M/S B.S.N.Joshi &
Sons Ltd. Vs. Ajoy Mehta & ANR.  INSC 2245 (19 December 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CONTEMPT PETITION NO. 245 OF 2007 IN
CIVIL APPEAL NO. 4613 OF 2006 M/s. B.S.N. Joshi & Sons Ltd. ...Petitioner
Versus Ajoy Mehta & Anr. ...Respondents
S.B. SINHA, J :
contempt proceeding has been initiated against respondent Nos. 1 and 2 for
alleged wilful disobedience of this Court's order dated 31.10.2006, the
operative portion whereof reads as under:
therefore, intend to give another opportunity to MAHAGENCO. It shall consider
the offer of Appellant upon consideration of the matter afresh, as to whether
it even now fulfils the essential tender conditions. If it satisfies the terms
2 of the tender conditions, the contract may be awarded in its favour for a
period of one year; but such contract shall take effect after one month from
the date of the said agreement so as to enable the private Respondents herein
to wind up their business. This order is being passed in the interest of
MAHAGENCO as also the private Respondents herein."
Maharashtra State Power Generation Co. Ltd. (for short "MAHAGENCO")
issued a notice inviting tender, inter alia, for coal liaisoning, quality and
quantity supervision of its thermal power station.
One of the conditions
laid down therefor is as under:
"(ii) The Bidder
should have executed the work of total minimum quantity of 5 (Five) Million
Metric Tons per year for preceding 5 years. Besides this bidder should have
executed the work of total quantity of 10 (ten) Million MT's in any of the
preceding 5 (Five) years. Above execution of work should be on behalf of State
Electricity Board and/or NTPC and/or other State or Central Undertaking and/or
the private Power Generating Companies as their liaison agent/coal agent, with
regard to receipt and supply of the coal including supervision on dispatch,
loading, movement of the coal upto destination by Railway only."
"year" occurring therein is said to be the financial year.
Petitioner along with
various others submitted its tender, inter alia, on the 3 premise that the
petitioner did not fulfill the essential conditions of having transported the
quantity of minimum five lakh tonnes of coal for the preceding five years, its
offer was not accepted.
writ petition was filed before the Madhya Pradesh High Court, which having been
dismissed, Civil Appeal bearing No. 4613 of 2006 was preferred by the
petitioner upon obtaining special leave.
One of the questions
which arose for consideration before this Court was as to whether MAHAGENCO
committed a serious error in not taking into account the quantity of coal
supplied by the petitioner to the Andhra Pradesh Power Generation Corporation
Limited; as it appears from its letter dated 15.06.2005 that the petitioner had
supplied the following quantity of coal:
"S. Period Name
of Colliery Quantity in MT No.
01. 11.09.2003 M/s
MCL Talcher 3172750.00 to March 2004
02. 01.10.2003 M/s
MCL, Ibvalley 316930.00 to Area ----------------- 31.03.2004 3489680.00
03. 01.04.2004 M/s
MCL Talcher 2774455.00 to 10.09.2004
04. 01.04.2004 M/s
MCL Ibvalley 389732.00 To Area ---------------- 30.09.2004 3164187.00
By a judgment and order
dated 31.10.2006, this Court held:
therefore, evident that total quantity of 62,64,135 metric tones of coal had
been handled by Appellant for them.
The intention of
introduction of the said clause becomes self-evident from the aforementioned
note. It may be true, as was observed by the High Court, that the Respondents
in the tender documents did not categorically state that the block of 365 days
in respect of handling of coal by the tenderes shall be taken into
consideration. It is also true that the Corporation must be held to be aware as
to what was the true intent and purport of the said term."
was, however, found that other tenderers, viz., M/s. Nair Coal Services Ltd.,
Nagpur, M/s. Nareshkumar & Co. Ltd., Nagpur and M/s. Karamchand Thapar
& Brs. Ltd., Mumbai had formed a cartel.
5 Alleged contemnor
Shri Ajoy Mehta, Managing Director of MAHAGENCO (Respondent No. 1 herein) in a
note dated 19.08.2005 stated as under:
"On perusal of
rates of M/s Nair Coal Services Ltd., Nagpur, M/s Nareshkumar & Co Ltd.,
Nagpur and M/s Karamchand Thapar & Brs. Ltd., Mumbai, it is apparent that
they have formed a cartel. The rates quoted by these firms are nearly 51 crs.
to 52 crs. more than that quoted by LT. As a goodwill gesture the above parties
were called for negotiations. However, they have refused to match the L1 rates.
In view of above it
is in public interest and in the interest of MAHAGENCO a Govt. owned, public
utility that the work is allocated to the lowest qualified bidder namely M/s
B.S.N. Joshi & Co."
the said proposal was not accepted.
the fact that a cartel was formed, the contract was awarded to the members
thereof. In the aforementioned context, this Court observed:
so, however, we would like to observe that that having regard to the fact that
a huge public money is involved, a public sector undertaking in view of the
principles of good corporate governance may accept such tender which is
economically beneficial to it. It may be true that essential terms of the
contract were 6 required to be fulfilled. If a party failed and/or neglected
to comply with the requisite conditions which were essential for consideration
of its case by the employer, it cannot supply the details at a later stage or
quote a lower rate upon ascertaining the rate quoted by others. Whether an employer
has power of relaxation must be found out not only from the terms of the notice
inviting tender but also the general practice prevailing in India.
For the said purpose,
the court may consider the practice prevailing in the past. Keeping in view a particular
object, if in effect and substance it is found that the offer made by one of
the bidders substantially satisfies the requirements of the conditions of
notice inviting tender, the employer may be said to have a general power of
relaxation in that behalf. Once such a power is exercised, one of the questions
which would arise for consideration by the superior courts would be as to
whether exercise of such power was fair, reasonable and bona fide. If the
answer thereto is not in the negative, save and except for sufficient and
cogent reasons, the writ courts would be well advised to refrain themselves in
exercise of their discretionary jurisdiction."
It was on the
aforementioned premise, the Civil Appeal was allowed by this Court.
Vikas Mehta, learned counsel appearing on behalf of the petitioner, in support
of the contempt petition, would argue:
7 (i) Alleged
contemnors had from the very beginning gave a twist to the said order insofar
as it proceeded on the basis that the five years period should be calculated
from the date of the order of this Courts.
refused to grant a contract in favour of the petitioner relying on or on the
basis of the interim order passed by this Court.
(iii) A different
stand is being taken now that the petitioner should not be allotted any
contract in view of a subsequent event, viz., the letter dated 20.02.2007
issued by the Sanjay Gandhi Thermal Power Station.
On the aforementioned
premise, the learned counsel would submit that the alleged contemnors must be
held to have committed gross contempt of this Court.
Altaf Ahmed, learned senior counsel appearing on behalf of the alleged
contemnors, on the other hand, would contend that:
8 (i) the alleged
contemnors might have committed a mistake in properly understanding the order
of the court, but the same would not mean that they have committed contempt of
(ii) The term
"year" having been found by this Court to mean a financial year, even
if the figures supplied by the petitioner are taken into consideration, it
cannot be said to have satisfied the essential conditions for grant of contract
of transportation of coal.
In any event, the
learned Senior Counsel would submit that the alleged contemnors are ready and
willing to abide by any direction which may be issued by this Court.
of coal and that too good quality of coal is essential for running of a thermal
power station. It was with that intent in mind that this Court, either at the
interim stage or final stage, did not intend to pass any order which would
hamper transportation of coal resulting in stoppage of the functioning of the
thermal power station.
alleged contemnors, in our opinion, misconstrued the order of this Court for
which there was no basis that they were bound by the interim 9 order passed by
this Court. For the sake of clarity, we may notice the interim order dated
27.03.2006 which reads as under:
for the petitioner submits that the main petition is coming up for final
hearing on 17th April 2006. Learned counsel appearing for respondent Nos. 2
& 3 submits that for purposes of generating power, coal supplies have to be
continued to the respondents failing which the entire generation of electricity
shall come to a standstill. Keeping in view this fact, the respondents are
permitted to go ahead with their tender process including award of contract.
They are free to make whatever arrangement they want to make in this behalf to
ensure continued supply of coal to them. It is, however, made clear that
whatever arrangement is made by the respondents the same will be subject to the
final decision of this Special Leave Petition."
[Underlining is ours
therefore, fail to understand as to how a fresh tender was floated to allot the
work of liaisoning of coal and the same companies who had formed a cartel were
allowed to carry on the contract job. We may, however, place on record that the
contracts were awarded on the condition that the same would be subject to the
final outcome and decision of this Court.
attention has been drawn to the fact that the petitioner was asked to file
additional documents in support of its contention that it fulfilled the
essential conditions of contract, if it so intended to do. It was, however,
wholly unnecessary as only a fresh look was required to be given in regard to
the eligibility of the petition for the purpose of awarding the contract
wherefor the Scrutiny Committee was required to form an opinion as to whether
the petitioner had substantially complied with the tender conditions, subject,
of course, to the fulfillment of essential conditions.
contemnors, in our opinion, committed a serious error in calculating the
quantity of coal transported for preceding five financial years from the date of
the judgment. The date of the judgment was not at all relevant for the
aforementioned purpose. The alleged contemnors did not explain how they have
understood the order of this Court wrongly as they had also proceeded on the
basis that the five financial years should be counted from the date of calling
for the tender and the date of the judgment separately. If they had any
difficulty in understanding the direction of the court, they should have
approached this Court for clarification but could not have arrived at such an
absurd conclusion that what was necessary to be 11 considered is handling of
coal by the petitioner for the preceding five years from the date of passing of
the judgment by this Court.
was necessary for them to consider was implementation of the directions issued
by this Court in the backdrop of the events noticed by this Court. This Court
in its judgment had not only taken into consideration the contentions raised by
MAHAGENCO in regard to non-fulfillment of the essential conditions on the part
of the petitioner but also implications thereof at some details.
sought to take into consideration a purported subsequent event, viz, the letter
dated 20.02.2007 issued by the Sanjay Gandhi Thermal Power Station, which was neither
relevant nor decisive.
alleged contemnors, therefore, in our opinion, did not read the directions of
the court in their proper perspective.
We say so:
(i) because they
could not have considered the directions contained in the interim order passed
by this Court. The interim order merged into the final order. In any event,
even the said interim order was 12 subject to the decision of the court and,
thus, we fail to understand as to how the interim order was found to be
continuing despite passing of the final order.
(ii) As the matter
was required to be considered afresh, the purpose of considering the
eligibility of the petitioner is concerned, they committed a serious error
insofar as the eligibility criteria were applied from the date of the judgment.
furthermore could not have ignored the note of the alleged Contemnor No. 1 that
the other respondents in the Civil Appeal had formed a cartel. They furthermore
did not notice that having regard to the overall situation and particularly in
view of the opinion of the Scrutiny Committee that the petitioner had
substantially complied with the conditions and, thus, the general power of
relaxation should have been used.
is, therefore, not a case where two interpretations of the judgment of this
Court were possible.
us an additional affidavit has been filed by Shri Ajoy Mehta, Contemnor No. 1,
13 "17. I,
therefore, respectfully submit that we have not flouted the orders passed by
the Hon'ble Court and we shall abide by all directions given by this Hon'ble
Court including awarding of the contract to M/s BSN Joshi & Sons Ltd.,
Petitioner herein, if this Hon'ble Court so directs."
Keeping in view the
aforementioned statement made before us, we accept the apology tendered by the
alleged contemnors for the time being and direct that the contract for a period
of one year be granted to the petitioner in terms of our judgment dated
are distressed to see that MAHAGENCO had been encouraging formation of a cartel
and, thus, allowing the rate of transportation of coal to go high up. Unless a
power generating company takes all measures to cut down such malpractices, the
generation cost of electricity is bound to go higher and ultimately the same
would be passed on to the consumers of electricity. We hope a public sector
undertaking would take adequate and appropriate measures to meet the said
contingency in future.
contempt petition is disposed of with the aforementioned directions.