APARNA INFRAENERGY INDIA PVT. LTD. Vs. UNION OF INDIA & ORS.
LAWS(BOM)-2017-4-114
HIGH COURT OF BOMBAY
Decided on April 25,2017

Aparna Infraenergy India Pvt. Ltd. Appellant
VERSUS
Union of India And Ors. Respondents

JUDGEMENT

- (1.) By this writ petition, the petitioner Aparna Infraenergy India Private Limited, Nagpur seeks a declaration that the action on the part of the respondent no.3 Western Coalfields Limited of issuing the communication, dated 07.12.2013 as also the impugned order dated 27.06.2014 cancelling the letter of assurance issued in favour of the petitioner Company is arbitrary and violative of the provisions of Article 14 of the Constitution of India. The petitioner has sought a direction against the respondents to execute the fuel supply agreement in favour of the petitioner as per letter of assurance dated 16/17.07.2010 by holding that the petitioner has achieved all the milestones as per the letter of assurance.
(2.) The petitioner is a private limited company registered under the Indian Companies Act, 1956. The respondent no.1Union of India/Ministry of Coal had floated a new coal distribution policy on 18.10.2007 pertaining to the allocation of coal to be made by the respondent no.3 Western Coalfields Limited and its other subsidiaries. On 11.07.2008, a partnership firm in the name of M/s Aparna Infraenergy was formed wherein Shri Mitesh Bhangadiya, Shri Sanjay Shivankar and Smt.Kiran Wadettiwar were the partners. The said partnership firm desired to set up a power plant at Kawathala and was desirous of securing coal linkage for the said purpose. The partnership firm, therefore, applied to the Standing Linkage Committee on 04.08.2008 seeking the allocation of coal. The Standing Linkage Committee recommended to the Western Coalfields Limited that a letter of assurance as per the new coal distribution policy could be granted to the partnership firm. The Western Coalfields Limited called upon the firm to submit commitment guarantee for the issuance of the letter of assurance. The partnership firm applied to the Register of the Partnership Firm for the registration of the same and was registered as such on 07.05.2010. On 24.05.2010, admittedly seven new partners that were the subsidiaries of M/s Gammon Infrastructure Projects Limited joined as partners in the firm. The said partnership-deed was also registered and a commitment guarantee to the tune of Rs.10,09,34,000/was submitted by the said reconstituted firm to the Western Coalfields Limited on 25.05.2010. A letter of assurance was issued in favour of the partnership firm M/s Aparna Infraenergy India Private Limited on 16.07.2010. On 05.01.2011, the three partners that initially constituted the firm, viz. Shri Mitesh Bhangadiya, Shri Sanjay Shivankar and Smt.Kiran Wadettiwar retired from the firm and the firm comprised of only seven partners that were included in the firm as partners on 24.05.2010. It is the case of the petitioner Company that steps were taken by the petitioner Company for achieving the milestones as per the letter of assurance issued in favour of the partnership firm on 16.07.2010. It is stated that several communications were exchanged between the Western Coalfields Limited and the company pertaining to the achievement of the milestones. On 10.08.2012, the Western Coalfields Limited informed the company that the bank guarantee submitted by the company would be forfeited as the milestones were not achieved within the stipulated time. However, the petitioner Company wrote to the Western Coalfields Limited vide several communications that are placed on record pointing out that the milestones were achieved and what was not achieved would be complied within the time frame. Admittedly, the Western Coalfields Limited did not take any action against the company in respect of the forfeiture of the bank guarantee as per its communication, dated 10.08.2012. The Standing Linkage Committee took a decision on 01.07.2013 that the Western Coalfields Limited should look into the matter pertaining to the cancellation of letter of assurance to the petitioner Company and report to the committee. By an order dated 07.12.2013, the petitioner was informed by the Western Coalfields Limited that the partnership firm had breached the conditions in the letter of assurance, since there is an assignment of the letter of assurance in favour of the company in which none of the partners that had originally applied for the letter of assurance are the partners. It was informed that the taking over of the original firm by the petitioner-Company could not be accepted. In pursuance of the said order, the letter of assurance was cancelled as the original partners of the company that had applied for the letter of assurance had assigned their right and interest in the letter of assurance. By the impugned communication and order dated 07.12.2013 and 27.06.2014 respectively, the letter of assurance awarded in favour of the partnership firm on 16.07.2010 was cancelled. The action on the part of the respondent-Western Coalfields Limited in cancelling the letter of assurance is challenged by the petitioner in the instant petition.
(3.) Shri Jaiswal, the learned Senior Counsel appearing for the petitioner Company, submitted that as per the letter of assurance, the power or the authority to cancel or withdraw the letter of assurance could be invoked only under Clause 3.4.1 of the letter of assurance, which provides that the cancellation could be effected if the milestones are not achieved within the specified time. It is stated that only if the milestones were not achieved within the specified time under clause 3.4.1, there could have been a cancellation or withdrawal of the letter of assurance. It is stated that it is apparent from Clause 3.4.1 of the letter of assurance that only when the letter of assurance is cancelled due to non-achievement of the milestones, the bank guarantee could be invoked. It is stated that in the instant case, the Western Coalfields Limited has cancelled the letter of assurance by the impugned order dated 24.07.2014 only on the ground that the original partners had withdrawn from the partnership firm and a new company with seven other incorporated entities was formed. It is submitted that the cancellation of the letter of assurance was permissible only if the petitioner had failed to achieve the milestones and since the cancellation of the letter of assurance is not due to non-achievement of the milestones by the petitioner, the same is liable to be set aside in view of Clause 3.4.1 of the letter of assurance. It is submitted that in any case, the respondent-Western Coalfields Limited is not entitled to encash the bank guarantee unless it comes to a conclusion that the petitioner-Company has not achieved the milestones. It is submitted that in the circumstances of the case, the impugned orders-communications are liable to be set aside.;


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