- 1 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE E.S.INDIRESH WRIT PETITION NO.12853 OF 2018 (GM-RES) BETWEEN: M/S. KARAM CHAND THAPAR AND BROTHERS (COAL SALES) LIMITED A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 HAVING ITS LOCAL HEAD OFFICE AT BUX RANKA HOUSE, N.R. SQUARE OTC ROAD, BENGALURU - 560002. REPRESENTED BY ITS DEPUTY GENERAL MANAGER. …PETITIONER (BY SRI. DHYAN CHINNAPPA, SENIOR COUNSEL FOR SRI. PUTTEGOWDA K., ADVOCATE & SMT. M.L. SUVARNA LAKSHMI, ADVOCATE) AND: KARNATAKA POWER CORPORATION LIMITED SHAKTHI BHAVAN, 3RD FLOOR BENGALURU - 560 001 REPRESENTED BY ITS MANAGING DIRECTOR. …RESPONDENT (BY SRI. AJAY J. NANDALIKE, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH Digitally signed by ARUNKUMAR M S Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 COMMUNICATIONS ISSUED BY THE RESPONDENT IN (I) NO.A1 M1 B3/KCT/1367 DATED 23.01.2018 (UNDER ANNEXURE-D TO THE WRIT PETITION) (II) NO.CE(FM)/MCL-RSR-KCT/309 DATED 10.02.2018 (UNDER ANNEXURE-F TO THE WRIT PETITION) AND (III) NO.A1 M1 B3/KCT/1476 DATED 14.02.2018 (UNDER ANNEXURE-G TO THE WRIT PETITION) BY ISSUE OF A WRIT IN THE NATURE OF CERTIORARI AND GRANT ALL CONSEQUENTIAL BENEFITS. THIS WRIT PETITION HAVING BEEN RESERVED FOR ORDERS, COMING FOR PRONOUNCEMENT THIS DAY, E.S. INDIRESH J., MADE THE FOLLOWING: CORAM: HON'BLE MR. JUSTICE E.S. INDIRESH CAV ORDER 1. In this Writ Petition, petitioner is assailing the communications dated 23.01.2018 (Annexure-D), 10.02.2018 (Annexure-F) and 14.02.2018 (Annexure-G), issued by the respondent. - 3 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 2. The facts in nutshell for the purpose of adjudication are that, the petitioner claims to be in the business of liaisoning, movement, handling and delivery of raw coal from coal fields to thermal power stations and has been awarded with several contracts by the respondent - Corporation. In this regard, the petitioner and the respondent - Corporation had entered into a contract agreement dated 05.02.2016 (Annexure-A) for a period of one year and thereafter, the contract was extended on 06.02.2017 (Annexure-B). It is also stated that, the aforementioned contract agreement was extended for further six months as per letter dated 05.02.2018 (Annexure-C). It is further stated in the writ petition that, as per the terms and conditions mentioned in Clause 3.0.1, the coal transportation agency - petitioner herein shall supply raw coal as invoiced by the Mahanadi Coalfields Limited, Talcher, Odisha and same has to be carried out at the Raichur Thermal Power Station by the respondent - Corporation and the petitioner - agency. It is further stated that if the Grade/Gross Calorific Value (for short, 'GCV') band of coal falls below invoice grade, the difference of cost of coal between the invoice Grade and the Grade determined in sample and analysis at Raichur Thermal Power - 4 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 Station by the respondent was to be deducted from the coal transportation agency bills i.e., the bill raised by the petitioner. It is also stated that, the aforementioned method was adopted to process the bill of the petitioner by recording the results at the loading point and the end point of unloading. It is also stated that, the respondent - Corporation has entered into an agreement with the Central Institute of Mining and Fuel Research (CIMFR), on 20.07.2017 to carryout the sampling and analysis, on behalf of the respondent - Corporation as per the communication addressed to the petitioner dated 23.01.2018 (Annexure-D). In this regard, the petitioner has addressed letter dated 07.02.2018 (Annexure-E) to the respondent informing that the results of CIMFR are not binding on the petitioner as the agreement by the respondent with the CIMFR was subsequent to the contract agreement with the petitioner as per Annexure-A. It is stated in the writ petition that, the petitioner has received the communication dated 10.02.2018 (Annexure-F), wherein, the respondent - Corporation has stated that based on the report of the CIMFR, the bills of the petitioner would be reviewed retrospectively. It is further stated in the writ petition that the respondent - Corporation, with - 5 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 reference to the letter of the petitioner dated 07.02.2018(Annexure-E), has also addressed the communication dated 14.02.2018 (Annexure-G), informing that the respondent - Corporation has appointed CIMFR as its agent to carryout sampling and analysis as per ASTM/BIS standards and therefore, informed the petitioner to co-operate with CIMFR accordingly. Being aggrieved by the said communications as at Annexures - D, F and G, the petitioner has presented this Writ Petition. 3. I have heard Sri. Dhyan Chinnappa, learned Senior Counsel appearing for the petitioner and Sri. Ajay J. Nanadalike, learned counsel for the respondent. 4. Sri. Dhyan Chinnappa, learned Senior Counsel appearing for the petitioner invited the attention of the Court to Clause 17.0.0 of Annexure-A and submitted that, since the agreement at Annexure-A was entered into between the petitioner and the respondent - Corporation much before the agreement between the respondent with CIMFR on 20.07.2017, in so far as testing the sample and analysis of the coal received at unloading end of the respondent - Thermal Plants and therefore, the reviewing - 6 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 of the bills raised much before the agreement of the respondent-Corporation with the CIMFR is not justifiable and accordingly, sought for interference of this Court. It is further argued by the learned Senior Counsel appearing for the petitioner that, the imposition of reviewing of the bills retrospectively as per the communication dated 10.02.2018 (Annexure-F) is bad in law and accordingly, sought for interference of this Court. 5. It is further argued by the learned Senior Counsel for the petitioner by referring to the Judgment of the Hon'ble Supreme Court in the case of ABL International Ltd. and Another Vs. Export Credit Guarantee Corporation of India Ltd. and Others, reported in (2004) 3 SCC 553 and in the case of Subodh Kumar Singh Rathour Vs. Chief Executive Officer and Others, reported in 2024 SCC OnLine SC 1682, that the writ petition is maintainable under Article 226 of the Constitution of India, as the respondent being an instrumentality of the State under Article 12 of the Constitution of India and the actions of the State instrumentality in contractual matters must conform to Article 14 of the - 7 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 Constitution of India and therefore, sought for interference of this Court. 6. Per contra, Sri. Ajay J. Nandalike, learned counsel appearing for the respondent - Corporation, submitted that the writ petition requires to be dismissed on the ground that, the cause of action for the petitioner is based on the contractual obligation between the parties and accordingly, sought for dismissal of the petition. 7. It is further argued by the learned counsel appearing for the respondent that, in order to determine the quality of coal, as per the parameters, there is a requirement to conduct sampling of the coal as per ASTM/BIS standards. Emphasising on these aspects, it is argued that, the respondent - Corporation was informed by the Ministry of Coal that, the collieries have appointed CIMFR for sampling of coal at the loading end and indicated that the very same agency be used for sampling at the unloading end and as such, the respondent - Corporation has appointed the same agency to carryout sampling in terms of the contract agreement at Annexure-A and as such, there is no material change in the contractual - 8 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 obligations and therefore, sought for dismissal of the petition. It is further argued by the learned counsel for the respondent by referring to paragraph 7 of the statement of objections stating that, the CIMFR is not an external agency and therefore, the said agency has to complete the quality as well as quantity checking at both starting and end points of loading and unloading of coal and therefore, sought to justify the action of the respondent - Corporation. 8. In the light of the submissions made by the learned counsel appearing for the parties, it is not in dispute that the petitioner and the respondent - Corporation had entered into an Agreement dated 05.02.2016 (Annexure-A) for effective transportation of coal to Raichur Thermal Power Station through various modes of transportation from Mahanadi Coal Fields Limited, Odisha and such other places. Clause 3.0.0. of the Agreement at Annexure-A provides for quality of coal to be checked and verified at the time of loading as well as during unloading coal at the end point. Clause 17.0.0 provides for basis of payment and price adjustment between the parties. It is not in dispute that the aforesaid process of transportation - 9 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 was being made as per the terms and conditions at Annexure- A, however, dispute between the parties arose on account of the entry of CIMFR into the affairs of the petitioner and the respondent - Corporation. The respondent has entered into an Agreement dated 20.07.2017 with CIMFR for sampling and analysis of coal received at unloading ends of respondent - Thermal Plants and in this regard, any agreement entered into between the respondent - Corporation with the CIMFR at the instance of Ministry of Coal should not be made applicable to the petitioner retrospectively as per the agreement at Annexure-A, between the petitioner and the respondent - Corporation. It is obvious that, any entry of a third party agency with the agreement between the petitioner and the respondent - Corporation at the instance of either of the parties to the Agreement at Annexure-A shall always be prospective in nature and cannot be made applicable from the date of the agreement as per Annexure-A. In this regard, I find force in the submission made by the learned Senior Counsel for the petitioner that, the respondent - Corporation being an authority/agency/instrumentality of the State under Article 12 of the Constitution of India, must conform to the fairness and - 10 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 has to act reasonably. In this regard, it is relevant to note the observation made by the Hon'ble Supreme Court in the case of Subodh Kumar Singh Rathour (supra), (see paragraph Nos.34 to 65) with regard to interference of the writ court under Article 226 of the Constitution of India while exercising judicial review in contractual matters. 9. Emphasising on the exercise of judicial review by this Court under Article 226 of the Constitution of India in contractual matters, it is relevant to emphasise on the Judgment of the Hon'ble Supreme Court in the case of M.P. POWER MANAGEMENT COMPANY LIMITED, JABALPUR Vs. SKY POWER SOUTHEAST SOLAR INDIA PRIVATE LIMITED AND OTHERS, reported in (2023) 2 SCC 703, (see Paragraph Nos. 53 to 82.15). 10. Following the declaration of law made by the Hon'ble Supreme Court in the above decisions, I am of the view that, the respondent being an instrumentality of the State and the scope of judicial review in respect of the disputes falling within the domain of contractual obligation must conform to Article 14 of the Constitution of India and therefore, there shall not be - 11 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 any arbitrariness on the part of the State instrumentalities to breach the tenets of Article 14 of the Constitution of India. Hence, applying the principles to the case on hand, wherein the respondent - Corporation retrospectively applied the consensus of agreement between itself with CIMFR on 20.07.2017 to the functioning of the petitioner in terms of the Agreement at Annexure-A is manifestly arbitrary in nature and the said action of the respondent - Corporation is hereby deprecated. Therefore, taking into consideration the factual aspects on record, enforcing the agreement between the respondent - Corporation and the CIMFR on 20.07.2017 retrospectively to the sampling and analysis of coal received at unloading ends of respondent - Corporation Plants is in violation of Article 14 of the Constitution of India. 11. In the result, I pass the following: ORDER (i) The Writ Petition is allowed. (ii) The Communications issued by the respondent bearing No.A1 M1 B3/KCT/1367 dated - 12 - HC-KAR NC: 2025:KHC:46216 WP No. 12853 of 2018 23.01.2018 (Annexure-D), bearing No.CE(FM)/ MCL-RSR-KCT/309 dated 10.02.2018(Annexure-F), and bearing No.A1 M1 B3/KCT/1476 dated 14.02.2018 (Annexure-G), are hereby set aside, in terms of the observation made above. SD/- (E.S.INDIRESH) JUDGE sac List No.: 1 Sl No.: 49