Allowed

M/s Nano Fuels though its Proprietor Varun Kumar Gupta v. The State of Bihar through its Principal Secretary

Patna HC5 Oct 2024CWJC/9198/2024

Case brief

AI extract

What is this about?

Petitioner's security deposit was forfeited and it was blacklisted for three years for allegedly exceeding the monthly scheduled quantity under a coal supply agreement with the Bihar State Mining Corporation. Following its earlier judgment in M/s Bhagwati Coke Industries, the court held there was no restriction on monthly usage beyond MSQ and set aside the blacklisting order.

What did the court decide?

Order of blacklisting set aside; agreement to continue until rescinded or expiry; interlocutory applications closed.

M/s Nano Fuels though its Proprietor Varun… — Contract and Commercial Disputes | Patna HC (2024)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.9198 of 2024

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M/s Nano Fuels though its Proprietor Varun Kumar Gupta Male, Aged about 46 years, S/o Narendra Prasad, having its registered office at Village - Habaspur, P.O - Siris, P.S. - Barun, District- Aurangabad, Bihar - 824112 and resident of Narendra Talkies, Tikari, More Shahpur, Shahpur, District - Aurangabad, Bihar - 824101.

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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. Amit Shrivastava, Sr. Advocate Mr.Puneet Siddhartha, Advocate Mr. Aryan Sinha, Advocate Mr. Zeeshan Khan, Advocate
For the State For the Mines	: :	Mr. Arvind Ujjwal, SC 4 Mr. Naresh Dikshit, P.P. Ms. Kalpana, Advocate
For the BIADA ===============	: ====	Mr. Gyan Shankar, Advocate ===================================
CORAM: HONOU and HONOU ORAL JUDGMEN (Per: HONOURAB	RABL RABL T LE T	E THE CHIEF JUSTICE E MR. JUSTICE PARTHA SARTHY HE CHIEF JUSTICE)

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Date : 05-10-2024

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The impugned orders forfeited the security deposit

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Patna High Court CWJC No.9198 of 2024 dt.05-10-2024 2/4

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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 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

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Patna High Court CWJC No.9198 of 2024 dt.05-10-2024 3/4

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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 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

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blacklisting and for forfeiture of security amount was similar to that indicated hereinabove.

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Patna High Court CWJC No.9198 of 2024 dt.05-10-2024 4/4

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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 the terms of the agreement.

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The writ petition stands allowed.

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Interlocutory application, if any, shall stand closed.

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(K. Vinod Chandran, CJ)

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( Partha Sarthy, J)

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Sujit/-

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AFR/NAFR	NAFR
CAV DATE
Uploading Date	05.10.2024
Transmission Date

M/s Nano Fuels though its Proprietor Varun Kumar Gupta v. The State of Bihar through its Principal Secretary

Case brief

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M/s Nano Fuels though its Proprietor Varun Kumar Gupta v. The State of Bihar through its Principal Secretary

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