S. Chandrashekhar, J. - (1.) CHALLENGE in this writ petition are to the termination of Fuel Supply Agreement and the consequent forfeiture of security deposit and also to levy of compensation by the respondent -Coal India Limited.
(2.) THE petitioner -Company, registered under Companies Act, 1956, is a manufacturer of high quality sponge iron. In terms of New Coal Distribution Policy, 2007, the petitioner furnished bank -guarantee to the extent of 6% to the value of annual coal requirement and Fuel Supply Agreement (FSA) was accordingly, entered on 30.04.2008. Under the Fuel Supply Agreement, only 75% of the normative requirement of coal of a linked consumer is supplied and the consumer is required to source the remaining 25% through E -auction or other sources. The Sales Manager, ECL vide letter dated 18.12.2009 sought clarification from the petitioner for non -utilisation of coal during September -October, 2009 and asked the petitioner to arrange survey of the entire stock of coal. The survey certificate of coal stock was submitted to the Sales Manager, ECL vide letter dated 23.02.2010 in which the Survey Company certified the availability of entire coal stock to the tune of approx. 13550 M T. In view of the repairing work and rectification as directed by the Jharkhand Pollution Control Board, the petitioner vide letter dated 17.05.2010 informed the General Manager (S&M), ECL that it would not lift coal for the month of May, 2010. However, vide letter dated 03.06.2010, the Sales Manager informed that there is no provision for non -booking of coal on repairing ground or any other ground except, the "Force Majeure" clause. Vide letter dated 21.07.2010 further allocation of coal to the petitioner was put under suspension. Immediately thereafter, vide letter dated 23.07.2010, the petitioner was directed to arrange payment of Rs. 15,37,268.18 as compensation for the financial year, 2009 -10. The petitioner submitted its reply dated 04.10.2010 explaining the reason for not lifting coal between the period May, 2009 and October, 2009 and though, compensation clause is not attracted in the case of petitioner, the respondent -Deputy Finance Manager(R.S.) vide letter dated 11.11.2010 directed the petitioner to arrange payment of compensation amount. Though, the petitioner deposited the compensation amount, it made further request for reconsideration of the plea for not lifting the coal on the ground of heavy maintenance and modernisation of plant taken by the petitioner. A show -cause notice dated 21.01.2011 was issued to the petitioner for non -booking of coal during 2010 -11, which was replied by the petitioner on 10.02.2011. However, the FSA dated 30.04.2008 was terminated on 25.07.2011 for breach of Clause 3.4, 3.5 and 15.1.4 of FSA and the security deposit amounting to Rs. 43,41,520/ - was forfeited. The petitioner has been directed to make further payment of Rs. 50,07,600/ - on account of compensation for the financial year, 2010 -11. Heard the learned counsel for the parties.
(3.) MR . Ajit Kumar, the learned counsel for the petitioner submits that though, the survey report certified availability of the entire quantity of non -utilized coal and no charge of misutilisation of coal supplied to the petitioner -company has been levelled, supply of coal to the petitioner was suspended vide order dated 21.07.2010. The coal supply to the petitioner remained suspended till the FSA dated 30.04.2008 was terminated by the respondents however, for the period during which the coal supply remained suspended, the respondents have levied compensation on the ground of non -booking of coal by the petitioner. It is further submitted that before issuing letter dated 23.07.2010 directing the petitioner to pay Rs. 15,37,268.18/ - in terms of clause 3.4 of FSA, no notice was issued to the petitioner. Contending non -applicability of Clause 3.4, 3.5 and 15.1.4 of FSA, order dated 25.07.2011 terminating the FSA has been challenged, as arbitrary and illegal.;