KARNATAKA POWER CORPORATION VS EMTA COAL LIMITED & ANR.
KARNATAKA POWER CORPORATION VS EMTA COAL LIMITED & ANR.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 54015404 OF 2017
KARNATAKA POWER CORPORATION …APPELLANT
EMTA COAL LIMITED & ANR. …RESPONDENTS
N. V. RAMANA, CJI
1 The present Civil Appeals, by way of Special Leave, arise out
of the impugned common judgment dated 24.03.2016 passed by
the High Court of Karnataka, at Bengaluru, whereby the High
Court allowed the writ petitions filed by the respondents herein.
By way of the writ petitions, the respondents had challenged the
adverse decisions taken by the appellant with respect to the
arrangement regarding coal procurement entered into by the
parties for the purposes of the appellant’s thermal power projects
in the State of Karnataka.
2 A conspectus of the facts necessary for the disposal of the
present appeal is as follows: the appellant was allotted coal mines
by the Union of India for captive consumption for their thermal
power projects in the State of Karnataka. In 2002, M/s EMTA
Coal Limited (hereinafter, “EMTA”) was selected to form a joint
venture with the appellant for the development of the mines, and
the supply of coal to the said power projects. After setting up of
the joint venture Karnataka EMTA Coal Mines Limited (in short,
“KEMTA”) by the appellant and EMTA, all three companies
entered into various contracts for development of the coal mines
and supply and delivery of coal.
3 The above arrangement progressed without any dispute,
until the Comptroller and Auditor General of India (in short,
“CAG”) submitted a report for the year ending March 2013,
wherein it was observed that minimum quantity of coal rejects
should be 10% per centum of the total production, valuing Rs.
52,37,00,000 (Rupees fifty two crore thirty seven lakh). At the
first instance, the appellant raised objections to the CAG report
stating that quantification of the coal rejects should be based on
actuals, i.e., the quantity of coal actually sent to the washery and
the quantity of coal dispatched thereafter to the thermal power
stations, after processing. The appellant specifically indicated
that quantification of the coal rejects in the CAG report was
erroneous. However, despite the said objections raised by the
appellant, the CAG finalized its report which was made available
to the appellant.
4 It was only after receipt of this report that the appellant
demanded reimbursement of Rs. 52,37,00,000 (Rupees fifty two
crore thirty seven lakh) from KEMTA by demand letters dated
July 31, 2014 and December 24, 2014. These two demand letters
were impugned by the respondents in Writ Petition Nos. 2995
2996 of 2016 before the High Court of Karnataka.
5 Parallelly, it appears that a dispute subsisted between the
respondents and the appellant regarding certain deductions
made by the appellant on bills payable to KEMTA on account of
washing charges which was based on the quantification by the
CAG. The said deductions were challenged by the respondents
vide Writ Petition Nos. 2997 and 2998 of 2016 before the High
Court of Karnataka whereby the respondents additionally sought
refund of Rs 59.78 crores (Rupees Fifty Nine Crores Seventy Eight
Lakhs) with interest at the rate of 18% p.a. from 30.06.2012.
6 The above writ petitions were heard together by the High
Court of Karnataka. Vide the impugned judgment, the High Court
of Karnataka allowed the said writ petitions and, inter alia,
directed the appellant to not initiate recovery from the
respondents solely on the basis of the CAG report dated March
2013 and held that the respondents would be entitled to receive
reimbursements for deductions made by the appellant from the
7 Aggrieved by the above, the appellant has filed the present
appeal by way of special leave under Article 136 of the
8 The primary submission of the learned senior counsel
appearing on behalf of the appellant is that the High Court
granted the relief without adjudicating the disputes between the
parties or properly appreciating the facts in issue.
9 On the other hand, learned counsel for the respondents
supports the impugned judgment and submits that no grounds
are made out by the appellant for this Court to interfere in the
present matter in exercise of its powers under Article 136 of the
10 Heard the counsel for the parties, and perused the material
11 It appears that one of the grounds raised by the appellant in
the present case relates to whether the High Court has correctly
exercised its discretion in entertaining the subject writ petitions.
Although this ground was initially raised by the appellant before
the High Court, it appears that it was not pressed at the time of
final hearing, as recorded in the impugned judgment.
12 It is worth noting that this Court has already held that in
matters pertaining to a state instrumentality, a writ may be
maintainable in matters concerning contractual disputes in
certain circumstances. While there is no bar on the
maintainability of such writ petitions, the discretion lies with the
High Courts as to whether to exercise the said jurisdiction or not.
This Court has elaborately discussed the principles that must
guide the High Courts while deciding whether to exercise their
writ jurisdiction in contractual disputes between a State and a
private party in a catena of judgments. [See ABL International
Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004)
3 SCC 553; Joshi Technologies International Inc. v. Union of
India, (2015) 7 SCC 728]
13 However, we are not inclined to delve into the issue of
whether the High Court’s exercise of writ jurisdiction was
appropriate, due to the peculiar facts and circumstances of the
present case. The present matter pertains to a tender that was
awarded by the appellant to EMTA nearly twenty years ago, in the
year 2002. The CAG report that appears to have been the starting
point for the entire dispute between the parties is dated March,
2013, close to a decade back. In such circumstances, to even
advert to arguments on the maintainability of the writ petitions
would be unjust to the parties involved.
14 Coming to the merits of the appeal, from the facts, it
appears that in the first instance, when the CAG report was first
submitted, the appellant itself had raised objections to the
quantification of coal rejects arrived at by the CAG. However,
when the audit objections were rejected by the CAG, and the final
report was made available, the appellant demanded
reimbursement from KEMTA based on the same CAG report to
which it had filed objections. Such a change of stand by the
appellant has not been sufficiently explained.
15 Additionally, a bare perusal of the clauses contained in the
various agreements entered into between the parties does not
indicate that such deductions could be made for the purposes of
washing charges. There does not appear to be any specification
laid down as to the method required to be adopted for washing of
16 No material has been placed on record by the appellant to
suggest that there was ever any problem with respect to the
quality of coal being supplied by KEMTA to the appellant. Rather,
the impugned order suggests that coal supplied by KEMTA was
utilized by the appellant in its thermal power plants in order to
17 Taking into consideration the above facts and
circumstances, we are of the opinion that no material has been
brought to the notice of this Court that would compel us to
interfere with the impugned common judgment passed by the
High Court in exercise of our jurisdiction under Article 136 of the
18 Accordingly, the Civil Appeals filed by the appellant are
19 Pending applications, if any, are accordingly disposed of.
MAY 20, 2022.