BARANJ COAL MINES PRIVATE LIMTED vs STATE OF KARNATAKA

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

TH
DATED THIS THE 13 DAY OF OCTOBER, 2026

PRESENT

THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE

AND

THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA

WRIT PETITION NO. 1391 OF 2024 (GM-MM-S)

BETWEEN:











1. BARANJ COAL MINES PRIVATE LIMTED
A COMPANY WITHIN THE MEANING OF
COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT:
5B, NANDALAL BASU SARANI
KOLKATA, WEST BENGAL – 700 071
REP. BY AUTHORISED SIGNATORY/OFFICER
MR. PURANJIT PATTNAIK

2. EMTA COAL LIMITED
A COMPANY WITHIN THE MEANING OF
COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT:
5B, NANDALAL BASU SARANI
KOLKATA, WEST BENGAL – 700 071
REP. BY AUTHORISED SIGNATORY/OFFICER
MR. SOMANATH PANTH
…PETITIONERS
(BY MS. SHRISTI WIDGE, ADVOCATE FOR
SRI MANU PRABHAKAR KULKARNI, ADVOCATE)







Digitally
signed by
AMBIKA H B
Location:
High Court
of Karnataka

AND:
1. STATE OF KARNATAKA
DEPARTMENT OF MINES AND GEOLOGY
THE OFFICE OF THE DIRECTOR

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49, KHANIJA BHAVANA
RACE COURSE ROAD
BANGALORE – 560 001

2. KARNATAKA POWER CORPORATION LTD.
A GOVERNMENT OF KARNATAKA ENTERPRISE
HAVING ITS REGISTERED OFFICE AT:
SHAKTI BHAVAN
82, RACE COURSE ROAD
BANGALORE – 560 001
REPRESENTED BY ITS MANAGING DIRECTOR
…RESPONDENTS

(MS. NILOUFER AKBAR, AGA FOR R-1 &
MS. CHAITRA DESAI, ADVOCATE FOR
SRI AJAY J. NANDALIKE, ADVOCATE FOR R-2)


THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OR ORDER
OR DIRECTION DIRECTING RESPONDENT NO.2 TO MODIFY
CLAUSE 28.1.1 (ii) OF THE AGREEMENT DATED 19/03/2021 FROM
(COMMENCING FROM THE FIRST QUARTER AFTER THE DATE OF
SIGNING OF THIS AGREEMENT) TO (COMMENCING FROM THE
FIRST QUARTER AFTER THE DATE OF ACCEPTANCE OF THE
EXPERT COMMITTEE REPORT BY THE EMTA COAL LTD., viz., MAY
2017) b) DIRECT RESPONDENT NO.2 TO REDETERMINE THE BASE
EXCAVATION CHARGES AND REVISED EXCAVATION CHARGES IN
TERMS OF PRAYER (A) AND PAY THE SAME TO PETITIONER
ALONG WITH 18% P.A., FROM THE DATE WHEN THE AMOUNTS
BECAME DUE AND ETC.
THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON'BLE MRS. JUSTICE K.S. HEMALEKHA

ORAL ORDER

(PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
1. The petitioners have filed the present petition, inter alia ,
seeking modification of Clause 28.1.1(ii) of an agreement dated
19.03.2021 [ the Agreement ]. Petitioner No.1 – a Special Purpose
Vehicle incorporated by Petitioner No.2 [ ECL ] had entered into the
Agreement with Respondent No.2 [ KPCL ]. Clause 28.1.1 which

sets out the ‘Base Excavation Charge’, is set out below:
“28.1 Base Excavation Charge
28.1.1 Subject to and in accordance with the terms
of this Agreement, the Authority shall pay to
the Mine Operator the excavation charge
per Ton of Coal Delivered by the Mine
Operator at the Delivery Point in
accordance with the provisions of this
Agreement, which shall be calculated in the
following manner:
(i) The excavation charge shall mean the
charges payable in relation to excavation and
Washing of the Coal, including but not limited
to all costs in relation to processing and
crushing of coal and all costs in relation to fuel
and explosives, used in relation to the
excavation of Coal and the excavation charge
as determined by the Expert Committee is INR
1169.16 (Rupees One Thousand One

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Hundred and Sixty Nine and Sixteen Paise)
per Ton (the " Base Excavation Charge ");

(ii) The Base Excavation Charge shall be
revised every quarter (commencing from the
first quarter after the date of signing of this
Agreement) to reflect the variation in Price
Index occurring between the Reference Index
Date of the quarter preceding the date of
signing of this Agreement and the Reference
Index Date for the quarter preceding the date
of revision (the "Revised Excavation Charge");

(iii) the Revised Excavation Charge shall be
adjusted for the Stripping Ratio calculated in
the Approved Annual Works Plan for that
Operating Year based on the revised
geological model incorporating the infill drilling
data. The adjustment in the Revised
Excavation Charge for the Stripping Ratio shall
be as under:
Excavation Charge adjusted for Stripping Ratio
(MFnes) = MFne (0.1+ 0.9 x
(1+SRn)/(1+SR0))
Where,
SRO = the Average Stripping Ratio
SRn = the Stripping Ratio (rounded upto 3
decimals) for the Operating Year as specified
in Approved Annual Works Plan.
MFnes = Adjusted Excavation Charge per Ton
of coal after adjustment for the Stripping Ratio
(rounded upto two decimals).
MFne = Revised Excavation Charge
The amount derived after such calculation shall be the
Excavation Charge payable for such Operating Year,
which is subject to revisions as per changes to the

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Revised Excavation Charge (the " Adjusted Excavation
Charge ").

2. Sub-clause (ii) of Clause 28.1.1 of the Agreement provides
for revision of the Base Excavation Charges every quarter and
expressly provides that the said charges would be revised based
on the variation in the price index occurring between the reference
index date of the quarter preceding the date of signing of the
Agreement and the reference index date for the quarter preceding
the date of revision. The Agreement was signed on 19.03.2021;
therefore, the excavation charges would be revised quarterly with
reference to the price index for the quarter preceding that date.
Sub-clause (i) of Clause 28.1.1 of the Agreement expressly
provides that the Base Excavation Charge would be ` 1169.16 per
ton as determined by the expert committee [ the Committee ].

3. The petitioners seek modification of the Agreement on the
premise that the Committee’s report, on the basis of which the said
charges were fixed, was furnished in the year 2017. Thus, the
quarterly revision should commence from the first quarter after the
date of acceptance of the said report by ECL and not from the first

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quarter after the date of signing of the Agreement. On the aforesaid
basis, the petitioners also pray that directions be issued to KPCL to
redetermine the Base Excavation Charges and the revised
excavation charges and pay the same along with interest at the

rate of 18% per annum.

4. The petitioners’ claim arises in the following context:

4.1 KPCL had applied for coal blocks and was allotted six coal
blocks in Chandapur, Maharashtra by the Ministry of Coal in 2008.
KPCL had invited tenders for appointment of a Mine Developer and
Operator by way of a joint venture agreement. ECL had
successfully participated in the bidding process which was declared
the lowest bidder. The parties agreed to operationalise the coal
blocks by creating a Joint Venture Company [ JVC ] between KPCL
and ECL in the ratio of 26:74. Accordingly, the JVC, named
Karnataka EMTA Coal Mines Limited, was incorporated. It is stated
that the said JVC entered into a back-to-back agreement with ECL
under which ECL would develop and operate the mines. The said
JVC would sell coal to KPCL under a Fuel Supply Agreement
[ FSA ], and the sale proceeds would be transferred to ECL. ECL

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claims that it was, in effect, the mining contractor for the JVC,
Karnataka EMTA Coal Mines Limited.

4.2 The allotment of coal blocks during the period 1993 till 2011
was challenged before the Supreme Court and, by a judgment
1
rendered in Manohar Lal Sharma vs Principal Secretary , the
Supreme Court cancelled the allotment of coal blocks during the
said period. Thus, the coal blocks allotted to KPCL were also
cancelled.

4.3 Thereafter, the Coal Mines (Special Provisions) Act, 2015
inter alia,
[ the Act ] was enacted. The said Act, permitted the
erstwhile allottees to reapply for allotment of coal blocks that had
been cancelled. Accordingly, KPCL applied for re-allotment of the
same coal blocks allotted to it. Under Section 11 of the Act, KPCL
could also novate the existing mine development/operation
agreement. However, KPCL invited fresh tenders for operation of
the coal blocks. According to ECL, KPCL ought to have novated
the contract with the JVC. Accordingly, it filed a writ petition, inter
alia, praying that directions be issued to KPCL to novate the

1
(2014) 3 SCC 163

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contract under Section 11(1) of the Act and to restrain it from
proceeding with the fresh invitation to tender.

4.4 The said petition (W.P Nos.45102-45103/2015) was
disposed of by the learned Single Judge of this Court by an order
dated 08.12.2015. The learned Single Judge directed KPCL to
grant ECL the right of first refusal. Both the parties (ECL and
KPCL) appealed the said order before the Division Bench of this
Court. The Division Bench disposed of the appeals by an order
dated 12.04.2016, directing KPCL to consider novation of the
contract with ECL under Section 11 of the Act. KPCL and the
Government of Karnataka filed special leave petitions before the
Supreme Court [SLP (C) Nos.25874-25879/201 and 26393-
26398/2016, respectively].

4.5 Before the Supreme Court, it was contended by KPCL and
the State Government that they would like to discover the best
price for the coal. ECL had no objection for discovery of the best
price and to match the said price. The Court observed that without
prejudice to the rights of the parties, an expert committee should be
constituted to determine the same. Accordingly, KPCL constituted

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the Committee to determine the best price for mining and supply of
coal from Integrated Baranj Open Cast Mines. The Committee
submitted its report under cover of the letter dated 08.02.2017. It
determined the base excavation charge at ` 1169.16 and the base
mining charges – which included base excavation charge, base
transportation charge, handling charge and rehabilitation and
resettlement (R&R) charges – at ` 1289.42. This charge was
recommended as the best price.

4.6 The Committee’s report along with the draft agreement was
th
considered by the Board of Directors of KPCL at its 256 Board
meeting held on 20.02.2017. Thereafter, KPCL filed the same
before the Supreme Court along with an affidavit dated 03.03.2017.
ECL expressed its willingness to accept the terms and conditions
as approved by KPCL's Board and filed an affidavit dated
25.04.2017 before the Supreme Court. On 04.05.2017, KPCL's
Board recommended the acceptance of the Committee's report.
Thereafter, the State of Karnataka also filed an affidavit before the
Supreme Court stating that it was willing to novate the contract with
ECL under Section 11(1) of the Act with such modified terms and

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price, as fixed by the Committee, if permitted by the Supreme
Court.

4.7 KPCL issued a letter of intent dated 07.07.2020, whereby it
expressed its intention to novate the said contract. ECL accepted
the same and agreed to withdraw the special leave petitions.
Thereafter, KPCL and the State Government filed applications
seeking withdrawal of their respective special leave petitions. The
special leave petitions filed by KPCL were dismissed as withdrawn
by an order dated 25.08.2020, and those filed by the State
Government by an order dated 04.09.2020.

4.8 Petitioner No.1, which is a subsidiary of ECL signed the
Agreement on 19.03.2021. However, ECL claims it sent a letter
dated 18.03.2021, prior to signing the said Agreement, stating that
signing the Agreement would not take away the petitioners' right to
claim escalation from May 2017.

4.9 The petitioners claim that they began carrying out operations
but suffered huge losses. They claim that they incurred significant
additional expenditure to rebuild the infrastructure and were also

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involved in local issues, including issues raised by labour and land
losers. The petitioners claim that the additional expenditure made
mining operations financially unviable. In this context, the
petitioners sent letters, including a letter dated 21.06.2023,
requesting KPCL to modify Clause 28.1.1(ii) of the Agreement.

4.10 According to the petitioners, they would be entitled to an
amount in excess of ` 55 crores on account of escalation if the
same was computed from the year 2017.

5. In the aforesaid context, the petitioners’ have filed the
present petition inter alia prayinf as under:
A) Issue a writ or order or direction directing
Respondent No. 2 to modify Clause 28.1.1 (ii) of the
Agreement dated 19.03.2021 from "(commencing from
the first quarter after the date of signing of this
Agreement)" to "(commencing from the first quarter
after the date of acceptance of the Expert Committee
report by the EMTA Coal Ltd viz. May 2017").
B) Direct Respondent No. 2 to redetermine the base
excavation charges and revised excavation charges in
terms of Prayer (A) and pay the same to Petitioner
along with 18% p.a., from the date when the amounts
became due.

6. The learned counsel appearing for the petitioners submitted
that although the petitioners have prayed for modification of the

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Agreement, they are essentially seeking implementation of the
.
Committee’s report The learned counsel sought time to amend the

petition.

7. It is not disputed that seeking implementation of the
Committee report would, in effect, entail the modification of the
Agreement as prayed for by the petitioners.

8. Considering the above and the fact that the present petition
had been listed before this Court on more than 20 prior occasions,

we did not consider it apposite to defer the proceedings.

9. The petitioners effectively seek modification of an agreement
admittedly signed by the concerned parties. We cannot accept that
the petitioners can resile from the terms of the Agreement after
signing it and compel KPCL to accept terms in variance of the

Agreement signed by it.

10. The only averment made by the petitioners in challenging the
Agreement is that KPCL put an “enormous amount of pressure” on
ECL to sign the Agreement. They claim that petitioner No.1 had
formally signed the Agreement “under severe economic duress”.

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11. We are unable to accept the above contention for several
reasons. First of all, the parties were already before the Supreme
Court at the material time. The petitioners had effectively
succeeded before the Division Bench of this Court, and KPCL and
the State Government had sought leave to appeal the said decision
under Article 136 of the Constitution of India. If the petitioners felt
any coercive pressure, they could have agitated the matter before
the said court. Second, the petitioners have produced no material
to establish that ECL was under economic duress. Plainly, the
petitioners cannot be permitted to resile from the Agreement on the

basis of such unsubstantiated pleas.

12. The learned counsel for the petitioner also contended that
the price determined in 2017 would not be relevant on the date of
signing the Agreement. In our view, the petitioners cannot
challenge the base excavation rate expressly agreed by the parties

under the Agreement.

13. We find no merit in the present petition and the same is

accordingly dismissed.

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14. The pending interlocutory application also stands disposed

of.


Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE


Sd/-
(K.S. HEMALEKHA)
JUDGE






AHB
List No.: 1 Sl No.: 8