Coal Mines (Special Provisions) Act, 2015 – s.11 – In Manohar Lal Sharma v. Principal Secretary and Others reported as [2014] 8 SCR 446, Supreme Court held that the allotment of Coal Blocks between 1993 and 2011 was arbitrary and illegal – All such Coal Block allocations were quashed – Respondent-prior contractor if had the first right of refusal in the matter of lending of Mining Lease, as held by High Court – On appeal, held: s.11 provides that a successful bidder or allottee, as the case may be, in respect of Schedule I coal mines, may elect, to adopt and continue such contracts which may be existing with any of the prior allottees in relation to coal mining operations – In the event the successful bidder or allottee elects not to adopt or continue with the existing contracts, all such contracts shall cease to be enforceable against the successful bidder or allottee in relation to Schedule I coal mine and the only remedy of such contracting parties shall be against the prior allottees – If it is held that u/s.11, a prior contractor is entitled to continue if his performance is found to be satisfactory and if there is nothing against him, then it will be providing something in s.11 which the Statute has not provided for – High Court erred in observing that respondent had a legitimate expectation – Merely because the Coal Mine Block was again allotted to the appellant, the same could not give any vested right in favour of respondent – High Court erred in forcing the appellant to continue the contract with respondent, though it was not willing to do so – Decision of the appellant dtd.
06.04.18 was taken in accordance with s.11 and after following the principle of natural justice – Impugned judgment set aside – Interpretation of Statutes – Literal Interpretation – Doctrine of Legitimate Expectation – Principle of Natural Justice – Judicial review.
Interpretation of Statutes – Literal Interpretation – Plain and literal meaning – Held: When upon a plain and literal interpretation of the words used in a Statute, the legislative intent could be gathered, it is not permissible to add words to the Statute – Coal Mines (Special Provisions) Act, 2015 – s.11.
Administrative Law:
Exercise of power of judicial review – Scope of – Discussed.
Judicial review – Wednesbury Principle – Held: While applying the Wednesbury principle, the Court will examine as to whether the decision of an authority is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it.
Words and Phrases – “may elect” in s.11, 2015 Act – Meaning of – Discussed – Coal Mines (Special Provisions) Act, 2015 – s.11. Allowing the appeals, this Court
HELD: 1.1 The Coal Mines (Special Provisions) Act, 2015 came to be enacted in pursuance of the decision of this Court in the case of Manohar Lal Sharma-I, wherein this Court held that the allotment of Coal Blocks between 1993 and 2011 was arbitrary, illegal and violative of Article 14 of the Constitution. A plain reading of Section 11 of the said Act would reveal that it begins with a non-obstante clause. It provides that a successful bidder or allottee, as the case may be, in respect of Schedule I coal mines, may elect, to adopt and continue such contracts which may be existing with any of the prior allottees in relation to coal mining operations and the same shall constitute a novation for the residual term or residual performance of such contract. The words “may elect” would clearly show that the legislature has given complete discretion to a successful bidder or allottee to elect. The words “may elect” would also mean a discretion not to elect. Only in the event, a successful bidder or allottee decides to adopt and continue such contract, which may be existing with any of the prior allottees in relation to coal mining operations, the same shall constitute a novation for residual term or residual performance of such contract. In the event, the successful allottee does not elect to adopt or continue such contract, there is no question of novation for residual term or residual performance of such contract. Perusal of sub- section (2) of Section 11 of the said Act would also make it clear that, it provides that in the event a successful bidder or allottee elects not to adopt or continue with the existing contract which had been entered into by the prior allottees with third parties, all such contracts which have not been adopted or continued shall cease to be enforceable against the successful bidder or allottee in relation to Schedule I coal mines and the remedy of such contracting parties shall be against the prior allottees. It could thus be seen that on a plain reading of sub-sections (1) and (2) of Section 11 of the said Act, it is clear that the successful allottee or bidder has complete freedom to decide as to whether he desires to continue or adopt any such existing contracts in relation to coal mining operation. Only in the event he elects to adopt or continue with existing contracts, it shall constitute novation for residual term or residual performance of such contracts. In the event the successful bidder or allottee elects not to adopt or continue with the existing contracts, all such contracts shall cease to be enforceable against the successful bidder or allottee in relation to Schedule I coal mines. The only remedy of such contracting parties shall be against the prior allottees. [Paras 20, 21][784-E-H; 785-A-E] Manohar Lal Sharma v. Principal Secretary and Others (2014) 9 SCC 516 : [2014] 8 SCR 446; Manohar Lal Sharma v. Principal Secretary and Others (2014) 9 SCC
614 : [2014] 12 SCR 110 – referred to.
1.2 If the words used in Section 11 of the said Act are construed in plain and literal term, they do not lead to an absurdity and as such, the rule of plain and literal interpretation will have to be followed. If it is held that under Section 11 of the said Act, a prior contractor is entitled to continue if his performance is found to be satisfactory and if there is nothing against him, then it will be providing something in Section 11 of the said Act which the Statute has not provided for. It will also lead to making the words “may elect, to adopt and continue” redundant and otiose. When, upon a plain and literal interpretation of the words used in a Statute, the legislative intent could be gathered, it is not permissible to add words to the Statute. Equally, such an interpretation which would make some terms used in a Statute otiose or meaningless, has to be avoided. [Para 22][785-G-H; 786-A, B-C]
Jugalkishore Saraf v. Raw Cotton Company Limited [1955] 1 SCR 1369; Ajit Mohan and Others v.
Legislative Assembly National Capital Territory of Delhi and Others 2021 SCC OnLine SC 456 – relied on.
1.3 When considering Section 62 of the Contract Act, 1872 read with Section 11 of the said Act, High Court has observed that the parties to a contract may willingly agree to substitute a new contract or to rescind it or alter it. Having observed this, the High Court has, however, erred in observing that EMTA had a legitimate expectation. The reasoning adopted by the High Court is totally wrong. Merely because the Coal Mine Block was allotted to PSPCL, the same could not give any vested right in favour of EMTA, particularly in view of the language used in Section 11 of the said Act. Having observed in earlier para that in view of Section 11 of the said Act read with Section 62 of the Contract Act, 1872, the parties to a contract may willingly agree to substitute a new contract or to rescind it or alter it, the High Court has erred in forcing PSPCL to continue with the contract with EMTA, though it was not willing to do so. [Paras 23-25] [786-F-G; 787-B, C-D]
Kerala State Beverages (M and M) Corporation Limited v. P.P. Suresh and Others (2019) 9 SCC 710 : [2019]
17 SCR 164 – relied on.
1.4 There can be no doubt that between Section 11 of the said Act and Clause 12.4.1 of the Allotment Agreement, Section
11 of the said Act would prevail. The question is, whether, Section
11 of the said Act mandates the successful allottee to continue with the existing contract. The answer is no. In any case, the claim of EMTA is not rejected by PSPCL solely on the ground of Clause 12.4.1 of the Allotment Agreement. [Para 28][788-B-C]
1.5 The order passed by PSPCL dated 6th April 2018, is an order passed by an authority of the State in exercise of its executive functions. While exercising powers of judicial review, the Court is not concerned with the ultimate decision but the decision-making process. The limited areas in which the court can enquire are as to whether a decision making authority has exceeded its powers, committed an error of law or committed breach of principle of natural justice. It can examine as to whether an authority has reached a decision which no reasonable Tribunal would have reached or has abused its powers. It is not for the court to determine whether a particular policy or a particular decision taken in the fulfilment of that policy is fair. The court will examine as to whether the decision of an authority is vitiated by illegality, irrationality or procedural impropriety. While examining the question of irrationality, the court will be guided by the principle of Wednesbury. While applying the Wednesbury principle, the court will examine as to whether the decision of an authority is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. [Paras 30, 31][788-D-E; 795-F-H; 796-A-B]
Tata Cellular v. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl. SCR 122 Rashmi Metaliks Limited and Another v. Kolkata Metropolitan Development Authority and Others (2013) 10 SCC 95 : [2013] 17 SCR 345 – relied on.
1.6 Applying the aforesaid principle, it can clearly be seen that the decision of PSPCL dated 6th April 2018, cannot be questioned on the ground of illegality or procedural impropriety. The decision is taken in accordance with Section 11 of the said Act and after following the principle of Natural Justice. The limited area that would be available for attack is as to whether the decision is hit by the Wednesbury principle. Can it be said that the decision taken by the authority is such that no reasonable person would have taken it? No doubt, that the authority has also relied on Clause 12.4.1 of the Allotment Agreement, however, that is not the only ground on which the representation of EMTA is rejected. No doubt, that while considering EMTA’s representation, PSPCL has referred to Clause 12.4.1 of the Allotment Agreement which requires the coal mines to be developed through contractors who were selected through a competitive bidding process, however, that is not the only ground on which the representation of EMTA is rejected. PSPCL decided to go in for competitive bidding process for the purpose of eliciting the best operator. It has further noticed that the composition with respect to capital/revenue investment is altogether different. Hence, the bidding parameters have entirely changed. A policy decision to get the best operator at the best price, cannot be said to be a decision which no reasonable person would take in his affairs. In that view of the matter, the attack on the order/letter dated 6th April 2018, is without merit. The impugned judgment and order passed by the High Court is quashed and set aside. [Paras 32, 33 and 35] [796-B-D, F-H; 797-B]
KPCL v. EMTA Coal Limited and Others ILR 2016 Kar 4301; EMTA Coal Limited and Another v. West Bengal Power Development Corporation (2016) 2 Cal LJ 424 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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