Read Judgment: Punjab State Power Corporation Limited & Another V. Emta Coal Limited & Others

Pankaj Bajpai

New Delhi, September  23, 2021 : The Supreme Court has held that 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, and hence Section 11 of the Coal Mines (Special Provisions) Act, 2015, does not mandate successful allottee to continue with existing contract.

The background of the case was that Punjab State Power Corporation Limited was allotted Captive Coal Mines by the Union of India. Later, it issued tender inviting bids for the purpose of development of Captive Coal Mines, wherein EMTA Coal Ltd. (respondent), emerged successful.

After almost fifteen years, a decision of the Supreme Court came which 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.

Accordingly, the Central Government again allocated Pachhwara Captive Coal Block in favour of Punjab State Power Corporation Limited (PSPCL – appellant), which issued a Request for Proposal (RFP), to invite Global Bids for the selection of Mine Developer­ cum ­Operator for Pachhwara Coal Block through competitive reverse bidding process.

This was challenged by EMTA before the Punjab and Haryana High Court, which came to be allowed by holding that the respondent will have the first right of refusal in the matter of lending of Mining Lease.

The Three Judge Bench of Justice L. Nageswara Rao, Justice Sanjiv Khanna and Justice B.R.Gavai said that 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.

Observing that it is not for the court to determine whether a particular policy or a particular decision taken in the fulfillment of that policy is fair or not, the Bench noted that 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.

“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 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”, observed the Bench.

The Top Court further found that representation of EMTA is not rejected by solely relying on the Allotment Agreement, rather, 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.

The Apex Court observed that the PSPCL has decided to go in for competitive bidding process for the purpose of eliciting the best operator and the composition with respect to capital/revenue investment was altogether different.

Therefore, the Top Court quashed the judgment of Punjab & Haryana High Court and allowed the appeals elucidating that the Coal Mines Act itself provides remedy for seeking compensation apart from the other remedies that are available in law.

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