M/s Arunodaya Coal Agency has lost its Rs 103 crore coal transportation contract with Western Coalfields Ltd (WCL) after the company was found to be indulging in coal theft. The Bombay High Court’s Nagpur Bench, led by Justices Nitin Sambre and Vrushali Joshi, dismissed the agency’s appeal. The agency had challenged WCL’s decision to terminate the contract and blacklist the company for two years over the theft incident. The agency, owned by Koshor Sankhala, had a contract with WCL from May 2022 to transport coal from the Yekona-I mine in Chandrapur. The contract was worth around Rs 103 crore. However, WCL accused the company of being involved in coal theft in March 2024, which led to the contract being terminated and other penalties.

 

The incident occurred on March 10, 2024, when two vehicles owned by the petitioner were caught in an alleged coal theft. The stolen coal was found at an unauthorised site, and the drivers of the vehicles fled when security staff tried to stop them. The police later filed a case against the company. Following this, WCL issued a notice on March 18, 2024, and questioned why the contract should not be terminated, why the company should not be blacklisted and why the security deposit should not be seized. The company denied the charges and requested that the contract remain in place while the investigation continued.

 

However, WCL decided to terminate the contract on September 26, 2024 and cited the involvement of the company’s equipment in the theft and breach of the contract’s terms, including the unauthorised use of vehicles and dumping coal at the wrong site. The company challenged WCL’s decision in court and argued that the action was unfair and based on incomplete evidence. They also claimed that the investigation was still ongoing and it was too soon to impose such penalties. However, the court disagreed with the company. Justices Sambre and Joshi said the company’s equipment was directly involved in the theft and that the coal found at the unauthorised site was under the company’s control.

 

The court also pointed out that the company didn’t provide a proper explanation or take action against those involved in the theft. The court ruled that WCL had the right to terminate the contract and blacklist the company. It dismissed the petition and upheld the penalties. The company was also ordered to forfeit its security deposit and performance guarantees. The court did allow the company four more weeks to explore further legal options, including arbitration. Sr Adv M G Bhangde and Adv R M Bhangde represented the petitioner agency while Adv A S Jaiswal and Adv N G Moharir for the respodents WCL.