IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 2376 of 2011
M/s Balaji Fuels Private Ltd. ....... Petitioner.
Versus
Central Coalfields Ltd. & others .... Respondents.
CORAM: - HON'BLE MRS. JUSTICE POONAM SRIVASTAV
For the Petitioner : M/s A.K. Sinha, Sr. Advocate, Amit Sinha
Neeta Sinha, Advocates.
For the Respondents : Mr.A.K. Mehta, Advocate, Mr. A.K. Das.
Reserved on 5th July,2011 Delivered on 21 /09 /2011.
09/ 21/09.2011
: Sri A.K. Sinha, Sr. Advocate assisted by Mr. Amit Sinha and Ms
Neeta Sinha, Advocates appears on behalf of the petitioner and Sri Anoop
Mehta, Advocate, appears on behalf of the respondents M/s C.C.L..
2. The instant writ petition is preferred for a direction in the nature
of mandamus to the respondents to release the coal for the month of
March, 2011 onwards, in the light of the decision of this Court in W.P.(C) No.
6044 of 2006 dated 1st April, 2006 and also order passed in Contempt Case
© No. 550 of 2009. Prayer is also for issuance of restrained order against
the respondent authorities from taking any coercive step against the
petitioner.
3. The questions raised in the instant writ petition are detailed in
paragraph 2 of the petition, which are being quoted herein below.
(a) Whether the action of the Respondent
authorities in not issuing the D.O. Letter and releasing coal for
the month of March, 2011 as illegal, arbitrary and without
jurisdiction?
(b) Whether the action of the Respondents in
stopping the coal supply merely on the basis of a newspaper
report about institution of a case against the petitioner by the
CBI can be said to be violative of the new Coal Distribution
Policy and the terms and conditions of Fuel Supply Agreement
executed between the petitioner and Respondent CCL?
(c ) Whether the seller and the consumer are legally
bound by the terms & conditions of the Fuel Supply Agreement?
2.
(d) Whether on mere institution of a case by CBI
and in absence of any direction by CBI to CCL for suspending
Coal supply, a monthly coal supply in favour of the petitioner
can be stopped?
(e) Whether the petitioner is legally entitled to have
monthly quota of coal for the month of March, 2011 and
onwards in the light of clear speaking direction of this Hon’ble
Court and also in the light of 3 inspections of the unit having
carried out by the Respondent CCL which has certified about
the working status of the unit?
(f) Whether the action of the Respondents is
violative of Articles 14,16,19(1)(g) and 300(a) of the
Constitution of India?
4. The facts of the case are that the petitioner was granted coal
linkage in the year 1991 to an extent of 5000 MT. After the appropriate
capacity assessment given by the CMPDIL after making a thorough
inspection recommendation was made to coal India Limited fixing quota
month wise as 5000 MT. Copy of the said letter dated 13/16.05.1991 is
Annexure-2 to the writ petition. Supply of coal to the petitioner was
stopped in the year 2005. This action was challenged by preferring W.P.(C)
No. 6044 of 2006 for resumption of supply of coal and the same was
disposed of vide order dated 1st April, 2009. Copy of the order is Annexure-4
to the writ petition. The direction in the said writ petition in substance was
that since the respondents had sought certain factual information against
15 points, but since no information was received coal supply was stopped.
This Court directed that the petitioner shall be given a reasonable
opportunity to bring on record all relevant documents and after submission
of the same if any doubt persists regarding the existence of the petitioner’s
unit, the respondent may make spot verification by fixing a date with prior
notice to the petitioner and even on spot inspection/ verification final
decision on each point shall be taken by the respondent by means of
speaking order. The entire exercise was further directed to be completed
3.
within three months. Since the petitioner’s unit is completely based on
linkage of coal, contempt proceedings was was initiated for non-compliance
of the order in the writ petition. Coal supply was resumed on initiation of
contempt proceedings, but subsequently once again the petitioner is facing
the same situation.
5. The submission on behalf of the petitioner is that the petitioner’s
linkage the petitioner’s linkage was accepted as valid and the petitioner
was required to enter into conditional Fuel Supply Agreement with CCL for
one month for release of monthly quota vide letter dated 15.3.2010. A
conditional agreement was executed on 16.3.2010, which according to the
petitioner, was executed contrary to the new Coal Distribution Policy, 2007.
The emphatic submission is that the new Policy does not provide any
conditional agreement. Subsequently vide letter dated 20.3.2010 the
petitioner was informed that supply of coal would be made for a period of
one month. Thereafter, after inspection by competent authorities further
supply of coal may or may not continue. After execution of the conditional
agreement the respondent accepted a draft for the month of March 2010
and released the coal for the said month. Thereafter inspection was made
on 22.4.2010. Consequent thereon the competent authority decided to
continue supply of coal. Another inspection was carried out by a team
consisting of C.C.L. Authorities and retired CBI officials on 22.9.2010. The
report submitted was :
(I) The factory was in running order;
(ii) 21 labourers were working;
(iii) Existing stock was approximately 300 tonnes (Raw material)as seen
and 300 tonnes SSF.
Copy of the said report is Annexure-8 to the writ petition.
6. Subsequently yet another inspection was carried out on 5.12.2010
i.e. approximately after 2 ½ months by a batch consisting of CCL authorities
and the CBI officials vide Annexure-9 to the writ petition certifying that the
4.
petitioner’s unit was in working status.
7. Learned counsel appearing on behalf of the petitioner submits
that another contempt petition being Contempt Case (C) No. 352 of 2010
was preferred highlighting the manner of functioning of the respondents,
whereby supply of coal was not continuous and was hampered time and
again which caused great inconvenience and financial loss to the unit,
evidently it prevented smooth functioning.
8. Suddenly coal supply for the month of March 2011 was
stopped, though amount towards the said supply was already in deposit
with the respondents. On inquiry it was revealed that a First Information
Report has been instituted against the petitioner by the C.B.I. News item
appeared in the daily newspaper and thus, the supply for the month of
March 2011 and onwards was stopped. The petitioner preferred the instant
writ petition on sudden stoppage of coal supply without notice. After the
news paper reporting and acquiring knowledge about the aforesaid F.I.R. an
amendment application vide I.A. No. 1547 of 2011 was made challenging
the letter/ order dated 9.5.2011.This letter was a communication issued to
the petitioner suspending supply/ dispatch of coal which is Annexure-9 to
the Amendment Application. The said I.A. was allowed vide order dated
13.6.2011.The petitioner was permitted to challenge the order dated
9.5.2011 by adding the prayer.
9. The submission on behalf of the petitioner is that the
respondents could not adopt highhanded attitude as it has been done in the
case of the petitioner. The only option before the respondents was to
cancel the agreement after issuing a notice and giving an opportunity of
hearing specially since merely lodging of a F.I.R. amounts to levelling
allegation alone but cannot be treated to be an unit liable for a criminal
offence. In absence of any written order or notice the act of the
respondents is nothing short of contempt, whereas in the instant case
5.
second cont. Case (C )No. 352 of 2010 is still pending for disposal. Sri Sinha
has castigated the action of the respondents as a blatant abuse of the
orders of this Court, besides being illegal, arbitrary and unfair. The news
paper report about the incident chastising the petitioner can hardly be a
good cause for stopping the supply of coal which was continued only after
direction of this Court in the previous writ petition specially when the
proceedings under Contempt petition and after executing a fresh
agreement. It is contended that the action of the respondents is violative of
Articles 14,16, 19(1)(g) and 300 (A) of the Constitution of India.
10. The respondents filed their counter affidavit. On the basis of a
revised Coal Supply Agreement dated 31.7.2010, whereby certain new
conditions were incorporated in the original Agreement dated 16.3.2010
and also stating therein that a complaint has been received by the S.P., CBI,
Ranchi, at the behest of Gopalka Credit Corporation, Church Complex,
Ranchi. The said complaint was sent to the C.B.I. by the Dy. S.P., Vigilance
Department. Complaint was in respect of black-marketing of coal by the
petitioner’s unit, which is also part of the counter affidavit. A joint surprise
check memorandum dated 26.3.2011 was made. The said surprise
inspection report reveals that on physical inspection of the plant, the unit
runs on generator sets, however, no bills/ invoices pertaining to
procurement of diesel was found or produced. The plant was found in-
operative and also the order suspending the coal dispatch as well as a
decision of the Apex Court between Coal India Limited and others
Versus Alok Fuels Private Limited ( 2010) 10 Supreme Court Cases
157. The respondents lay emphasis on the said decision of the Hon’ble
Supreme Court.
11. Learned counsel appearing on behalf of the petitioner submits
that the order of suspension though passed at a subsequent stage in the
month of May 2011 whereas supply of coal was suspended in the month of
6.
March 2011. No grounds have been enumerated for suspending the supply
of coal. It is for the first time the respondents have revealed that the supply
was stopped on account of a F.I.R. It is settled principle of law that ground
for passing an order against the petitioner cannot be supplemented for the
first time by means of counter affidavit. The impugned order suspending
the supply of coal is dated 9.5.2011, which can only be given effect
prospectively, but supply has been stopped for the month of March 2011,
for which admittedly money was in deposit with the respondents. An
advance amount was deposited in the month of April 2011 itself pertaining
to two months. There is no order in existence till date. This itself amounts
unfair practice. The next argument is that the impugned order is without
any reason and non-speaking. Learned counsel has placed reliance on the
decision by this Court in Mrs. Lakshmi Singh & anr. Versus State of
Jharkhand & others, 2007 (3) J C R 340 (Jhr). It was held that in the
event of absence of reason and the petitioners not made aware of the
penal action against them non-existence of grounds is a clear violation of
principle of natural justice. Similar view was expressed by the apex Court
in the case of M/S Dwarkadas Marfalia & Sons Vs. Board of Trustees of the
Port of Bombay, that every action of the executive authority must be
subjected to Rule of Law and must be informed by Reasons. In the decision
of Apex Court in State of Punjab V.Bhag Singh, (2004) 1 S.C.C. 547
and Kumari Shrilekha Vidyarthi etc. V. State of U.P. And others, AIR
1991 S.C. 537. It is contended on behalf of the petitioner that affording no
opportunity of hearing or giving explanation renders the impugned action
completely vitiated. In support of this contention reliance has been placed
on another decision of the Apex Court in Mahabir Auto Stores and
others V. India Oil Corporation and others AIR 1990 Supreme Court
1031. It was held in para 10 as enumerated below:
7.
“Failure to give reasons amounts to denial of justice”.
Reasons are live links between the mind of the decision
taker to the controversy in question and the decision or
conclusion arrived at. Reasons substitute subjectively by
objectively. The emphasis on recording reasons is that if
the decision reveals the “inscrutable face of the sphinx”, it
can, by its silence, render it virtually impossible for the
Courts to perform their appellate function or exercise the
power of judicial review in adjudging the validity of the
decision. Right to reason is an indispensable part of a
sound judicial system, reasons at least sufficient to
indicate an application of mind to the matter before Court.
Another rationale is that the affected party
can know why the decision has gone against him. One of
the salutary requirements of natural justice is spelling out
reasons for the order made. In other words, a speaking
out. The “inscrutable face of sphinx” is ordinarily
incongruous with a judicial or quasi-judicial performance”.
12. Exercise of power must be governed by Rule of Law and must
be informed by reason. Firm carrying on business of sale and distribution of
lubricants for 18 years, abrupt stoppage of supply of lubricants to the firm
by Indian Oil Corporation without any notice of intimation is glaring example
of arbitrariness and unfair play.
13. I am not in agreement with the contention on behalf of the
respondents on the basis of the decision of the Apex Court annexed with
the counter affidavit. It is not applicable to the facts of the present case
since while the Apex Court had directed for stoppage of supply of coal to
the unit in the case of Coal India Limited and others Versus Alok Fuels
Private Limited on account of the reason that the allegation of black-
marketing and mis-utilization of the coal was substantiated by filing of the
charge sheet after completion of investigation. In the instant case since
investigation is still continuing and only F.I.R. has been lodged and that too
on account of certain complaint by a private person who had definite
grudge against the petitioner, this could not be said to be a sufficient for
stoppage of supply of coal.
14. Sri Anoop Kumar Mehta, counsel appearing on behalf of the
respondent- CCL has controverted the argument of Sri A.K. Sinha and has
8.
tried to justify the action of the respondent that only after a complaint was
made by Gopalka Credit Corporation to the Vigilance Department and on
the basis of a letter written by the Department to the C.B.I., a joint surprise
check was conducted on 26.3.2011; an F.I.R. was lodged on 19.4.2011.
15. I have thoroughly examined and scrutinized the document and
have also given careful consideration to the argument advanced by the
respective counsels. Series of events commencing from the initial stoppage
of supply of linkage of coal to the petitioner and institution of first writ
petition (W.P.(C) No. 6044 of 2006) and the subsequent contempt cases are
quite eloquent on its face. Evidentially the petitioner and the respondents
were not working in a congenial atmosphere. The petitioner had to
approach this Court on several occasions for the supply of coal; inspections
were made on a number of occasions and in all previous inspections
conducted on 22.4.2010, 22.9.2010 and 5.12.2010, the unit was found to
be functioning. The last inspection in the month of December was carried
out in presence of C.B.I. authorities and only in the final inspection at a
subsequent stage i.e. on 26.3.2011 the Inspecting Team reported that on
inspection of the campus, raw coal as well as processed coal were found
which were measured by the Survey Manager CCL Head quarter, Ranchi.
Shri Munna Singh who was present at the time of inspection on behalf of
the petitioner, was unable to produce certain books of account and stock
register and the Team found that the plant was being run on generator set,
though no bills/ invoices pertaining to procurement of diesel could be found.
A small quantity of coal was being burnt at the exist point of the Oven,
despite the fact I am not making any comment on the allegations and
counter-allegations. It is apparent that the respondents act is far from being
commendable.
16. I am in agreement with the submission of the learned counsel
that since the unit was not able to function on account of intermittent
9.
supply of coal, the industry could not be made operative continuously for all
30 days and 24 hours of the month. Besides, the supply of coal was
admittedly reduced from 5000 MT to 3000 MT which was not sufficient to
run the industry continuously on all days of the month. It is also correct that
the F.I.R. was lodged by one Gopalka Credit Corporation alleging that the
petitioner indulged in black-marketing and despite the fact that Inspecting
Team along with the vigilance officer of the C.C.L. and C.B.I., submitted a
report in favour of proper utilization of coal on previous three occasions, but
only at a subsequent stage i.e. on 26.3.2011 the functioning of unit was
reported to be subsequently by aid of a generator set. The explanation
given by the petitioner that since supply of coal was insufficient, the unit
could not function and existence of generator in the premises of the unit is
not sufficient to conclude that the petitioner indulged in black-marketing.
17. I have also noticed from the documents on record and in the
second supplementary affidavit that apart from the instant F.I.R. at the
instance of Chandrakant Gopalka there are 10 more cases against the
petitioner all the reported allegations are by the same persons details of
which are given in paragraph 9 of the supplementary affidavit.
18. Besides this, I have also examined the agreement entered into
between the petitioner and the respondents. Clause 13, deals with ”
suspension of coal supplies”. Clause 15 deals with “termination of
agreement” Admittedly none of the conditions of the Agreement exists in
the instant case. Therefore, neither the suspension can be resorted to nor
the agreement could be terminated. It is evidently an action on behalf of
the respondent, which has far reaching effect, besides I cannot overlook
that the action taken is by an authority who is admittedly a State Executive
authority and, therefore, this act must be in accordance with Rule of Law
and informed by ‘reason’. Specially where the State enters the contractual
fields, it should necessarily be governed by incidence of the contract and in
10.
my opinion fairness must be cardinal rule that has to be followed with
reason non-arbitrariness. Since the order passed in the month of May 2011,
whereas the supply was stopped from the month of March 2011 itself. It is
absolutely clear that the action of the respondent is pre-determined. No
reason has been attributed for stopping the supply and for the first time it is
detailed in the counter affidavit. This cannot be done because assigning
reason at a subsequent stage by affidavit is deprecated by the Apex Court
as far back as in the year 1978 in the case of Mahendra Singh Gil Versus
State of Hariyana, (1978) 1 SCC 405.
19. I am of the considered view that the stoppage of supply of coal
in the instant case is not justified and giving of reasons is one of the
fundamentals of good administration. Reliance has been placed in the
decision of Ran Singh and Anr. Versus State of Haryana and
another, 2008(1) Supreme 473. Paragraph 10 is being quoted herein
below:
” Even in respect of administrative orders, Lord Denning M.R. In
Breen V. Amalgamated Engineering Union, (1971 (1) All E.R.
1148) observed “The giving of reasons is one of the
fundamentals of good administration”. In Alexander Machinery
(Dudley) Ltd. V. Crabtree (1974 LCR 120) it was observed:
“Failure to give reasons amounts to denial of justice”.
Reasons are live links between the mind of the decision taker to
the controversy in question and the decision or conclusion
arrived at”. Reasons substitute subjectivity by objectivity. The
emphasis on recording reasons is that if the decision reveals the
“inscrutable face of the sphinx”, it can, by its silence, render it
virtually impossible for the Courts to perform their appellate
function or exercise the power of judicial review in adjudging
the validity of the decision. Right to reason is an indispensable
part of a sound judicial system, reasons at least sufficient to
indicate an application of mind to the matter before Court.
Another rationale is that the affected party can know why the
decision has gone against him. One of the salutary
requirements of natural justice is spelling out reasons for the
order made, in other words, a speaking out. The “inscrutable
face of a sphinx” is ordinarily incongruous with a judicial or
quasi judicial performance.
20. For the reasons detailed herein above, there is no justification
in the manner , in which the supply was stopped and the order has been
11.
passed subsequently.
21. Mr. A.K. Mehta has apprised me of the fact that now under the
Coal Agreement supply cannot be resumed as a new policy has been
implemented. I am of the view that this Court cannot enter into the matter
of policy decision, therefore, this writ petition is disposed of with a direction
that the respondents shall take step to execute an agreement with the
petitioner under the New Policy for supply of coal in accordance with law
within a period of two months from the date a certified copy of this order is
produced before him. The continuance of investigation on the basis of F.I.R.
lodged by a private person shall have no adverse effect on the supply of
coal pursuant to the new agreement.
22. The writ petition is, accordingly, disposed of in terms provided
here-in-above.
(POONAM SRIVASTAV, J)
Sharma