1 2025:CGHC:41018-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 4335 of 2025 Prakash Industries Limited Through Its Authorized Signatory, Mr. Arun Kumar Singh, S/o Late Shiv Dayal Singh, Aged About 58 Years, Presently Working As Assistant Vice President, Having Its Head Office At - Srivan Near I.O.C.L. Crossing, Main Najafgarh Bijwasan Main Road, New Delhi-61 And Plant Address Inter-Alia At- Village Hathneora, Tehsil - Champa, District Janjgir-Champa C.G. 495671 ... Petitioner(s) versus 1 - South Eastern Coalfields Limited Through Its Chairman Cum Managing Director, Registered Office At Seepat Road Bilaspur C.G. 495006. 2 - The General Manager (M And S) South Eastern Coal Fields Limited, Having Its Office At Seepat Road, Bilaspur C.G. 3 - The Chief Manager (Finance), South Eastern Coal Fields Limited, Having Its Office At Seepat Road, Bilaspur C.G. 4 - The Union Of India Through Secretary, Ministry Of Coal, Shastri Bhavan, New Delhi- 110001, India. 5 - Coal India Limited, Through Its C M D, Coal Bhawan, Premised No. 04 M A R, Plot No. A F- Iii, Action Area-1 A, New Town, Rajarhat, Kolkata-700156, West Bengal. JYOTI SHARMA Digitally signed by JYOTI SHARMA Date: 2025.08.18 10:27:58 +0530 2 6 - South East Central Railways, Through Senior Divisional Operation Manager, Bilaspur C.G. ... Respondent(s) For Petitioner : Mr. Vivek Chopda, Advocate For Respondent/SECL : Mr. Pankaj Singh, Advocate For UOI : Mr. R.K. Mishra, DSG Hon’ble Shri Ramesh Sinha, Chief Justice Hon’ble Shri Bibhu Datta Guru, Judge Judgment on Board Per Ramesh Sinha, Chief Justice 14/08/2025 1. The present writ petition has been filled for following reliefs:- “10.1 Compensation Bill(s) No. No.C081501920001724 dated 22.08.2023 & No. 081502021002157 dated 28.09.2023 (ANNEXURE P/1 & ANNEXURE P/2 respectively) 6,13,18,868.00/-, whereby 51,09,906.00/- respectively has been determined as compensation owing to alleged short lifting of coal during the financial year from 2018-19, 2019-20 & 2020-21 respectively under the Fuel Supply Agreement (For Short FSA) No. A-150 be quashed/set aside. 10.2 Respondent No.1 be directed to forthwith pay to the petitioner actual damage to the tune of Rs. 27947337/-which has occasioned to the petitioner on the account of the breach committed by the Respondent No.1 BUPIA ogether with interest @ 18% per annum from the date became due till its actual payment or at such rates as this Hon'ble Court would 3 deem fit in the facts and circumstances of the instant case. 10.3 Any other relief which this Hon'ble Court may deem fit in the facts & circumstances of case. 10.4 Cost of the petition may also be awarded. An affidavit in support is filed herewith.” 2. (A) Learned counsel for the petitioner submits that a Fuel Supply Agreement (FSA) was entered into between the parties, i.e., the Petitioner and Respondent No. 1, on 22.02.2017 for supply of coal by Rail for an Annual Contracted Quantity of 91,400 metric tons of coal. The mode of supply as agreed between the parties was Rail mode and the source of supply was Chirimiri Siding and the Grade of Coal was G-7 & Size (-) 100mm. He further submits that the FSA agreement was executed pursuant to the petitioner's successful participation in an electronic auction conducted under the Scheme Document dated 12.01.2017 issued by Coal India Limited. As per the requirement of Clause 3.5.4 of the Scheme Document, the petitioner has submitted various documents with the respondent Authority in accordance with the timelines stipulated therein including an unconditional and irrevocable Bank guarantee dated 09.02.2017 from IDBI bank, for an amount of Rs. 1,46,60,000.00 towards performance security. Further, under the said FSA the respondents were to supply coal to the petitioner on the basis of the rake program submitted by the petitioner. The Petitioner had also submitted another BG amounting to Rs. 4 2,03,60,000.00 towards financial coverage of rake supplies. (B) The above Annual Contracted Quantity (ACQ) was to be pro- rated monthly to arrive at the Monthly Scheduled Quantity (MSQ) under the agreement. Despite the execution of the FSA, right from the inception the respondent failed to fulfill its contractual obligations to supply the agreed quantity of coal. Persistent operational challenges at the Chirimiri Siding, where coal loading was to occur, hampered the respondent's ability to meet their obligation to supply the ACQ to the petitioner. The respondent attempted to address the shortfall by allowing an alternate supply arrangement-rail to road mode on multiple occasions. However, even these alternative measures fell significantly short of the agreed supply targets, causing severe operational and financial hardships to the petitioner. It is respectfully submitted that, by notice dated 03.04.2019, the respondents themselves acknowledged the operational issues prevailing at the Chirmiri Open Cast Mine, including the reduced availability of coal. Consequently, the respondents revised the allocation 44 pertaining to the Chirmiri Siding by altering the mode of Transportation from rail to road. It is pertinent to note that the petitioner's allocation for the relevant months was deferred due to the non-availability of sufficient coal during this period. It is submitted that during the entire period from June 2017 to March 2020, there was almost complete disruption in the supply of coal, leading to frequent changes in the mode of transportation and a 5 poor availability of rakes. This disruption compelled consumers, including the petitioner, to opt for a change in the mode of transportation from rail to road. However, even under this revised arrangement, the respondents were unable to provide sufficient quantities of coal for lifting during the relevant period, thereby causing considerable hardship to the petitioner. (C) It is respectfully submitted that the coal supplied by the respondent consistently failed to meet the agreed quality standards of Grade G7 (GCV 5200-5500 Kcal/kg) as stipulated under the Fuel Supply Agreement (FSA). When the coal supplies through rail mode commenced, the quality of coal was substantially below the contractual standards. The petitioner states that the loaded wagons primarily contained shale and stones, with a superficial layer of freshly released coal placed on top. The coal supplied amounted to approximately 4000 tonnes per rail consignment, with a GCV of only 3000-3200 Kcal/kg, as against the contracted quality of 5200-5500Kcal/Kg. This supply of substandard coal resulted in significant financial losses to the petitioner, quantified at 279.47 lakhs. Additionally, in October 2019, the respondent unilaterally downgraded the grade of coal allocated to the petitioner to a lower grade, i.e., G9 (GCV 4600- 4900 Kcal/kg) as *against G7 (GCV 5200-5500) specified in the agreement, without providing any justification or obtaining prior consent from the petitioner. This action further aggravated the petitioner's financial and operational difficulties. Since the 6 petitioner never gave its consent for down grading the contracted quality required as per clause 2.3 of FSA, any penalty for not lifting of coal on and from 19.10.2019 is not applicable on this ground alone. It is further submitted that the petitioner repeatedly raised concerns regarding the quality issues with the respondent authorities by submitting applications and availing third-party analysis and sampling. The results of these analyses consistently confirmed that the GCV value of the coal supplied was significantly below the contractual specifications. As a result of the inferior quality of coal supplied, the petitioner faced numerous operational challenges and financial setbacks. It is submitted that the respondent's repeated inability to supply the agreed quantity and quality of coal, coupled with unilateral actions such as the downgrading of coal grade, constitutes a breach of the terms of the FSA. These breaches have not only undermined the petitioner's operational efficiency but have also inflicted significant financial losses, thus compelling the petitioner to seek redressal through appropriate legal proceedings. (D) It is respectfully submitted that due to the non-availability of coal, there was significant accumulation of rakes over extended periods. For instance, the rake allotted in June 2018 was not loaded till April 2019, and rakes allotted from July 2018 to March 2019 were not loaded till January 2020. The petitioner was compelled to cancel these rakes in April 2019 and Jan/Feb 2020 respectively. This delay in providing rakes is in clear violation of 7 Clause 1.2(n) of the Fuel Supply Agreement (FSA), which explicitly states that "time is the essence in the performance of the parties.". It is further submitted that there was virtually no availability of G7 grade coal at Chirmiri Siding from July 2018 onwards. During 2018-19, no rakes were offered for loading, and only a fraction of the contracted quantities was supplied by road, with merely 20% of the Annual Contracted Quantity (ACQ) being fulfilled. The same situation continued in 2019-20. Additionally, the declared grade of coal at Chirmiri Siding was unilaterally downgraded by the respondent authorities from G7 to G9, effective 19.10.2019. This unilateral downgrade is in violation of Clause 1.1, Clause 6, and Clause 2.3 of the FSA. This downgrading also proves that the quality of Coal earlier was inferior and there was a need to downgrade. It is most respectfully submitted that the factual scenario as stated above has already been deliberated upon by the petitioner in the context of the present case. However, the same is reiterated herein for the sake of advancing arguments and substantiating the grounds raised against the inaction of the respondent authorities with respect to the settlement of the dispute and the return of the bank guarantee and challenging the illegal initiation and imposition of compensation bills raised against the petitioner. It is submitted that even though the aforesaid factual scenario continued for a duration of almost two years yet the respondents out of bolt from the blue has raised the impugned Compensation bills vide 8 Compensation Bill(s) dated 28.09.2023 and *C081501920001724 dated 22.08.2023, whereby amounts of ₹51,09,906/- and ₹6,13,18,868/- respectively have been claimed. It is submitted that the respondents even though oblivious of the fact that it was their own faults because of which the supplies could not be effected upon the petitioner yet have raised the impugned compensation bills thereby taking benefits out of their own wrongs in order to get themselves unjustly enriched and therefore the said compensation bills being raised against the terms of the contract and since non lifting of coal was not at the behest of the petitioner thus there has been no breach of the contract by the petitioner warranting such issuance of compensation bills, the instant petition is being filed challenging the said compensation bills and the facts and grounds enumerated hereinbelow. (E) It is further submitted that, as is evident from the terms of the contract, the quality and quantity of coal to be supplied to the petitioner were not adhered to by the respondent authorities. The inaction of the respondent authorities towards the settlement of the dispute is bad in law, arbitrary, and illegal, and therefore deserves to be struck down by this Hon'ble Court in the exercise of its powers under Article 226 of the Constitution of India.Hence this petition. 3. On the other hand, learned respondents counsel oppose the submissions made by the learned counsel for the petitioner and submits that the writ petition as framed and filed is not 9 maintainable as the disputed question of facts cannot be adjudicated in writ petition under Article 226 of the Constitution of India. 4. We have learned counsel for the parties, perused the impugned order and other documents appended with writ petition. 5. It is settled law that the High Court should not exercise its jurisdiction under Article 226 of the Constitution of India when it raises disputed question of facts. 6. The Hon'ble Supreme Court in the case of Chairman, Grid Corpornation of Orissa Ltd. (GRIDCO) and others v. Sukamani Das (Smt.) and another, (1999) 7 SCC 298 was dealing with the question of whether the High Court had made an error in entertaining a writ petition filed seeking compensation for the death of a person due to electrocution, which had allegedly been caused due to the negligence of the authorities. The Supreme Court in the said case observed as under: "6. In our opinion, the High Court committed an error in entertaining the writ petitions even though they were not fit cases for exercising power under Article 226 of the Constitution. The High Court went wrong in proceeding on the basis that as the deaths had taken place because of electrocution as a result of the deceased coming into contact with snapped live wires of the electric transmission lines of the appellants, that "admittedly/prima facie amounted to negligence on the part of the 10 appellants". The High Court failed to appreciate that all these cases were actions in tort and negligence was required to be established firstly by the claimants. The mere fact that the wire of the electric transmission line belonging to Appellant 1 had snapped and the deceased had come in contact with it and had died was not by itself sufficient for awarding compensation. It also required to be examined whether the wire had snapped as a result of any negligence of the appellants and under which circumstances the deceased had come in contact with the wire. In view of the specific defences raised by the appellants in each of these cases they deserved an opportunity to prove that proper care and precautions were taken in maintaining the transmission lines and yet the wires had snapped because of circumstances beyond their control or unauthorised intervention of third parties or that the deceased had not died in the manner stated by the petitioners. These questions could not have been decided properly on the basis of affidavits only. It is the settled legal position that where disputed questions of facts are involved a petition under Article 226 of the Constitution is not a proper remedy. The High Court has not and could not have held that the disputes in these cases were raised for the sake of raising them and that there was no substance therein. The High Court should have directed the writ petitioners to approach the civil court as it was done in OJC No. 5229 of 1995." (emphasis supplied) 11 7. The aforesaid judgment has been relied/ reiterated by the Supreme Court in S.P.S. Rathore v. State of Haryana and others, (2005) 10 SCC 1 wherein it observed as follows: "16. In Chairman, Grid Corpn. of Orissa Ltd. (Gridco) v. Sukamani Das [(1999) 7 SCC 298] the question which arose for consideration was, can the High Court under Article 226 of the Constitution award compensation for death caused due to electrocution on account of negligence, when the liability was emphatically denied on the ground that the death had not occurred as a result of negligence, but because of an act of God or of acts of some other persons. The Court held that it is the settled legal position that where disputed questions of facts are involved, a petition under Article 226 of the Constitution is not a proper remedy. Therefore, questions as to whether death occurred due to negligence or due to act of God or of some third person could not be decided properly on the basis of affidavits only, but should be decided by the civil court after appreciating the evidence adduced by the parties. In T.N. Electricity Board v. Sumathi [(2000) 4 SCC 543] it was held that when a disputed question of fact arises and there is clear denial of any tortious liability, remedy under Article 226 of the Constitution may not be proper. The Court carved out exception to this general rule by observing that, it should not be understood that in every case of tortious liability, recourse must be had to a suit. When there is negligence on the face of it and infringement of Article 21 is there, it cannot be said that there will be any bar to 12 proceed under Article 226 of the Constitution." (emphasis supplied) 8. Similarly, the Hon'ble Supreme Court in Shubhas Jain v. Rajeshwari Shivam, 2021 SCC OnLine SC 562 has held as under: "26. It is well settled that the High Court exercising its extraordinary writ jurisdiction under Article 226 of the Constitution of India, does not adjudicate hotly disputed questions of facts. It is not for the High Court to make a comparative assessment of conflicting technical reports and decide which one is acceptable." 9. Subsequently, in Union of India Vs. Puna Hinda, (2021) 10 SCC 690, the Hon'ble Supreme Court has observed: "24. Therefore, the dispute could not be raised by way of a writ petition on the disputed questions of fact. Though, the jurisdiction of the High Court is wide but in respect of pure contractual matters in the field of private law, having no statutory flavour, are better adjudicated upon by the forum agreed to by the parties. The dispute as to whether the amount is payable or not and/or how much amount is payable are disputed questions of facts. There is no admission on the part of the appellants to infer that the amount stands crystallised. Therefore, in the absence of any acceptance of joint survey report by the competent authority, no right would accrue to the writ petitioner only because measurements cannot be undertaken after passage of time. Maybe, the resurvey cannot take place but the measurement books of the work 13 executed from time to time would form a reasonable basis for assessing the amount due and payable to the writ petitioner, but such process could be undertaken only by the agreed forum i.e. arbitration and not by the writ court as it does not have the expertise in respect of measurements or construction of roads." 10. Recently, the Hon'ble Supreme Court in the case of M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India (P) Ltd., (2023) 2 SCC 703, while dealing with the issue of exercise of writ jurisdiction by a Court in matters arising out of a contract, has stated: "82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit." (emphasis supplied) 11. A reading of the aforesaid judgments makes it clear that it is 14 well settled proposition of law that when there are disputed question of facts involved in a case, the High Court should not exercise its jurisdiction under Article 226 of the Constitution of India. It has been held that the remedy under Article 226 of the Constitution of India may not be proper. 12. From perusal of the pleadings, it appears that the petitioner has prayed for quashment of Compensation Bill(s) No. No.C081501920001724 dated 22.08.2023 & No. 081502021002157 dated 28.09.2023 (ANNEXURE P/1 & ANNEXURE P/2 respectively) 6,13,18,868.00/-, whereby 51,09,906.00/- respectively has been determined as compensation owing to alleged short lifting of coal during the financial year from 2018-19, 2019-20 & 2020-21 respectively under the Fuel Supply Agreement and forthwith pay to the petitioner actual damage to the tune of Rs. 27947337/-which has occasioned to the petitioner on the account of the breach committed by the Respondent No.1 BUPIA together with interest @ 18% per annum from the date became due till its actual payment. 13. In the instant case, the relief of issuance of direction to quash the compensation bills and to repay the damages, the petitioner is contingent upon the resolution of the disputed question of facts raised, and these questions cannot be adjudicated under Article 226 of the Constitution of India. In view of the aforesaid, 15 it would not be appropriate for this Court to entertain the instant writ petition as there are disputed questions of fact involved. 14. Considering the submissions advanced by learned counsel for the parties, further considering the disputed questions of law involved in this writ petition, the relief sought by the petitioner and in view of law laid down by the Supreme Court in the above-stated judgments (supra), we do not find any good ground to entertain this writ petition. 15. Accordingly, the writ petition being devoid of merit is liable to be and is hereby dismissed. However, liberty is reserved in favour of the petitioner to take recourse to other alternate remedies available to him under the law. No cost(s). Sd/- Sd/- SD/- SD/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice Jyoti