# PUNJAB STATE POWER CORPORATION LIMITED AND ANOTHER v. EMTA COAL LIMITED

- **Citation:** [2021] 11 S.C.R. 772
- **Court:** Supreme Court of India
- **Decided:** 2021-09-21
- **Case number:** Civil Appeal Nos. 5823-5824 of 2021
- **Bench:** L. Nageswara Rao, B. R. Gavai, B. V. Nagarathna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/punjab-state-power-corporation-limited-and-another-v-emta-coal-limited-34774
- **Pages:** 26

## Headnote

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 -
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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
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
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[2021] 11 S.C.R.
any of the prior allottees in relation to coal mining operations,
the same shall

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[2021] 11 S.C.R. 772
772
PUNJAB STATE POWER CORPORATION LIMITED AND
ANOTHER
v.
EMTA COAL LIMITED
(Civil Appeal Nos. 5823-5824 of 2021)
SEPTEMBER 21, 2021
[L. NAGESWARA RAO, B. R. GAVAI AND
B. V. NAGARATHNA, JJ.]
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 -
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773
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
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
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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
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"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]
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
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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
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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.
Case Law Reference
[2014] 8 SCR 446
referred to
Para 2
[2014] 12 SCR 110
referred to
Para 6
[2019] 17 SCR 164
relied on
Para 11
[1955] 1 SCR 1369
relied on
Para 22
[1994] 2 Suppl. SCR 122
relied on
Para 30
[2013] 17 SCR 345
relied on
Para 30
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.58235824 of 2021.
From the Judgment and Order dated 25.01.2019 of the High Court
of Punjab and Haryana at Chandigarh in CWP No.10055 of 2018 and
CWP No.16245 of 2018 (O&M).
Sanjay Jain, Ms. Aishwarya Bhati, ASGs, Salman Khurshid, K.
V. Vishvanathan, Abhishek Manu Singhvi, Dhruv Mehta, Mukul Rohatgi,
Sr. Advs., Atul Nanda, Karan Bharihoke, Venkataraman R., Siddhant
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
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Sharma, Ms. Sakshi Kotiyal, Zafar Khurshid, Asif Rashida, Ms. Vanshaja
Shukla, Ms. Gunjan Chowksey, Shantanu Shrivastava, Abhishek Singh,
Abhimanyu Bhandari, Sangram S. Saron, Ms. Roohe Hina Dua, Ejaz
Maqbool, Ms. Akriti Chaubey, Ms. Neha Sahai Bharihoke, Gurmeet Singh
Makkar, Ms. Ruchi Kohli, Ms. Archana Pathak Dave, Mohd. Akhil,
Advs. for the Appearing parties.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. Leave granted.
2. A short question relating to interpretation of Section 11 of the
Coal Mines (Special Provisions) Act, 2015 (hereinafter referred to as
the "said Act") which is an outcome of the judgment of this Court in the
case of Manohar Lal Sharma v. Principal Secretary and Others1
(hereinafter referred to as "Manohar Lal Sharma-I") and an ancillary
question pertaining to scope of judicial review of an administrative action
of the State Authority arise for consideration in these appeals.
3. These appeals challenge the judgment and order passed by the
Division Bench of the High Court of Punjab and Haryana dated 25th
January 2019, thereby allowing the civil writ petitions being CWP Nos.
10055 and 16245 of 2018, filed by the respondent herein-EMTA Coal
Limited (hereinafter referred to as "EMTA") and holding that the
respondent herein will have the first right of refusal in the matter of
lending of Mining Lease.
4. The facts in the present case are not in dispute, which are
taken from appeals arising out of SLP(C) Nos. 9924-25 of 2019.
5. The Punjab State Electricity Board (hereinafter referred to as
the "PSEB") which is now known as Punjab State Power Corporation
Limited (hereinafter referred to as the "PSPCL"), was proposed to be
allotted Captive Coal Mines by the Union of India. On 16th February
1999, PSEB issued a tender, thereby inviting bids for the purpose of
development of Captive Coal Mines. In the said bid, opened on 9th
February 2000, the respondent-EMTA emerged successful. Accordingly,
an agreement was entered into between PSEB and EMTA on 5th May
2000, thereby creating a Joint Venture Company called Panem Coal
Mines Limited (hereinafter referred to as "Panem"). The said agreement
1 (2014) 9 SCC 516
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provided the rights for mining of coal from the Coal Mines, transporting
and delivery of it, wholly and exclusively to PSEB. Since EMTA being a
partnership firm could not have been a shareholder of the Joint Venture
Company, a follow up Joint Venture Agreement was entered into on 21st
March 2001 between PSEB, EMTA and the three partners of EMTA,
incorporating the same terms and conditions as were found in the earlier
agreement dated 5th May 2000. The same was intimated to the Union of
India by PSEB. Thereafter on 26th December 2001, Union of India allotted
a Captive Coal Block being Pachhwara (Central Block) Coal Mine
(hereinafter referred to as "Pachhwara Coal Block") in the State of
Jharkhand to PSEB. On 22nd February 2002, Union of India notified the
supply of coal from the Pachhwara Coal Block by the Joint Venture
Company (Panem) to the power stations of PSEB on an exclusive basis
as an end use under Section 3(3)(a)(iii) of the Coal Mines (Nationalization)
Act, 1973, in the official gazette. On 25th November 2004, a Mining
Lease was executed between the Government of Jharkhand and Panem
for mining coal from the non-forest areas of Pachhwara Coal Block.
Subsequently on 30th August 2006, a Coal Purchase Agreement was
executed between Panem and PSEB, for the purpose of supply and
delivery of the coal from Pachhwara Coal Block to the power stations
of PSEB. On 6th January 2007, Mining Lease was issued by the
Government of Jharkhand in favour of Panem, for mining coal even
from the forest areas of the Coal Block.
6. Till 2014, there was no problem. However, on 25th August 2014,
this Court in the case of Manohar Lal Sharma-I, held that the entire
allocation of Coal Blocks made between 1993 and 2011, except those
which were made through competitive bidding, were invalid, unfair,
arbitrary and violative of Article 14 of the Constitution of India. On 24th
September 2014, vide further orders passed in the case of Manohar
Lal Sharma v. Principal Secretary and Others2, this Court quashed
all Coal Block allocations made by the Central Government between
1993 and 2011. This Court also accepted the submission of the learned
Attorney General that the allottees of the Coal Blocks other than those
covered by the judgment and the four Coal Blocks covered by the
subsequent order, must pay an amount of Rs.295/- per metric ton of coal
extracted as an additional levy. In pursuance of the judgment of this
Court in the case of Manohar Lal Sharma-I, the Coal Mines (Special
2 (2014) 9 SCC 614
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
[B. R. GAVAI, J. ]
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Provisions) Ordinance, 2014 ("First Ordinance") came to be promulgated
on 21st October 2014. The Second Ordinance came to be promulgated
on 26th December 2014. Vide further orders passed by this Court in
February 2015 in contempt proceedings in the case of Manohar Lal
Sharma-I, an additional levy at the rate of Rs.295/- per metric ton was
directed to be paid by the prior allottees. Subsequently on 30th March
2015, the said Act was notified, repealing the Second Ordinance.
7. The Central Government vide Allotment Order dated 31st March
2015, again allocated Pachhwara Captive Coal Block in favour of PSPCL.
As PSPCL was facing acute shortage of coal for paddy season, and
closure of Coal Block had resulted in sudden loss of employment, it
entered into a Transitory Agreement with EMTA on 30th June 2015. As
per Clause 1.1.20 of the Transitory Agreement, the said contract was
for a period of nine months or till Mine Developer-cum-Operator was
appointed by PSPCL through competitive bidding. On 23rd July 2015,
PSPCL informed Union of India about the Transitory Agreement. On
31st August 2015, PSPCL published Notice inviting Global Tender
(hereinafter referred to as the "NIT"), inviting bids for the appointment
of Mine Developer-cum-Operator, for supply of coal.
8. EMTA filed a civil writ petition being CWP No. 26180 of 2015
before the High Court of Punjab and Haryana, thereby challenging the
said NIT. On 10th February 2016, the High Court passed a direction
restraining PSPCL from opening the financial bids till 29th February 2016.
On 1st February 2018, CWP No. 26180 of 2015 was dismissed as
withdrawn by the High Court on the basis of the statement made by
PSPCL that it shall consider the representation-cum-claims made by
EMTA and it shall take a decision thereon before finalizing the fresh
tender process for allotment of Coal Mines at Pachhwara. Accordingly,
a representation was made by EMTA on 20th February 2018, which
came to be rejected by PSPCL on 6th April 2018. The same was
challenged by EMTA by filing a civil writ petition being CWP No. 10055
of 2018 before the High Court of Punjab and Haryana.
9. It is to be noted that in the meantime, since the tender process
was held up due to various writ petitions, PSPCL passed a Resolution on
30th June 2017, to drop the Global Tender dated 31st August 2015. During
the pendency of CWP No. 10055 of 2018, on 30th April 2018, PSPCL
issued a fresh Request For Proposal (RFP), to invite Global Bids for the
selection of Mine Developer-cum-Operator for Pachhwara Coal Block
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through competitive reverse bidding process. The same was challenged
by EMTA by filing another civil writ petition being CWP No. 16245 of
2018 before the High Court of Punjab and Haryana. PSPCL contested
the same by filing a written statement. Pursuant to RFP dated 30th April
2018, the bids were opened on 10th August 2018. The lowest bid was
submitted by DBL-VPR Consortium who is the appellant in appeal arising
out of SLP(C) Nos. 14384-14385 of 2021. Letter of Award was issued
in favour of the said DBL-VPR Consortium and a Coal Mining
Agreement was signed on 11th September 2018. By the impugned
judgment and order dated 25th January 2019, the High Court allowed the
civil writ petitions as aforesaid. Being aggrieved thereby, the present
appeals.
10. Shri K.V. Viswanathan, learned Senior Counsel appearing on
behalf of appellant-PSPCL submitted that the High Court has grossly
erred in holding that EMTA had a first right of refusal. The learned
Senior Counsel submitted that the prior allotment of the Coal Blocks
between 1993 and 2011 was cancelled, since this Court had held in
Manohar Lal Sharma-I, that the said allotments were arbitrary, illegal
and violative of Article 14 of the Constitution. He submitted that Section
11 of the said Act clearly provides that it was the discretion of PSPCL to
allow a successful allottee to continue or not to continue with the existing
contracts, which were in existence prior to the fresh allotment in relation
to coal mining operation. Shri Viswanathan submitted that only when the
allottee decides to continue with the old contracts, the question of
constitution of novation for residual term would arise. The learned Senior
Counsel submitted that in view of sub-section (2) of Section 11 of the
said Act, when an allottee decides not to continue with the existing
contracts entered into by the prior allottees with third parties, all such
contracts 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. The learned Senior
Counsel submitted that Section 16 of the said Act provides for
compensation for land as well as for mining infrastructure.
11. The learned Senior Counsel further submitted that in pursuance
of the directions issued by this Court for payment of Rs.295/- per metric
ton, it was the liability of EMTA to make the said payment amounting to
Rs.1400 crore. He submitted that however, EMTA had failed to make
the said payment resulting in a huge loss to the public exchequer. The
learned Senior Counsel further submitted that the findings of the High
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
[B. R. GAVAI, J. ]
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Court with regard to the legitimate expectation of EMTA, are totally
unsustainable. The learned Senior Counsel submitted that the legitimate
expectation would not be applicable against the Statute. He further
submitted that PSPCL has taken a policy decision to appoint Mine
Developer-cum-Operator by competitive bidding process. He submitted
that the policy is reasonable and as such, the legitimate expectation would
not be applicable as against such a reasonable policy. The learned Senior
Counsel relied on the judgment of this Court in the case of Kerala State
Beverages (M and M) Corporation Limited v. P.P. Suresh and
Others3.
12. Shri Viswanathan further submitted that in view of Clause
12.4 of the Allotment Agreement, PSPCL was bound to appoint a Mine
Developer-cum-Operator only through a competitive bidding process.
He submitted that due to certain exigencies, PSPCL had entered into a
transitory arrangement with EMTA for a limited period of nine months.
However, the same was disapproved by Union of India and a ShowCause Notice came to be issued to PSPCL. He therefore submitted that
understanding the Clause 12.4 of the Allotment Agreement in correct
perspective, PSPCL had decided to issue RFP, inviting Global Tenders
for appointing Mine Developer-cum-Operator.
13. Dr. A.M. Singhvi, learned Senior Counsel appearing on behalf
of appellant-DBL-VPR Consortium, also supports the submissions made
by Shri Viswanathan. He submitted that DBL-VPR Consortium had
participated in the Global Tender and is the lowest bidder. He submitted
that the High Court has grossly erred in holding that EMTA had a right
of first refusal after the bidding process was complete and DBL-VPR's
offer was known to all. He therefore submitted that the impugned
judgment and order passed by the High Court needs to be set aside.
14. Shri Mukul Rohatgi, learned Senior Counsel appearing on
behalf of respondent-EMTA vehemently opposed the submissions made
on behalf of PSPCL. The learned Senior Counsel submitted that EMTA
has made huge investment by deploying specialized machinery for the
purpose of mining, construction of roads to the Mining Blocks and other
infrastructural developments. He submitted that since the contract was
entered into for a period of 30 years, EMTA has a legitimate expectation
to continue till completion of the said period of 30 years. He therefore
submitted that the High Court has rightly held that EMTA had a legitimate
right of first refusal.
3 (2019) 9 SCC 710
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15. Shri Rohatgi submitted that the legislative intent behind Section
11(1) of the said Act is to permit an existing contractor to continue if his
performance is found to be satisfactory, and nothing adverse against
EMTA has been found. The learned Senior Counsel submitted that
however, PSPCL, in an arbitrary and irrational manner, has denied the
claim of EMTA. He submitted that only when the performance of the
existing contractor is found to be unsatisfactory or there is something
against him, the allottee would be entitled to take recourse to the
competitive bidding.
16. Shri Rohatgi would further submit that a similar view has been
taken by the Karnataka High Court in the case of KPCL v. EMTA Coal
Limited and Others4. He submitted that aggrieved by the judgment of
the Karnataka High Court, KPCL had approached this Court. This Court
appointed a Committee of Experts to determine the price and EMTA,
who was also a Mine Developer in the said matter, was permitted to
continue with the operations at the rates fixed by the Experts Committee.
He further submitted that from the letter dated 9th June 2020, addressed
by the Joint Secretary, Ministry of Coal, Government of India, it would
be clear that it is also the stand of Union of India that Section 11 of the
said Act prevails over Clause 12 of the Allotment Agreement. The learned
Senior Counsel submitted that the contention on behalf of PSPCL that
on account of Clause 12.4 of the Allotment Agreement, PSPCL was
bound to appoint a Mine Developer-cum-Operator by competitive bidding,
is unsustainable.
17. He further submitted that no prejudice is caused to PSPCL by
the impugned judgment and order. He submitted that the price is now
known and what has been done by the High Court is only granting a
right of first refusal. If EMTA is desirous to continue, it will have to
continue at the same rate and therefore, no financial loss would be caused
to PSPCL.
18. Shri Rohatgi further submitted that in the earlier round of
litigation, the High Court had recorded the statement of PSPCL that if a
representation is made by EMTA, the same would be considered by
PSPCL and a decision would be taken on merits. He however submitted
that, a perusal of the order passed by PSPCL dated 6th April 2018, would
show that the representation of EMTA has been decided in a perfunctory
manner without giving any valid reasons.
4 ILR 2016 Kar 4301
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
[B. R. GAVAI, J. ]
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19. For appreciating the rival submissions, it will be necessary to
refer to Section 11 of the said Act:-
"11. Discharge or adoption of third party contracts with prior
allottees.-(1) Notwithstanding anything contained in any other
law for the time being in force, 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:
Provided that in such an event, the successful bidder or allottee or
the prior allottee shall notify the nominated authority to include
the vesting of any contracts adopted by the successful bidder.
(2) In the event that a successful bidder or allottee elects not to
adopt or continue with existing contracts which had been entered
into by the prior allottees with third parties, in that case all such
contracts which have not been adopted or continued shall cease
to be enforceable against the successful bidder or allottee in
relation to the Schedule I coal mine and the remedy of such
contracting parties shall be against the prior allottees."
20. It will not be out of place to mention that the said Act 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.
21. 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
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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.
22. The principle of giving a plain and literal meaning to the words
in a Statute is well recognized for ages. Though there are a number of
judgments, we may gainfully refer to the judgment of this Court delivered
by Das, J. as early as 1955 in the case of Jugalkishore Saraf v. Raw
Cotton Company Limited5:-
"The cardinal rule of construction of statutes is to read the statute
literally, that is by giving to the words used by the legislature their
ordinary, natural and grammatical meaning. If, however, such a
reading leads to absurdity and the words are susceptible of another
meaning the Court may adopt the same. But if no such alternative
construction is possible, the Court must adopt the ordinary rule of
literal interpretation."
Though there are various authorities on the said subject, we do
not wish to burden the present judgment by reproducing those. In our
considered view, 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
5 [1955] 1 SCR 1369
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
[B. R. GAVAI, J. ]
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such, the rule of plain and literal interpretation will have to be followed.
We find that in case the interpretation as sought to be placed by Shri
Rohatgi is to be accepted, it will do complete violence to the language of
Section 11 of the said Act. 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. It is a settled principle of law
that 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. We therefore find that if an interpretation as sought to be placed
by EMTA is to be accepted, the same would be wholly contrary to the
principle of literal interpretation. There are number of authorities in support
of the said proposition. However, we refrain from referring to them in
view of the following observations made by this Court in a recent judgment
in the case of Ajit Mohan and Others v. Legislative Assembly National
Capital Territory of Delhi and Others6:-
"239. .....In our view if the proposition of law is not doubted by
the Court, it does not need a precedent unless asked for. If a
question is raised about a legal proposition, the judgment must be
relatable to that proposition - and not multiple judgments....."
As such, the contention in that regard is found to be without merit.
23. We find that the High Court has also clearly understood the
said legal position with regard to language used in Section 11 of the said
Act. When considering Section 62 of the Contract Act, 1872 read with
Section 11 of the said Act, it 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 High Court has observed
thus:-
"It could not therefore, have been left in the lurch particularly
when the same mine was re-allocated to the Corporation suggestive
of continuity. Indeed, the respondents were very well within their
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rights to reject the arrangement while granting a consideration
under Section 11 if the performance of the petitioner was
unsatisfactory or if there was any other factor which the
Corporation found relevant enough to discard the arrangement
altogether."
24. We find that 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. The reasoning
given by the High Court that PSPCL was within its right to reject the
arrangement if the performance of EMTA was unsatisfactory or if there
was any other factor which the Corporation found relevant enough to
discard the arrangement altogether, in our view, are totally erroneous.
25. 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.
26. The issue with regard to legitimate expectation has been
recently considered by a bench of this Court to which one of us (L.
Nageswara Rao, J.) was a member. After considering various authorities
on the issue, in the case of Kerala State Beverages (M and M)
Corporation Limtied (supra), it was observed thus:-
"20. The decision-makers' freedom to change the policy in public
interest cannot be fettered by applying the principle of substantive
legitimate expectation. [Findlay, In re, 1985 AC 318 : (1984) 3
WLR 1159 : (1984) 3 All ER 801 (HL)] So long as the Government
does not act in an arbitrary or in an unreasonable manner, the
change in policy does not call for interference by judicial review
on the ground of a legitimate expectation of an individual or a
group of individuals being defeated."
27. Shri Viswanathan has relied on the judgment of the Calcutta
High Court in the case of EMTA Coal Limited and Another v. West
Bengal Power Development Corporation7. Per contra, Shri Rohatgi
has relied on the judgment of the Karnataka High Court in KPCL v.
EMTA Coal Limited (supra). We do not desire to go into the issue of
7 (2016) 2 Cal LJ 424
PUNJAB STATE POWER CORPORATION LTD. v. EMTA COAL LTD.
[B. R. GAVAI, J. ]
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correctness of either of the judgments inasmuch as we are independently
considering the issue and examining the correctness of the judgment
impugned before us.
28. Insofar as the reliance placed by Shri Rohatgi on the letter of
Union of India dated 9th January 2020 is concerned, 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, obviously, 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.
29. That leaves us with the last submission of Shri Rohatgi. It is
his submission that as per the statement made by PSPCL before the
High Court in first round of litigation, it was to consider the representation
of EMTA in a reasonable and just manner. He however submitted that
the order dated 6th April 2018, was passed by PSPCL in a totally arbitrary
and irrational manner.
30. 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.
The scope of judicial review of administrative action has been well
crystalised by this Court in the judgment of Tata Cellular v. Union of
India8. The judgment in the case of Tata Cellular (supra), has been
subsequently followed in a number of judgments of this Court. This Court
in the case of Rashmi Metaliks Limited and Another v.