Case Note & Summary
The petitioner, B. S. Ispat Limited, a public limited company incorporated under the Companies Act, 1956, emerged as the successful bidder in a tender process under the Coal Mines (Special Provisions) Act, 2015 and the Coal Mines (Special Provisions) Rules, 2014. A Coal Mine Development and Production Agreement (CMDPA) dated 17.08.2022 was executed between the petitioner and respondent 2, the Nominated Authority. The petitioner challenged the termination of the CMDPA vide letter dated 02.11.2022 issued by respondent 2. The facts were largely undisputed. In accordance with the CMDPA, the petitioner furnished a bank guarantee (BG) dated 13.12.2021 issued by Axis Bank Ltd., Nagpur for Rs.4,32,48,666.00, valid from 13.12.2021 to 14.07.2022. The BG was subsequently amended on 14.06.2022 and 07.09.2022 to extend validity from 14.07.2022 to 14.09.2022 and from 14.09.2022 to 14.12.2022 respectively. The petitioner also paid amounts of Rs.5,41,93,508.56 on 21.09.2022 and Rs.5,40,60,832.50 on 23.09.2022 into the designated bank account. The respondent terminated the CMDPA on the ground that the petitioner failed to submit an extended bank guarantee. The court noted that the petitioner had submitted the extended BG and the termination was without any prior notice or opportunity of hearing. The court held that the termination was arbitrary and violative of principles of natural justice. The impugned termination letter dated 02.11.2022 was quashed and set aside. The respondents were directed to restore the CMDPA and all rights and obligations thereunder. The petition was allowed in the above terms.
Headnote
A) Administrative Law - Natural Justice - Right to be Heard - Termination of Contract - The petitioner challenged the termination of CMDPA for alleged failure to submit extended bank guarantee. The court held that the termination without prior notice or opportunity of hearing is arbitrary and violative of principles of natural justice. The impugned termination letter was quashed and set aside. (Paras 6-8) B) Coal Mines - Contractual Obligations - Bank Guarantee - Coal Mines (Special Provisions) Act, 2015 - The petitioner furnished bank guarantee which was extended twice. The respondent terminated the agreement alleging non-submission of extended BG. The court found that the petitioner had submitted the extended BG and the termination was unjustified. (Paras 4-6)
Issue of Consideration
Whether the termination of the Coal Mine Development and Production Agreement (CMDPA) by the Nominated Authority without affording an opportunity of hearing to the petitioner is arbitrary and violative of principles of natural justice.
Final Decision
The impugned termination letter dated 02.11.2022 is quashed and set aside. The respondents are directed to restore the CMDPA and all rights and obligations thereunder. The petition is allowed in the above terms.
Law Points
- Natural justice
- Right to be heard
- Termination of contract without notice
- Coal Mines (Special Provisions) Act 2015
- Coal Mines (Special Provisions) Rules 2014
