Holding

The Court held that the respondents misinterpreted the Supreme Court's directions, did not willfully disobey, and therefore were not in contempt; the contract must be awarded to the petitioner.

Summary

The Supreme Court examined a contempt petition filed by M/s B.S.N. Joshi & Sons Ltd. after MAHAGENCO refused to award it a coal‑transport contract despite a prior Supreme Court order (31‑Oct‑2006) directing a fresh assessment of its eligibility. The petitioners alleged that the respondents misinterpreted the order by calculating the required five‑year coal‑handling period from the date of the judgment rather than from the tender’s financial years, and that they relied on an interim order to deny the contract. The Court held that the respondents had not read the directions in proper perspective, that the interim order merged into the final order, and that there was no room for two reasonable interpretations of the judgment. It found no willful disobedience, accepted the respondents’ apology, and directed that the contract be awarded to the petitioner for one year. The contempt petition was consequently disposed of.

Issues considered

Whether the respondents' refusal to award the contract amounted to willful disobedience of the Supreme Court's order dated 31‑Oct‑2006.
Whether the phrase ‘preceding five years’ could be interpreted as starting from the date of the judgment.
Whether the interim order dated 27‑Mar‑2006 bound the respondents notwithstanding the final order.
Whether the alleged misinterpretation and actions of the respondents constituted contempt of court.
Whether the petitioner satisfied the essential tender conditions and whether the court could exercise a power of relaxation.

Subjects

contempt of courttender eligibilitycoal transportation contractpublic sector undertakinginterpretation of judgmentinterim orderpower of relaxationcartel

Judgment

(2008] 17 S.C.R. 1352

A MIS. B.S.N. JOSHI & SONS LTD.
v.
AJOY MEHTA & ANR.
Contempt Petition No. 245 of 2007
IN
B Civil Appeal No, 4613 of 2006
I ,

DECEMBER 19, 2008

[S.B. SINHA AND CYRIAC JOSEPH, JJ.]
/

c Contempt of Court - Disputes arising out of contract for
transportation of coal - Judgment passed by Supreme Court
- Contempt petition filed alleging willful disobedience of the
judgment- Held: Alleged contemnors.did not read directions
of the Court in their proper perspective - It was not a case
D where two interpretations of the judgment were possible -
Apology tendereq by the alleged contemnors accepted -
Direction passed in favour of the Petitioner.
Respondent No.1 is Managing Director of
Maharashtra State Power Generation Co. Ltd.
(MAHAGENCO), a public sector undertaking.
E MAHAGENCO issued notice inviting tender for transpor:
tation of coal. The bid of Petitioner was not accepted on
the premise that it did not fulfill the essential condition of
having transported the prescribed minimum quantity of
coal for the preceding five years.
F The matter came upto this Court, which vide
judgment dated 31-10-2006 directed that a fresh look be
given in rega-rd to the eligibility of the Petitioner for
purpose of the contract and if it satisfied the tender
conditions, the contract be awarded in its favour for a
G period of one year.
On the allegation that respondents willfully
disobeyed the said judgment passed by this Court,
contempt proceedings were initiated' against them. It was
contended that the respondents gave a twist to the said
H 1352
M/S. B.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1353
ANR.

judgment of this Court insofar as it proceeded on the A
basis that the five years period should be calculated from
the date of the judgment and refused to grant contract
/
in. favour of the petitioner relying on an interim order
passed by Court and further sought to take into
consideration an irrelevant subsequent event. B
On the aforementioned premise, it was contended
that the respondents must be held to have committed
gross contempt of this Court.
Disposing of the petition, the Court
HELD:1.1. Supply of coal and that too good quality c
of coal is essential for running of a thermal power station.
It was with that intent in mind that this Court, either at the
interim stage or final stage, did not intend to pass any
order which would hamper transportation of coal
resulting in stoppage of the functioning of the thermal :D
power station. The respondents misconstrued the order
· of this Court for which there was no basis that they were
bound by the interim order passed by this Court. [Paras
8 and 9] [1360-D-E]
1.2. One fails to understand as to how a fresh tender E
was floated to allot the work of liaisoning of coal and the
same companies who had formed a cartel were allowed
to carry on the contract job. [Para 10] [1361-8-C]
1.3. The petitioner was asked to file additional
documents in support of its contention that it fulfilled the F
essential conditions of contract, if it so intended to do. It
.... was, however, wholly unnecessary as only a fresh look
was required to be given in regard to the eligibility of the i
petition for the purpose of awarding the contract
wherefor the Scrutiny Committee was required to form an
G
opinio'n as to whether the petitioner had substantially
complied with the tender conditions, subject, of course, ,
to the fulfillment of essential conditions. [Para 11] [1361 D-
-4 If
E]
2. The respondents committed a serious error in
' H
..
1354 SUPREME COURT REPORTS [2008) 17 S.C.R.

A calculating the quantity of coal transported for preceding
five financial years from the date of the judgment. The
date of the judgment was not at all relevant for the
aforementioned purpose. The respondents did not
'
explain how they understood the order of this Court
B wrongly as they had also proceeded on the basis that
the five financial years should be counted from the date
of calling for the tender and the date of the judgment
separately. If they had any difficulty in understanding the
direction of the court, they should have approached this
Court for clarification but could not have arrived at such
c an absurd conclusion that what was necessary to be
considered is handling of coal by the petitioner tor the
preceding five years from the date of passing of the
judgment by this Court. What was necessary for them to ,...
;;

consider was implementation of the directions issued by "
D this Court in the backdrop of the events noticed by this
Court. This Court in its judgment had not only taken into
consideration the contentions raised by MAHAGENCO in
regard to non-fulfillment of the essential conditions on the
part of the. petitioner but also implications thereof at
E some details. The respon·dents furthermore sought to
take into consideration a purported subsequent event,
viz, the letter dated 20.02.2007 issued by the Sanjay
Gandhi Thermal Power Station, which was neither
relevant nor decisive. [Paras 12 and 13][1361-E; 1362-C]
F 3. The respondents did not read the directions of the
court in their proper perspective. They could not have
considered the directions contained in the interim order ..,
passed by this Court. The interim order merged into the
final order. In any event, even the said interim order was
subject to the decision of the court and, thus, one fails
G to understand as to how the interim order was found to
be continuing despite passing of the final order. As the
matter was required to be considered afresh, as far as the ... I
~
purpose of-considering the eligibility of the petitioner is
concerned, they committed a-serious error insofar as the
H eligibility criteria were applied· from the date of the
M/S. B.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1355
ANR.

judgment. They furthermore did not notice that having, A
regard to the overall situation and particularly in view of
r the opinion of the Scrutiny· Committee that the petitioner
had substantially complied with the conditions and, thus,
the general power of relaxation should have been used.
It is, therefore, not a case where two interpretations of the
8
judgment of this Court were possible. [Paras 14 and 15]
[1362-C; 1363-A]
4. The apology tendered by the respondents is
accepted for the time being and it is directed that contract
for a period of one year be granted to the petitioner in , C
terms of the judgment dated 31.10.2006. [Para 16] [1363-
C]
5. It is distressing to see that MAHAGENCO had been
encouraging formation of a cartel and, thus, allowing the
rate of transportation of coal to go high up. Unless a
power generating company takes all. measures to cut 'D
down such malpractices, the generation cost of electricity
is bound to go higher and ultimately the same would be
passed on to the consumers of electricity. It is hoped as
a public sector undertaking it would take adequate and
appropriate measures to meet the said contingency in E
future. [Para 17] [1363-D-E]
CIVIL APPELLATE JURISDICTION : Contempt Petition
(C) No. 245 of 2007.
IN
Civil Appeal No. 4613 of 2006. F
' ''f Vikas Mehta for the Petitioner.
Altaf Ahmed, AS. Bhasme, Brajesh Pandey and Varun
Thakur for the Respondents.
The Judgment of the Court was delivered by
G
S.B. SINHA, J.1. This contempt proceeding has been
initiated against respondent Nos. 1 and 2 for alleged wilful
disobedience of this Court's order dated 31.10.2006, the
operative portion whereof reads as under:
" ... We, therefore, intend to give another opportunity to H
1356 SUPREME COURT REPORTS [2008] 17 S.C.R.

A MAHAGENCO. It shall consider the offer of Appellant upon
consideration of the matter afresh, as to whether it even
now fulfils the essential tender conditions. If it satisfies the
terms of the tender conditions, the contract may be
awarded in its favour for a period of one year; but such
contract shall take effect after one month from the date of
B
the said agreement so as to enable the private
Respondents herein to wind up their business. This order
is being passed in the interest of MAHAGENCO as also
the private Respondents herein."
2: The Maharashtra State Power Generation Co. Ltd. (for
C short "MAHAGENCO") issued a notice inviting tender, inter alia,
for coal liaisoning, quality and quantity supervision of its thermal
power station. One of the conditions laid down therefor is as
under:
"(ii) The Bidder should have executed the work of total
D minimum quantity of 5 (Five) Million Metric Tons per
year for preceding 5 years. Besides this bidder
should have executed the work of total quantity of
10 (ten) Million MT's in any of the preceding 5 (Five)
years. Above execution of work should be on behalf
E of State Electricity !3oard and/or NTPC and/or other
State or Central Undertaking and/or the private
Power Generating Companies as their liaison
agent/coal agent, with regard to receipt and supply
of ttie coal including supervision on dispatch,
loading, movement of the coal upto destination by
F
Railway only."
The term "year'' occurring therein is said to be the financial
year. Petitioner along with various others submitted its tender,
inter alia, on tbe premise that the petitioner did not fulfill the
essential conditions of having transported the quantity of
G minimum five lakh tonnes of coal for the preceding five years,
its offer was not accepted.
3. A writ petition was filed before the Madhya Pradesh
High Court, which having been dismissed, Civil Appeal bearing
No. 4613 of 2006 was preferred by the petitioner upon obtaining
H special leave.
M/S. 8.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1357
ANR. [S.B. SINHA, J.]

One of the questions which arose for consideration before A
this Court was as to whether MAHAGENCO committed a
I serious error in not taking into account the quantity of coal
supplied by the petitioner to the Andhra Pradesh Power
Generation Corporation Limited; as it appears from its letter
dated 15.06.2005 that the petitioner had supplied the following
B
quantity of coal:
"S. Period Name of Colliery Quantity in MT
No.
01. 11.09.2003 M/s MCL Talcher 3172750.00
to
March 2004
c
02. 01.10.2003 M/s MCL, lbvalley 316930.00
to Area
31.03.2004 -------
3489680.00
---------~
D
03. 01.04.2004 M/s MCL Talcher 2774455.00
to
""" 10.09.2004
04. 01.04.2004 Mis MCL lbvalley 389732.00
to Area E
30.09.2004
----------
3164187.00
---------- II

By a judgment and order dated 31.10.2006, this Court F
held:
" "It is, therefore, evident that total quantity of
62,64, 135 metric tones of coal had been handled by
Appellant for them.
The intention of introduction of the said clause G
becomes self-evident from the aforementioned note. It may
be true, as was observed by the High Court, that the
~ i Respondents in the tender documents did not categorically
state that the block of 365 days in respect of handling o~
coal by the tenderes shall be taken into consideration. It H
1358 SUPREME COURT REPORTS [2008) 17 S.C.R.

A is also true that the Corporation must be held to be aware
as to what was the true intent and purport of the said term."
4. It was, however, found that other tenderers, viz., M/s. Nair
Coal Services Ltd., Nagpur, M/s. Nareshkumar & Co. Ltd.,
Nagpur and M/s. Karamchand Thapar & Brs. Ltd., Mumbai had
B formed a cartel.
Alleged contemnor Shri Ajay Mehta, Managing Director of
MAHAGENCO (Respondent No. 1 herein) in a note dated
19.08.2005 stated as under:
"On perusal of rates of Mis Nair Coal Services Ltd.,
C Nagpur, M/s Nareshkumar & Co Ltd., Nagpur and Mis
Karamchand Thapar & Brs. Ltd., Mumbai, it is apparent
that they have formed a cartel. The rates quoted by these
firms are nearly 51 crs. to 52 crs. more than that quoted
by LT. As a goodwill gesture the above parties were called
D for negotiations. However, they have refused to match the
L 1 rates.
In view of above it is in public interest and in the
interest of MAHAGENCO a Govt. owned, public utility that
the work is allocated to the lowest qualified bidder namely
E M/s B.S.N. Joshi & Co."
Ultimately, however, the said proposal was not accepted.
5. Despite the fact that a cartel was formed, the contract
was awarded to the members thereof. In the aforementioned
context, this Court observed:
F "While saying so, however, we would like to observe
that that having regard to the fact that a huge public money )' .
is involved, a public sector undertaking in view of the
principles of good corporate governance may accept such
tender which is economically beneficial to it. It may be true
G that essential terms of the contract were required to be
fulfilled. If a party failed and/or neglected to comply with the
requisite conditions which were essential for consideration
of its case by the employer, it cannot supply the details at
a later stage or quote a lower rate upon ascertaining the
H rate quoted by others. Whether an employer has power of
MIS. B.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1359
ANR. [S.B. SINHA, J.]

relaxation must be found out not only from the terms of the A
notice inviting tender but also the general practice
prevailing in India. For the said purpose, the court may
consider the practice prevailing in the past. Keeping in
view a particular object, if in effect and substance it is found
that the offer made by one of the bidders substantially
8
satisfies the requirements of the conditions of notice
inviting tender, the employer may be said to have a general
power of relaxation in that behalf. Once such a power is
exercised, one of the questions which would arise for
consideration by the superior courts would be as to
whether exercise of such power was fair, reasonable and C
bona fide. If the answer thereto is not in the negative, save
and except for sufficient and cogent reasons, the writ courts
would be well advised to refrain themselves in exercise of
their discretionary jurisdiction."
It was on the aforementioned premise, the Civil Appeal D
was allowed by this Court.
6. Mr. Vikas Mehta, learned counsel appearing on behalf
of the petitioner, in support of the contempt petition, would
argue:
E
(i) Alleged contemnors had from the very beginning
gave a twist to the said order insofar as it
proceeded on the basis that the five years period
should be calculated from the date of the order of
this Courts.
F
(ii) MAHAGENCO refused to grant a contract in favour
of the petitioner relying on or on the basis of the
interim order passed by this Court.
(iii) A different stand is being taken now that the
petitioner should not be allotted any contract in view, G
of a subsequent event, viz., the letter dated
20.02.2007 issued by the Sanjay Gandhi Thermal
Power Station.
On the aforementioned premise, the learned counsel
would submit that the alleged contemnors must be held to have H

\
I
1360 SUPREME COURT REPORTS [2008] 17 S.C.R.

A committed gross contempt of this Court.
7. Mr. Altaf Ahmed, learned senior counsel appearing on ~
behalf of the alleged contemnors, on the other hand, would
contend that:
(i) the alleged contemnors might have committed a
B mistake in properly understanding the order of the
court, but the same would not mean that they have
committed contempt of the court.
(ii) The term "year" having been found by this Court to
mean a financial year, even if the figures supplied
c by the petitioner are taken into consideration, it
cannot be said to have satisfied the essential
conditions for grant of contract of transportation of
coal.
In any event, the learned Senior Counsel would submit that
D the alleged contemnors are ready and willing to abide by any
direction which may be issued by this Court.
8. Supply of coal and that too good quality of coal is
essential for running of a thermal power station. It was with that
intent in mind that this Court, either at the interim stage or final
E stage, did not intend to pass any order which would hamper
transportation of coal resulting in stoppage of the functioning
of the thermal power station.
9. The alleged contemnors, in our opinion, misconstrued
the order of this Court for which there was no basis that they
F were bound by the interim order passed by this Court. For the
sake of clarity, we may notice the interim order dated -,,
27.03.2006 which reads as under:
"Learned counsel for the petitioner submits that the main
petition is coming up for final hearing on 17th April 2006.
G Learned counsel appearing for respondent Nos. 2 & 3
submits that for purposes of generating ·power, coal
supplies have to be continued to the respondents failing
~ '"'
which the entire generation of electricity shall come _to a
standstill. Keeping in view this fact, the respondents are
H permitted to go ahead with .iheir tender process including
MIS. B.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1361
ANR. [S.B. SINHA, J.]

award of contract. They are free to make whatever A
arrangement they want to make in this behalf to ensure
continued supply of coal to them. It is, however, made clear
that whatever arrangement is made by the respondents
the same will be subject to the final decision of this
Special Leave Petition." B
[Underlining is ours for emphasis]
10. We, therefore, fail to understand as to how a fresh
tender was floated to allot the work of liaisoning of coal and
the same companies who had formed a cartel were allowed
to carry on the contract job. We may, however, place on recor~ C
that the contracts were awarded on the condition that the sam~
would be subject to the final outcome and decision of this Court.
11. Our attention has been drawn to the fact that the
petitioner was asked to file additional documents in support of
o
its contention that it fulfilled the essential conditions of contract, ·
if it so intended to do. It was, however, wholly unnecessary as
only a fresh look was required to be given in regard to the
eligibility of the petition for the purpose of awarding the contract
wherefor the Scrutiny Committee was required to form ah
opinion as to whether the petitioner had substantially complied E
with the tender conditions, subject, of course, to the fulfillment
of essential conditions.
12. Alleged contemnors, in our opinion, committed a
serious error in calculating the quantity of coal transported for
preceding five financial years from the date of the judgment,. F
The date of the judgment was not at all relevant for the
aforementioned purpose. The alleged contemnors did not
explain how they have understood the order of this Court
wrongly as they had also proceeded on the basis that the five
financial years should be counted from the date of calling fot
the tender and the date of the judgment separately. If they had G
any difficulty in understanding the direction of the court, they
should have approached this Court for clarification but could
not have arrived at such an absurd conclusion that what wa~
necessary to be considered is handling of coal by the petitione~
for the preceding five years from the date of passing of the H ·
(

•
1362 SUPREME COURT REPORTS [2008] 17 S.C.R.

A judgment by this Court.
13. What was necessary for them to consider was
implementation of the directions issued by this Court in the
backdrop of the events noticed by this Court. This Court in its
judgment had not only taken into consideration the contentions
B raised by MAHAGENCO in regard to non-fulfillment of the
essential conditions on the part of the petitioner but also
implications thereof at some details.
They furthermore sought to take into consideration a
purported subsequent event, viz, the letter dated 20.02.2007
c issued by the Sanjay Gandhi Thermal Power Station, which was
<.'
neither relevant nor decisive.
14. The alleged contemnors, therefore, in our opinion, did
not read the directions of the court in their proper perspective.
We say so:
,0
(i) because they could not have considered the
directions contained in the interim order passed by
this Court. The interim order merged into the final
order. In any event, even the said interim order was
subject to the decision of the court and, thus, we fail
-
E to understand as to how the interim order was found
to be continuing despite passing of the final order.
(ii) As the matter was required to be considered
afresh, the purpose of considering the eligibility of
the petitioner is concerned, they committed a
F serious error insofar as the eligibility criteria were
applied from the date of the judgment.
'"
-
(iii) They furthermore could not have ignored the note
of the alleged Contemnor No. 1 that the other
respondents in the Civil Appeal had formed a
G .cartel. They furthermore did not notice that having
regard to the overall situation and particularly in view
of the opinion of the Scrutiny Committee that the
petitioner had substantially complied with the • ~

conditions and, thus, the general power of relaxation
H should have been used. ..£
M/S. B.S.N. JOSHI & SONS LTD. v. AJOY MEHTA & 1363
ANR. [S.8. SINHA, J.]

15. It is, therefore, not a case where two interpretations of A
the judgment of this Court were possible.
16. Before us an additional affidavit has been filed by Shri
Ajoy Mehta, Contemnor No. 1, stating:
"17. I, therefore, respectfully submit that we have not flouted
the orders passed by the Hon'ble Court and we shall abide B
by all directions given by this Hon'ble Court including
awarding of the contract to Mis BSN Joshi & Sons ltd.,
Petitioner herein, if this Hon'ble Court so directs."
Keeping in view the aforementioned statement made
before us, we accept the apology tendered by the alleged C
contemnors for the time being and direct that the contract for a
period of one year be granted to the petitioner in terms of our
judgment dated 31.10.2006.
17. We are distressed to see that MAHAGENCO had been
encouraging formation of a cartel and, thus, allowing the rate D
of transportation of coal to go high up. Unless a power
generating company takes all measures to cut down such
malpractices, the generation cost of electricity is bound to go
higher and ultimately the same would be passed on to the
consumers of electricity. We hope a public sector undertaking E
would take adequate and appropriate measures to meet the
said contingency in future.
18. The contempt petition is disposed of with the
aforementioned directions.
B.B.B. Petition disposed of. F