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2016 (3) TMI 1423 - HC - Indian LawsProcurement of coal for the thermal power projects of KPCL in the State of Karnataka - tri-partite agreement - price adjustments - HELD THAT:- The fuel supply agreement contemplated for price adjustments based on the variance in the properties of coal supplied compared to the guaranteed values specified in the contract. In other words, price adjustments were to be undertaken based on the variance in cross calorific value, ash content, size, moisture content etc. - there has not been any stipulation either in the joint venture agreement or the fuel supply agreement that deductions could be made based on other activities. In the joint venture agreement and in the fuel supply agreement there has been no indication that ₹ 90/- (Rupees ninety) only per MT could be attributable towards washing charges nor the contracts provided any deductions from the coal price payable on the basis that the coals have not been washed in the washery. The fuel supply agreement does not stipulate a particular process for washing of coal. It was neither suggested that coal washing should be necessarily water-washing nor it was provided that dry-washed coal could not be accepted as washed coal - there are no stipulation in the joint venture agreement or the letter of award, which mandates that coal should, necessarily, be washed through the process of water-washing at washeries. Our understanding of the coal defined in those documents is that the coal would mean washed coal that meets certain stipulated parameters irrespective of the process that may be adopted in mining and washing such coal. It is the settled law that when an action of the State is arbitrary or discriminatory and, thus, is violative of Article 14 of the Constitution of India, a writ petition is certainly maintainable, although ordinarily in the writ jurisdiction the High Court does not enforce the terms of a contract qua contract. The Supreme Court of India in DWARKADAS MARFATIA & SONS VERSUS BOARD OF TRUSTEES OF THE PORT OF BOMBAY [1989 (4) TMI 315 - SUPREME COURT] held that every action of the authority must be subject to rule of law and must be informed by reason. If the State action, even in contractual matters, fails to satisfy the tests of reasonableness, it would be unconstitutional. The agreement between the KPCL, EMTA and KEMTA is tripartite and an agreement of multiple contracts in the form of the joint venture agreement, the fuel supply agreement and the mining operation agreement - the coal supplied by the writ petitioner to KPCL met the parameters stipulated in the fuel supply agreement and such coal has been utilised in the thermal power stations of KPCL. It was not felt proper for KPCL to unilaterally effect deduction of ₹ 90/- (Rupees ninety) only, per MT towards washing charge against KEMTA. No adjudication has been undertaken by a competent judicial authority. In the absence of adjudication, it is impermissible for KPCL to unilaterally effect such withhold and deductions. The report of CAG cannot be the sole basis for any liability being caused or for that matter the sole basis for the prosecution to be launched. However, mere drawing up of FIR by the CBI against unknown officials of KPCL, EMTA and KEMTA cannot provide legal basis or impetus for unilateral demand by KPCL for recovery of ₹ 52,37,00,000/- only. Such action is arbitrary and unsustainable in law. The communications dated November 23, 2013 (Annexure-A) and January 29, 2014 (Annexure-B) notifying deduction of a sum of ₹ 90/-(Rupees ninety) only, per MT of coal are quashed - Petition allowed.
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