Simplified Explanation of the Judgment
The Patna High Court recently dealt with a petition filed by M/s Bhawani Coke Industries Pvt. Ltd., a company engaged in the coal business, against its blacklisting by Central Coalfields Limited (CCL), a subsidiary of Coal India Limited.
The dispute arose when CCL blacklisted the company through an order dated 26 February 2004 (Annexure-4). The petitioner challenged this order before the Patna High Court, arguing that it was illegal, arbitrary, and unsustainable in law.
Key Arguments
- On jurisdiction: CCL argued that under Clause 18.4 of an earlier agreement dated 30 April 2008, the Jharkhand High Court at Ranchi had exclusive jurisdiction over such disputes. They relied on a Division Bench judgment in Central Coalfields Ltd. v. Babul Smokeless Fuel Pvt. Ltd. (LPA 788 of 2009), which had been upheld by the Supreme Court in SLP (C) No. 16777 of 2011.
- Petitioner’s reply: The petitioner countered that the agreement had already expired, and therefore, the clause granting exclusive jurisdiction to the Jharkhand High Court was no longer operative. Since the impugned action (blacklisting) followed registration of an FIR and occurred after the expiry of the agreement, Patna High Court could exercise jurisdiction.
- On blacklisting: The petitioner contended that indefinite blacklisting was contrary to the law laid down by the Supreme Court in Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNL [(2014) 14 SCC 731]. The principle established is that blacklisting must be for a specific and reasonable duration; it cannot be indefinite.
Court’s Reasoning and Decision
Justice Anil Kumar Upadhyay noted that:
- The blacklisting order was arbitrary and directly contrary to Supreme Court judgments.
- Indefinite blacklisting is not permissible in law.
- Patna High Court itself had recently quashed similar blacklisting orders in CWJC No. 24940 of 2019 (28.01.2021) and CWJC No. 55 of 2019 (19.10.2020).
To maintain consistency and uphold the law, the Court quashed the blacklisting order dated 26.02.2004. The respondents (CCL) were directed to act strictly in accordance with binding Supreme Court precedents.
The Court cited several key Supreme Court rulings, including:
- Kulja Industries Ltd. v. CGM, Western Telecom Project, BSNL (2014) 14 SCC 731
- Daffodiles Pharmaceuticals Ltd. v. State of U.P. (Civil Appeal No. 9417 of 2019, decided on 13.12.2019)
- Vetindia Pharmaceuticals Ltd. v. State of U.P. (Civil Appeal No. 3647 of 2020, decided on 06.11.2020)
- UMC Technologies Pvt. Ltd. v. Food Corporation of India (Civil Appeal No. 3687 of 2020, decided on 16.11.2020)
Thus, the writ petition was allowed.
Significance or Implication of the Judgment
- For Businesses: The ruling reinforces protection against arbitrary blacklisting by government undertakings. Companies cannot be indefinitely blacklisted without reasonable time limits.
- For Public Sector Enterprises (PSEs): Entities like CCL must follow Supreme Court guidelines and impose blacklisting, if at all, only for specified periods.
- For Courts: Ensures consistency with established Supreme Court precedent, strengthening judicial uniformity.
- For Trade and Industry: Boosts confidence of contractors and suppliers that they will not face lifetime exclusion due to one-sided or arbitrary orders.
Legal Issue(s) Decided and the Court’s Decision with reasoning
- Whether Patna High Court had jurisdiction despite agreement clause conferring jurisdiction on Jharkhand High Court?
Decision: Yes. Since the agreement had expired, the exclusive jurisdiction clause was no longer applicable. - Whether indefinite blacklisting of a company is valid?
Decision: No. The Court held that indefinite blacklisting is illegal, arbitrary, and contrary to binding Supreme Court rulings. - What relief was granted?
Decision: The order of blacklisting dated 26.02.2004 was quashed. Respondents were directed to comply with Supreme Court’s judgments on the subject.
Judgments Referred by Parties (with citations)
- Central Coalfields Ltd. v. Babul Smokeless Fuel Pvt. Ltd., LPA No. 788 of 2009 (Patna HC, 02.02.2011), upheld by Supreme Court in SLP (C) No. 16777 of 2011.
Judgments Relied Upon or Cited by Court (with citations)
- Kulja Industries Ltd. v. CGM, Western Telecom Project, BSNL (2014) 14 SCC 731
- Daffodiles Pharmaceuticals Ltd. v. State of U.P. (Civil Appeal No. 9417 of 2019, decided 13.12.2019)
- Vetindia Pharmaceuticals Ltd. v. State of U.P. (Civil Appeal No. 3647 of 2020, decided 06.11.2020)
- UMC Technologies Pvt. Ltd. v. Food Corporation of India (Civil Appeal No. 3687 of 2020, decided 16.11.2020)
Case Title
M/s Bhawani Coke Industries Pvt. Ltd. v. Central Coalfields Ltd. & Anr.
Case Number
Civil Writ Jurisdiction Case No. 1641 of 2021
Citation(s)
2021(2) PLJR 197
Coram and Names of Judges
Hon’ble Mr. Justice Anil Kumar Upadhyay
Names of Advocates and who they appeared for
- Mr. S.D. Sanjay, Sr. Advocate with Mr. Parul Prasad and Mr. Mohit Agrawal — for the petitioner
- Mr. Vishwa Mohan Kumar Sinha — for the respondents (CCL)
Link to Judgment
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