Review Petition Rejected as No Error Apparent Existed in Diesel Escalation Clause Judgment

ANE Industries Private Limited Vs Eastern Coalfields Limited & Ors. (Calcutta High Court)

The Calcutta High Court dismissed review petitions seeking reconsideration of its judgment dated 08.01.2020 concerning a contractual dispute between a contractor and Eastern Coalfields Limited (ECL) relating to reimbursement of increased High Speed Diesel (HSD) costs under a diesel escalation clause. The Court held that no error apparent on the face of the record existed to justify exercise of review jurisdiction.

ECL had floated a tender in 2009 for hiring equipment, and the contractor was awarded a five-year contract. Under the contract, the contractor was required to procure HSD directly from Indian Oil Corporation Limited (IOCL) as a bulk consumer. Initially, IOCL supplied diesel at rates equivalent to subsidized retail prices, but this arrangement was later withdrawn, requiring the contractor to purchase diesel at higher bulk-consumer rates. The contractor sought modification of the diesel escalation formula to account for the increased fuel cost.

The Board of Directors of ECL considered the issue in February 2013 and approved proposals relating to modification of the diesel escalation formula. The Functional Directors subsequently approved consideration of the bulk consumer price as the base rate for HSD with effect from 18.01.2013. Payments based on the higher diesel price were made for a period. However, ECL later suspended the decision following recommendations arising from concerns regarding subsidized diesel pricing and sought recovery of the differential amounts paid. The contractor challenged these actions through writ petitions.