the petitioner company had not done so. It merely assured making payment after confirmation from the respondent company, a dilatory course which was wholly unnecessary in this conspectus of facts, the action of the respondent authority to sale to buyers who had already made payment of the sale price was in public interest and cannot be arbitrary or discriminatory in nature. 23. The decisions cited on behalf of the petitioners are of little help to them. 24. In AIR 1979 (2) SC 700 it has been held that time is not the essence of contract if consequences like penalty are provided in the terms of the contract. 23. The decisions cited on behalf of the petitioners are of little help to them. 24. In AIR 1979 (2) SC 700 it has been held that time is not the essence of contract if consequences like penalty are provided in the terms of the contract. Learned counsel has referred to one of the terms in the price circular which provided that payment could be made within three working days and delayed payment would be entail judged imposition of penalty. As I have held that in the instant case the respondents company gave preference to the requisitionists who made 100 per cent advance payment along with their requisitions in comparison to the claim of the petitioner, I am of the opinion that the ratio of the aforesaid decision does not apply to the facts of this case. 25. In (2010) 14 SCC 334 it has been held that a conditional sale is also a valid contract. I have already held that in view of the intricate and disputed questions of fact it would be beyond the jurisdiction of this Court to come to a definite conclusion as to whether a concluded contract has been entered or not. Even if it is assumed to be so, the relief for sale of 30000 MT of LAM coke at the price quoted in the price circular dated 23rd December, 2009 would cause undue hardship to the respondents company and would be contrary to public policy as the value of LAM coke had increased considerably in the meantime and the respondent authorities had not acted in an arbitrary, unreasonable or whimsical manner in refusing to offer of the writ petitioners in preference to others who had made payment of the entire sale price. 26. In the instant case I am of the opinion that the action of the State is neither arbitrary nor whimsical nor unjust and therefore the ratio of ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation of India Ltd. & Ors. reported in (2004) 3 SCC 553 does not get attracted to the facts of the case. 27. For the aforesaid reasons, I am of the opinion that the writ petition is liable to be dismissed. 28. There shall be no orders as to costs. Petition dismissed.