COAL INDIA LTD Vs. CHINTAMANI AGROTECH INDIA LTD

JUDGEMENT

(1.) The appellants are the defendant nos. 2 and 3 in Special Civil Suit No. 824/2010, whereas the respondent no.1 is the plaintiff and respondent no. 2 is the defendant no.1. This Appeal against Order preferred by defendant nos. 2 and 3, challenges the order passed below Exh. 5 by the learned 3 rd Joint Civil Judge, Senior Division, Nagpur, on 22 nd November, 2010, allowing the application for grant of temporary injunction filed under Order 39, Rule 1 and 2 read with Section 151 of C.P.C., by the respondent No.1/plaintiff in Special Civil Suit No. 854/2010. By this order, the appellants/defendants are restrained from acting upon the letters dated 10.03.2010 and 9/13 th September, 2010, issued by them to the respondent no.1/plaintiff and doing any act of cancelling the Letter of Assurance and encashing the bank guarantee till the decision of the suit. The parties shall hereinafter be referred to according to their status in this appeal as appellants and respondent.

(2.) The facts leading to the case are as under; The Government of India, Ministry of Coal issued Office Memorandum dated 18 th October, 2007, laying down New Coal Distribution Policy. As per this Policy, the Letter of Assurance (LOA) having validity of 24 months is to be issued by the Coal India Ltd., (CIL) i.e. the appellant no.1, for the consumers/ applicants of Power Utilities, Captive Power Plants and others. The allottee of LOA is required to fulfill certain stipulated conditions and to meet the specified Milestones within a period of 24 months and thereupon to approach the Coal Company for entering into Fuel Supply Agreement (FSA). With a view to ensure that only serious and committed consumers approach for LOA, they would be required to furnish an Earnest Money Deposit (EMD) in the form of Commitment Guarantee and the same is to stand discharged upon the execution of FSA within a stipulated period. On failure to fulfill the commitments in the form of conditions and milestones within a stipulated period, there is a right conferred upon the Coal India Ltd., for forfeiting the EMD. The EMD could initially be kept at 5% of the value of annual Coal requirement and the Coal India Limited is empowered to decide different levels based upon the relevant factors with the approval of the Board of Directors of Coal India Ltd (CIL).

(3.) The respondent No.1 M/s. Chintamani Agrotech (India) Limited, is a company said to have been established in the year 2001 with the object of setting up an Integrated Sugar Plant with 250 TCD Sugar, 30 MW Power Plant and 2,00,000 liters Ethenol per day. It approached the CIL (the appellant no.1) through its subsidiary company i.e. the appellant no. 2 Western Coalfields Ltd (WCL) for issuance of LOA in terms of New Coal Distribution Policy for supply of 1,51,000 MT of Coal per annum for its 30 MW Captive Power Plant at post Bijora Dhanuk, Tah. Mahagaon, District Yavatmal, in the State of Maharashtra. In response to such request, the WCL appears to have processed the proposal and asked the respondent no.1 to furnish commitment guarantee either in cash or in the prescribed format of bank guarantee for an amount equivalent to 10% of the notified base price of annual Coal requirement asked for. It was by communication dated 25 th /26 th March, 2008, along with which the model LAO and the format of bank guarantee was enclosed.