Shree Gopal Govind Sponge Private Limited v. Coal India Limited, having office at 10, Netaji Subhas Road, P. O. G. P. O.
2019-09-11
SUJIT NARAYAN PRASAD
body2019
DigiLaw.ai
JUDGMENT : 1. This writ petition is under Article 226 of Constitution of India, whereby and where under, initially notice for termination of agreement dated 31.08.2017, which was issued by the General Manager (M&S), Central Coalfields Limited to which the petitioner has responded by filing reply vide Annexure-16, was under challenge but, in course of pendency of the writ petition, the authorities having taken final decision on 27.02.2018 rejecting the reply submitted by the petitioner in terms of notice dated 31.08.2017, it occasioned the petitioner to file an interlocutory application (I.A. No. 2244 of 2018), seeking relief from the Court to make necessary amendment in the prayer of the writ petition. This Court vide order dated 23.03.2018 has allowed the prayer made in the aforesaid interlocutory application by granting relief to the petitioner to make necessary amendment in the writ petition. In pursuance thereto, amended writ petition has been filed. 2. Learned counsel appearing for the petitioner submitted that after the amendment having been allowed to be incorporated to the original prayer of the writ petition, now the notice which was assailed in the writ petition has been culminated and the final decision taken by the authorities as on 27.02.2018 has been assailed by the petitioner, interalia on the ground that the authorities while passing such order have not assigned any reason although it has been reflected from the said order that the reply submitted by the petitioner in terms of the notice has been found as “unsatisfactory”. According to the petitioner, after receiving notice he has submitted exhaustive reply for its consideration, but in one line, the reply was held to be “unsatisfactory” and the contract has been terminated and the banker has been advised to encash the bank guarantee in favour of Central Coalfields Limited and, therefore, the said order cannot be said to be sustainable in the eyes of law and, hence, the same is fit to be quashed. Further submission has been made by the learned counsel for the petitioner while assailing the aforesaid order that the fault lies on the part of the respondent-CCL in terminating the Coal Supply Agreement.
Further submission has been made by the learned counsel for the petitioner while assailing the aforesaid order that the fault lies on the part of the respondent-CCL in terminating the Coal Supply Agreement. It is submitted that on one pretext or other, the supply could not be made, which resulted into non-supply of coal and ultimately the respondent-authorities invoked the provisions of Clause 15.1.4 of the Coal Supply Agreement and issued notice while the content of the said notice has been denied so far as lifting of less quantity of coal by the petitioner is concerned, but has not been considered since the impugned order has been passed. 3. Mr. Amit Kumar Das, learned counsel appearing for the respondent-CCL has vehemently opposed the submission agitated by the petitioner while submitting that the petitioner is raising issue of non statutory contract when the terms and conditions of the Coal Supply Agreement is known to the petitioner. One of the conditions as has been mentioned under Clause 15.1.4 with Clause 3.6 pertaining to forfeiture of security deposit, the petitioner ought to have lifted the coal as per the condition stipulated under Clause 15.1.4 taking into consideration the fact that non-lifting of coal in pursuance of the condition stipulated under Clause 15.1.4 of the Coal Supply Agreement will cause termination of coal agreement. Learned counsel for the respondents further submitted that it appears from the fact which has been agitated by the petitioner that the petitioner has challenged the impugned order pertaining to terms and conditions incorporated in the Coal Supply Agreement and the petitioner has not agitated any vital aspect and, hence, the writ petition will not lie under Article 226 of the Constitution of India. Learned counsel for the respondents further submitted that remedy has been made available under the Coal Supply Agreement for its redressal. So far as contention raised by the petitioner regarding non-supply of coal is concerned, the submission as has been made even accepted as true, the petitioner is not entitled to get any relief from the Court as per the terms and conditions incorporated in the Coal Supply Agreement as it appears from the material available on record about some undisputed fact i.e. the petitioner has entered into agreement known as Coal Supply Agreement as on 30.04.2008, which is annexed at Annexure-1 to the writ petition for supply of coal with certain terms and conditions.
Clause 15.1.4 of the agreement reads as under: “15.1.4 In the event that the Level of Delivery (LD) falls below thirty percent (30%) or the Level of Lifting (LL) falls below thirty percent (30%), the Purcha or the Seller as may be the case, shall have the right to terminate this Agreement, with in sixty (60) days of the end of there levant Year after providing the other Party with prior written notice of not less than thirty (30) days.” Learned counsel for the respondents further submitted that no restriction was imposed by the Central Coalfields Limited in filing the rail program without submission of D.I. Certificate and as such the level of lifting in respect of the petitioner remained below 30% for the year 2016-17 due to inaction on the part of the petitioner and, therefore, as per Clause 16.1.4 of the Coal Supply Agreement, show cause notice dated 31.08.2017 was issued to the petitioner. The petitioner after accepting the terms and conditions of the Coal Supply Agreement has started lifting the coal, but meanwhile certain dispute has arisen with respect to exemption of D.I. Certificate which in the instant case was to be issued by the West Bengal since the petitioner's unit is situated within the territorial jurisdiction of the State of West Bengal, but ultimately the exemption has been granted by the CCL authority by taking general decision in this regard, but even after the exemption has been granted in this regard, the petitioner has failed to lift the coal as required under Clause 15.1.4 of the Coal Supply Agreement which has resulted into issuance of notice of termination of agreement by notice dated 31.08.2017 asking the petitioner to explain its position within 30 days of issuance of notice, which is evident from the notice of termination of agreement (Annexure-15), whereby, it has been stated that as per the terms and conditions stipulated under Clause 16.1.4 the level of lifting has fallen below 30% during 2016-17 and, therefore, the agreement is required to be terminated. 4.
4. It is evident from Annexure-16 that the petitioner has replied to the said notice explaining the situation by stating therein that the petitioner is demanding supply of coal, but no such supply has been made, on the other hand, notice has been issued to the petitioner for non-lifting of coal as required under Clause 15.1.4 of the Coal Supply Agreement and on these grounds notice issued to the petitioner, has been sought to be recalled. The respondent authorities have come out with the order dated 27.02.2018 by constituting a Committee for examination of the representation submitted by the petitioner in terms of notice of termination, but the same has been rejected by the Committee by finding the reply “unsatisfactory”, which has been assailed in this writ petition. 5. It is evident from the stand taken by the respondent-CCL more particularly paragraphs 10 and 11 of the first counter affidavit filed on 13.06.2018 wherein stand has been taken by the respondents that the petitioner has flouted the conditions stipulated under Clause 15.1.4 of the Coal Supply Agreement and it has been further stated that required document i.e. D.I. Certificate, although was requested under Clause 4.4 of the Coal Supply Agreement, which was duly notified, but the petitioner itself stopped submitting the rail program and no restriction was imposed by the respondent-CCL in filing the rail program without submission of DI Certificate and as such level of lifting in respect of the petitioner remained below 30% for the year 2016-17 due to inaction on the part of the petitioner and, therefore, notice dated 31.08.2017 was issued to the petitioner. The reply given by the petitioner was examined by the Committee of the respondent and as the reply of the petitioner was found “unsatisfactory”, the decision to terminate the contract has been taken. 6. Mr. Rohit Roy, learned counsel for the petitioner has raised legal issue about the sustainability of the impugned order on the ground that in absence of any consideration of reply can it be said an order in accordance with law? 7. It is not in dispute. It has been held by the Hon'ble Supreme Court in the case of Commissioner of Police, Bombay vs. Gordhandas Bhanji, reported in (1952) SC 16 paragraph 9, which reads as under:- “9.
7. It is not in dispute. It has been held by the Hon'ble Supreme Court in the case of Commissioner of Police, Bombay vs. Gordhandas Bhanji, reported in (1952) SC 16 paragraph 9, which reads as under:- “9. We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what be meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have publice effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language use din the order itself.” 8. It has also been held by the Hon'ble Supreme Court in the case of Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi reported in (1978) 1 SCC 405 paragraph 8, which reads as under:- “8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji. Public orders, publicly made......................................................................................................................itself.” 9. It has also been held by the Hon'ble Supreme Court in the case of East Coast Railway v. Mahadev Appa Rao, reported in (2010) 7 SCC 678 paragraph 9, which reads as under:- “9. There is no quarrel with the well-settled proposition of law that an order passed by a public authority exercising administrative/executive or statutory powers must be judged by the reasons stated in the order or any record or file contemporaneously maintained. It follows that the infirmity arising out of the absence of reasons cannot be cured by the authority passing the order stating such reasons in an affidavit filed before the court where the validity of any such order is under challenge. The legal position in this regard is settled by the decision of this Court in Commr.
It follows that the infirmity arising out of the absence of reasons cannot be cured by the authority passing the order stating such reasons in an affidavit filed before the court where the validity of any such order is under challenge. The legal position in this regard is settled by the decision of this Court in Commr. of Police v. Gordhandas Bhanji wherein this Court observed: Public orders, publicly made.......................................................................................................................it self.” 10. It has also been held by the Hon'ble Supreme Court in the case of United Air Travel Services v. Union of India, reported in (2018) 8 SCC 141 paragraph 11, which reads as under:- “11. The learned counsel for the petitioner has, thus, rightly drawn our attention to the Constitution Bench judgment of this Court in Mohinder Singh Gill v. Chief Election Commr. to submit that such a plea cannot be accepted. We may note that this is a well-settled legal position in many judicial pronouncements of this Court, but it is not necessary to revert to the same. In para 8 of the aforesaid judgment, V.R. Krishna Iyer, J., in his inimitable style states as under: “8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji:- Public orders, publicly made....................................................................................................................itself.” 11. It has also been held by the Hon'ble Supreme Court in the case of Chairman, Life Insurance Corporation of India v. A. Masilamani, reported in (2013) 6 SCC 530 paragraph 19, which reads as under:- “19. The word “consider” is of great significance. The dictionary meaning of the same is, “to think over”, “to regard as”, or “deem to be”. Hence, there is a clear connotation to the effect that there must be active application of mind. In other words, the term “consider” postulates consideration of all relevant aspects of a matter. Thus, formation of opinion by the statutory authority should reflect intense application of mind with reference to the material available on record.
Hence, there is a clear connotation to the effect that there must be active application of mind. In other words, the term “consider” postulates consideration of all relevant aspects of a matter. Thus, formation of opinion by the statutory authority should reflect intense application of mind with reference to the material available on record. The order of the authority itself should reveal such application of mind. The appellate authority cannot simply adopt the language employed by the disciplinary authority and proceed to affirm its order.” It is evident from the aforesaid judgments as referred herein above that in absence of any reason, an order cannot be said to be in accordance with law. It is also proposition of law that if a notice is being issued, the same cannot be said to be a formality and if it is being responded, the consideration is to be made by the concerned authority. The consideration means active application of mind and, thus, the active application of mind would only come if there would be appreciation of the factual aspect. It is also evident from the aforesaid judgments that if any decision is being taken without appreciating the stand taken by the person concerned against whom notice has been issued and if no reason is there, it will be said to be without any consideration as expressive consideration is to be reflected in the order and the same cannot be allowed to be reflected by an affidavit and if it is allowed to be reflected through an affidavit against the person against whom such decision is being taken, he will not be in a position to know the reason as to what led the authority in taking such decision rather he can only know the reason when he come to the Court of law. Otherwise also, scope of natural justice ought to be followed and if no reason is assigned in the order, it will be subject to violation of principles of natural justice. 12. At this juncture, this Court thinks fit to go with the arguments canvassed by the learned counsel for the petitioner that in not assigning any reason in the order, no term of contract can be cancelled.
12. At this juncture, this Court thinks fit to go with the arguments canvassed by the learned counsel for the petitioner that in not assigning any reason in the order, no term of contract can be cancelled. Notice has been issued to the petitioner by giving 30 days' time, as required under Clause 15.1.4 of the Coal Supply Agreement, but the question remains that notice has been issued to explain the position of the petitioner which does mean that the petitioner has been provided with an opportunity, otherwise the content of the notice would be reflected in Clause 15.1.4 wherein it has been provided that the agreement could be cancelled after 30 days. When the authorities have come with the notice asking the petitioner to explain its position, it means that reply is required to be placed by the petitioner in its defence and consequently such notice has been issued and same has been responded, but it depends upon the respondent authorities to deal with the reply either positive or negative and by discussing the reason, order will be passed so that there may be active application of mind. Having not done so, this Court is of the view that the impugned notice dated 31.08.2017 does not stand in the eyes of law and as such the same is to be quashed and accordingly the same is quashed. Accordingly, the impugned order dated 27.02.2018 is also quashed. 13. It is settled position of law that on technicality no one is allowed to take advantage, therefore, since this Court is quashing the impugned order dated 27.02.2018 as such justice demand that the matter be looked into by General Manager (M&S), Central Coalfields Limited by calling for the entire records and to take fresh decision on the basis of reply already submitted by the petitioner by passing a speaking order within a period of two weeks from the date of receipt of a copy of this order. 14. Accordingly, this writ petition stands allowed and disposed of. 15. Interim relief, if any, stands vacated.