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2025 DIGILAW 1684 (RAJ)

Amar Prem and Sons Private Limited v. Rajasthan State Mines and Minerals Limited

2025-10-30

NUPUR BHATI

body2025
ORDER : 1 . Learned counsel for the petitioner, at the outset, requested the Court to hear the matter at this stage itself despite the fact that no reply has been filed by the respondents’ counsel, however, the respondents’ counsel agreed to the said request of the petitioner and therefore, the instant matter is heard and decided today itself. 2. The instant writ petition has been filed under article 226 of the constitution praying following reliefs :- “xxxxxxx A. That Impugned Office Order dated 17.10.2025 (Annex.26) issued and passed by Respondent No. 2 on behalf of Respondent no. 1 may kindly be quashed and set aside and it be declared as violative of Article 14 and 19 (1) (g) of the Constitution of India; B. That Respondents may kindly be directed to continue the dispatch of Lignite at Kasnau mines on the earlier sale consideration i.e. earlier basic selling price at Rs. 2100 PMT as agreed between the parties immediately. C. That Respondents may be directed to not to forfeit the Earnest Money Deposit (EMD)/Security Deposit, as available with them, deposited by Petitioner with the respondents, after the expiry of validity of extension period i.e. 30.10.2025. xxxxxxxx” 3. Brief facts of the case are that the petitioner is a company incorporated under the provisions of the Companies Act and is engaged in the business of mining and trading of lignite. Respondent No. 1 – Rajasthan State Mines & Minerals Limited (RSMML) – is a Government of Rajasthan enterprise engaged in mining and marketing of industrial minerals in the State. Respondent No. 1 invited bids through an e-auction dated 24.10.2024 (Annnex.2) for the sale of Run-of-Mine (ROM) Lignite from Kasnau Mines, Nagaur, under specified terms and conditions. The petitioner participated in the said e-auction, was declared a successful bidder, and was allotted 16,600 metric tonne (MT) of lignite at a basic price of ?2,100 per metric tonne, the contract was valid upto 31 st March 2025. A sale intimation letter and purchase order were thereafter issued by the respondents confirming the allotment. It is the case of the petitioner that subsequent to the allotment, the respondents failed to commence timely production of lignite from the said mines, resulting in delays, irregular dispatches, inadequate stock availability, and supply of lignite of inferior quality having excessive moisture content. A sale intimation letter and purchase order were thereafter issued by the respondents confirming the allotment. It is the case of the petitioner that subsequent to the allotment, the respondents failed to commence timely production of lignite from the said mines, resulting in delays, irregular dispatches, inadequate stock availability, and supply of lignite of inferior quality having excessive moisture content. The petitioner made several representations and sent multiple emails seeking redressal of these issues; however, no effective action was taken by the respondents. Owing to these operational difficulties, the respondents themselves extended the validity period of the e-auction contract on several occasions, and the validity was ultimately extended up to 30.10.2025(Annex.22). During this extended period, the petitioner continued to lift lignite as per the availability at the mines and deposited the requisite instalments from time to time. Out of the total allotted quantity of 16,600 MT, the petitioner could lift only 9,906.37 MT, leaving a balance of 6,639.63 MT un-lifted on account of the respondents’ failure to ensure regular and adequate supply. On 17.10.2025 (Annex.26), the respondents issued an Office Order revising the basic sale price of lignite from Rs. 2,100 per metric tonne to ?3,030 per metric tonne with immediate effect, in purported exercise of powers under Clause 13.5 of the e-auction terms, and called upon the petitioner to convey its consent to the revised price within three days in order to continue further dispatches. The petitioner objected to the said revision, contending that the unilateral enhancement of the price during the subsistence of the contract was arbitrary and without justification, particularly when it had already entered into commitments with its customers at the earlier rate. The petitioner submitted that such a sudden and unilateral increase in price would cause severe financial hardship and disrupt its ongoing contractual obligations. It is the grievance of the petitioner that despite several representations, the respondents did not reconsider or withdraw the impugned order dated 17.10.2025 (Annex.26), thereby halting dispatches of lignite and acting in breach of the agreed contractual terms. This wit petition has been preferred. 4 . Learned counsel for the petitioner submits that the impugned Office Order dated 17.10.2025 (Annex.26), whereby the respondents have revised the basic sale price before 12 days of expiration of contract dated 30.10.2025 (Annex.22), of lignite from Rs. 2,100 per MT to Rs. This wit petition has been preferred. 4 . Learned counsel for the petitioner submits that the impugned Office Order dated 17.10.2025 (Annex.26), whereby the respondents have revised the basic sale price before 12 days of expiration of contract dated 30.10.2025 (Annex.22), of lignite from Rs. 2,100 per MT to Rs. 3,030 per MT, is arbitrary, unreasonable, and violative of Articles 14 and 19(1)(g) of the Constitution of India. It is contended that such unilateral enhancement of price at the fag end of the contract period, without notice or justification, is dehors the terms of the e-auction and contrary to settled principles of fairness. 4.1 He further submits that Clause 13.5 of the Special terms and Conditions does not confer absolute power on the respondents to revise prices at will, and any discretion under the said clause must be exercised reasonably and not in a manner that defeats the legitimate expectation of the contracting party. He submits that the abrupt increase of nearly 50% in the basic sale price, issued just before the Diwali Vacation, demonstrates lack of bona fides and procedural fairness. 4.2 It is further submitted that the impugned order violates the doctrines of promissory estoppel and legitimate expectation, as the respondents had earlier provided that supply of lignite would continue at the existing price during the extended validity period up to 30.10.2025 on the basis of which the petitioner entered into onward supply contracts. 4.3 Learned counsel argues that even in contractual matters, actions of the State and its instrumentalities must conform to constitutional standards of fairness and non-arbitrariness. Reliance is placed upon Judgment dated 24.07.2023 S.B. Civil Writ Petition No. 10996/2022 M/s Agrawal Distributors vs. Rajasthan State Mines and Minerals Ltd. passed by Coordinate Bench and also relied upon judgment of apex court in the case of Reliance Energy Limited and Ors. Vs. Respondent: Maharashtra State Road Development Corporation Ltd. and Ors. (2007) 8 SCC 1 . 5. Per contra, learned counsel for the respondents submits that the present writ petition is not maintainable under Article 226 of the Constitution, as the dispute arises purely out of contractual obligations governed by the terms of the e-auction agreement voluntarily executed between the parties. Vs. Respondent: Maharashtra State Road Development Corporation Ltd. and Ors. (2007) 8 SCC 1 . 5. Per contra, learned counsel for the respondents submits that the present writ petition is not maintainable under Article 226 of the Constitution, as the dispute arises purely out of contractual obligations governed by the terms of the e-auction agreement voluntarily executed between the parties. It is contended that the petitioner, having participated in the bid with full knowledge of all clauses, including Clause 13.5 of the Special Terms and Conditions, cannot now challenge its operation after having derived benefit under the contract. 6. Counsel for the respondents further submits that Clause 13.5 specifically empowers the respondent RSMML to review and change the basic sale price of lignite at any time during the currency of the contract, and such power was exercised strictly in accordance with the said clause. He submits that the impugned Office Order dated 17.10.2025 revising the price from Rs. 2,100 to Rs. 3,030 per MT was issued after due consideration of increased costs, royalty, levies, and other commercial factors and the decision applies uniformly to all purchasers and not selectively to the petitioner. 7. Counsel for the respondents further submits that the petitioner voluntarily accepted the tender conditions and continued lifting lignite thereafter, and hence is estopped by conduct from challenging the same. He submits that the doctrine of legitimate expectation has no application as the contract expressly reserved the right of price revision, and no assurance was ever given regarding stability of rates. He further submits that the petitioner did not start lifting the material in first 8 months of the contract for which, communication via email was also made with the petitioner and thereafter, which the respondent has extended the validity till 30.10.2025 (annex.22), without imposing any penalty. Though, the validity of the contract was for a period of five months only i.e. from 24.10.2024 upto 31.03.2025 (Annex.2). 8. Counsel for the respondents further submits that the respondent corporation, being a commercial entity, took the decision in exercise of its business discretion, and judicial interference in such price escalation related matters is unwarranted, prayed that the writ petition be dismissed as not maintainable and devoid of merit. 9 . Counsel for the respondents also draws the Court’s attention to the Bid Sheet dated 16.09.2025. 9 . Counsel for the respondents also draws the Court’s attention to the Bid Sheet dated 16.09.2025. It is submitted that, on one hand, the petitioner has challenged the revised price on the ground that it is excessively high—approximately 50% higher— while, on the other hand, he himself has accepted the price of Rs. 3,020 per MT as reflected in the Bid Sheet at Sr.No.5, for the same mineral situated in the adjoining mines, therefore, the petitioner was fully aware of the prevailing price and the escalation in costs. He also submits that having voluntarily quoted and accepted the said price, the petitioner cannot now contend that the respondents’ action in reviewing or revising the price was arbitrary. Counsel further contends that the case of Agarwal Distributors (supra) is not applicable to the present matter because in the case in hand, the relevant clause in the contract permits RSMML to review the price at any time, consequently, the petitioner’s argument that the respondents were not entitled to review the price toward the completion of the contract stands untenable. The Bid Sheet dated 16.09.2025, is taken on record. 10. I have heard and considered the arguments advanced at Bar by counsel for the parties and perused the material available on record. 11 . The question which come up before this Court in order to decide the controversy of the present writ petition is as follows:- (i) Whether the impugned Office Order dated 17.10.2025 (Annex.26) revising the basic sale price of lignite suffers from arbitrariness, unreasonableness, or violation of Articles 14 and 19(1)(g) of the Constitution. 12. The present case involves a controversy of revision of sale price under an e-auction contract governed by mutually accepted terms. The action of respondent RSMML stems from Clause 13.5, which expressly empowers it to revise the basic sale price. Clause 13.5 is reproduced hereunder:- "13.5 The management reserves the right to review and change the basic selling price of the successful bidders during validity period of e-auction. In such case, the consent of the successful bidder shall be sought for the changed price. However, there shall not be any forfeiture of Security Deposit on the balance un-lifted quantity if the changed price is not accepted by the successful bidder and the lifted quantity completed prior to changed price shall be treated as final." 13 . In such case, the consent of the successful bidder shall be sought for the changed price. However, there shall not be any forfeiture of Security Deposit on the balance un-lifted quantity if the changed price is not accepted by the successful bidder and the lifted quantity completed prior to changed price shall be treated as final." 13 . The aforesaid clause of the Special Terms and Conditions gives respondent RSMML liberty to review and change the basic selling price of the successful bidder during the validity of the period of auction. This is an admitted fact that here, in the present case, the respondents have reviewed and changed the basic selling price during the validity period of e-auction as the validity period is coming to an end on 30.10.2025 (Annex.22). Further, the respondents had sought the consent of the petitioner for the revised price; however, the petitioner did not accept the reviewed price. The relevant clause also provides that, in the event the petitioner does not accept to the change in price, there shall be no forfeiture of the security deposit for the balance of the un-lifted quantity, and the quantity lifted prior to such change shall be treated as final. It is also important to note that the petitioner will not incur any financial loss if it chooses not to accept the revised price, as the clause expressly stipulates that there shall not be any forfeiture of Security Deposit on the balance un-lifted quantity if the changed price is not accepted by the successful bidder and the lifted quantity completed prior to changed price shall be treated as final. Therefore, this is not a situation where the petitioner would suffer financial detriment or face any penalty upon refusal. The petitioner’s contention that the respondents could not have reviewed or revised the basic selling price at the verge of completion of the contract is untenable. The language of the clause does not prohibit the respondents from reviewing or altering the price near the conclusion of the contract. Moreover, the clause cannot be considered unilateral since the respondents were obligated under it to seek the petitioner’s consent, which they duly sought. The petitioner, thus, remained at liberty to either accept or reject the revised terms. The language of the clause does not prohibit the respondents from reviewing or altering the price near the conclusion of the contract. Moreover, the clause cannot be considered unilateral since the respondents were obligated under it to seek the petitioner’s consent, which they duly sought. The petitioner, thus, remained at liberty to either accept or reject the revised terms. In the present case, the petitioner has refused to accept the revised price, thereby bringing the contractual obligations to an end with respect to the un-lifted quantity. The petitioner took part in the auction and signed the contract knowing well about the Clause 13.5 and did not raise any objection during the bidding or signing process. After accepting this term, the petitioner now cannot call the company’s action arbitrary just because the price increase results in financial implication. Although every decision must be fair and reasonable, there is nothing to show that the price revision was done with ill- intention or discrimination. The price increase applies equally to all buyers and is based on valid business reasons, such as higher production costs and government levies. 14. Counsel for the petitioner relied on a previous judgment of this Court in M/s Agrawal Distributors (supra), but the facts of that case are completely different. In case of M/s Agrawal Distributors (supra), there was no clause in the contract allowing a price change, yet the buyers were told to accept new terms. The Court in that case found the action to be unfair and beyond the contract. However, in the present case, Clause 13.5 clearly allows RSMML to revise the sale price anytime during the contract. The petitioner was fully aware of this and voluntarily agreed to it during the e- auction. Moreover, the Office Order dated 17.10.2025 does not force the petitioner to continue; it gives a choice — either to buy lignite at the new price or to stop lifting it. Therefore, the ruling in Agrawal Distributors (supra) does not have application here, since the revision of price in this case is based on a clause that both parties had agreed to. 15 . The Hon’ble Apex Court in the case of Har Shankar & Ors. v. The Dy. Excise and Taxation Commissioner & Ors. Therefore, the ruling in Agrawal Distributors (supra) does not have application here, since the revision of price in this case is based on a clause that both parties had agreed to. 15 . The Hon’ble Apex Court in the case of Har Shankar & Ors. v. The Dy. Excise and Taxation Commissioner & Ors. ( 1975) 1 SCC 737 ; has held that those who offer their bids in the auction with full knowledge of the terms and conditions, cannot be allowed to wriggle out their contractual obligations arising out of the existence of their bids. Further, in para 17 of the said decision, the Hon’ble Apex Court has also held that: “Those, who contract with open eyes must accept the burdens of the contracts along with its benefits.”. In the case in hand, the petitioner has accepted the terms and conditions of the contract with full knowledge and open eyes including Clause 13.5 of the Contract which gave the respondents an unbridled authority/power to review the selling price at any point of time and to any extent. The petitioner, till the date the price was not reviewed, was satisfied with all the conditions/clauses mentioned in the contract and only after when the respondents reviewed the basic selling price, the petitioner was aggrieved. Thus, the petitioner can not take benefit of some part of the contract & feel aggrieved of the other part. When the petitioner has accepted the conditions of the contract with full knowledge, it has to accept the burden of the contract along with its benefits. 16 . The Hon’ble Apex Court in the case of New Bihar Biri Leaves Co. & Ors. vs. State of Bihar , ( 1981) 1 SCC 537 , has applied the maxim “qui approbrat non-reprobat” (one who approbates cannot reprobate) and held that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the contract which might be disadvantageous to him. 17 . In Tata Cellular v. Union of India & Ors. 17 . In Tata Cellular v. Union of India & Ors. ( 1994) 6 SCC 651 , the Hon’ble Apex Court held that: “The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.”. The petitioner while laying challenge to the Office Order dated 17.10.2025 (Annex.26) is unable to demonstrate that the order is in contravention to the condition/clause 13.5 of the contract or is in violation of Article 14 of the Constitution of India, as the respondents while issuing the Office Order dated 17.10.2025 (Annex.26), have not flouted or gone beyond the condition of the contract particularly clause 13.5 and further, there is no violation of Article 14 and 19(1)(g) of the Constitution of India as the subsequent buyers would also be bound by the reviewed selling price and thus, when the respondents have not flouted/gone beyond the condition/clause No.13.5 of the contract, the petitioner’s prayer that: the respondents may be directed to continue/dispatch of lignite on the earlier basis selling price at Rs.2,100/- per MT, cannot be granted. The Hon’ble Apex Court in the case of Tata Cellular (supra) has further held that the duty of the court is to confine itself to the question of legality and its concern should be: (i) Whether a decision-making authority exceeded its powers?, (ii) committed an error of law, (iii) committed a breach of the rules of natural justice, (iv) reached a decision which no reasonable tribunal would have reached, or (v) abused its powers. Regarding the scope of judicial review, the Hon’ble Apex Court has observed that: “xxxxxxx 85 . It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. xxxxxx” 18 . This is an admitted position that the contract has come to an end/coming to an end on 30.10.2025 and in such circumstance, given the fact that the petitioner vide email dated 23.10.2025 (Annex.27), has refused to accept the revised selling price, the respondents cannot be directed to continue the dispatch of lignite at the earlier basic selling price, inasmuch as under clause 13.5 of the auction notice, the respondent also reserve the right to not only refuse further extension but also cancel the contract. 19 . This Court is also of the view that the occurrence of financial difficulty, inconvenience, or hardship in performing the conditions agreed to in the contract cannot justify non-compliance with its terms, which the petitioner had accepted with full awareness. When the petitioner signed the contract, everything was made transparent to the petitioner and thus, there is no element of prejudice that can be attributed to the petitioner. 20 . As an upshot of the above discussion, the petitioner is not found to be entitled to the relief as prayed, inasmuch as the impugned order dated 17.10.2025 (Annex.26) has been passed by the respondent No.2-Manager (Marketing), Rajasthan State Mines And Minerals Limited, strictly in consonance with Clause 13.5 of the Contract and the petitioner could not be directed to continue the dispatch of lignite at the mines in question on the earlier basic selling price @ Rs.2,100/- per MT. The petitioner is further estopped from challenging the respondents’ action in issuing the Office Order dated 17.10.2025 (Annex. The petitioner is further estopped from challenging the respondents’ action in issuing the Office Order dated 17.10.2025 (Annex. 26), as the said order was made pursuant to Clause 13.5 of the Contract, under which the petitioner has been a beneficiary and has enjoyed all the fruits and benefits of the contract since its inception. 21 . The writ petition fails and is hereby dismissed. Stay application as well as all other pending application(s), if any, also stand dismissed.