M/s Siddhi Vinayak Enterprises v. The State of Bihar

Patna HC4 Sept 2024CWJC/4298/2024

Case brief

AI extract

What is this about?

Patna High Court; CWJC No.4298 of 2024; decided 04-09-2024; K. Vinod Chandran, CJ and Partha Sarthy, J; M/s Siddhi Vinayak Enterprises vs. State of Bihar and Bihar State Mining Corporation Ltd.; coal supply agreement; blacklisting set aside; forfeiture of security deposit; Annual Contracted Quantity (ACQ); Monthly Scheduled Quantity (MSQ); followed CWJC No. 1114 of 2024 (M/s Bhagwati Coke Industries Pvt. Ltd. vs. The State of Bihar and Ors.); no counter affidavit filed; writ petition allowed; contract continues until rescinded unless expired by efflux of time.

What did the court decide?

Order of blacklisting set aside, with a clarification that unless the agreement has expired by efflux of time it continues until rescinded by either party as per its terms; writ petition allowed. ¶¶32

M/s Siddhi Vinayak Enterprises Vs The State of Bihar — Patna HC (2024) — LawSathi Research

What the court decided

AI extract

Outcome

Order of blacklisting set aside, with a clarification that unless the agreement has expired by efflux of time it continues until rescinded by either party as per its terms; writ petition allowed.

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Issue for consideration

Whether the impugned orders forfeiting the petitioner's security deposit and blacklisting it for three years on the ground of violation of the terms of the coal supply contract could be sustained. +1 more

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Court's answer

Following this Court's judgment in CWJC No. 1114 of 2024 (M/s Bhagwati Coke Industries Pvt. Ltd. vs. The State of Bihar and Ors.), the order of blacklisting the petitioner is set aside.

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Ratio / Principle

It is clarified that unless the coal supply agreement has expired by reason of efflux of time, it has to continue until rescinded by either party, as per the terms of the agreement.

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Key takeaways

Since no counter affidavit was filed despite sufficient time granted, and the impugned order is identical to that dealt with in the cited case, the respondents were taken to have no answer other than the position accepted in the cited case.ratio¶¶28

Detailed headnote1 paragraphs

Patna High Court (K. Vinod Chandran, CJ, for the Bench with Partha Sarthy, J) allowed CWJC No.4298 of 2024 filed by M/s Siddhi Vinayak Enterprises against orders that forfeited its security deposit and blacklisted it for three years for alleged violation of a coal supply contract with the Bihar State Mining Corporation. Holding the matter identical to its earlier decision in CWJC No. 1114 of 2024 (M/s Bhagwati Coke Industries Pvt. Ltd. vs. The State of Bihar and Ors.) — wherein the Court had construed the agreement as requiring supply/utilisation against the Annual Contracted Quantity over the year, with compensation confined to under-utilisation of 100% of the ACQ and no bar on monthly utilisation exceeding the Monthly Scheduled Quantity — and noting that no counter affidavit was filed despite time granted, the Court set aside the blacklisting order and clarified that unless the agreement has expired by efflux of time it continues until rescinded by either party as per its terms.

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.4298 of 2024

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M/s Siddhi Vinayak Enterprises through its Proprietor Mr. Pradeep Anand, aged about 33 years (Male), S/o Bachchu Prasad having its registered office at New Sabajpura, BMP-16, Khagaul Road, Patna (Bihar), Pin-801105 and having its Business address at Plot No. 192, Section E, Mauja Asthawan, Karande, Sheikhpura-811304.

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... ... Petitioner/s

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Versus

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The State of Bihar through the Principal Secretary, Department of Industries, Govt. of Bihar, Patna.

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The Principal Secretary, Department of Industries, Govt. of Bihar, Patna.

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The Principal Secretary, Department of Mining, Govt. of Bihar, Patna.

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The Bihar State Mining Corporation Ltd. through its Chief Executive Officer, Vikas Bhawan, New Secretariat, Bailey Road, Patna, Bihar, Pin800015.

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The Chief Executive Officer, Bihar State Mining Corporation Ltd., Vikas Bhawan, New Secretariat, Bailey Road, Patna, Bihar, Pin-800015.

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The Managing Director, the Bihar State Mining Corporation Ltd., Vikas Bhawan, New Secretariat, Bailey Road, Patna, Bihar, Pin-800015.

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The General Manager, the Bihar State Mining Corporation Ltd., Vikas Bhawan, New Secretariat, Bailey Road, Patna, Bihar.

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The Administrative Officer, Bihar State Mining Corporation Ltd., Vikas Bhawan, New Secretariat, Bailey Road, Patna, Bihar.

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... ... Respondent/s

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====================================================== Appearance : For the Petitioner/s : Mr. Siddharth Shankar Pandey, Advocate For the Respondent/s : Mr. Arvind Ujjwal, SC-4 Mr. Sushil Kumar Mallick, AC to SC-4 Mrs. Kalpana, Advocate ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

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Date : 04-09-2024

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The impugned orders forfeited the security deposit and blacklisted the petitioners for three years on the ground of violation of the terms of contract. The contract itself was for

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Patna High Court CWJC No.4298 of 2024 dt.04-09-2024 2/4

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supply of coal, which identical matter was considered by us in 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 petitioners was also that in many months there was no supply and they have 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/

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Patna High Court CWJC No.4298 of 2024 dt.04-09-2024

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3/4

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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 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 herein above.

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Despite having granted sufficient time, no counter affidavit has been filed. In such circumstance, we take it that the respondents have no answer than that put-forth in the cited case. We also see from the order that it is identical to the cited case

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Patna High Court CWJC No.4298 of 2024 dt.04-09-2024 4/4

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and necessarily there cannot be any supplanting of reasons in a counter affidavit filed.

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In such circumstance, 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 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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avinash/-

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AFR/NAFR
CAV DATE	N/A
Uploading Date	06.09.2024
Transmission Date	N/A

M/s Siddhi Vinayak Enterprises v. The State of Bihar

Case brief

What is this about?

What did the court decide?

M/s Siddhi Vinayak Enterprises v. The State of Bihar

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Cases cited

Procedural history

Parties & counsel

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