IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 5385 of 2009
with
W.P.(C) No. 5321 of 2009, W.P.(C) No. 5339 of 2009, W.P.(C) No. 5340 of
2009, W.P.(C) No. 5342 of 2009, W.P.(C) No. 5344 of 2009, W.P.(C) No.
5345 of 2009,W.P.(C) No. 5352 of 2009, W.P.(C) No. 5355 of 2009,
W.P.(C) No. 5368 of 2009, W.P.(C) No. 5387 of 2009, W.P.(C) No. 5392 of
2009, W.P.(C) No. 5322 of 2009, W.P.(C) No. 5369 of 2009, W.P.(C) No.
5585 of 2009, W.P.(C) No. 5583 of 2009, W.P.(C) No. 5839 of 2009 &
W.P.(C) No. 6092 of 2009
---
M/s Maha Laxmi Enterprises, Palamau
(Petitioner in W.P. (C) No. 5385 of 2009)
M/s. National Fuels , Daltonganj
(Petitioner in W.P. (C) No. 5321 of 2009)
M/s India (SF) Prducts Company, Daltongaj
(Petitioner in W.P. (C) No. 5339 of 2009)
M/s. Jagdish Fuel Industries, Palamau
(Petitioner in W.P. (C) No. 5340 of 2009)
M/s. Deccan Trade Linc, Palamau
(Petitioner in W.P. (C) No. 5342 of 2009)
M/s. Maa Durga Enterprises, Palamau
(Petitioner in W.P. (C) No. 5344 of 2009)
M/s. Volvo Enterprises, Palamau
(Petitioner in W.P. (C) No. 5345 of 2009)
M/s. Spice Jet Enterprises, Palamau
(Petitioner in W.P. (C) No. 5352 of 2009)
M/s. F. G. Engeecom & Industries, Dalgonganj
(Petitioner in W.P. (C) No. 5355 of 2009)
M/s. Classic Chemicals, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5368 of 2009)
M/s. Bhasker Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5387 of 2009)
M/s. Jai Mata Jee Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5392 of 2009)
M/s. Balajee Enterprises, Daltonganj, Palamau
(Petitioner in W.P. (C) No. 5322 of 2009)
M/s. Shiv Coke Briquettes &Manufacturing Co. Daltonganj,Palamau
(Petitioner in W.P. (C) No. 5369 of 2009)
M/s. Sri Salasar Mineral Processing Works, Tendua Kalan, Palamau
(Petitioner in W.P. (C) No. 5583 of 2009)
M/s. Vananchal Mineral & Processing Works, Kataiya, Palamau
(Petitioner in W.P. (C) No. 5839 of 2009)
M/s. Shiv Sagar Industries, Manuadih, Ramgarh
(Petitioner in W.P. (C) No. 6092 of 2009)..
Versus
1. The State of Jharkhand through the Secretary, Department of
Industries
2. Jharkhand State Mineral Development Corporation Ltd. Ranchi
3. The Managing Director, Jharkhand State Mineral Development
Corporation Ltd. , Ranchi
2
4. In-Charge, Coal Marketting, Jharkhand State Mineral
Development Corporation Ltd. Ranchi
5. The Joint Director Industries, Directorate of Industries, Govt.
of Jharkhand, Ranchi ... ... Respondents
( In all cases)
---
CORAM: HON'BLE MR. JUSTICE RAMESH KUMAR MERATHIA
---
For the Petitioner : M/s. Anil Kumar Sinha &
Ajit Kumar, Advocate
For the State : Mr. A. Allam, Sr. S.C. II.
For the JSMDC : Mr. Anoop Kumar Mehta, Advocate.
---
C.A.V. on 30.4.2010 Delivered on 19.5.2010
---
9. 19.5.2010
: All these writ petitions involving common questions
were heard together at length. Parties agreed that these writ
petitions can be disposed of on the basis of pleadings of W.P.
(C) No. 5385 of 2009.
2. These writ petitions have been filed for directing the
respondent-Jharkhand State Mineral Development
Corporation Limited (JSMDC for short) to resume the coal
supply to the petitioners from the month of October, 2009,
and for quashing the letters under which, the coal supply
agreements have been terminated/ suspended.
3. According to the petitioners, pursuant to Notice Inviting
Tender (N.I.T.) dated 6.12.2007 issued by JSMDC inviting
applications for purchase of coal of Coal India Limited
(C.I.L.) collieries from JSMDC, they applied for
purchase/allotment of coal. JSMDC asked the Deputy
Commissioner, Palamau to hold preliminary inquiry at the
District level about the status of the petitioners. Accordingly,
three men committee consisting of the District Mining
Officer; the General Manager, District Industries Centre,
Medninagar; and the Additional Collector, Palamau inspected
and recommended allotment of 350 M.T. coal per month.
Accordingly, they entered into the agreements; deposited
money, and started lifting coal, allotted to them, from April,
2009. In July JSMDC asked the petitioners to submit the
utilization report with other documents and informations,
which the petitioners complied in August and October, 2009,
3
but while the petitioners were running their industries the
allotment of coal was discontinued from October 2009. Then
they made several representations. But the coal supply
agreements have been terminated/suspended without any
show cause notice and without affording opportunity of
hearing to the petitioners.
4. On the other hand the respondents justified their
actions.
5. Accordingly, on 4.12.2009 the following order was
passed in these writ petitions:-
“All these writ petitions involve similar
controversy and therefore this common interim order
is being passed in all these petitions.These are in all 14 writ petitions of “tiny”
industries, as they are known whose supply/allocation
of coal under the F.S.A. has either been cancelled or
suspended. The cancellation/suspension is due to the
suspicion on the part of the State Government that
these industries do not exist on the spot. This
suspicion has been generated because letters sent to
some of these industries were returned with the
endorsement that the unit was not found on the spot.
This in turn led to a suspicion that in the entire district
there has been some large scale fraud by showing
non-existent industries to be working on the spot and
thereby obtaining allocation of coal through F.S.A.Having regard to the nature of controversy, in
stead of wasting time in obtaining lengthy affidavits
from the parties, hearing lengthy arguments only for
deciding the question of fact whether the industries
actually exist on the spot or not, it seems to be more
appropriate to require a dependable officer to conduct
a spot inspection and to submit a report regarding
existence of each of these 14 industries on the spot
and either their running or their ability to run upon
supply of fuel, along with photographs taken on the
spot to corroborate the report. For this purpose, the
Sub-Judge of the district Palamau or if the Sub-Judge,
Palamau is not available for any reason, another civil
Judicial Officer to be nominated on or before
10.12.2009 by the District Judge, Palamau is hereby
appointed for the above purpose. The petitioners will
produce a certified copy of this order along with a list
of names and complete addresses of each industry
involved in these petitions before the District Judge,
Palamau on or before 9th December, 2009 to enable
him to issue necessary direction to the concerned Civil
Judicial Officer. Because on 12.12.2009 there are
elections in the district of Palamau, therefore, the
Judicial Officer will conduct his inspection on
13.12.2009 and if the inspection cannot be completed
on 13.12.2009 he may continue the same on
14.12.2009. If the inspection is continued on
414.12.2009 the Officer will be treated to be on duty for
that day. The report will be sent through the District
Judge, Palamau in sealed cover via special messenger
so as to reach this Court by 16.12.2009. The
photographs taken by a digital camera may be sent in
the form of a memory card which is normally used in
such cameras so that time is not wasted in getting
them printed in Palamau.The Deputy Commissioner, Palamau will for this
purpose arrange a proper vehicle with appropriate
security escort for the Judicial Officer at 9.00 A.M. on
13.12.2009 at the residence of the Judicial Officer. The
learned counsel for the State will intimate this order to
the Deputy Commissioner, Palamau by FAX by
09.12.2009.The learned counsel for the petitioners
undertakes to supply a good quality digital camera to
the Judicial Officer for this purpose along with a
photographer for the period of two days.A certified copy of this order will be issued on
payment of requisite charges by 05.12.2009″6. Pursuant to the said order a report from Sub Judge-1,
Palamau, Daltonganj dated 15.12.2009 sent through the
learned District Judge was received. The Sub Judge opined
that the industries were in existence and were able to run
upon supply of fuel and they were found in running
condition. Along with report photographs and other
documents were enclosed.7. On 27.1.2010, the parties were given photo copies of
the relevant documents/ reports for filing their objections if
any.8. Thereafter, when the matters were taken up on
24.2.2010, counsel for the petitioners submitted that in view
of the said reports, the writ petitions should be allowed and
JSMDC be directed to resume coal supply.9. On the other hand, learned counsel for the
respondents submitted that as per the said order passed on
4.12.2009, the inspections were conducted on
13/14.12.2009, and within these 9-10 days the petitioners
got time to manage the show by window dressing, which will
find support from the stereotyped report of learned Sub
Judge.10. On being prima facie satisfied with the said
submissions of the respondents, I thought it proper to get a
confidential inquiry done through the Vigilance Department,
5without indicating anything in the court. Accordingly only
this order was passed on 24.2.2010-“Heard the parties. Order is reserved.”
11. Accordingly a confidential letter dated 19th March, 2010
was issued to the Director General of Police, Vigilance
Bureau, Jharkhand, Ranchi. One inquiry report for 14 units
was received. But when these cases were got listed on
7.4.2010, it was noticed by this Court that writ petitions of 3
more units were tagged with these writ petitions.
Accordingly, reports with regard to these 3 units were also
asked, confidentially, and simply this order was passed-“Put up for orders on 17.4.2010.”
12. Then on 17.4.2010, the following was passed:-
“Pursuant to the order dated 4.12.2009, reports were
received. On 27.1.2010, the parties were given copies
of relevant reports for their objection, if any. On
24.2.2010, State counsel objected to the reports,
saying that the petitioners got time to manage the
show by window dressing and therefore, the
stereotyped reports have come.In the circumstances, I thought it proper to get
an inquiry done, confidentially, without indicating
anything in the order. A confidential letter dated
19.3.2010 was sent to the Director General of Police,
Vigilance Bureau, Jharkhand. One inquiry report was
received for 14 units, but when the cases were listed
on 7.4.2010, it was noticed that writ petition of three
more units were tagged with these writ petitions.
Accordingly, the matter was simply adjourned for
17.4.2010 and a report was called for, confidentially
about the remaining three units.The two sealed covers, containing the said
reports, were opened in Court.Let copies of the reports be supplied to the
parties. Objections, if any, by the parties may be filed
by 27.4.2010.Put up on 30.4.2010 under the same heading for
disposal, if possible.Let a copy of this order be handed over the State
Counsel, as prayed.”The parties were given liberty to look into the reports and
raise their objection, if any.13. On 30.4.2010, the parties were heard at length. Mr.
Sinha, appearing for the petitioners objected to the said
confidential reports on the following grounds. The judicial
6officer correctly reported that the units of the petitioners
exist. The respondents did not file written objections to such
reports and without rejecting such reports; no further
enquiry should have been done by this Court. The
confidential enquiry has been done by the Vigilance behind
the back of the petitioners. A big unit Kalawati Coal
Company has been compared with the tiny units of the
petitioners. The vigilance enquiry also shows that the units
of the petitioners exists.14. In reply it was submitted that decision was taken in a
high level meeting to cancel/suspend the agreements when
the coal utilization reports were asked but the letters
returned and the petitioners, did not submit such reports,
which showed that they have not utilized coal for specified
purpose and have disposed off coal otherwise. Now this
position finds support from the vigilance report. The Judicial
Officer held enquiry after about 9-10 days from the order of
this court and between this period, the petitioners managed
the show, which is apparent form the stereotyped reports. It
is further argued on behalf of the respondents that in such
circumstances it cannot be said that the enquiry reports of
the Judicial Officer should be believed and not the Vigilance
enquiry. Moreover, both the reports are part of these
proceedings. When the vigilance enquiry is confidential, it
cannot be said that it was behind the back of the petitioners.
It is also submitted on behalf of respondents that even if the
observations about Kalawati Coal Company and other
observations, in the vigilance report are kept aside for the
sake of argument, petitioners’ claim-that their units
functioned for about 4-6 months, before they were closed in
October, 2009, does not find support form the vigilance
report. It was also said that the committee has
recommended action against the General Manager, District
Industry Centre, Medninagar, Palamau. It was lastly said that
the petitioners have set up their units only for getting quota
of coal for selling it at premium price.15. The impugned letter dated 17.11.2009, issued to the
petitioner in the first writ petition (W.P.C. No. 5385 of 2009 )
reads as follows:-7
“To
M/s Mahalaxmi Enterprises
Nimia, Sudana
Palamau (Jharkhand)Sub: Order terminating Agreement No. 131 dated
10.08.2009 for sale of coal between M/s Jharkhand
State Mineral Development Corporation Ltd., Doranda,
Ranchi and M/s Mahalaxmi Enterprises District
Palamau.Sir,
M/s Jharkhand State Mineral Development
Corporation Ltd., Doranda, Ranchi has been entrusted
with the duty of sale and distribution of coal to
small/medium scale industrial units on the
recommendation of District Level Committee and State
Level Committee under New Coal Distribution Policy,
2007 vide resolution of the Dept. of Mines & Geology
dated 13.05.2008 published in Jharkhand Gazette No.
395 dated 15.05.2008.In the Jharkhand Gazette No. 395 dated
15.05.2008, it has been clarified that the District Level
Committee is to verify the consumption and utilization
of coal allocated to these units and the State Level
Committee will examine the utilization of coal on the
report by the District Level Committee.The Director of Industries, Jharkhand, Ranchi vide
its letter No. 1653 dated 6.7.08 sought for utilization
report in the prescribed format from 181 industrial
units. As per the report received from the Dept. of
Industries it was found that 64 units are working while
14 units have not been established. Letters sent by the
Industries Department in respect to 62 units have
returned undelivered while in respect to 41 units no
utilization report could be received by the Industries
Department as in evident from the above mentioned
letter.The Secretary, Dept. of Industries, Govt. of
Jharkhand, Ranchi has therefore directed the Managing
Director JSMDC Lt. to cancel the allotment of coal if
being made in respect to 62 units whose where about
are not known.The Director Industries Govt. of Jharkhand by her
letter no. 2633 dated 11.11.09 has forwarded a list
containing names of 62 units with a direction to
comply with the decision taken in the meeting held on
15.10.09 and communicated to the Corporation vide
letter No. 2492 dated 22.10.09 where by the Managing
Director JSMDC Ltd. has been directed to
cancel/terminate allotment of coal and report
compliance to the said Directorate.Now, therefore, in view of the orders and the
directions passed by the Secretary, Industries
Department. The Director of Industries, Govt. of
Jharkhand, Ranchi and clause II(V) of the Coal Supply
Agreement No. 131 Dated 10.08.2009 is hereby
terminated.8
You are directed to collect amount if any, due to
you from the Corporation, upon reconciliation of
account within a period of 15 days from the date of
receipt of this order.By order of the competent authority.
Yours faithfully,
(Pravir Kumar)
I/c Coal Trading Cell”16. Clause 10 and 11 and 12(iv) of the agreements
entered between the petitioners and JSMDC, reads as
follows:-“10. End User Clause:
(i) The purchase hereby declares that the CIL coal
to be purchased by them from the Seller in
pursuance of this agreement shall not be
diverted for any use other than the end-use as
mentioned herein or traded in any other way and
that the same will be used only for the purpose
indicated in this agreement. In other words all
coal to be supplied to the Purchaser shall be
utilized as fuel/raw material for further
processing in Mahalaxmi Enterprises
Company/plant of the purchaser situated at
Nimia, Sudna, Aurangabad, Medinagar, Palamau,
Jharkhand.(ii) The Purchaser has submitted/undertakes to
submit an affidavit to the effect that the coal to
be supplied to them shall be used only for the
purpose specified herein.(iii) The Seller, the Government of Jhakrhand or any
of their authorised officer shall be free to visit
the Purchaser’s plant for verification of end-use
of coal and the Purchaser shall be bound to
facilitate the same extend all help and assistance
and produce all documents and records which
may be necessary for the purpose of such
verification.(iv) The Purchaser also hereby undertakes to furnish
periodical certificates, as may be required by the
Seller, from a practicing Chartered
Accountant/Cost Accountant certifying end-use
of coal to be supplied to them in terms of this
agreement. The Purchaser further undertakes to
supply such other information, and/or certificate
as may be required by the Seller, during the
term of this agreement.11. Termination of Agreement:-
This agreement shall be liable to be terminated
by the Seller on the occurrence of the following
events. However, such termination shall be
without prejudice to the accrued rights or
obligations of the either party as it stood
9immediately prior to the termination. The
termination shall be dully communicated to the
Purchaser in writing. The Seller shall bear no
liability on account of such termination.
(i) If a material information furnished by the
Purchaser before or after signing of this
Agreement is found to be not true. This would
also cause the security deposit to be forfeited.
(ii) On permanent closure of the end-use plant of the
Purchaser or on shifting or relocating the same
outside the State of Jharkhand.
(iii) If the Seller on its own motion or on the
information furnished by others finds and is
satisfied that the coal supplied under this
agreement is put to a use other than the end-use
specified in this agreement or is disposed of
otherwise. This would also lead to forfeiture of
the security deposit.
(iv) In the event of non payment of compensation for
short-lifting of coal by the Purchaser within the
permitted time or extension thereof if any. The
security deposit would also be liable to be
forfeited.
(v) On receipt of any order or direction of the State
Government to that effect.”
12 Miscellaneous:
(iv) Arbitration:-
In the event of any differences or dispute
between the Seller and the Purchaser with
reference to any matter arising out of this
agreement such disputes or differences will be
referred for arbitration to a Sole Arbitrator who
will be nominated by the Manging Director,
JSMDC in terms of the provisions of the
Arbitration and Conciliation Act, 1996.
17. Thus it appears that the quota of coal was allotted with
clear stipulation that it will be used only for the specified
purpose and if it appeared to JSMDC that the coal supplied
has not been used for the specified purpose, and it has been
disposed off, otherwise, it could terminate/suspend the
agreements. The impugned action cannot be said to be
without any basis. Petitioners are claiming coal supply under
the contract. Respondents are denying such claim on the
basis of the contract. Actually, both the parties are alleging
violation of contract, against each other. Such disputes
cannot be decided in these writ petitions. Moreover, it is
settled position that in such type of non-statutory contracts,
petitioners cannot allege that there has been violation of the
principles of natural justice. Further there appears to be an
10
arbitration clause.
18 In the facts and circumstances noticed above and for
the reasons aforesaid, these writ petitions are dismissed.
However, no costs.
(R. K. Merathia, J.)
MK