COAL INDIA LIMITED Vs. GAJRAJ CHEMICALS

JUDGEMENT

(1.) THE present suit has been filed by the plaintiff praying for a decree for declaration that the contract entered into between the plaintiff and defendant is valid for a period of one year with effect from 28 th July, 2006 and defendant is obliged to continue the supply of explosives uninterruptedly for the entire period of the said contract and for other consequential reliefs.

(2.) THE plaintiff 's case in brief is that in the ordinary course of business, plaintiff requires regular supply of explosives for the purpose of blasting operations for facilitating coal production. On 2 nd May, 2006 the Deputy Chief Material Manager of the plaintiff issued a notice inviting offers from Indian Manufacturers for supply of bulk loading explosives to all the subsidiary companies of the plaintiff for a period of one year from the date of issuance of the Letter of Intent. The defendant being a License-holder for manufacture of Class-II explosives submitted their offer and the same was duly accepted by the plaintiff. On 28 th July, 2006 a Letter of Intent was issued by the plaintiff recording the acceptance of the offer submitted by the defendant for supply of bulk loading explosives and on the basis thereof agreeing to enter into a running contract with the defendant. It was expressly stated in the said Letter of Intent that the running contract proposed to be entered into shall be valid for a period of one year with effect from the date of issuance of the Letter of Intent. On 11 th August, 2006 plaintiff in terms of the aforesaid Letter of Intent entered into a running contract with the defendant for supply of bulk loading explosives in respect of which the offer was submitted by the defendant on the express terms and conditions as stipulated in the said running contract. The contract expressly stipulated that the supply of bulk loading explosives by defendant shall continue uninterrupted for a period of one year with effect from the date of issuance of the Letter of Intent i.e. 28 th July, 2006 subject to the right of plaintiff to shorten and extend the validity period of contract. It also contains an implied negative covenant that the defendant shall not disrupt and/or stop supply to the plaintiff at any time during the validity and/or tenure of the said contract i.e. till 27 th July, 2007 unless expressly directed by the plaintiff. The defendant though performing its obligations to supply bulk loading explosives as agreed under the said contract but they have been raising certain disputes with regard to the rates payable thereunder right from the inception of the contract and on 28 th February, 2007 issued a letter threatening to discontinue further supply of bulk loading explosives on and from March 2007 on various pleas. Explosives, both bulk and cartridge of definite quality and specification, are essential necessities for ensuring and facilitating smooth and uniform production of coal and the suppliers of such explosives of requisite specification have formed themselves into a 'cartel ' for the purpose of pressurizing the plaintiff to yield to their common demands, taking advantage of the fact that there are only limited approved manufacturer capable of manufacturing such explosives of desired requisite specifications. The defendant having participated in an open tender and agreed to the terms of a concluded contract are obliged to continue to supply the explosives uninterruptedly and without any break till expiry of the present running contract and their failure to continue supplies as per the contract will result in a massive shortfall having a tremendous adverse impact on level of coal production in the mines of the plaintiff which will have a serious impact on power generation by different Thermal Power Stations and accordingly the present suit has been filed on 14 th March, 2007. P.W.1, the Chief Manager (Materials Management) of the plaintiff company, on the basis of his unchallenged testimony and on the basis of documents filed, which have been marked exhibits in the present case, has proved that the defendant in spite of entering into running contract with the plaintiff for supply of bulk loading explosives, said contract being for one year from the date of issue of Letter of Intent i.e. 28 th July, 2006, refused to supply the same with effect from 1 st March, 2007. The suit accordingly succeeds ex-parte. In the present case the defendant did not appear in spite of service of writ of summons. Plaintiff do get a decree declaring that the contract is valid for a period of one year from 28 th July, 2006 and the defendant is bound to continue the supply uninterruptedly for the entire period of the said contract. Plaintiff do also get a decree for costs.