Allowed

M/s Pawansut Industries v. The State of Bihar

Patna HC3 Oct 2024CWJC/11149/2024

Case brief

AI extract

What is this about?

Petitioner's coal supply contract led to blacklisting for three years and forfeiture of security deposit for alleged breach of monthly scheduled quantity limits. Following its earlier judgment in a similar matter, the High Court held the agreement required annual quantity compliance only and set aside the blacklisting.

What did the court decide?

Order of blacklisting set aside; agreement to continue until rescinded or expiry by efflux of time.

M/s Pawansut Industries Vs The State of Bihar — Contract and Commercial Disputes | Patna HC (2024)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.11149 of 2024

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M/s Pawansut Industries through its Proprietor Barun Kumar Singh, Male, Aged about 43 years, S/o Pramod Kumar Singh, having its registered office at Village- Bhopatpur, P.O.-Siris, P.S. Barun, District- Aurangabad, Bihar -824112 and resident of Near S.B.I. Bank, Makoli Upar Dhoura, Nawadih, Bokaro, Jharkhand - 829144

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... ... Petitioner/s

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Versus

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The State of Bihar through its Principal Secretary, Department of Mines and Geology, Government of Bihar, Vikash Bhawan, Patna.

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The Principal Secretary, Department of Mines and Geology, Government of Bihar, Vikash Bhawan, Patna.

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Bihar State Mining Corporation Limited through its Managing Director having registered office at Room No. 164, Vikas Bhawan (New Secretariat), Bailey Road, Patna 800015

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The Chief Executive Officer, Bihar State Mining Corporation Ltd. Bihar, Room No. 164, Vikas Bhawan (New Secretariat), Bailey Road, Patna - 800015

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The Deputy General Manager, Gaya Cluster, Bihar Industrial Area Development Authority, Gaya.

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The Area-In-Charge, Industrial Area, Bihar Industrial Area Development Authority, Gaya.

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... ... Respondent/s

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====================================================== Appearance : For the Petitioner/s : Mr.Puneet Siddhartha, Advocate For the Respondent/s : Mr.Standing Counsel (04) ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

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Date : 03-10-2024

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The impugned orders forfeited the security deposit and blacklisted the petitioner for three years on the ground of violation of the terms of contract. The contract itself was for supply of coal, which identical matter was considered by us in

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Patna High Court CWJC No.11149 of 2024 dt.03-10-2024 2/4

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CWJC No. 1114 of 2024 and analogous case (M/s Bhagwati Coke Industries Pvt. Ltd. vs. The State of Bihar and Ors.) in which we looked into the agreement and found that there is a specification of an Annual Contracted Quantity (ACQ) and a Monthly Scheduled Quantity (MSQ), the latter of which is 1/12^th of ACQ. The question agitated was whether the agreement stipulated the actual utilisation equivalent to the MSQ in each of the months in a year; especially as to whether there was a prohibition in exceeding the MSQ.

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On facts, it is to be noticed that the supply of coal was not regular and the contention of the petitioner was also that in many months there was no supply and they had to lockdown their manufacturing unit for want of coal. In certain months, the deficiency in supply of the either months were made up; in which months the units functioned overtime for utilisation of the coal supplied. The restriction in the agreement was also that there should not be any shortage in use of the 100% of the ACQ and there was no restriction to the use of MSQ in a month.

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We held so in Paragraph Nos. 9 and 10 of the aforementioned judgment:

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9. The specific contention of the purchaser/ petitioners is that that the petitioners’ Unit had to work overtime during the months in which the supply was made and remained idle when there was

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Patna High Court CWJC No.11149 of 2024 dt.03-10-2024 3/4

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no supply of coal. Considering the fact that the requirement was to supply a specified quantity of coal annually and the rigor of compensation falling on the purchaser, as specified in the agreement only on under-utilization of 100 per cent of the ACQ in a whole year; we cannot find the purchaser to be at fault for using coal as and when it was supplied, which resulted in the monthly utilization exceeding the monthly scheduled quantity.

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10. Reading the agreement as a whole, we can only understand that the contract was to supply specified quantity annually. There was also stipulation of a monthly scheduled quantity, the non-supply of which would not prejudice the Corporation since such short supply would always depend on the supply of coal from the Coal Companies. The purchasers also could not have raised a grievance against the non-supply or short supply in any month coming within an year. The penalty of compensation also is confined to shortlifting of coal as per the ACQ and not as per the MSQ. The revision of the ACQ to be supplied to each purchaser would also depend upon the utilization of the purchaser in the preceding year and not of every month. We also have to look at Schedule-1 of the agreement which specifies the ACQ, the mode of transport; being by road and also indicates that the supply will be as per the availability.

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In the present case also, the ground stated for blacklisting and for forfeiture of security amount was similar to that indicated hereinabove.

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In such circumstances, following the aforesaid judgment, we set aside the order of blacklisting. We also make it clear that unless the agreement has expired by reason of efflux of time, it has to continue until rescinded by either party as per

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Patna High Court CWJC No.11149 of 2024 dt.03-10-2024 4/4

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the terms of the agreement.

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The writ petition stands allowed.

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(K. Vinod Chandran, CJ)

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( Partha Sarthy, J)

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Harsh/-

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AFR/NAFR	NAFR
CAV DATE
Uploading Date	04 .10.2024
Transmission Date

M/s Pawansut Industries v. The State of Bihar

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M/s Pawansut Industries v. The State of Bihar

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