Authority: Calcutta High Court (High Court at Calcutta)

Order Date: 06 October 2026

Case Overview

  • Appeal (MAT 1570 of 2025) against the order dated 19 May 2025 (WPA No. 12688 of 2017) passed by a Single Judge, which had directed Coal India Limited (appellant) to release payment to Orissa Explosive & Ors. (respondent) for goods supplied under Running Contract (RC) No. CIL/C2D/Cartridge Expl & Accy/2015-17/Orissa/5099 dated 30 March 2015.
  • The RC covered supply of cartridges, explosives and accessories to Coal India and its eight subsidiaries from 15 April 2015 to 31 March 2017, with unit prices and quantities specified in Annexure‑I.
  • On 30 November 2016 Coal India’s General Manager (MM) informed the respondent that three other firms (Ideal, IDL, Regenesis) had accepted orders from Singareni Collieries Company Limited (SCCL) at lower prices and that the price‑fall clause would be invoked against them.
  • The respondent replied on 19 December 2016 refusing to supply at the SCCL price. Coal India remained silent, later extending the RC for one month on 27 March 2017 at the existing rate.
  • On 31 March 2017 Coal India invoked the price‑fall clause (Clause 7.2 of the RC) and amended the prices for LD explosives (CAP‑sensitive/Booster and Non‑CAP‑sensitive/Column), issuing a notice of two‑week implementation.
  • The writ petition sought mandamus to cancel the communications, release payment at the original RC rate, and prohibit further effect of the price‑fall clause.
  • Counsel for Coal India argued that the court exceeded jurisdiction by interpreting contract terms and that the price‑fall clause allowed deduction of differential amounts.
  • Counsel for the respondent argued that the clause applied only when parallel RCs existed with Coal India’s subsidiaries; SCCL was not a subsidiary, and the other firms did not hold parallel RCs, making the clause inapplicable.
  • The Court examined several precedents (e.g., M.P. Power Management Co. Ltd. vs. Sky Power Southeast Solar India Pvt. Ltd., Coal India Ltd. vs. Prakash Roadlines Corp., Kerala State Electricity Board vs. Kalathil, Punjab National Bank vs. Atmanand Singh, Eastern Coal Fields Ltd. vs. UCC‑RLA‑STA (JV)), concluding that contractual interpretation is a matter for a civil court when factual disputes arise, but the price‑fall clause’s plain language could be applied directly.
  • The Court held that the clause required parallel RCs with Coal India’s subsidiaries, which were absent; therefore, invoking the clause was arbitrary, unfair, and violative of Article 14.
  • It noted that Coal India’s conduct of continuing to accept supplies at the original rate after the respondent’s refusal amounted to acceptance by conduct (sub‑silentio).
  • The Court also rejected any reliance on the risk‑purchase clause, as no notice of its invocation was issued.

Final Outcome

  • The appeal and connected application are dismissed.
  • The order of the Single Judge is upheld, directing Coal India Limited to release payment for the goods supplied by Orissa Explosive at the rate agreed in the RC dated 30 March 2015, and to release any other amounts, including the bank guarantee, within twelve weeks of receipt of the order.
  • The twelve‑week period is extended by an additional six weeks, making the total period eighteen weeks from the date of the order.
  • The directions under paragraph 36 of the original order are to be implemented forthwith.

Topics: Contract Law, Public Procurement