Disposed

M/S.Sainik Mining and Allied Services Ltd. v. Mahanadi Coalfields Ltd.

Orissa HC3 Nov 2021WP(C)/21135/2016

Case brief

AI extract

What is this about?

In W.P.(C) No.21135 of 2016, the High Court of Orissa referred to the Supreme Court in Mahanadi Coalfields Ltd. V. Dhansar Engg. Co. regarding procedural posture. The court noted the petitioner disputed underloading charges but found clause-12 of the General Conditions of Contract provided a dispute settlement mechanism. It directed the petitioner to utilize this mechanism, extending interim relie

What did the court decide?

Petitioner directed to seek redressal under Clause-12 of General Conditions; interim order extending to restrain penalty effect for six weeks.

M/S.Sainik Mining and Allied Services Ltd… — Contract and Commercial Disputes | Orissa HC (2021)

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IN THE HIGH COURT OF ORISSA AT CUTTACK

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W.P.(C) No.21135 of 2016

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(Through Hybrid Mode)

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M/S. Sainik Mining and ….. Petitioner Allied Services Ltd. Mr. Avijit Patnaik, Advocate Vs. ….. Mahanadi Coalfields Opposite Parties Ltd.and others Mr. Saktidhar Dash, Senior Advocate

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CORAM: JUSTICE ARINDAM SINHA ORDER 03.11.2021

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Order No. 03. 1. Mr. Patnaik, learned advocate appears on behalf of petitioner, who executed work under contract for Mahanadi Coalfields Limited. He submits, under challenge is communication dated 15^th October, 2016, whereby Rs.12,34,322.55 was imposed as under loading charges. According to him it is a penalty. No opportunity of hearing was granted in issuing this demand, purportedly in terms and conditions as per clause-25.01 of the contract. He refers to clause-25.01, reproduced below :-

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“ All Pay loaders which are engaged for mechanical loading of coal into wagons are to be fitted with “True load” system to measure the quantity of coal loaded into particular wagon which are forming part of the rake.”

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On query from Court he submits, there is no penalty

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Page 1 of 4

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clause in relation to clause-25.01, in the terms and conditions. Furthermore his client by letter dated 1^st October, 2016 addressed to the Regional Transport Authority (RTO), had requested permission for installation of true load system in the pay loaders engaged for mechanical transfer of coal. The office replied by letter dated 3^rd October, 2016. According to him, permission was denied. Contents of said letter dated 3^rd October, 2016 are reproduced below :-

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“ In inviting reference to the subject cited above, I am intimating you that the manufacturer manufacatures the loader after getting approval from authorized testing agency, who is authorized by Govt. of India. Ministry of Road Transport and Highways. Accordingly after getting approval, the same prototype loaders are manufactured. Nobody can change or alter or allow altering the same prototype approved equipment/vehicles. The loading capacity of the loader only can be ascertained from the bucket capacity.

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This is for your information and necessary action.”

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He submits, there should be interference. Not only is the contract silent on imposition of penalty but also the transport authority did not allow installation of true load system. 3. Mr. Das, learned senior advocate appears on behalf of MCL and draws attention to, inter alia , clause-13 in the Special Terms and Conditions, which provides for the company to recover loss on account of, amongst others, equipments of contractor, value of such loss as assessed by

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Page 2 of 4

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the company to be recovered from the contractors bill/security deposits. He also refers to clause-12 in the General Terms and Conditions to submit, it was incumbent upon petitioner to seek settlement of disputes in terms thereon. He relies on judgment of the Supreme Court in Mahanadi Coalfields Ltd. V. Dhansar Engg. Co. (P) Ltd. reported in (2016) 10 Supreme Court Cases 571 , paragraph-23, wherefrom following passage is extracted and reproduced below :-

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“23. ….. It is a different matter that the respondents were not put to notice before the final decision was taken by the appellants to recover the financial loss along with penalty. The respondents could have approached the appellants for reconsideration of their demand towards penalty, in terms of Clause 30.3 of the contract; and persuade the appellants to waive the penalty amount to be recovered from them. The respondents, however, chose to straightaway approach the High Court by way of writ petition. Notably, the High Court has not set aside the penalty amount as such, but the entire demand being impressible.”

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Going by what was said in Mahanadi Coalfields Limited (supra) there appears to be some similarity between this case and the case decided. Opposite parties took the decision without reference to petitioner. It is not necessary to adjudicate whether or not such could be done under authority of clause-13 in the Special Terms and Conditions, relied upon by Mr. Dash. What is important is that clause-12 of the

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General Conditions of Contract provide for a mechanism for settlement of dispute.

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It is clear that petitioner disputes the demand of under loading charges. It must seek redressal in terms of provisions in clause-12 of the general conditions. Mr. Patnaik, submits the representation dated 5^th November, 2016 was made to the Project Officer. That representation has not been dealt with. It be treated as approach in terms of clause-12 of the general conditions. Mr. Das, submits, it will be so treated.

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It appears from order-sheet, by order dated 14^th December, 2016 interim measure was directed restraining effect being given to the penalty imposed on petitioner. That direction is extended to continue for six weeks from date, for petitioner to approach for settlement of the dispute.

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The writ petition is disposed of.

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(Arindam Sinha)
Judge

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Prasant

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M/S.Sainik Mining and Allied Services Ltd. v. Mahanadi Coalfields Ltd.

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M/S.Sainik Mining and Allied Services Ltd. v. Mahanadi Coalfields Ltd.

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M/S.Sainik Mining and Allied Services Ltd. Vs Mahanadi Coalfields Ltd.