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2019 DIGILAW 1699 (MAD)

Fly Ash Movers (India) Pvt. Ltd. , Rep. By its Zonal Head Uttam Banerjee v. General Manager (C&M) NTPC Tamil Nadu Energy Company Ltd. , Vallur Thermal Power Project Vellivoyal Chavadi Post, Ponneri Taluk Chennai

2019-06-19

R.SURESH KUMAR

body2019
ORDER : O.A.No.1032 of 2018 was filed by M/s. Fly Ash Movers (India) Pvt. Ltd., challenging the notice for expression of interest for purchase of dry fly ash, dated 24.10.2018, published by the respondents 1 and 2 in the Newspaper “Daily Thandhi”, dated 24.10.2018, where, the National Thermal Power Corporation, Tamil Nadu Energy Company Limited, Vallur Thermal Power Project, Chennai – 103, through its General Manager, Additional General Manager and Senior Manager had been arrayed as party respondents. 2. In the said Original Application, this Court, by order, dated 15.11.2018, has granted interim order of injunction restraining the respondents from selling the dry fly ash to outsiders as per the notification dated 24.10.2018. In order to vacate the said interim order dated 15.11.2018, the respondents, ie., NTPC has filed Application No.1380/2019 with a prayer to vacate the interim order of injunction granted on 15.11.2018 in O.A.No.1032/2018. That is how, both the Original Application No.1032/2018 and Application No.1380/2019 came to be filed before this Court. 3. Both O.A. as well as the application were heard together and are disposed of by this common order. 4. The petitioner in main O.A. ie., Fly Ash Movers India Pvt. Ltd., hereinafter be referred to as “Fly Ash Movers” for the sake of brevity. Like that, the respondents in the main O.A. ie., General Manager, NTPC Tamil Nadu Energy Company Limited and two others are called as NTPC for the sake of brevity. 5. The case of the Fly Ash Movers is that, NTPC floated a tender, for supply of dry Fly Ash from the NTPC Vallur Thermal Power Project, on 13.11.2017 inviting bids for sale of fly ash to the interested eligible users for 10 lakh metric ton as available basis for a period of one year. 6. The applicant/petitioner was one of the participant in the tender. There had been no sufficient bidders for the said tender. Subsequently, NTPC has reduced the quantity from 10 lakh metric ton to 5.90 lakh metric ton of fly ash. 7. Accordingly, the petitioner was awarded the contract by giving the LoA dated 02.04.2018, wherein, the contract was awarded to the Fly Ash Movers for lifting of fly ash to the extent of 5.90 lakh metric ton for one year period from 05.04.2018 at the rate of Rs.75/- per metric ton. Accordingly, on 05.04.2018, the LoA was issued to the Fly Ash Movers. 8. Accordingly, on 05.04.2018, the LoA was issued to the Fly Ash Movers. 8. It is the further case of Fly ash movers that, though the contract has been concluded by awarding the contract to the Fly Ash Movers to lift the fly ash with total quantity of 5.90 lakh metric ton per year, the daily average to the extent of 1616 metric ton could not be achieved for unforeseen reasons and this has been informed/intimated duly to the NTPC by various communications of the Fly Ash Movers. Despite this factor, the NTPC had come forward to issue further notice for expression of interest for purchase of dry fly ash for the quantity of 4.5 lakh metric ton as available basis, by notification dated 24.10.2018, thereby, the NTPC intended to give the contract to some third party for lifting of fly ash to the extent of 4.5 lakh metric ton per year with the result the interest of the Fly Ash Movers being the existing contractor was getting affected. 9. It is the further case of the Fly Ash Movers that, as per Clause 1.6 of the Letter of Award ie., LoA dated 05.04.2018, on NTPC awarding contract originally to the Fly Ash Movers, the Fly Ash Movers is entitled to get extra ash quantity and the relevant portion of said Clause 1.6 reads thus: “In case NTECL has extra ash on any day due to generation above contracted quantity or backing out by some buyer etc., NTECL will offer the extra ash quantity to the buyers, pro rata to the contracted quantity, at the same discovered price. If still extra ash is available for distribution, NTECL reserves the right to offer it to any other party (other than the contracted parties) at the same discovered price.” In view of the said Clause 1.6, even beyond the 5.9 lakh metric ton per year, if further extra quantity of ash is available with the NTPC, the same was also be offered only to the Fly Ash Movers being the contractor and in this regard, NTPC cannot go for seeking expression of intention of any third parties to lift the extra quantity of dry fly ash to the extent of 4.5 lakh metric ton per year and therefore, the impugned notification dated 24.10.2018 is directly contra to the expressed/agreed provision of the contract ie., LoA and therefore on that ground also, the petitioner, challenging the said notification of the NTPC dated 24.10.2018, had moved this Court by filing the original application under Section 9 of the Arbitration and Conciliation Act 1996 for the prayer as set out hereinabove. 10. On the other hand, the NTPC has filed counter affidavit in the main O.A. and also filed affidavit in support of the application No.1380/2019 seeking to vacate the injunction order. In the counter affidavit as well as the affidavit filed in support of their vacate injunction petition, the NTPC has stated that, no doubt the Fly Ash Movers was a successful bidder for lifting 5.9 lakh metric ton of fly ash per year, ie., 1616 metric ton per day. However, since they miserably failed to comply with the contractual commitment/obligation in lifting the fly ash, they had no locus-standi to challenge the impugned notification dated 24.10.2018 inviting interested agencies to lift the extra quantity of 4.5 lakh metric ton of dry fly ash. The counter further proceeds to say that, since the NTPC is generating fly ash above the contracted quantity of 1616 metric ton per day, the same shall be evacuated then and there and since the Fly Ash Movers was not able to lift the quantity agreed by them, ie., the contractual quantity, there was no meaning in expecting the NTPC to offer additional quantity of dry fly ash to the Fly Ash Movers. 11. In this context, the following factual matrix given by the NTPL in their counter affidavit can be usefully referred to: “17. 11. In this context, the following factual matrix given by the NTPL in their counter affidavit can be usefully referred to: “17. The performance of the Applicant in lifting of Fly Ash from the beginning was below the contractual quantity. It is submitted that as per contractual commitment, the Applicant ought to lift 5.9 lakh metric ton (5,90,000 metric ton) for one year ie., 49,000 metric ton per month or 1616 Metric ton per day. However, the applicant lifted only an average of 716.82 metric ton per day since 29.05.2018. The applicant is not able to cope up to lift the fly ash on most of the days at an average of 1616 metric ton per day as per contractual commitment. The monthly Dry Fly Ash off take by the applicant during the period between May, 2018 and 7 October, 2018 is furnished hereunder: Month Quantity in Metric ton May 2018 4,151.71 June 2018 14,543.83 July 2018 29,120.11 August 2018 34,232.82 September 2018 31,544.50 October 2018 26,940.32 Thus, it is clear from above that the performance of the applicant was poor at the cost of ash utilization and ash sale of the respondents.” By relying upon this quantity of dry fly ash lifted by the Fly Ash Movers, the NTPC wanted to project a case that, since the very contractual quantity itself could not be lifted by the Fly Ash Movers, the question of offering the additional quantity to them does not arise and in this context, the NTPC cannot withhold the additional quantity of fly ash, which is produced everyday and if such additional quantity of dry ash is continued to be stored at the NTPC premises itself, that would cause heavy environmental issues, thereby, the NTPC would be halved for violation of relevant environmental loss and therefore, the NTPC decided to offer the extra quantity of dry fly ash available with them, which was not lifted by the Fly Ash Movers, to any third parties, that is how, the impugned notice was necessitated to be issued. 12. I have heard the learned counsel for the Fly Ash Movers and the learned counsel appearing for the respondents, ie., NTPC. 13. 12. I have heard the learned counsel for the Fly Ash Movers and the learned counsel appearing for the respondents, ie., NTPC. 13. The learned counsel for the petitioner Fly Ash Movers had submitted that, for some unforeseen reasons due to lack of transportation and the time consumption taken by the transport vehicles in lifting the dry ash floated at the plant of NTPC, the contracted quantity was not lifted for some time by them. However, that would not give rise or giving leverage to the NTPC to go for creating a third party interest to offer the extra quantity of dry ash to third parties for expression of interest for purchase of dry fly ash by way of tender by issuing the impugned notification dated 24.10.2018. 14. The learned counsel for the Fly Ash Movers has very much relied upon Clause 1.6 of LoA dated 05.04.2018, which has already been extracted hereinabove. By relying upon the same, he would submit that, when there is a specific clause agreed between the parties, which envisages that if NTPC has extra ash that will offer the extra ash quantity to the buyers pro rata to the contracted quantity at the same discovered price ie., to the Fly Ash Movers. If still any extra ash is available for distribution, the NTPC has got every right to offer it to any other party other than the buyer ie., the contracted party at the same discovered price. Therefore, the learned counsel would submit that, the extra ash should first be offered only to the buyer ie., the Fly Ash Movers and still any extra quantity is available, that alone the NTPC will have right to offer to any third party. Here, in the case in hand, according to him, no such offer was made by NTPC to the Fly Ash Movers as agreed by them in Clause 1.6 of the LoA and therefore, such a unilateral offer to third party by making the Fly Ash Movers as one of the third party to offer its bid for lifting extra quantity of fly ash, would run directly contra to the said clause 1.6 of the LoA and therefore, the entire impugned notification is against the contractual terms between the parties. Hence, it is liable to be interfered with, the learned counsel contended. 15. Hence, it is liable to be interfered with, the learned counsel contended. 15. However, the learned counsel for NTPC has submitted that no doubt Clause 1.6 of LoA dated 05.04.2018 has given a priority to the buyer ie., the Fly Ash Movers to get the extra ash quantity on pro rata basis at the same discovered price. However, the fact remains that, from the day one of the contract, the Fly Ash Movers has never lifted the contracted quantity in any month. This had been clearly demonstrated in the table provided by the NTPC at their counter affidavit in Paragraph No.17, which has already been extracted hereinbefore. According to the contractual obligation, the Fly Ash Movers has to lift at least 49000 metric ton of fly ash every month ie., 1616 metric ton per day. From May 2018 till October 2018, for the six months period, the actual quantity of fly ash lifted out by the Fly Ash Movers, has been provided in the table, which shows that, in any of the six months period, the Fly Ash Movers has not lifted the contractual quantity. Even the maximum quantity that the Fly Ash Movers lifted was in the month of August 2018 and in that month itself, the quantity lifted was only 34,232.82 metric ton alone ie., far below the contractual quantity of 49000 metric ton per month. 16. Since the factual matrix provides that, at no point of time, the Fly Ash Movers has reached the contractual quantity, the question of offering any extra dry fly ash to the buyer does not arise. Therefore, Clause 1.6 of LoA dated 05.04.2018 would never advance the case of the Fly Ash Movers, the learned counsel for the NTPL contended. 17. I have considered the said rival submissions made by the learned counsel for both sides and have perused the materials placed before this Court. 18. It is an admitted fact that, there has been a contract between the Fly Ash Movers and NTPC, where the NTPC is the owner of the dry fly ash and the Fly Ash Movers is the buyer of the dry fly ash. According to the contract, the Fly Ash Movers has to lift totally 5.9 lakh metric ton of fly ash per year ie., the whole one year period of the contract. According to the contract, the Fly Ash Movers has to lift totally 5.9 lakh metric ton of fly ash per year ie., the whole one year period of the contract. On that basis, every month they must lift 49000 metric ton of fly ash at the rate of 1616 metric ton per day. The entire chart indicating the quantity of dry fly ash lifted by Fly Ash Movers shows that, not even in a single month, the Fly Ash Movers reached the target ie., lifting the entire contractual quantity of 49000 metric ton. In this regard, there has been a number of communications between the parties. The NTPC, on 24.05.2018, has written the following letter to the Fly Ash Movers: “you had been allotted 5.9 lakh tons of dry fly ash for one year on sale. For the last one month till date, we observe that you had lifted only 238 metric tons against a monthly average of 49,000 metric tons. Your performance so far is unsatisfactory. You shall reply with an action plan to raise the ash lifting to the contractual quantity failing which we may take contractual action as deemed fit.” 19. Like that NTPC written several letters. One such letter was on 07.06.2018 with following content: “Against your contractual commitment of 5.9 lakh tons for one year (or monthly average of 49,000 metric tons or daily average of 1600 metric tons), your daily average for the last one week (since 29.05.2018) is only 716.82 MT/day. The maximum ash lifting clocked by you on a day is only 1163 MT on 31.05.18. You are therefore reminded to submit your action plan by 15th of June 2018 and also improve the off-take of dry fly ash.” and yet another letter dated 02.07.2018, which reads thus: “Against your contractual commitment of 5.9 lakh metric tons for one year (or monthly average of 49,000 metric tons), your monthly off-take for June 2018 is only 14,544 metric tons. You are therefore reminded to submit your action plan by 07th of July 2018 and also improve the off-take of dry fly ash.” 20. In response to these letters, the Fly Ash Movers, on 12.06.2018, wrote the following, “In above reference we would like to state that the quantity we have been allotted we are lifting and making continue efforts to increase the quantity up to required level. In response to these letters, the Fly Ash Movers, on 12.06.2018, wrote the following, “In above reference we would like to state that the quantity we have been allotted we are lifting and making continue efforts to increase the quantity up to required level. Few of the vehicles are operating long distance hence the loading take time due to distance. We are trying to deploy more no. of vehicles for the same to cover up the gap. Please bear with us till the time we operate in our full capacity. We also like to request to permit the vehicle for full load capacity as they can carry more load in each trip.” 21. Therefore, it is an admitted fact on the part of the Fly Ash Movers that, the contracted quantity of fly ash was not lifted by them and for which, they have given some reasons, which, according to the NTPC, was only lame excuses. Be that as it may, for the lesser quantity of fly ash lifted by Fly Ash Movers, the NTPC has not in fact cancelled the contract. However, the NTPC proceeded to seek the expression of third parties by way of bids to lift the extra fly ash to the extent of 4.5 metric ton per year. In this context, it is to be noted that, the Government of India, Ministry of Environment and Forests, time and again issued policy decision by way of notifications regarding the fly ash and its utility, on 14.09.1999, the Notification No.8.0.763(E) Ministry of Environment and Forests, Government of India was issued. Subsequently another Notification was issued in S.O.2804(E) on 03.11.2009, where the following policy guideline has been given: “(1) All coal or lignite based thermal power stations would be free to sell fly ash to the user agencies subject to the following conditions, namely – (i) the pond ash should be made available free of any charge on “as is where is basis” to manufacturers of bricks, blocks or tiles including clay fly ash product manufacturing unit(s), farmers, the Central and the State road construction agencies, Public Works Department, and to agencies engaged in backfilling or stowing of mines. (ii) at least 20% of dry ESP fly ash shall be made available free of charge to units manufacturing fly ash or clayfly ash bricks, blocks and tiles on a priority basis over other users and if the demand from such agencies falls short of 20% of quantity, the balance quantity can be sold or disposed of by the power station as may be possible; Provided that the fly ash obtained from the thermal power station should be utilised only for the purpose for which it was obtained from the thermal power station or plant failing which no fly ash shall be made available to the defaulting users.” 22. In yet another notification of the Ministry of Environment Forest in S.O. 254(E) dated 25.01.2016, certain mandatory guidelines have been given and a time frame to comply with the said mandatory directives also had been given to the stake holders, upto 31st December 2017. These notifications have been marked and relied upon by the counsel for NTPC and he made submissions that, if these policy decisions of Government of India through Ministry of Environment and Forests are not strictly adhered to by the stake holders, heavy penalty would be imposed and in this context, they relied upon a decision of the National Green Tribunal, New Delhi in Original Application No.117/2014 etc. batch dated 20.11.2018, whereby, hefty fine has been imposed by way of damages to the tune of crores of rupees to the thermal power units, who have not strictly adhered to the policy decision of the Ministry. 23. In this background, one cannot expect that, the NTPC, through its thermal power station, cannot withhold or store heavy quantity of dry fly ash without being evacuated the same or lift the same either on their own or their parties to the contract. Here, in the case in hand, though the petitioner had been awarded the contract to lift the fly ash to the extent of 5.90 metric ton per year, they could not even lift 60 to 70 percent of the contracted quantity. This finding is given by this Court based on the factual matrix projected by the NTPC as the same has not been disputed/controverted by the Fly Ash Movers. 24. This finding is given by this Court based on the factual matrix projected by the NTPC as the same has not been disputed/controverted by the Fly Ash Movers. 24. Though some reasons have been given for not lifting the contracted quantity by the Fly Ash Movers, those reasons are not attributable to NTPC and therefore, the same cannot be accepted as Force Majeure. The relevant clause at Clause 37 of the invitation for bids dated 13.11.2017 under the heading “Force Majeure” reads thus: “37. Force Majeure: “Force Majeure” shall mean any event beyond the reasonable control of the owner or of the Buyer, as the case may be, and which is unavoidable notwithstanding the reasonable care of the party affected and which substantially affect the performance of the contract. (i) Terrorist Acts, (ii) Confiscation, nationalization, comandeering or requisition by or under the order of any government or de jure or de facto authority or ruler or any other act of failure to act of any local state or national government authority. (iii) National/sectoral/illegal strike, lack of usual means public transportation and communication, industrial dispute, shipwreck, epidemics, quarantine and plague.” 25. Therefore, whatever reasons given by Fly Ash Movers for not lifting the contracted quantity is not an acceptable reason and therefore, on those reasons Fly Ash Movers cannot take any shelter under Force Majeure. Moreover, Clause 1.6 of the LoA dated 05.04.2018, no doubt gives a preemptive right to the Fly Ash Movers to get extra quantity of ash from NTPC. The question of non compliance of the contracted quantity by NTPC to the Fly Ash Movers does not arise in this case because, once the Fly Ash Movers lifted the contracted quantity, then only, they can expect offering of extra quantity from NTPC and if there is any such situation available at any point of time, the Fly Ash Movers can justify their stand that, extra quantity of ash should be offered only to them. Here, in the case in hand, at no point of time, such a situation was available, as at no point of time, the Fly Ash Movers have achieved the contracted quantity. Therefore, the offering of extra quantity of ash to the Fly Ash Movers never arisen throughout the contract period. Here, in the case in hand, at no point of time, such a situation was available, as at no point of time, the Fly Ash Movers have achieved the contracted quantity. Therefore, the offering of extra quantity of ash to the Fly Ash Movers never arisen throughout the contract period. In that view of the factual matrix, the question of invoking Clause 1.6 does not arise in the case in hand, and the Fly Ash Movers is not entitled to seek any indulgence from this Court by invoking Clause 1.6 of the LoA. 26. Moreover, even under clause 1.6, there is a sub-clause to state that, “if still extra ash is available for distribution, NTPC reserves the right to offer the same to any third party”. Whatever extra quantity is available means, the quantity produced by the NTPC minus the quantity lifted by Fly Ash Movers which is nothing but extra quantity and those extra quantity of ash can very well be offered to any third party, even under Clause 1.6 of the LoA, since the Fly Ash Movers never reached the contracted quantity at any point of time. 27. Moreover, there has been a statutory obligation on the part of the NTPC to lift the fly ash then and there and to make it available for the units, who depend fly ash for manufacturing of bricks and other materials for construction activities, which is part of the policy decision of the Government of India in the said notification referred to above. Hence, it is the obligation on the part of the NTPC to clear off extra quantity of ash available then and there from the thermal power station itself. Therefore, the NTPC has no other option except to go for inviting expression of intention to lift the fly ash to the extent of 4.5 lakh metric ton of fly ash per year as extra quantity from any third parties, where, if at all the Fly Ash Movers wants to make their offer, they could also make this offer competitively. Here, in the case in hand, since the Fly Ash Movers was not in a position to lift even the contractual quantity of 5.90 lakh metric ton ie., 49000 metric ton per month, there is no chance of making further offer by way of expression by Fly Ash Movers to lift the additional quantity. Here, in the case in hand, since the Fly Ash Movers was not in a position to lift even the contractual quantity of 5.90 lakh metric ton ie., 49000 metric ton per month, there is no chance of making further offer by way of expression by Fly Ash Movers to lift the additional quantity. Therefore, the Fly Ash Movers does not have any grievance over the impugned notification. 28. If the case of the Fly Ash Movers is accepted that, will amount to give a pre-emptive right to Fly Ash Movers to lift the extra quantity of ash, even if they are not able to lift the contractual quantity as per the existing contract, then, such kind of pre-emptive right will be nothing but superfluous offer, which would never be materialised at any point of time during the contractual period between the Fly Ash Movers and the NTPC. Therefore, viewing from any angle, the Fly Ash Movers cannot have any grievance against the impugned notification of the NTPC thereby the Fly Ash Movers has not made out any case to interfere with the impugned notification. Accordingly, this Court is of the considered view that, the Fly Ash Movers case must fail and the case of the NTPC has to be accepted. 29. In the result, the following orders are passed: (1) the interim order of injunction granted by this Court dated 05.11.2018 is hereby vacated, by thus, the application number 1380/2019 is allowed. (2) Resultantly, the original application No.1032/2018 is dismissed. However, there shall be no order as to costs.