draft model coal supply agreement between subsidiary companies of...

DRAFT

MODEL COAL SUPPLY AGREEMENT

BETWEEN SUBSIDIARY COMPANIES

OF COAL INDIA LIMITED

AND

INDEPENDENT POWER PLANTS

June 11, 2008

Draft Model for IPP Version 4.0 June 11, 2008

2

THIS AGREEMENT made this day of ____________________ 2008 BETWEEN: (1) ………………………….. Coalfield Limited a company incorporated in the

Republic of India registered under the Companies Act, 1956 and having its registered office at ……………………… hereinafter called the “Seller”, which term shall, unless excluded by or repugnant to the subject or context, include its successors and permitted assigns, of the ONE PART: and

(2) ………………………………… a company incorporated in the Republic

of India registered under the Companies Act, 1956 and having its registered office at ………………………, hereinafter called the “Buyer”, which term shall, unless excluded by or repugnant to the subject or context, include its successors and permitted assigns, of the OTHER PART.

The Seller and the Buyer shall be individually referred to herein as a “Party” and collectively as the “Parties”.

WITNESSETH: (A) Whereas the Purchaser was issued a Letter of Assurance (LOA) dated

[______________] Reference No. [________________] and the Purchaser has achieved the milestones as setout in the Annexure 1 of the LOA and fulfilled other conditions as stipulated under the LOA.

Or Whereas the Purchaser has been granted linkage of Coal by Standing Linkage Committee – Long Term (SLC- LT) [Delete above paragraph in such case] (B) WHEREAS, the Buyer desires to design, finance, build, own and operate a

…….MW Coal fired thermal power plant at ………….., in the State of ……………. consisting of ….. Units of …… MW each, for the production and sale of electricity (the “Plant”) to be built together with the railway sidings, unloading points and storage and other facilities in accordance with the plans attached hereto as Annexure “1”, and

(B) WHEREAS, the Seller owns and operates Coal mines having substantial

reserves of Coal and adequate production capability to service the requirements of the Buyer; and

(C) WHEREAS, the Buyer desires to purchase and accept such Coal from the

Seller for use in the production of electricity in accordance with the terms

Formatted: Not Highlight


3

and conditions set out herein; and (D) WHEREAS, the Seller desires to sell and deliver Coal to the Buyer for use

in the production of electricity at the Plant in accordance with the terms and conditions set out herein.

NOW, THEREFORE, in consideration of the agreement and covenants hereinafter set out, and intending to be legally bound hereby, the Parties hereto covenant and agree with each other as follows:

CLAUSE 1

DEFINITIONS 1.0 When used in this Agreement, the defined terms set out in this Clause 1

shall, unless the context otherwise require, have the following meanings: “Actual Delivery” means the delivery of Coal to the Buyer at the Delivery

Point or at the Plant or at any other point pursuant to the terms of this Agreement during any specified period or at any specified time.

“Adjustment Invoice” shall have the meaning ascribed to it in Clause 7.5. “Advance” shall have the meaning ascribed to it in Clause 7.1. “Affected Party” shall have the meaning ascribed to it in Clause 8.1. “Agreement” means this Coal Supply Agreement(along with its annexure)

entered into on the Signature Date, as the same may be amended from time to time in accordance with the terms and conditions hereof.

“Alternate Fuel” means fuel other than Coal. “Alternate Source” means the Coal mines of the Seller (other than the

Linked Coal Mine) or any other mine under the control of the Seller or CIL or any of the other subsidiaries of CIL or any other source from which Coal is supplied under this Agreement in accordance with Clause 3.3 and 4.8.

“Applicable Laws” means any law, rule, regulation, ordinance, order, code,

treaty, judgment, decree, injunction, permit or decision of any central, state or local government, authority, agency, court or other body having jurisdiction over the matter in question, as in effect from time to time.


4

“As Delivered Price” shall have the meaning ascribed to it in Clause 6.1. “Average Superficial Moisture” or “ASM” shall have the meaning

ascribed to it in Clause 5.1(G). “Base Price” means the price set out in and revised as per Clause 6.2. “Billing Period” means each of the periods from the first day of the month

to the fifth day of the month, from the sixth day of the month to the tenth day of the month, from the eleventh day of the month to the fifteenth day of the month, from the sixteenth day of the month to the twentieth day of the month, from the twenty - first day of the month to twenty - fifth day of the month and from twenty - sixth day of the month to the last day of the month.

“BIS” means Bureau of Indian Standards or any successor or any other

mutually agreed similar organisation which performs substantially the same role as that currently performed by the Bureau of Indian Standards.

“Business Day” means any day excluding Sunday and any day, which shall

be at the mine a legal holiday or a day on which banking institutions are permitted to be closed.

“Build – Up Period” shall have the meaning ascribed to it in Clause 4.4 (B) “Buyer’s Financing Documents” means the definitive, executed

documentation, executed on or before the commercial operations date, pursuant to which the Buyer’s Financing Parties collectively or severally commit the funds necessary to construct and operate the Plant.

“Buyer’s Financing Parties” means any or all of the parties other than the

Buyer which are party to the Buyer’s Financing Documents. “Capacity Charges” shall mean the charges as determined in accordance

with Clause 3.12. “Cash Credit Rate” means the rate of interest announced from time to

time as the cash credit rate by the State Bank of India (or any other bank which may become the primary bank of the Seller) for working capital loans by such bank to the Seller.

“CIL” means Coal India Limited, the holding company of the Seller, having

its registered office at 10, Netaji Subhas Road, Kolkata 700 001, India.


5

“Coal” Means Coal as defined by the Colliery Control Order, 2000. “Coal Handling Plant” means the Coal handling plant of the Buyer at the

Plant. “Commitment Advance” means the payment by the Buyer to the Seller

calculated and paid in accordance with the terms of Clause 2 .6(B). Two months coal value (One year after signature date)

“Conditions Precedent” means all the conditions precedent to this

Agreement as set out in Clause 2.3. “Condition Precedence Period” shall mean a period of 12 months or a

period of [•] days/ months which ever ends later from the Signature Date of this agreement not exceeding a period of 2 years or pursuant to Clause 2.4 (F). The [•] days/ months period shall be half of the time required by Purchaser for commissioning of the plant from the Signature Date of this agreement as per the implementation schedule under the detailed project report / technical feasibility report submitted during the validity of Letter of Assurance.

“Contract Quantity” means the quantity of Coal set out in Clause 4.1. “Daily Composite Specification Certificate” shall have the meaning

ascribed to it in Clause 5.2(E). “Daily Minimum Required Quantity” shall have the meaning ascribed to

it as per Clause 4.2. “Daily Required Quantity” means the Required Quantity divided by the

number of days in the relevant Month. “Deemed Delivery” shall mean Coal deemed to have been delivered in

accordance with the provisions of Clause 4.9.1(B-2). “Delivery Point” means the Receiving Yard to which the Seller transports

the Coal in accordance with the terms of this Agreement. “Effective Date” shall have the meaning ascribed to it as per Clause 2.4 (B)

. “Event of Default” shall have the meaning ascribed to it in Clause 9.1. “Failed Quantity” shall have the meaning ascribed to it in Clause 3.12



6

“Final Invoice” shall have the meaning ascribed to it in Clause 7.4. “First Delivery Date” means the date notified by the Buyer on which the

Seller is obliged to commence deliveries of Coal as determined in accordance with Clause 4.3.

“First Split” shall have the meaning ascribed to it in Clause 5.2(D). “Force Majeure” shall have the meaning ascribed to it in Clause 8.1.

“Gross Calorific Value” (GCV) means the total heat in Kilo Calories liberated on burning one Kilogram of Coal as tested in a Bomb Calorimeter in accordance with BIS 1350 (Part II) 1970.

“Incentive Charge” shall have the meaning ascribed to it in Clause 6.7

“Independent Engineer” shall mean a consulting engineering firm or group having necessary expertise to undertake the services or activities as mentioned under Clause 2.3.2 (C)

“India” means the Republic of India.

“Inspector” means an inspector appointed by the relevant statutory inspection authority from time to time to inspect, test and certify the weigh bridges in accordance with Applicable Laws.

“Invoice” means a Provisional Invoice, a Final Invoice or an Adjustment Invoice, as the case may be.

“Laboratory” shall have the meaning ascribed to it in Clause 5.2(B).

[“Linked Coal Mines”] means, the [ • ] Coal Mines owned, operated, maintained and linked by the Seller for supply of Coal in terms of this Agreement, as more specifically identified in Annexure-II. “Liquidated Damages” means the amount determined in accordance with Clauses 3.8, 3.9, 3.10, 3.11 & 3.13 as the case be and payable by the Seller to the Buyer in terms of this Agreement.

“Long Flame Coal” means the coal falling within the following parameters as laid down below.

Volatile Matter Range of Gross Range of Dried


7

Present (Unit Coal Basis)

Calorific Value in Kcal / Kg (Unit Coal basis)

Moisture present at 60%relative humidity and 400C temperature (Mineral free Coal basis)

Over 32% 8060 to 8440 3% to 7% Over 32% 7500 to 8060 7% to 14%

Unit Coal basis and mineral free Coal basis shall have the meanings as set

out below: If on analysis, as per BIS 1350 (Part II ) 1970 of a Coal after equilibration

at 60% relative humidity and 400C temperature, the volatile content, GCV, Moisture content and Ash content are V%, CV Kcal/Kg, M% and A% respectively, then:

CV x 100 Gross CV (Unit Coal Basis) =

100 – (M + 1.1A) Kcal/Kg

Moisture at 60% relative humidity and 400 C temperature (Mineral Free Coal

Basis ) = (Mx100)/(100 - 1.1xA) “Material Amount” means such amount as represents the As Delivered

Price of [ ** ] Tonnes of Coal. “Minimum Required Quantity” or “MRQ” means the quantity set out in Clause 4.2.

“Month“ means a period beginning at 00.00 hrs (Indian Standard time) on

the first day of a given English calendar month and ending at 00.00hrs (Indian Standard time) on the first day of the next succeeding English calendar Month.

“Notice of Quantity Revision” shall have the meaning ascribed to it in

Clause 4.6. “Notified Price”: The notification of Base Price, Transportation charges, * Note: Quantity equivalent to 75/365 days Annual Contract Quantity.

100-A-M-V Volatile Matter Present (Unit Coal Basis)% =100 -

100 – (M + 1.1A) x 100


8

Sizing Charges as set out in Annexure-6 “NPV” shall mean net present value to be calculated at the discount rate

latest notified by CERC from for the purpose of bid evaluation as per the “Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees” by Ministry of Power notified on 19.01.2005 and amended subsequently. The Buyer and Seller shall select independent Chartertered Accountants for determination of net present value.

“Operating Year” means, the period from the First Delivery Date to the

following March 31; each period thereafter from April 01 to the following 31 March, and with respect to the Operating Year in which the termination or expiry of this Agreement occurs, the period from April 01 immediately preceding the date of such termination or expiry to the date of such termination or expiry.

“Other Source” means any source, other than the Linked Coal Mine, from which the Buyer/Seller may import/procure Coal pursuant to the provisions of Clause 3.6.

“Over Supply” during any Month shall have the meaning ascribed to it in

Clause 4.8 “Plant” shall have the meaning ascribed to it in Recital (A) to this

Agreement. “Power Purchase Agreement” or “PPA” means the Power Purchase

Agreement dated [ …… ] executed between [______] and the Buyer as amended from time to time.

“Prime Lending Rate” or “PLR “means long-term prime lending rate of

the State Bank of India on the date when such rate is to be determined. In the absence of such rate, any other arrangement that substitutes such prime lending rate as mutually agreed to by the Parties;

“Provisional Invoice” shall have the meaning ascribed to in Clause 7.2. “Railways” means [ ......................... ] Railway (one of the Zonal Railways of

Indian Railways) or such other railway company as may be engaged by the Buyer for transportation / movement of Coal from the Delivery Point to the Plant.

“Rakes” means trains comprising of wagons coupled together capable of


9

transporting Coal to the Plant. “Receiving Yard” means a plot of land adjacent to the [Linked Coal Mine]

arranged by the Buyer for receiving coal in terms of Clause 4.9.1. “Representative(s)” shall have the meaning ascribed to it in Clause

13.12(B). “Required Quantity” shall mean the quantity of Coal that the Seller shall

be required to deliver to the Buyer each Month calculated in accordance with Clause 4.5.

“Risk Premium Charge” shall have the meaning ascribed to it in Clause

6.8. “Sampling Standards” means sampling and testing standards for Coal in

accordance with procedure laid down in IS (436 Part I / Sec 1), 1964, for Manual Sampling, IS (436 Part I / Sec 2), 1976, for Mechanical Sampling and IS (1350 Part I), 1984, for Proximate Analysis respectively.

“Scheduled Quantity” or “SQ” means the presently estimated quantities

of Coal to be delivered in any calendar Month as set out in Annexure 4. “Second Split” shall have the meaning ascribed to it in Clause 5.2(D).

“Seller’s Financial Closure” shall mean the execution of all the loan agreements, notes, indentures, security agreements, letters of credit and any other documents relating to the financing required or before the commissioning of plant for the project and fulfillment of conditions precedents and waiver, if any, of any of the conditions precedent for the initial draw down of funds there under.

“Signature Date” shall have the meaning ascribed to it in Clause 2.1, the

date on which the agreement is signed. “Sizing Charges” shall have the meaning ascribed to it in Clause 6.3. “Specifications Certificate” means a document issued by the Laboratory

certifying the results of its sampling and testing in accordance with this Agreement.

“Standard Tonne” shall have the meaning ascribed to it in Clause 4.7.


10

“Statutory Charges” shall have the meaning ascribed to in Clause 6.5. “Subsidiary” means in relation to a company (“the holding company”) any

company which is a subsidiary of that holding company within the meaning of the Companies Act, 1956.

“Target Start Period” shall have the meaning ascribed to it in Clause 4.3

(A) “Term” shall have the meaning ascribed to it in Clause 2.2. “Tonne” means one thousand kilograms. “Transportation Charges” shall have the meaning ascribed to it in Clause

6.4. “Under Supply” during any Month shall have the meaning ascribed to it in

Clause 4.8.1. “Useful Heat Value” shall have the meaning ascribed to it in Clause

5.1(B). “Unit” means each [ • ]MW self contained part of the Plant designated as

a Unit of the Plant. “Varied Quantity” shall have the meaning ascribed to it in Clause 4.6. “Weights and Measure Standards” means the standards as prescribed

under the Weights and Measures Act, 1976 as amended or re-enacted from time to time.

“Weigh bridge(s)” means the weigh bridge(s) or weighing machines

owned and maintained by the Seller at the Linked Coal Mine, or any other source of supply of coal duly stamped by the statutory Inspection authority, which shall be used to determine the weight of Coal delivered.

In this Agreement where the context admits:

(A) references to “statutory provisions” shall unless otherwise stipulated be construed as references to those provisions as amended or re-enacted or as their application is modified by other provisions from time to time and shall include references to any provisions of which they are re-enactments (whether with or without modification);


11

(B) references to “this Agreement” or to any other Agreement or

document referred to in this Agreement means this Agreement, or as the case may be, such other agreement or document as may be amended, varied, supplemented, modified or novated from time to time, and shall include the schedules to the same;

(C) references to a “person” include any individual, company, body,

corporate, corporation sole or aggregate, government, state or agency of a state, firm, partnership, joint venture, association, organisation or trust (in each case, whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists) and a reference to any of them shall include a reference to any other;

(D) any reference to “writing” shall include typewriting, printing,

lithography, photography and other modes of representing or reproducing words in a legible form, other than writing on an electronic display screen or similar device;

(E) references to the singular shall be deemed to include references to the

plural and vice-versa as the context requires.


12

CLAUSE 2

COMMENCEMENT AND TERM

2.1 Commencement

This Agreement shall come into force upon signature by both parties hereon (the “Signature Date”).

2.2 Term

A. This Agreement, unless terminated earlier in accordance with terms

hereof., shall continue to remain in force for a period of 10 years, subject to review after 5 years and extendable by 5 more years after expiry of initial term, effective from the “First Delivery Date”.

B. Notwithstanding the provisions of Clause 2.2 above, in the event of any

change in the Grade structure of Coal, such changed Grade structure shall be binding and complied with by both the Parties. The Seller shall within seven (7) days of introduction of such change provide a written notice to the Purchaser calling for a joint review of such provisions of this Agreement on which such change in the Grade structure has a bearing, and upon such joint review, this Agreement shall be duly amended in writing to bring it in full conformity with such change.

C. In the event of any material change in the Coal distribution system of

the Seller due to a Government directive/ notification, at any time after the execution of this Agreement, the Seller shall within seven (7) days of introduction of such change provide a written notice to the Purchaser calling for a joint review. If the Parties are unable to arrive at a mutually agreed position with respect to the subject matter of review, within a period of thirty (30) days from the date of notice, CIL shall have the right to terminate the Agreement subject to a further notice of thirty (30) days given in writing to the other Party.

2.3 Conditions Precedent

The obligations of the Parties under this Agreement (other than those set out in Clause 2.3, Clause 2.4, Clause 2.5, Clause 2.6 and Clause 13.2 and those obligations specifically provided to take place before satisfaction of the Conditions Precedent) are subject to the satisfaction in full of the following Conditions Precedent within one year of the Signature Date (or such other extended period as may be agreed in writing in accordance with

Comment [R1]: EMD + CA


13

the terms of this Agreement).

2.3.1 Seller’s Condition Precedent

A. The Seller shall have obtained from the lawful authority all requisite sanctions, approvals, licences and consents including those related to land acquisition, environment and forest clearance for development and operation of the coal block identified in Schedule I to this Agreement

B. The Seller shall have achieved Financial Closure with respect to

development and operation of the coal block identified in Schedule I to this Agreement.

C. In respect of supply of Coal from Alternate Source, the Seller shall have made all necessary arrangements including having executed the fuel supply agreement, which shall no longer be subject to termination due to failure to fulfill or waive the conditions precedent specified therein. The Seller shall have made the necessary logistics arrangement for delivery of Coal from Other Source in accordance with the terms of this Agreement.

2.3.2 Purchaser’s Condition Precedent A. The Purchaser shall have obtained from the lawful authority all necessary

clearances, authorisations, approvals and permissions required for, construction, commissioning, operation and maintenance of the Plant

B. Purchaser shall have placed order for the procurement of main package

Boiler, Turbine, Generator) for the Power Plant.

C. The Purchaser shall have constructed at least fifty percent (50%) of the Plant, as per the implementation schedule specified in detailed project report/ techno-economic feasibility report submitted during the validity of Letter of Assurance (LoA), and the completion of such 50% construction has been certified by an Independent Engineer within the Condition Precedent Period.

D. Purchaser shall have signed Power Purchase Agreement (PPA) for sale of

power for not less than 50% of the installed capacity of Power Plant. In an event the Purchaser is operating as an integrated utility (i.e. the Purchaser is in the business of Generation, Transmission and Distribution of Power) and shall not be signing the Power Purchaser Agreement with the distribution utility, the Condition Precedent shall stand waived at the time of signing the Agreement.

Comment [R2]: We have not exclusively mentioned about Imported Coal anywhere else in the document.


14

2.4 Satisfaction of Condition Precedent

A. The Conditions Precedent shall be completed/ achieved within the Condition Precedent Period.

B. Within 15 days of completion of their respective CPs each party shall issue a

notice of satisfaction notifying other party about the completion of its CPs. Other party within a period of 15 days from receipt of such notice shall confirm its acceptance of the same. The later of two dates on which acceptance letter is issued by Seller or Purchaser, as the case may be, or the last date of Condition Period, whichever occurs earlier shall be the Effective Date.

C. If a Party is prevented from fulfilling a Condition Precedent because of the

occurrence of an event of Force Majeure within the Condition Precedent Period and the affected party provides documents to other party’s satisfaction establishing the Force Majeure period , then such Condition Precedent Period shall stand extended by the number of days such Party is delayed from fulfilling its Condition Precedent. Such extension due to Force Majure however shall not exceed a total of 180 days

D. The CPs set out in Clause 2.4 above shall be fulfilled to the satisfaction of

Seller or waived by Seller at its sole discretion without affecting the Seller in any way to honour the obligations under this agreement. Within 15 days of achieving or waving the CPs set out in Clause 2.4. as the case may be, the Seller shall issue a notice of satisfaction and notify to Purchaser in writing. The Purchaser within 15 days from receipt of such notification shall issue a letter accepting the same.

E. The CPs set out in Clause 2.5.above shall be fulfilled to the satisfaction of

both the Parties or waived jointly by both the Parties in writing, as the case may be. Within 15 days of completion of achieving the CPs set out in Clause 2.5 the Purchaser shall issue a written notice of satisfaction and notify to Seller. The Seller within 15 days from receipt of such notification by Purchaser shall issue a letter accepting the same.

F. In the event that any of the Conditions Precedent stipulated have not been

satisfied or waived within the Condition Precedent Period or any extended period as mutually agreed by both the Parties, the non defaulting party shall have the right to extend the Condition Precedent period at its discretion or terminate the agreement by providing a written notice of 30 days provided the non defaulting party has completed/ achieved its CPs as set out in this Agreement and issued a notice of satisfaction.


15

G. In case of termination of agreement by Seller due to reasons other than Force Majeure, the Seller shall have the right to forfeit the Security Deposit amount submitted by the Purchaser.

2.5 Security Deposit (SD)

A. On signing of this agreement the Commitment Guarantee (CG) provided by the Purchaser prior to issue of Letter of Assurance (LOA) shall stand converted into the Security Deposit amount as determined under Clause 2.5 (B). In an event the Commitment Guarantee amount provided by Purchaser is more than the Security Deposit amount as determined under Clause 2.5 (B), Seller shall return such balance amount within three (3) months from the date of signing of this Agreement. In an event the Security Deposit amount as determined under Clause 2.5 (B) is more than the Commitment Guarantee amount, the Purchaser shall deposit such balance amount within three (3) months from the date of signing this agreement. Failure to submit the balance amount by the Purchaser within three (3) months from the date of signing of this agreement, as aforementioned, shall entitle the Seller to adjust the ACQ such that it is commensurate with the Security Deposit submitted by the Purchaser. Accordingly, the Purchaser has furnished Rs. [•] (Indian Rupees ________) towards the Security Deposit amount stipulated in Clause 2.5 (B).

[Notes: Purchaser directly entering into this Agreement who have been granted coal linkage by Standing Linkage Committee – Long Term (SLC- LT) and have not been issued Letter of Assurance (LOA) by Seller shall deposit the Security Deposit amount as determined under Clause 2.5(B) before the Signature Date.[In such case delete Clause 2.5 (A)]

B. The Purchaser shall deposit with the Seller a sum of [Rs. _________ (Indian

Rupees ________)] equivalent to the value of the Base Price (a as applicable on the date of such payment), of the Contract Quantity of Coal for the Plant (based on a full operating year of 12 months), divided by four (4) on or before the signing of this Agreement. In case of multiple Grades indicated in Schedule-II, the highest Grade shall be considered for the purpose of calculation of SD without any commitment whatsoever to supply such Grade of Coal..

C. The amount of the Security Deposit or any unused or unrefunded balance

thereof shall bear interest at a rate equal to Prime Lending Rate plus 0.5% for the period from the date of deposit of the Security Deposit, as the case may be, to the date upon which such amount is finally used up or refunded, in accordance with the provisions of this Agreement. However, in case of extension of Condition Precedent Period under Clause 2.4 (C) and / or Clause 2.4.(F) of this Agreement, the Security Deposit shall not bear any


Comment [R3]: Not allowing BG for SD in line with the provisions of IPP model


16

interest for such extended Condition Precedent Period.

2.6 Refund/Adjustment of Security Deposit

(A) (i) The amount of Security Deposit, alongwith the accrued interest thereon upto but excluding the First Delivery Date unless forfeited pursuant to Clause 2.4 (G) shall be adjusted in the Provisional Invoices for all payments due from the Buyer to the Seller for Coal supplied during the first twenty four (24) Months in installments (the installments to be calculated as provided herein after) following the First Delivery Date. The balance of the Security Deposit and interest accrued upto but excluding the First Delivery Date shall continue to accrue interest on the reducing balance and the amount of such further interest shall also be similarly adjusted during the first 24 Months.

(ii) The aforesaid installments shall be calculated in accordance with the following formula; Installment = (Outstanding balance of Security Deposit and interest

as at the end of the Billing Period relevant to the Provisional Invoice) ÷ (145 − n) where ‘n’ is the Serial No. of the installment so that for the first installment n=1.

(B) If the Agreement is terminated under Clause 2.4(G), the Security

Deposit alongwith interest accrued thereon , will be forfeited by Seller. If however the Agreement is terminated owing to Clause 2.2 (C) and/ or Clause 2.4.(C) , the Security Deposit will be refunded, within five (5) Business Days of termination with interest at the Prime Lending Rate plus 0.5% with quarterly rests on compounding basis.


17

CLAUSE 3

OBLIGATION TO SELL AND PURCHASE 3.1 Sale and Purchase of Coal (A) The Seller has the absolute obligation to sell and deliver to the Buyer, and

the Buyer has the absolute obligation to purchase and pay for, Coal in the quantities, and having the qualities as required hereby, upon the terms and conditions set out in this Agreement. Each Party shall perform its obligations under this Agreement in accordance with Applicable Laws.

(B) Save as expressly permitted in Clause 3.6, the Buyer shall not purchase Coal

from any Source other than the Seller, or purchase any Alternate Fuel other than fuel oil for the purpose of start up and stabilisation of the Plant.

3.2 Source Subject to the provisions of Clause 3.3 and Clause 3.4, the Coal sold

hereunder shall be mined and produced by the Seller at the Linked Coal Mine, which shall be the linked source of supply of Coal to the Plant.

3.3 Supplies from Alternate Sources 3.3.1 In the event the Seller is unable to supply the Required Quantity from the

Linked Coal Mine, whether due to an Event of Force Majeure or default of the Seller, supplies by the Seller from Alternate Sources shall be in accordance with the provisions of Clause 3.3 and Clause 3.4.

Supply under Force Majeure: (A) Where the Seller is unable to supply to the Buyer the Required

Quantity from the Linked Coal Mine due to an event of Force Majeure affecting the Seller, the Seller may at its discretion and on the prior written request of the Buyer, supply Coal from Alternate Sources. All additional costs in supply of Coal by the Seller under this Clause 3.3.1(A) shall be borne by the Buyer.

(B) Supply under Non Force Majeure:

Comment [R4]: If committing lower quantity then we should allow purchase. Why this clause, purchase is anyway paying as per take or pay ?


18

Where the Seller is unable to supply to the Buyer the Minimum Required Quantity from the Linked Coal Mine, not due to an event of Force Majeure, the Seller shall be obliged to supply Coal from Alternate Sources only to the extent such failure to supply the Minimum Required Quantity is attributable solely to default on the part of the Seller.

3.3.2. The Buyer shall accept Coal delivered by the Seller from Alternate Sources

under Clause 3.3.1 if the Seller delivers the Coal by road up to the Delivery Point or to the Plant, as the case may be or if the supplies are made from Alternate Sources by rail without routing through the Delivery Point.

3.3.3 Where the Seller proposes to supply Coal from Alternate Sources by road at

the request of the Buyer either in the event of Force Majeure or otherwise, the Seller shall intimate the point of Actual Delivery to the Buyer and the transportation charges to be incurred. Supplies shall commence after the transportation charges and the Actual Delivery point are accepted by the Buyer which acceptance shall be communicated within 5 days of intimation by the Seller.

3.4 Provisions Relating to supplies from Alternate Sources (A) When providing Coal from Alternate Sources pursuant to Clause 3.3 the

Seller shall, supply Coal from sources conforming to the quality of Coal stipulated in Clause 5 and to the extent practicable nearest to the Plant. Except to the extent modified by Clause 3.3 and Clause 3.4, the provisions of the Agreement shall apply mutatis mutandis to all supplies of Coal from Alternate Sources.

(B) (i) If supplies from Alternate Sources are made by rail, the Seller shall be

responsible to load in all cases the Coal into wagons and consign the same to the Buyer’s Plant. If such supplies are made at the request of the Buyer, the supply of wagons at such loading point will be arranged by the Buyer.

(ii) In case of deliveries from Alternate Sources, the Seller shall inform

the Buyer of actual dispatch as and when this takes place. 3.5 Minimum Stock of Coal at the Receiving Yard (i) The Buyer shall maintain a minimum stacking capacity of [ MS ]

Tonnes** at the Receiving Yard, excluding the Coal in the Receiving * (*) equivalent to one twelfth of Annual Contract Quantity.


Comment [R5]: Who is bearing addl. Charges in case of Non FM supplies? There are not alternative supplies without request. Right ?. We can add : “All additional costs in supply of Coal by the Seller under this Clause 3.3.1(B) shall be borne by the Seller.”


19

Yard Hopper, bunker and rapid loading system constructed by the Buyer at the Receiving Yard (Receiving Yard Stock). The Buyer shall give the Seller a daily notice of the level of its stock at the Receiving Yard calculated as per following formula

Closing Stocks = Opening Stocks + Receipts - Dispatches. (ii) The Seller shall have unrestricted right to deliver Coal, on any day,

subject to a maximum of 250% of the Daily Required Quantity, so long as the stocks at the Receiving Yard are less than [MS ] Tonnes.

(iii) On a reasonable notice to the Buyer the Seller may undertake physical

measurement of the stocks at the Receiving Yard for verification of the level of stocks.

3.6 Buyers Right to Procure Coal from Other Sources (i) If the Seller fails to deliver RQ in any month, the Buyer shall have the

right to procure the short fall from Other Sources. Such procurement shall be completed within three months of the month in which such shortfall occurred. The Buyer before releasing any procurement order shall give the Seller a notice at least 7 days prior to such release. If the Seller within 7 days of such notice confirms its ability to supply the quantity proposed to be procured from Other Sources, the Buyer shall not make such procurement and permit the Seller to deliver the quantity.

(ii) Where the Seller has failed to deliver the Required Quantity (RQ) for

events other than Force Majeure and Buyer procures Coal from other sources in terms of Clause 3.6.(i), the Seller shall be liable to pay the difference in price on the quantity of coal which is the difference between the Required Quantity and the quantity actually delivered by the Seller. The difference in price shall be calculated on the basis of landed cost per million Kilo Calories of coal in accordance with the provisions of Cl.3.3.4 for which purpose the procurement from Other Sources shall be deemed to be the supplies from Alternate Sources.

The quantity which the buyer procures from Other Sources and for

which the Seller is liable to pay the price difference shall be deemed to have been delivered by the Seller. The Seller however shall not be liable for difference in price for any procurement against shortfall of a month in an operating year if the procurement takes place after such

Comment [R6]: Due to this buyer will loose on generation / fixed charges. In some cases dispatch would not happen in subsequent months, and buyer will be loaded with addl. Coal also. How to address this? What happens in case receiving yard doesn’t have storage capacity for this addl. Supplies?


20

Operating Year. Provided however, the Seller shall not be liable for any amount which

is in excess of the Liquidated Damages that the Seller would have been liable to pay as Liquidated Damages if such alternative procurement was not resorted to by the Buyer.

3.7 Restriction on Sale of Coal The Buyer agrees that it shall use the Coal purchased from the Seller

hereunder for the purposes of power generation in the Plant and shall not sell or otherwise dispose of Coal except in the following circumstances: (i) in the event of sale of the Plant or; (ii) as part of the Buyer’s Financing Parties collateral on foreclosure. Such disposal and transfer shall be in conformity with Applicable Laws.

3.8 Failure to deliver the Minimum Required Quantity (A) The Seller shall be liable to pay Liquidated Damages to the extent and in the

manner set forth in this Clause if and only if the following conditions are fulfilled at the end of a month:-

(i) the quantity of Coal delivered by the Seller including coal procured by

the Buyer from Other Sources pursuant to Clause 3.6 (ii) is less than the Minimum Required Quantity (MRQ) as at the end of that month; and

(ii) the quantity of Coal at the Receiving Yard on any day during the

month is below one-three hundred sixty-fifth of the Contract Quantity; and

(iii) The Buyer has, during the month, lost generation of electricity for

inadequate supply of coal. (B) (i) The Liquidated Damages payable by the Seller in respect of failure to

deliver the Minimum Required Quantity (MRQ) shall be determined as follows:-

Q = {DMRQ} x n1- {TD1+ RF1 +DD1 } - {DMRQ}x n0

- {TD0+ RF0+DD0} Where DMRQ = Daily Minimum Required Quantity as per Clause 4.2

n1 = No. of days in the year upto the end of the relevant


Comment [R7]: This exposes buyer to the risk for the last quarter.

Comment [R8]: Are we keeping this as termination under breach of agreement?

Comment [v9]: It is difficult to establish the Loss of Generation; may create dispute between the parties and hence may be removed


21

Month.

TD1 = Total quantity in Standard Tonnes supplied during the year upto the end of the relevant Month.

RF1 = Proportionate Required Quantity of Coal for the duration of one or more Force Majeure events affecting the Buyer and/or the Seller, upto the end of the relevant month.

DD1 = Deemed Deliveries in Standard Tonnes during the year upto the end of the relevant Month.

n0, TD0, RF0 and DD0 are corresponding quantities upto the end of the previous Month.

(ii) The Liquidated Damages payable by the Seller to the Buyer will be

equal to P x Q

Where 'Q' has the same meaning as in this Clause 3.8(B)(i) and 'P' is the Base Price of [ --- ] Grade Coal.

Provided that no Liquidated Damages in terms of this Clause 3.8 shall be

payable by the Seller during the first three (3) months starting from the First Delivery Date.

(C) For the purpose of this Clause 3.8 and Clause 3.9, quantity of Coal imported

or procured from Other Sources by the Buyer in terms of Clause 3.6, shall be deemed to be Coal supplied by the Seller.

3..9 Failure to deliver the Required Quantity (A) If at the end of any Month during an Operating Year, Coal supplied by the

Seller in accordance with the provisions of this Agreement (which includes Coal imported/ procured from Other Sources pursuant to Clause 3.6) falls below the Required Quantity upto that Month by more than 10%, the stocks at the Receiving Yard on any day during the month, is less than 1/ 365th of the Contract Quantity and the Buyer, during the relevant month lost generation of electricity for inadequate supply of coal, Liquidated Damages shall be payable by the Seller to the Buyer.

(B) The Liquidated Damages payable shall be for a quantity (Q) equal to

Q = {0.90RQ1 - (TD1+ RF1 + DD1)} - {0.90RQ0 - (TD0 + RF0 +DD0)}


Comment [v10]: It is difficult to establish the Loss of Generation; may create dispute between the parties and hence may be removed


22

Where RQ1 = Sum of Required Quantity for the year upto the end of the

Month, as modified under Clause 4.5. RQ0 = Sum of Required Quantity for the year upto the end of the

previous Month, as modified under Clause 4.5. TD1, RF1, DD1, TD0, RF0, and DD0 have the same meaning as in Clause

3.8 B (i). (C) The Liquidated Damages payable by the Seller to the Buyer will be equal to Q x 0.05 x P Where Q has the same meaning as in Clause 3.9 (B) and P is the Base Price

of (...) Grade Coal. 3.10 During any month the Buyer shall be entitled to Liquidated Damages either

under Clause 3.8 or under Clause 3.9 but not simultaneously under both the Clauses.

3.11 (i) Working in terms of Clause 3.8 and 3.9 above shall be done with respect

to the end of every month during an Operating Year. With respect to such of those months for which the determinant 'Q' has a positive value, the Seller shall be liable to pay Liquidated Damages as provided in this Agreement. If the Liquidated Damages worked out in terms of Clauses 3.8 and 3.9 are negative the Buyer shall refund such amount to the Seller, provided that such payment by the Buyer shall not exceed the amounts received by the Buyer from the Seller as Liquidated Damages during the relevant period. The Seller shall raise a claim for the purpose to the Buyer which shall be paid by the Buyer within 5 (five) Business days of receipt of the claim.

(ii) At rhe end of an Operating Year, Liquidated Damages shall be calculated

for the whole year independently in terms of Clause 3.8 and 3.9 and the Buyer shall be entitled to higher of the two and if the Seller has already paid Liquidated Damages in excess, the excess shall be refunded by the Buyer to the Seller for which purpose the Seller shall raise a claim to be paid by the Buyer within 5 (five) Business Days of receipt of the claim.


23

3.12 Capacity Charges (A) If the Buyer fails to accept the Required Quantity in any Month of an

Operating Year for reasons other than due to an event of Force Majeure or an act or omission of the Seller, the Buyer shall pay to the Seller Capacity Charges on the Failed Quantity in accordance with the formulae given below.

(A-1) The Capacity Charges shall be a percentage of the Base Price and

determined on a monthly cumulative basis with annual reconciliation as below :-

Cumulative Failed Quantity upto 10% of the Cumulative Required Quantity : Nil Cumulative Failed Quantity more than 10% of the Cumulative Required Quantity : 5% of the Base Price Capacity Charges will be rolled over (truing up) month to month and will be

adjusted on yearly basis. (A-2) Formula for computation of Failed Quantity FQ = QO - (TD + RF) Where: FQ = Cumulative Failed Quantity in Standard Tonnes QO = Cumulative Quantity offered by the Seller in Standard Tonnes

(including for the avoidance of doubt Deemed Delivery) subject to maximum of Cumulative Required Quantity of Coal as per Clause 4.5 during the Operating Year upto the end of the Month.

TD = Total Quantity of Coal, in Standard Tonnes delivered during

the Operating Year upto the end of the Month (excluding Deemed Delivery).

RF = The quantity of Coal, in Standard Tonnes that would have

been purchased by the Buyer but for the occurrence of Force Majeure events affecting the Buyer and/or the Seller during the operating year upto the end of the month.

(A-3) The total amounts payable as Capacity Charges by the Buyer shall be

assessed on the basis of the cumulative Failed Quantity and the cumulative Required Quantity from the beginning of the relevant Operating Year upto the end of the Month under consideration. The actual amount payable shall


24

be the difference between the total amount so calculated and the total amount already paid during the year upto the end of the previous Month. If the difference is negative, the same shall be refunded by the Seller to the Buyer within five (5) days.

(B) After the expiry of each Month the Seller shall calculate and notify to the

Buyer the Capacity Charges payable by the Buyer to the Seller for the Failed Quantity calculated in accordance with Clause 3.12(A-2) above and the Buyer shall pay to the Seller such amount of Capacity Charges within five (5) days of such notification. In case of any dispute on whether such Capacity Charges were due or payable the Buyer shall nevertheless pay such Capacity Charges in accordance with this Clause. Any excess payment made by the Buyer shall be refunded by the Seller upon determination of the same, together with interest from the first day of the month following the month in which the excess payment has been made, at the Cash Credit Rate prevailing on such date plus [ ● ] % per annum.

3.13 The Liquidated Damages / Capacity Charges shall be paid by the Seller/Buyer within five (5) Business Days of receipt of the claim raised in accordance with Clauses 3.8, 3.9, 3.10, 3.11 and 3.12 as the case may be. If the Seller / Buyer fails to pay the Liquidated Damages / Capacity Charges except to the extent the claim shows a manifest error, within the aforesaid time, the Buyer / Seller shall be entitled to set off such amount as may be due and owing to it from the other Party. In case of any dispute on whether such sums were due and payable, the concerned Party shall nevertheless pay the sum claimed and a dispute shall be raised in terms of Clause 11. If in terms of the award of the Arbitrator, any sum is to be refunded by one Party, that party shall refund the sum along with interest thereon at the Cash Credit Rate prevailing on such date plus [ ● ] per annum, payable from the date the sum was paid.


25

CLAUSE - 4

QUANTITY AND DELIVERY OF COAL 4.1 Contract Quantity The "Contract Quantity" of Coal agreed to be supplied shall be [ • ] Standard Tonnes per Operating Year of 12 calender months provided that where an Operating Year is of less than 12 months, the Contract Quantity shall be prorated accordingly. 4.2 Minimum Required Quantity (MRQ) "Minimum Required Quantity" shall be cumulative quantity @ [ Quantity of coal determined in Standard Tonne equivalent to ACQ x 0.8 ÷ 365 ] of Coal per day in an Operating Year upto the relevant day from the beginning of such Operating Year, and the Daily Minimum Required Quantity (DMRQ) shall be [ Quantity of coal determined in Standard Tonne equivalent to ACQ x 0.8 ÷ 365 ]. 4.3 First Delivery Date

A. Not later than 5 days from Effective Date, both parties, shall determine a mutually agreeable 3 Month period “Target Start Period” within a time period of 18 month from the Effective Date for commencement of coal supplies. In the event that the Parties are not able to agree on such 3-Month period the later of the 3 month period suggested by either party shall prevail. The actual date of coal delivery at the Delivery Point by the Seller during the mentioned 3 month period shall be the “First Delivery Date”. In case there is no coal supply by the Seller at the Delivery Point during this 3 month period owing to reasons other than Force Majeure the last date of such 3 month period shall be deemed to be the First Delivery Date and performance obligations of both the Parties in accordance with the provisions of this Agreement shall be applicable thereafter

B. In case of Force Majure during the target start period and the affected party

provides documents to other party’s satisfaction establishing the Force Majeure period, then the target start period shall stand extended by the number of days for which Force Majure has occurred. Such extension due to Force Majure however shall not exceed a total of 180 days


26

4.4 Build – Up Period

A. Build-Up Period shall commence immediately after the First Delivery Date. The Build-Up Period shall be a period of 1 Year from the First Delivery Date.

B. The Purchaser shall 12 months before the last date of Target Start Period

indicate the firm monthly coal quantities for a period of 12 months as per Annexure 4. The total of such scheduled quantities in the 12 month period shall be the Contract Quantity for the first contract year. The total of monthly quantities under the Build- Up Period shall however not exceed the Contracted Quantity as defined under Clause 4.1

4.4 Scheduled Quantity 4.4.1 Attached as Annexure - 4 is a schedule of Buyer's monthly requirement of

Coal, in Standard Tonnes, ("Scheduled Quantity" or "SQ") for the entire term of this Agreement from the First Delivery Date including the Build-Up Period Quantities.

4.5 Required Quantity (A) The quantity of Coal that the Seller shall be required to deliver to the Buyer

for each Month shall be equal to the Required Quantity calculated as follows :-

RQ=(SQ ± VQ) ± SV Where : RQ - The Required Quantity of Coal, in Standard Tonnes, for such

Month. SQ - The Scheduled Quantity for such month. VQ - The Varied Quantity of Coal in Standard Tonnes, requested by

the Buyer in a Notice of Quantity Revision delivered in accordance with and subject to provisions of Clause 4.6

SV - Seller’s variance in accordance with Clause 4.8.1(A). 4.6 Notice of Quantity Revision In the event the Buyer desires the Seller to deliver a quantity of Coal during any Month in an Operating Year which is greater or lesser than the Scheduled Quantity

Comment [R11]: This takes care of merchants generation profile?


27

for such Month, the Buyer shall deliver a written notice (the "Notice of Quantity Revision") to the Seller in accordance with this Clause, informing the Seller of the increase/decrease in the Scheduled Quantity (the "Varied Quantity"), provided: (A) The Notice of Quantity Revision shall be delivered at least sixty 60 days

prior to the first day of the Month in which such Coal is to be delivered, (B) The Varied Quantity (VQ) shall not exceed 10% of the Scheduled Quantity

in any Month provided that in the Months of July, August and September the Required Quantity shall not exceed the Scheduled Quantity.

(C) The total of all the Required Quantity during any Operating Year shall be

neither less nor more than the Contract Quantity. 4.7 Coal Quantities in Standard Tonnes The Buyer shall indicate its Coal requirements on the basis of Standard Tonnes. A "Standard Tonne" of Coal is that quantity of Coal which has the same heat content as a tonne of Coal with Gross Calorific Value of [ • ] kilo calories per kilogram (equilibrated). Any actual quantity of Coal delivered by the Seller shall be converted to Standard Tonnes by multiplying it by the actual Gross Calorific Value in kilo calories per kilograms (equilibrated) of such quantity of Coal and dividing it by [ • ] 4.8 Sellers Right to Over Supply or Under Supply 4.8.1 Notwithstanding the provisions of Clause 4.6, the Seller may increase or

decrease the Required Quantity of Coal in any Month (Over Supply/Under Supply) in accordance with the following provisions:

(A) Subject to the Clause 4.6(C) the Seller may, upon giving thirty (30)

days prior notice in this regard, increase or decrease the Required Quantity for any Month by a quantity not exceeding 10% of the Required Quantity for that Month (Seller’s Variance);

(B) The Seller shall have unrestricted right to supply Coal so long as the

stocks at the Receiving Yard are less than [ MS ] Tonnes. (C) The Seller, in any case, shall have the right to supply additional

quantity of Coal to the extent necessary to make up the shortfall in supply, if any, in the immediately preceding Month.

(D) The Seller may at any time supply Coal in addition to the quantities

set forth in sub-Clauses (A), (B) and (C), subject to the prior written

Comment [R12]: This is quite long period.

Comment [R13]: Purchase requires 60 days notice. Should be similar for the parties

Comment [R14]: ?? to liberal??. To mitigate B and C , I think we should add a cap of 10% as SV and with consent of buyer addl. Coal only B & C , D qualifies for over supply


28

consent of the Buyer. (E) The Seller has the right to advance delivery of Coal as provided in

Clause 9.5. 4.8.2 The Seller shall be entitled to make over supplies in terms of this Clause

4.8.1 to the Delivery Point or, if the Railways agree, from Alternate Sources provided always that supply from such Alternate Sources shall not result in any additional costs to the Buyer unless such additional costs are to be borne by the Buyer in terms of this Agreement.

4.9.1 Loading and Delivery (A) Prior to requiring the Seller to supply any quantity of Coal, the Buyer shall,

at its own cost, arrange land for the Receiving Yard and the associated rail lines, at which the Coal is to be delivered and provide all facilities that are necessary for accepting the delivery of Coal there at.

(B) Coal shall be deemed to have been duly delivered by the Seller in such

quantities as the Seller delivers at the Delivery Point or, as the case may be, to the Plant or if such Coal is loaded on wagons at Alternate Sources in accordance with the provisions of this Agreement, when loaded and consigned to the Buyer or coal procured by the Buyer persuant to Clause 3.6.

(B-1) The Seller shall give a break - up of the total quantity of Coal

proposed to be supplied for a month or the following month, as the case may be, indicating the quantities of Coal proposed to be delivered from the Linked Coal Mine and the quantities of Coal proposed to be delivered from Alternate Sources in accordance with the provisions of this Agreement.

(B-2) Coal shall be deemed to have been delivered by the Seller in such

quantities (Deemed Delivery)

(i) as the Seller is in a position and entitled to deliver to the Buyer and the Buyer is obliged to accept in accordance with the provisions of Clause (B-1) above but which the Buyer fails to accept and/or

(ii) in case the Buyer refuses to accept at the Plant supply of Coal

from Alternate Sources or from Other Sources in terms of this


29

Agreement and/or

(iii) as the Seller would have delivered if dispatches had not been suspended by the Seller pursuant to Clause 7.8 and/or

(iv) as the Seller is able and offers to deliver two and a half times

the Daily Required Quantity {(RQ+OS) / No. of Days of month} but which the Buyer defaults to accept at the Delivery Point even though the stocks at the Receiving Yard/Plant are less than [ MS ] tonnes.

Provided however, that failure of the Buyer to accept Coal because of

any event of Force Majeure affecting the Buyer shall not be considered as Deemed Delivery.

(B-3) The quantity of Deemed Delivery for the purpose of (B-2) shall be

determined as under:

RQ + Over Supply The quantity actually delivered ------------------------- (minus) - and accepted by the Buyer as No. of Days of the Month per Clause 4.9.1(B). Provided however, (i) when the above results in negative, the Deemed Delivery shall be

taken as zero. (ii) Actual Deliveries plus Deemed Delivery during a month shall not

exceed {[ MS ]Tonnes minus Opening Stock of the month) + (Required Quantity) + OS}

(iii) Actual Deliveries plus Deemed Delivery during an operating year

shall not exceed {(Contract Quantity) + [ MS ] Tonnes minus Opening Stock of the year)}

Explanation: "Opening Stock" refer to stocks at the Receiving Yard and. “Over Supply” refers to additional quantities in terms of

clauses 4.8.1(B) and 4.8.1(C). (C) Delivery Arrangements - It shall be the sole responsibility of the Buyer to

provide for loading and transportation of Coal from the Delivery Point to the Plant. Where the Buyer undertakes loading at the Delivery Point the Seller shall within 5 days reimburse to the Buyer an amount at the rate of [ • ]% of the Base Price upon receipt of an invoice from the Buyer.

Comment [R15]: Over Supply due to a. less than MS Tonnes at receiving yard b. shortfall in previous month c. oversupply with consent of buyer


30

(D) In case of supply of Coal at a point other than the Delivery Point, no credit for such loading shall be given to the Buyer in the Base Price as per sub-Clause (C) above and loading in the wagons, where required, shall be undertaken by the Seller .

(E) Delivery Procedures - Detailed operational procedures to ensure smooth

delivery to and loading of Coal from the Delivery Point shall be worked out and agreed in writing between the authorised representatives of the Parties. These procedures shall also lay down the required documentation and the procedures for determination of the quantity that the Seller failed to deliver or the Buyer failed to accept and the quantity considered as Deemed Delivery as stipulated in Clauses (B-1) and/or (B-2) above within the principles laid down in this Agreement.

(F) Notwithstanding the provisions of Clause 4.9.1(B-1), if at any time the

Receiving Yard Stock is less than [ MS }Tonnes, the Seller shall be at liberty to make deliveries on a day to the extent of two and a half times the Daily Required Quantity. However so long as the Receiving Yard Stock is not less than { MS } Tonnes, the daily supply will not exceed a quantity which is (RQ + OS)/ number of days of the month .

4.9.2 (A) The Buyer shall at its own cost, install and maintain an Automatic

Mechanical Sampling System. Such sampling system shall be installed at such a point immediately after the Receiving Yard Hopper as would enable sampling of all Coal delivered by the Seller, before being dumped on Receiving Yard or any other storage facility or into wagons. The sampling will be done jointly as per provisions contained in Clause 5.

(B) The Seller shall at its own cost, install and maintain electronic Weighbridges

within the premises of the Linked Coal Mine and in proximity to the Receiving Yard Hopper for weighing the Coal loaded in the trucks. The Weighbridges shall be liable to joint inspection.

4.10. Measurement of Quantity (A) The quantity of Coal delivered at the Delivery Point shall be as weighed on

the Seller’s electronic Weighbridges installed in accordance with Clause 4.9.2(B). A representative of the Buyer may be present to witness the weighment. The weight so recorded by the Seller in the presence of a representative of the Buyer (or, in his absence, if such representative is not present at the time of such weighment) shall be final and conclusive for the purpose of deciding the quantity of Coal delivered, subject to adjustment

Comment [R16]: Alternative source loading by CIL without prices , else x% of base price


31

towards Superficial Moisture provided under Clause 5.1(E). If all weighbridges fail, weight will be determined on mutually agreed volume to weight conversion basis.

(B) The Seller shall maintain Weighbridges in accordance with the Weights and

Measures Standards. The Weighbridges shall be inspected, tested, certified and stamped by the statutory authority, in accordance with applicable laws, at the Seller’s expense. A copy of the Inspectors report verifying such inspection, testing and certification shall be furnished by the Seller to the Buyer. The Seller shall, at any time and upon written demand of the Buyer allow access to the Weighbridges for the purpose of inspection and testing of the Weighbridges by the statutory inspection authority which shall be carried out at the Buyer’s own cost and expense.

(C). If, as a result of any inspection by the statutory inspection authority, the

Weighbridge of the Seller is found to be in error in excess of the tolerances set out in the Weights and Measures Act or otherwise provided by law (or if no such tolerance is provided by law, then in excess of the tolerance provided by BIS or if not provided in BIS, then as established in the manufacturers' specification), then the Weighbridge shall not be used for weighing shipments of delivered Coal till the defective Weighbridge is rectified, certified and stamped.

(D). The Seller shall maintain standard cheese weights and whenever the Buyer

so desires, the accuracy of the Weighbridges shall be demonstrated by the Seller within three hours of such demand and the provisions of Clause 4.10 (C) shall be applicable mutatis mutandis.

(E) In case of supply of Coal from an Alternate Sources, sampling and

weighment would be on the basis of procedures used by the Seller for such dispatches from such Alternate Sources.

4.11 Title And Risk Of Loss A) The Seller warrants that the Seller shall have good title to all Coal delivered

(excluding coal deemed to have been delivered by the Seller in accordance with Clause 3.6) to the Buyer hereunder, its transfer is lawful, and at the time of delivery, such Coal will be free and clear of any lien, claim, demand, security interest or other encumbrance.

B) Title to and risk of loss with respect to the Coal supplied from the Linked

Coal Mine shall pass from the Seller to the Buyer at the Weighbridge. Notwithstanding that the title to and risk of loss of coal purchased from the Linked Coal Mine passes at the Weighbridge, the Seller shall be obliged to


32

deliver such coal at the Delivery Point. C) Title to and risk of loss with respect to Coal supplied by the Seller from an

Alternate Sources by rail (other than at the Delivery Point) shall pass from the Seller to the Buyer upon the issuance of a forwarding note after such Coal is loaded on to the wagons at the rail siding of the relevant Alternate Sources. Title to and risk of loss with respect to coal supplied by the Seller from Alternate Sources by road to the Delivery Point shall, where such supply is made at the request of the Buyer, pass when the Coal is loaded on the trucks and weighed at the weighbridge of such Alternate Sources and where such supply is made at the option of the Seller, shall pass on delivery of such Coal at the Delivery Point. If, however, such Coal is delivered to the Plant by road at the option of the Seller, the title to and risk of loss of such Coal shall pass from the Seller to the Buyer when unloaded at the unloading point at the Plant Provided that if the Seller agrees to deliver such Coal to the Plant at the request of the Buyer title to and risk of loss of such Coal shall pass when the Coal is loaded on the trucks, and weighed at the weighbridge.

4.12 Delivery Records :

Each truck -load of Coal delivered at the Receiving Yard Hopper shall be evidenced by challans provided in two copies, one copy of which shall be received by the Buyers representative at the Delivery Point. At the closing of the day a jointly signed report showing the challan - wise quantity delivered by the Seller shall be prepared. The jointly signed reports shall be final for purposes of weight of Coal delivered to the Delivery Point, subject to adjustments for moisture content in terms of Clause 5.1(G). For all other dispatches by road, delivery shall be evidenced by a challan for each truck load prepared by the Seller after weighment (in the presence of a representative of the Buyer if present) at the points at which risk and title passes to the Buyer and subject to adjustment for moisture content in terms of Clause 5.1 (G). For dispatches effected by rail from the Alternate Sources, the railway receipt shall be final for the purposes of weight of Coal delivered subject to adjustments for the moisture content in terms of Clause 5.1(G).

_____________________________

Comment [R17]: What about rail ?


33

CLAUSE 5

QUALITY OF COAL

5.1. Quality (A) (i) The agreed characteristics of Coal to be delivered by the Seller under this

Agreement are at Annexure - 9. (ii) Coal deliverable to the Buyer under this Agreement is categorised in 3(three)

categories as follows:-

GCV (On Equilibrated Basis)

i/ Incentive Range Above […..]K.Cal/Kg. } ii/ Normal Range […..] to [….]K.Cal/Kg. } iii/ Rebate Range Below […] K.Cal/Kg. }

(B) For purposes of pricing and for determination of grade of delivered Coal,

Useful Heat Value shall be the determining factor.

Notwithstanding any change by the applicable Governmental authority in the manner of calculating heat value for purposes of the Price Notification, the formula set out in the definition of Useful Heat Value shall for the purpose of this Agreement remain valid and continue to apply.

(C) Both moisture and ash shall be determined after equilibrating at sixty (60)

per cent relative humidity and forty (40) degree C temperature as per relevant clauses of Bureau of Indian Standard Specification No.IS:1350(Part I) 1984.

(D) Delivered Size - Coal delivered hereunder shall contain Coal of top size

limited to 250 mm. If the Buyer notifies the Seller that a significant quantity of delivered Coal during the course of a day appears to be in excess of 250 mm, then upon the Buyer’s request the Seller shall immediately commence testing the Coal prior to delivery to determine the size of the Coal to be delivered. Testing shall be done as per IS436 (Part 1/Sec2) - 1976. If such testing indicates that the size of more than 5% of the Coal to be delivered is in excess of 250 mm on a continuous basis (which for purposes of this Clause shall mean for all deliveries during a single 24 hour period), then the Seller shall take immediate measures to reduce the size of Coal to be delivered to the maximum size of 250mm. Comment [R18]: Shouldn’t there be

any penalities?


34

(E) Not used (F) Stones and Foreign Material - All Coal delivered hereunder shall be

substantially free of stones in excess of 250 mm and all metal objects. The Seller shall use reasonable efforts to remove all stones, extraneous to the Coal. If, in the Buyers opinion, the presence of stones causes operating or maintenance problems with the Plant, then, upon the Buyers request, the Buyer and the Seller shall meet and use reasonable efforts to devise a mutually acceptable plan for increasing the effectiveness of the Sellers efforts at removing stones from the Coal.

(G) Superficial Moisture - The moisture content of delivered Coal shall be

measured as per BIS specification no 1350 (Part I) 1984. The difference between total moisture and the moisture after equilibration of the Coal at 60% relative humidity and 40°C temperature determined as per the same BIS specification shall be called "Superficial Moisture". The weighted average of the Superficial Moisture of all Coal delivered during a day, weighted by the weight of Coal to which each sample relates shall be the "Average Superficial Moisture"(ASM). If the ASM of the Coal delivered to the Buyer hereunder in a day, as measured at the point of sampling, exceeds 6%, then the Actual Deliveries for such day shall be deemed to have been reduced by a percentage equal to the difference between ASM and 6%. If the ASM of the Coal delivered to the Buyer hereunder in any day is less than 6%, then the Actual Deliveries for such day shall be deemed to have been increased by a percentage equal to the difference between 6% and the ASM. Such reduction or increase in weight shall be reckoned for the purposes of the Final Invoice and for determining the quantity of Coal actually supplied by the Seller with respect to any obligation to supply under this Agreement. Superficial Moisture (SM) shall be determined on a daily basis. This Clause 5.1(G) shall not be construed to prohibit the sprinkling of water on the Coal for the purpose of dust suppression. The Buyer agrees that no water or any other substance shall be added to the Coal or quality of Coal interfered with after the Coal has been delivered into Receiving Yard Hopper and until the Coal has been sampled. After sampling of the Coal the Buyer shall be free to deal with the Coal, in any manner the Buyer deems fit.

5.2 Measurement of Quality (A) General - The determination of ash and moisture shall be carried out on

samples of Coal as per procedure laid down in the Indian Standard Specification No. IS 1350 (Part I) 1984. Determination of Gross Calorific Value shall be carried out in accordance with procedure laid down in BIS-1350 (Part II) 1970 or any subsequent revision thereof.

Comment [R19]: No compensation for stones?


35

All Coal supplied shall subject to Clause 4.10(E) be sampled and analysed jointly by the Parties in accordance with the BIS Standards # 436 and 1350, as revised from time to time, or as otherwise mutually agreed. Sampling shall be carried out, through the on line automatic mechanical sampler to be provided and installed by the Buyer in terms of Clause 4.9.2(A), and the same shall be maintained by the Buyer. Each Party shall have the right to have a representative present at any and all times to observe such sampling and analysis. In case the representative of the Buyer or of the Seller fails to be present at the time of sampling and/or analysis, the other Party may continue to draw the sample and such sample so obtained, shall be final and binding, on both Parties (subject to the provisions of Clause 5.2(H) hereof). The detailed procedure within the prescription of BIS 436 or any other jointly agreed method shall be worked out and agreed to in writing between the Parties, at least 90 (ninety) days prior to the First Delivery Date. If the sampler is out of order, samples shall be collected manually at the mine end at the point of loading of trucks.

Whenever any repair or maintenance work of the sampler is undertaken by the Buyer the Buyer shall inform the Seller at least one day in advance and the Seller shall have the right to be present and witness such repair/maintenance. If the Seller so requires, a joint Bias test shall be undertaken in accordance with BIS.

(B) Joint Laboratory - The Seller and Buyer shall jointly construct and equip a laboratory (the "Laboratory") in the proximity of the Linked Coal Mine, which shall be constructed and equipped in accordance with generally accepted industry standards which shall be exclusively used for the purposes of this Agreement. Representatives of both the Buyer and the Seller shall have the right to be present while samples are analysed, and the result shall be binding on both Parties (subject to the provisions of Clause 5.2(H) hereof). The Laboratory shall be manned by suitable technical and other personnel made available by the Seller for this purpose. All capital costs for construction of the Laboratory shall be as mutually agreed by the Buyer and the Seller in advance and shall be shared equally between the Parties. The Seller shall initially incur the costs of constructing and equipping the Laboratory and shall be reimbursed by the Buyer for the Buyers share of actual costs (not to exceed the agreed upon costs, as the Parties may mutually agree to revise from time to time) within thirty (30) days after presentation by the Seller to the Buyer of invoices documenting such costs. Actual operating costs (other than sampling costs) shall be shared equally by the Parties, and the Buyer and the Seller shall mutually pay its share in the first week of the Month. The


36

Seller shall retain general administrative control of the Laboratory and shall be responsible for administrative matters. All decisions to incur capital expenses shall be made jointly by the Seller and the Buyer. Results of all analysis shall be made available by the Laboratory to the Parties as soon as possible after analysis is complete.

(C) Coal Sampling - A representative sample of all Coal delivered during each

day (24 hours) shall be taken in accordance with the BIS Standards # 436 or as mutually agreed, in accordance with Clause 5.2(A). All expenses of Coal sampling shall be the responsibility of the Buyer.

(D) Splits - Collection of the samples shall be done by on-line Automatic

Mechanical Sampling System in accordance with Clause 4.9.2 (A) or manually, as the case may be, as per BIS Standards and the final laboratory sample of Coal will be divided into two splits both of which will be forwarded to the Laboratory. One split (the "First Split") shall be analysed by the Laboratory for the purpose of providing the Daily Composite Specification Certificate. The second split of each sample (the "Second Split") shall be jointly sealed and placed in a suitable air-tight container, properly marked so as to provide unquestionable identification, and retained by the Laboratory for fifty (50) days unless a dispute has been raised in accordance with Clause 5.2(H) in which case it shall be dealt with in terms of Clause 5.2(H).

(E) Daily Composite Specification Certificate - The Laboratory shall, each

day analyse the First Split for Ash and moisture, Gross Calorific Value pursuant to Clause 5.1(A) hereof, and for Superficial Moisture pursuant to Clause 5.1(G) hereof. The Laboratory shall deliver to the Buyer, with a copy to the Seller, the results of each such analysis in a "Daily Composite Specification Certificate" within seven (7) days of the taking of each sample of Coal.

(F) If either Party disputes the results of the testing of the First Split, the

reason for such dispute shall be recorded in the Laboratory Register as soon as the results of testing are available and in any event within two days thereof and the personnel from each Party involved in the dispute shall consult with senior management of their respective companies regarding the reason for disagreement, and such senior management members shall consult with each other to attempt to resolve the dispute. In case the dispute remains unresolved for a period of three (3) working days from the date of recording the dispute, the Second Split shall be tested by or before fifth working day of recording the dispute in the presence of such senior management officials, and the results of such test of the Second Split shall be binding on the Parties; provided, however, that


37

either Party, no more than once per Month, may elect to have a portion of the Second Split of one sample only (after testing in the Laboratory of the Second Split as specified above and if the dispute is not resolved) sent to an independent Laboratory by or before the third working day of the following Month, as mutually determined by the Parties for analysis, the result of which shall be final and binding on the Parties. Thereafter, the Parties shall immediately meet and seek in good faith to resolve any problems associated with the operations of the Laboratory that have resulted in such Party’s request for use of an independent Laboratory. In the event the results of the testing of the independent Laboratory are not received by the date that is two (2) days prior to the deadline for delivery of the Fortnightly Specification Certificates, as set out in Clause 5.2(G) hereof then, for the purpose of preparation of such Fortnightly Specification Certificates, the Laboratory results of the test of the Second Split shall be used and the price and quantity shall be determined on such basis. If however, based on the results of analysis carried out by the independent laboratory, it becomes necessary to revise the Fortnightly Specification Certificates, accordingly a Revised Fortnightly Specification Certificates shall be issued by the Laboratory, which shall then form the basis for raising claim for refund/additional payment by the concerned Party as due.

(G) All certificates prepared by the Laboratory pursuant to the provisions of this Clause 5 shall be handed to the representatives of the Parties at the colliery.

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________


38

CLAUSE - 6 PURCHASE PRICE FOR COAL

6.1 As Delivered Price The "As-Delivered Price" for Coal delivered hereunder shall be the sum of the Base Price, Sizing Charges, Transportation Charges upto Delivery Point, Statutory Charges and Risk Premium Charges. The As-Delivered Price is subject to adjustments in accordance with the provisions of this Agreement. 6.2 Base Price of Coal The Base Price of different Grades of Coal as at the Signature Date shall be as set out in Table - I of Annexure - 6. The Base Price of Coal includes loading charges and transportation charges upto 3 (three) kms. 6.3 Sizing Charges The Buyer shall pay Sizing Charges at the rate on the Signature Date as set out in Annexure - 6 for limiting the top size of Coal upto [ ● ] through manual facilities or mechanical means. 6.4 Transportation Charges Where Coal is transported by the Seller beyond a distance of 3 (three) kilometers to the Delivery Point, the Buyer shall pay to the Seller, Transportation Charges (the "Transportation Charges") for such Coal as set out in note 3 of Annexure - 6. 6.5 Statutory Charges The "Statutory Charges" shall comprise royalties, cesses, duties, taxes, levies and without limitation all other payments of a similar nature, levied by any state and/or central government, local or other authorities and other statutory bodies, or taxes and levies in the nature of excise or sales tax which are paid or payable on the production, sale, dispatch or transportation of Coal. The Statutory Charges shall be payable at the rates applicable or become applicable as on the date of delivery of Coal and shall be part of the Provisional Invoice. 6.6 Revision of "As Delivered Price" (A) In the beginning of every year (1st April) the price for one year’s supply shall

be decided by negotiation. The market price shall form the basis of such negotiation.

Comment [R20]: Does price gets revised in between?


39

(B) The Statutory Charges shall be payable at the rates and from the date they

are made applicable by the Statutory Authorities and shall stand revised accordingly.

(C) All references of "As Delivered Price" on a particular date shall be the "As

Delivered Price" as revised upto that date. 6.7 Quality Incentive and Rebate (A) The Buyer shall pay Quality Incentive Charge with respect to Coal delivered

falling in Incentive Range and the Seller shall pay Rebate Charge for Coal delivered falling in Rebate Range on the basis of daily average of quality and in the manner and extent shown in Annexure - 8.

(B) The Base Price shall be adjusted upwards or downwards depending upon

the daily average of GCV of delivered Coal in accordance with (A) above to allow for the Quality Incentive Charge or Rebate Charge as permissible.

6.8 Risk Premium Charge The Buyer shall pay a risk premium charge (the "Risk Premium Charge") to the Seller in consideration of the Sellers obligations under this Agreement and the liability for damages . The Risk Premium Charge shall be [ ] of Base Price per Tonne of Coal delivered by the Seller including supplies deemed to have been made by the Seller to the Buyer in terms of this Agreement but excluding for avoidance of doubt coal purchased by the Buyer from Other Sources in accordance with clause 3.6. 6.9 Quantity Bonus (A) The Buyer agrees to pay to the Seller a bonus (the "Quantity Bonus") at the

rate of 5% of the Base Price per Tonne of Coal for the quantity of Coal supplied by the Seller in excess of 90% of the Contract Quantity provided that Quantity Bonus as aforesaid on Coal that is supplied by the Seller in excess of the Contract Quantity will be payable only where such supply has been made either (i) at the request of the Buyer or (ii) to maintain a minimum coal stock of [ MS ] Tonnes at the Receiving Yard /Plant as provided in Clause 3.5.

(B) Within fifteen (15) days of the end of each Operating Year, the Seller

shall calculate and invoice the Buyer for payment of the Quantity Bonus

Comment [v21]: The Incentive charge can be made similar to SEB Model


40

and the Buyer shall pay such amount within five (5) days of receipt of the invoice. In case of any dispute on whether such Quantity Bonus was due or payable, the Buyer shall nevertheless pay such Quantity Bonus in accordance with this Clause. Any excess payment made by the Buyer shall be refunded by the Seller upon determination of the same, together with interest from the first day of the month following the month in which the excess payment has been made, at the Cash Credit Rate prevailing on such date plus [ ● ] per annum.

_______________________________


41

CLAUSE - 7 PAYMENTS AND RECORDS

7.1 Payment Advance and Bank Guarantee (A) Not later than sixty days prior to the First Delivery Date the Buyer shall; (i) deposit with the Seller an amount of advance equal to the estimated As-

Delivered Price of one twenty fourth (1/24) of the Contract Quantity for a full Operating Year “the Advance” and

(ii) furnish in favour of the Seller three bank guarantees (the "Bank

Guarantees") representing, amounts equivalent to the As Delivered Price of 5/365th, 5/365th and 6/365th respectively of the Contract Quantity.

(B) Following the revision of Base Price in terms of Clause 6.2, within 15

(fifteen) days thereafter the Advance and the Bank Guarantee shall be adjusted by the Buyer or Seller, as the case may be, based on the revised Base Price. The Buyer shall keep the Bank Guarantee current by timely annual renewals under intimation to the Seller, for so long as this Agreement is in force.

(C) The Advance shall be refundable on termination of this Agreement after

adjustment of any amount due and payable to the Seller by the Buyer. The Seller shall discharge the Bank Guarantees on termination of this Agreement after recovery/adjustment of any amount due and payable to the Seller by the Buyer.

7.2 Billing Commencing upon the First Delivery Date (or earlier if deliveries have

commenced in accordance with Clause 9.5) by 5th, 10th, 15th, 20th 25th and last day of each Month, the Seller shall deliver to the Buyers nominated representative at the Linked Coal Mine, a provisional invoice (the "Provisional Invoice") showing the payment due, which shall be equal to the sum of the applicable As Delivered Price, calculated on a per Tonne basis for the grade of Coal declared by the Seller for the Linked Coal Mine in accordance with applicable law, multiplied by the weight of the Coal in Tonnes (and not Standard Tonnes) actually delivered ( excluding any Deemed Delivery of Coal ) by the Seller during each Billing Period after adjustment in terms of Clause 2.7. For the avoidance of doubt, the As Delivered Price shall not be payable for Deemed Delivery of Coal.

Comment [R22]: Alternatively , we may also give LC with amount equivalent to XXXXX days coal value

Comment [R23]: Pertain to EMD And CA, Kindly change the referencing


42

7.3 Payment (A) On presentation of a Provisional Invoice, the Buyer shall make payment in

full as per such Invoice within 3 (three) Business Days ("Due Date"), save to the extent of any error manifest on the face of such Invoice.

(B) All the payments shall be made through Demand Draft / Banker’s cheque/

Electronic Fund Transfer payable at ([•] to be stated by the Seller. In the event of non-payment within the aforesaid stipulated period, the Purchaser shall be liable to pay interest in accordance with Clause 7.6.

(C) All payments made by the Buyer shall be appropriated by the Seller in the

following order of priority:

i. towards interes on delayed payment under 7.6, payable by the Buyer, if any;

ii. towards earlier unpaid invoice , if any; and iii. towards the then current Invoice.

7.4 Monthly Adjustments (A) Within 10 days following the last day of each Month, the Seller shall deliver

to the Buyer a final invoice (the "Final Invoice") for the Coal delivered during such Month. The Final Invoice shall be suitably adjusted as per the Fortnightly Specification Certificates with respect to the weight of Coal in terms of Clause 5.2(G) and with respect to Incentive Charge / Rebate Charge in terms of Annexure - 8 and the grade of coal in terms of daily composite certificate. The Final Invoice shall also include Capacity Charges calculated in terms of Clause 6.9 and such other payments, as are due in terms of this Agreement.

(B) Amounts due and payable by the Buyer to the Seller in terms of the Final

Invoice shall be paid to the Seller within seven (7) Business Days of presentation of the Final Invoice.

(C) Amounts due and payable by the Seller, if any, in terms of the Final Invoice

shall be paid by the Seller within seven (7) Business Days after the date of such Final Invoice or may be adjusted from the next delivered Provisional Invoice.

7.5 Yearly Adjustments (A) Within 15 (fifteen) days of the end of an Operating Year, the Seller shall

deliver to the Buyer an Invoice reflecting adjustments as may be necessary,


43

with respect to quantity of Coal delivered, Capacity Charges, Incentive Charge and any other levies as are due and payable under this Agreement (the "Adjustment Invoice").

(B) Amounts due and payable by the Buyer/Seller in terms of the Adjustment

Invoice shall be paid within the time and in the manner specified in Clause 7.4(B) & (C).

7.6 Interest In respect of payments not made by Buyer/Seller by the Due Date, the Defaulting Party shall be liable to pay interest at the Cash Credit Rate. If the default continues beyond 30 (thirty) days, then the Defaulting Party shall be liable to pay an additional levy at [ ● ] of the said Cash Credit Rate for the period beyond 30 (thirty) days from the Due Date. 7.7 Reconciliation of Invoice The Buyer shall have the right to point out any discrepancy or other objection to a Provisional Invoice, but only after making payment. In such event, the Seller shall make efforts to resolve the issue as quickly as possible. In the event the discrepancy is resolved mutually, the Seller shall make refund as is admissible together with interest from the relevant Due Date at the Cash Credit Rate prevailing on such Due Date. Similarly, with respect to sums due to the Seller, the Buyer shall be liable to pay interest likewise. Disputed Invoices (A) If a Party does not dispute a Provisional Invoice or a Final Invoice raised by

the other Party within thirty (30) days of receiving it, such bill shall be taken as conclusive.

(B) The Buyer shall have the right to point out any discrepancy or other

objection to the invoices raised by the Seller, but only after making payment. (C) If a Party disputes the amount payable under a Provisional Invoice or a

Final Invoice, as the case may be, that Party shall, within thirty (30) days of receiving such bill, issue a notice (the "Invoice Dispute Notice") to the invoicing Party setting out:

i) the details of the disputed amount; ii) its estimate of what the correct amount should be; and iii) all written material in support of its claim.


44

(D) If the invoicing Party agrees to the claim raised in the Invoice Dispute

Notice issued pursuant to sub clause 7.7(C), the invoicing Party shall revise such bill within seven (7) days of receiving such notice and if the disputing Party has already made the excess payment, refund to the disputing Party such excess amount within fifteen (15) days of receiving such notice. In such a case excess amount shall be refunded along with interest at the same rate as pursuant to the Clause 7.6 which shall be applied from the date on which such excess payment was made to the invoicing Party and upto and including the date on which such payment has been received.

(E) If the invoicing Party does not agree to the claim raised in the Invoice

Dispute Notice issued pursuant to Article 7.7.(C), it shall, within fifteen (15) days of receiving the Invoice Dispute Notice, furnish a notice to the disputing Party providing:

i) Reasons for its disagreement; ii) Its estimate of what the correct amount should be; and iii) All written material in support of its counter-claim.

(F) Upon receipt of notice of disagreement to the Invoice Dispute Notice under

sub clause 7.7.(E), authorised representative(s) or a director of the board of directors/member of board of each Party shall meet and make best endeavours to amicably resolve such dispute within fifteen (15) days of receiving such notice of disagreement to the Invoice Dispute Notice.

(G) If the Parties do not amicably resolve the Dispute within fifteen (15) days of

receipt of notice of disagreement to the Invoice Dispute Notice pursuant to Article 7.7.(E), the matter shall be referred to Dispute Resolution in accordance with Article 11.

(H) If a Dispute regarding a Provisional Invoice or a Final Invoice is settled

pursuant to Article 7.7 or by Dispute resolution mechanism provided in this Agreement in favour of the Party that issues a Invoice Dispute Notice, the other Party shall refund the amount, if any incorrectly charged and collected from the disputing Party or pay as required, within five (5) days of the Dispute either being amicably resolved by the Parties pursuant to Article 7.7.(F) or settled by Dispute resolution mechanism along with interest at the same rate as pursuant to the Clause 7.6 from the date on which such payment had been made to the invoicing Party or the date on which such payment was originally due, as may be applicable.


45

7.8 Non-Payment of Dues (A) Notwithstanding other provisions of this Agreement, when a payment with

respect to a Provisional Invoice, Final Invoice or Adjustment Invoice is not paid by the Buyer by the Due Date (Outstanding Payment), the Seller shall have the right under intimation to the Buyer

i) to adjust the Outstanding Payment against the Advance or such

portion of it as is available; ii) to invoke one or more of the Bank Guarantees to the extent

necessary to meet the Outstanding Payment; iv) to suspend delivery of Coal after giving not less than 48 hours'

Notice in this behalf to the Buyer before exhaustion of the Bank Guarantees. The Seller shall be entitled to give such Notice as soon as the aggregate of the outstanding sum and the value of the quantity of Coal due to be delivered during the Notice period is equal to or more than the value of the subsisting Bank Guarantees.

(B) In the event of suspension of delivery of Coal pursuant to this Clause, the

Seller shall have the right to continue the suspension as long as the Advance and the Bank Guarantees have not been fully replenished as required in terms of Clause 7.1(A) and deliveries are resumed as provided hereinafter. Seller shall resume deliveries as soon as possible but not later than 48 hours of replenishment of Advance or receipt of Bank Guarantees, as the case may be.

7.9 The Seller shall be relieved of its obligations to supply Coal under this

Agreement during the period deliveries are suspended pursuant to Clause 7.8. However, during such period the obligations of the Purchaser under this Agreement shall be deemed to remain in full force

7.10 Notice In the event either Party owing payment of any amount to the other Party under the terms of this Agreement defaults in making such payments, the Party not in default shall serve a notice to the Party in default and the matter shall be dealt with in accordance with Clauses 7.8 and Clause 9, as the case may be.

_______________________________

Comment [R24]: Need to add LC clause , if we add LC clause as payment security.


46

CLAUSE - 8

FORCE MAJEURE 8.1 Definition "Force Majeure" shall mean any event or circumstance or combination of events or circumstances beyond the reasonable control of either Party (the "Affected Party") and such event or circumstance cannot by exercise of reasonable diligence be prevented or caused to be prevented; cannot despite the adoption of reasonable precautions and reasonable alternative measures (where sufficient time to adopt such precautions or alternative measures before the occurrence of such event or circumstance is available) be prevented; and which materially and adversely affects such Party’s performance of its duties or obligations under this Agreement. Force Majeure circumstances and events shall include the following events to the extent that they or their consequences satisfy the above requirements: (A) the effect of any natural element or other act of God, including but not

limited to any storm, flood, drought, lightning, earthquake, cyclone, volcanic eruption, landslide, typhoon, tornado or other natural disaster;

(B) fire (to the extent originating from a source external to the site), accident,

breakage of facilities or equipment, structural collapse or explosion attributable to a cause other than due to

(1) inherent defects of any equipment; or

(2) circumstances within the reasonable control of the Affected Party or

its contractors; (C) geological conditions that were not reasonably foreseeable as a result of

which construction of the Plant is delayed; (D) industry wide strikes and labor disturbances having a nationwide impact in India

(E) epidemic, plague or quarantine;

(F) any unavailability at the site of the Plant or otherwise where and when

required of equipment, facilities, materials or utilities as a consequence of a Force Majeure;

(G) Force Majeure affecting the performance of the obligations of the


47

contractors of the Buyer under the engineering, procurement and construction contracts for the Plant upto the Commercial Operation Date.

(H) air crash, shipwreck, train crash or failure or delays of transportation of equipment that were not reasonably foreseeable;

(I) acts of war (whether declared or undeclared), sabotage, terrorism or act of

public enemy (including the acts of any independent unit or individual engaged in activities in furtherance of a program of irregular warfare), riot, commotion or disorder except where solely restricted to employees of the Affected Party, mobilisation, requisition, invasion, acts of belligerents or foreign enemies (whether declared or undeclared), blockades, embargoes, civil disturbance, revolution, rebellion or insurrection, exercise of military or usurped power, or any attempt at usurpation of power;

(J) radioactive contamination or ionising radiation from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel, radioactive toxic explosives or other hazardous properties of any explosive nuclear assembly or nuclear components thereof;

(K) the enactment, promulgation, amendment, suspension or repeal of any Applicable Laws after the date hereof;

(L) any delay or direction or order on the part of the Government of India or relevant State Government or denial or refusal to grant or renew, or any revocation, or modification of any required permit or mining lease or governmental approvals provided that such delay, modification, denial, refusal or revocation was not due to a cause attributable to the Affected Party.

(M) Mine fires and inundation where either is caused due to natural causes despite normal precautions in accordance with extant mining practices in India, subsidence, eruption of gases and unforeseen geological disturbances;

(N) any event or circumstance of a nature analogous to the foregoing. 8.2 Burden of Proof In the event that the Parties are unable to agree in good faith that a Force Majeure event has occurred, the Parties shall resolve their dispute in accordance with the provisions of this Agreement. The burden of proof as to whether a Force Majeure event has occurred shall be upon the Party claiming the Force Majeure event.


48

8.3 Effect of Force Majeure If either Party is rendered wholly or partially unable to perform its obligations under this Agreement because of a Force Majeure event, that Party shall be excused from performance of the Agreement to the extent it is affected by the Force Majeure event provided. (A) the Affected Party within 5 (five) Business Days after the occurrence of the

prevention, delay or hindrance in the performance of its obligations due to a Force Majeure event provides written notice to the other Party that such an event has occurred and, within 15 (fifteen) Business Days of the occurrence of such events further notice specifying the particulars of the occurrence, including an estimation of its expected duration and probable impact on the performance of its obligations hereunder provided that where the Affected Party has give notice after the expiry of the aforesaid period of 5 (five) Business Days, the Affected Party shall be excused from performance of the Agreement only from the date of the notice and not from the date of the occurrence of the Force Majeure event;

(B) the Affected Party continues to furnish timely regular reports with respect

thereto during the period of Force Majeure; (C) the Affected Party shall use all reasonable efforts to continue to perform its

obligations hereunder and to correct or cure the event or condition excusing performance as soon as possible;

(D) the suspension of performance shall be of no greater scope and no longer

duration than is reasonably necessitated by the Force Majeure event; (E) the Affected Party shall provide the other Party with prompt notice of the

cessation of the Force Majeure and shall promptly thereupon resume performance hereunder;

(F) the non performance of any obligation of either Party that was required to

be completed prior to the occurrence of the Force Majeure event shall not be excused as a result of such subsequent Force Majeure event;

(G) the occurrence of an event of Force Majeure shall not relieve either Party

from its obligations to make any payment hereunder for performance rendered prior to the occurrence of Force Majeure or for partial performance hereunder during periods of Force Majeure.


49

(H) the Force Majeure event shall not relieve either Party from its obligation to comply with Applicable Laws;

(I) both Parties shall exercise all reasonable efforts to mitigate or limit damages

to each other. 8.4 Savings If the Seller is prevented from supplying Coal due to a Force Majeure event affecting the Buyer, the Seller shall be relieved of his obligation to supply Coal. If Seller is prevented from supplying Coal due to Force Majeure affecting the Seller, (unless required to supply Coal from Alternate Sources pursuant to Clause 3.3) the Buyer shall be relieved from its liability to accept Coal for the duration of the relevant Force Majeure event.


50

CLAUSE - 9 EVENTS OF DEFAULT

9.1 Event of Default An event of default ("Event of Default") under this Agreement shall be deemed to exist upon the occurrence of any one or more of the following events: (A) failure by either Party to make payment of a sum equal to or more than

Material Amount due to the other Party under the Agreement, which failure continues for a period of thirty (30) days after notice of such non-payment, shall be an Event of Default of the Party failing to make such payment;

(B) purchase by the Buyer of any quantity of coal from a supplier other than the

Seller, unless such purchase is in accordance with provisions of this Agreement.

(C) failure by the Seller to supply or failure by the Buyer to accept minimum

[…•… ] Standard Tonnes* of Coal in each of any twelve (12) Months in any continuous period of eighteen (18) Months excluding the first three Months starting from the First Delivery Date ; and

(D) any insolvency, appointment of liquidator (provisional or final),

appointment of receiver of any of material assets of the affected Party, levy of any order of attachment of the material assets of the affected Party, and order or injunction restraining the affected Party from dealing with or disposing of its assets and such order having been passed is not vacated within sixty days.

9.2 Remedies for Breach Without prejudice to the right to terminate this Agreement provided for in Clause 2.2, 2.5(C), 2.6(G), and 4.3 (B) and any other remedy specifically provided for in this Agreement; (A) Upon the occurrence and during the continuation of any Event of Default,

set forth in either sub-Clause (A), sub-Clause (C) or sub-Clause (D) of Clause 9.1, the Party not in default (without prejudice to all other rights that the non-defaulting Party may have hereunder) may give notice of an occurrence of an Event of Default to the defaulting Party, (and where the defaulting *Party is the Buyer, with a copy to the Buyer’s Financing Parties)

* Note: Quantity corresponding to 50% PLF or 58% of Annual Contract Quantity whichever is lower.


51

calling upon the defaulting Party to cure the Event of Default within a period of ninety (90) days from the receipt of such notice, during which period (a) in the case of Event of Default of the Buyer, the Buyer shall be liable to pay Capacity Charges on monthly basis to be paid within five (5) days from the expiry of each Month and (b) in the case of Event of Default of the Seller, the Seller shall be liable to pay Liquidated Damages on monthly basis to be paid within five (5) days from the expiry of each Month. Provided that non-payment of such Capacity Charges or Liquidated Damages, as the case may be, as aforesaid, shall constitute a separate and independent event of default which will entitle the Seller and the Buyer, as the case may be, to terminate this Agreement.

(B) Upon the occurrence and during the continuation of an Event of Default

set forth in sub-Clause (B) of Clause 9.1, the Seller (without prejudice to all other rights that the Seller may have hereunder) may give notice of an occurrence of an Event of Default to the Buyer pursuant to which the Seller and the Buyer shall, within a period of thirty (30) days of such notice, meet and discuss with a view to ascertaining whether the default is of such a nature that it should be waived or whether the Seller should exercise its rights to terminate the Agreement. On the expiry of the aforesaid period of thirty (30) days, the Seller may either waive the default or terminate the Agreement.

9.3 Additional Termination Right : (A) In the event that either Party is rendered wholly or partially unable to

perform its obligations under this Agreement (“Affected Party”) because of a Force Majeure, as described in Clause 8 above, and such inability to perform lasts for not less than a total of nine (9) months in continuous form or of twelve (12) months in discontinuous form in a period of two (2) Years, and in the considered assessment of the other Party (“Non-Affected Party”) there is no reasonable likelihood of the Force Majeure Act coming to an end in the near future, such Party shall have the right to terminate this Agreement, by giving at least ninety (90) days prior written notice to the Affected Party of the intention to so terminate this Agreement. In such event, the termination shall take effect on expiry of the notice period or ninety (90) days whichever is later.

(B) In the event of any material change in the Coal distribution system of the

Seller due to a Government directive/ notification, at any time after the execution of this Agreement, the Seller shall within seven (7) days of introduction of such change provide a written notice to the Purchaser calling for a joint review. If the Parties are unable to arrive at a mutually agreed position with respect to the subject matter of review, within a period


52

of thirty (30) days from the date of notice, Seller shall have the right to terminate the Agreement subject to a further notice of thirty (30) days given in writing to the other Party.

(C) Pursuant to clause 2.2, after completion of five (5) years from the Effective

Date, either Party may, by prior written notice to the other Party of period not less than thirty (30) days, seek a review of this Agreement. In the event both the Parties fail to agree upon the future course of action within a period of thirty (30) days from the date of issue of notice, the Seller shall have the right to terminate this Agreement, subject to a prior written notice to the Purchaser of thirty (30) days.

9.4 Consequences of Termination (A) Where the Agreement is terminated by the Seller pursuant to an Event of

Default of the Buyer in accordance with Clause 9.2, the Buyer shall pay to the Seller the NPV of Capacity Charges for the period referred to below based on the balance Term of the Agreement on the date of termination:

48 Months - Where the balance term of the Agreement is 25 years or more. 42 Months - Where the balance Term of the Agreement is 20 years or more

but less than 25 years. 36 Months - Where the balance Term of the Agreement is 15 years or more

but less than 20 years. 30 Months - Where the balance Term of the Agreement is 10 years or more

but less than 15 years. 24 Months - Where the balance Term of the Agreement is 5 years or more but less than 10 years. 18 Months - Where the balance Term of the Agreement is less than 5 years.

(B) Where the Agreement is terminated by the Buyer pursuant to an Event of

Default of the Seller in accordance with Clause 9.2, the Seller shall reimburse the Buyer NPV for all additional costs that will accrue to the Buyer for purchase of Coal from persons other than the Seller for the balance Term of this Agreement subject to a maximum of the sum payable as under :

the Seller shall pay to the Buyer the NPV of the Liquidated Damages for the

Comment [R25]: These clauses need to be reflected in Termination Clauses


53

period referred to below based on the balance term of the Agreement as on the date of termination.

24 Months - Where the balance Term of the Agreement is 5 years or more but less than 10 years.

18 Months - Where the balance Term of the Agreement is less than 5 years. (C) Where the Agreement is terminated pursuant Clause 9.3, there shall not be

any termination payments and the Parties shall be absolved of all rights/obligations under this Agreement, save those that had already accrued as on the effective date of termination.

9.5 Delay in Commissioning of Plant (i)(a) Where commissioning of the plant is likely to be delayed due to inability of

the Seller to commence supply of Coal pursuant to Clause 4.3 the Seller shall give notice of its inability to perform its obligations, such notice to be given not later than six months prior to the last date of 3 month Target Start Period as mentioned under Clause 4.3, following which the Buyer shall be entitled to obtain Coal from Other Sources and provisions of Clause 3.6 shall apply for such procurement . Provided that the Seller may withdraw the said notice unless the Buyer has placed orders for procurement from Other Sources. In the event the Seller has not withdrawn the notice and the Buyer is unable to obtain Coal from Other Sources then the Seller shall be liable to pay to the Buyer a compensation. Such compensation shall be calculated in accordance with Clause 3.8 to Clause 3.12 of this Agreement. For avoidance of doubt it is clarified that the Annual Contracted Quantity for the first year of operations shall be the quantities as mentioned under Annexure 4 under the Build-Up Period Quantities

(iii) Notwithstanding anything contained herein, the Seller shall not be liable to

make any payment under this Clause 9.5 until the Buyer has demonstrated that the delay in commissioning of the Plant is attributable to the default of the Seller to perform its obligations under this Agreement.

9.6 Exclusive Remedy (A) The Buyers remedies for the Sellers failure to deliver Coal in accordance

with this Agreement or for any other breach of this Agreement shall be exclusively limited to the remedies provided for in Clause 3 and this Clause 9.

Comment [R26]: Should be symmetrical with termination payment by buyer.

Comment [v27]: The liability has been treated as per the regular compensations for shortfall of coal. As during the Build-Up period (1st year of operations) the Buyer shall be providing the Quarterly quantities which shall be forming the ACQ.


54

(B) The Sellers remedies for the Buyers failure to take the Required Quantity or any other breach by the Buyer of this Agreement shall be exclusively limited to the remedies provided for in Clause 6.3 and this Clause 9.

9.7 Limitation of Liability The Parties agree that except as otherwise expressly agreed in this Agreement, neither Party shall have any right or entitlement to any consequential losses; costs or damages, loss of profit or market as a result of a breach by the other Party of this Agreement. ______________________________


55

CLAUSE - 10 REPRESENTATION WARRANTIES AND COVENANTS

10.1 General Representations, Warranties and Covenants 10.1.1 Each Party hereby represents and warrants to the other Party as follows: (A) that it is a company, validly existing and in good standing under the laws of

its place of incorporation and is qualified to do business and is in good standing in all other places where necessary in light of the business and properties it conducts and owns;

(B) the execution, delivery and performance of this Agreement has been duly

authorized by all necessary corporate action; (C) this Agreement constitutes a legal, valid and binding obligation of such

Party, enforceable against such Party in accordance with its terms except to the extent that its enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the rights of creditors generally and by general principles of equity; and

(D) the execution, delivery and performance of this Agreement will not conflict

with, result in the breach of, constitute a default under any of the terms of the Memorandum and Articles of Association of such Party or of any Applicable Laws or any covenant, agreement, understanding, decree or order to which such Party is a party or by which such Party or any of its properties or assets is bound or affected.

10.2 Compliance with Laws (A) The Seller covenants with the Buyer that it will obtain and during the term

of this Agreement it will renew and maintain all permits, licenses and approvals required under Applicable Laws to be held in connection with development and construction of the Linked Coal Mine, the mining, transportation and delivery of Coal, all as contemplated by this Agreement, and as otherwise required for the performance by the Seller of its obligations hereunder. The Seller shall promptly notify the Buyer of any actual loss, revocation, termination, amendment or breach of any such permit, license or approval or any actual breach of any Applicable Laws related to performance of this Agreement.

(B) The Buyer covenants with the Seller that it will obtain and during the term of this Agreement it will renew and maintain all permits, licenses and approvals required under Applicable Laws to be held in connection with


56

construction and operation of the Plant, all as contemplated by this Agreement and as otherwise required for the performance by the Buyer of its obligations hereunder. The Buyer shall promptly notify the Seller of any actual loss, revocation, termination, amendment or breach of any such permit, license or approval or any actual breach of any Applicable Laws related to performance of this Agreement.

(C) The Seller shall take all action required under Applicable Laws in connection

with the Sellers operations and activities under this Agreement, including without limitation compliance with any reporting or notice requirements under Applicable Laws relating to environmental matters.

(D) The Buyer shall take all action required under Applicable Laws in

connection with the Buyers operations and activities under this Agreement, including without limitation compliance with any reporting or notice requirement under Applicable Laws relating to environmental matters.

10.3 Inspection Each Party grants to the other (including its agents) in addition to the rights of the Parties pursuant to this Agreement, the right to visit such Party’s facilities from time to time, upon reasonable notice and subject to the applicable rules and regulations of the facilities, to witness operations related to this Agreement and/or to carry out any rights or obligations under this Agreement.

_______________________________


57

CLAUSE – 11

RESOLUTION OF DISPUTES AND GOVERNING LAW 11.1 Good Faith Negotiation In the event of a dispute, disagreement or difference (each a "Dispute") arising out of or in connection with performance of this Agreement and/or the rights and liabilities of the Parties to this Agreement in respect of which a procedure for the resolution of the Dispute is not otherwise provided for in this Agreement, the following provision shall apply: (A) the Dispute shall not be subjected to the provisions of this Agreement

dealing with conciliation and arbitration or to any litigation unless and until the provisions of Clauses 11.1(B), 11.1(C) and 11.1 (D) mentioned below are fulfilled.

(B) either Party shall give to the other written notice setting out the material

particulars of the dispute and requiring a senior authorized officer from each of the Seller and the Buyer to meet within five (5) Business Days of the date of receipt of such notice by the relevant Party to attempt in good faith, and using their best endeavors at all times, to resolve the Dispute, and

(C) If any Party fails or refuses to meet as required by the notice described in

Clause 11.1(B) or if the Dispute is not resolved as evidenced by the terms of the settlement being reduced to writing and signed by each authorized senior executive officer, within fifteen (15) Business Days after the date of receipt of the notice described in Clause 11.1(B) by the relevant Party then the provisions of Clause 11.2 shall apply.

11.2 Arbitration Except as otherwise provided in this Agreement, any disagreement, dispute, controversy or claim arising out of or relating to this Agreement or the interpretation hereof, any arrangements relating to this Agreement or contemplated in this Agreement or the breach, termination or invalidity of this Agreement shall be settled exclusively and finally by arbitration. It is specifically understood and agreed that any disagreement, dispute or controversy which cannot be resolved between the Parties, including without limitation any matter relating to the interpretation of this Agreement, shall upon election by either Party be submitted to arbitration irrespective of the magnitude hereof, the amount in dispute or whether such disagreement, dispute or controversy would otherwise be


58

considered justifiable or suitable for resolution by a court or arbitral tribunal. Should either Party submit a request to the Arbitrators to determine whether and when the termination of the Agreement had occurred, each Party’s obligations and rights under this Agreement including, for the avoidance of doubt, the rights of each Party set out in Clause 9.2(A) shall be continuing and remain in full force during the term of the arbitration proceedings until an award stating the occurrence and timing of termination of the Agreement has been rendered. 11.3 Arbitration Rules (A) All disputes arising between or amongst the Parties hereto or their permitted

assignee, arising out of or in connection with the Agreement which are not resolved by good faith negotiation, pursuant to Clause 11.1 shall be resolved by Arbitration conducted according to the Arbitration and Conciliation Act, 1996 or any other corresponding Indian Law for the time being in force(Act).

(B) Number of Arbitrators - The arbitral tribunal shall consist of three (3)

Arbitrators. (C) Place of Arbitration - The arbitration shall be conducted in New Delhi /

Kolkata and Indian laws shall govern the arbitration. (D) Finality and Enforcement of Award - Any decision or award of the arbitral

tribunal shall be made within a period of four (4) months from the date on which the Arbitrators enters upon the reference or such extended period as the Parties may mutually agree and shall be final and binding upon the Parties. In all cases except cases under Clauses 3.13, 6.9 and 7.6, any Award of the Arbitrators shall include an award of interest on the amount awarded, if any, by the Arbitrators from the date on which such amount is due till the date of payment and in the event that any amount already paid to either Party by the other Party is directed to be refunded then only on the amount directed to be refunded from the date of payment till the date of refund thereof at the Cash Credit Rate prevailing on the date of Award. In the disputes covered by Clauses 3.11, 6.7(B) and 6.9(B), interest awarded shall be at the rates stipulated therein. The Parties hereto agree that the arbitral award shall be enforced against the Parties to the arbitration proceeding or their assets wherever they may be found and that judgment upon the arbitral award may be entered in any court having jurisdiction thereof.

(E) Appointing Authority - The arbitral tribunal consisting of (3) Arbitrators

shall be formed by the Buyer and the Seller each nominating one Arbitrator and the third Arbitrator shall be nominated by the two Arbitrators


59

nominated by the Buyer and the Seller and if the two Arbitrators have failed to so nominate the third Arbitrators within 15 working days of their appointment then as per the provisions of the said Act.

(F) Language - the language of the arbitration and the arbitral judgment shall be

English. 11.4 This Agreement shall be governed by and construed in accordance with

Indian law. _______________________________


60

CLAUSE – 12 SUCCESSORS AND ASSIGNS

12. Assignment by the Buyer and the Seller (A) Save as provided in Clause 12 (B), the rights and obligations of the Parties

under this Agreement, including any rights for monies or payments, shall not be assigned under this Agreement by either Party except upon the express written consent of the other Party.

(B) The Buyer shall have the right to assign any or all of its rights and interest

under this Agreement to the Buyer’s Financing Parties as security for its obligations under the Buyer’s Financing Documents, which assignment shall not relieve the Buyer of its obligations under this Agreement. Upon a default by the Buyer under the Buyer’s Financing Documents, any Buyer’s Financing Party shall have the right (but not the obligation) to exercise the rights granted under the Buyer’s Financing Documents by giving prior notice to the Seller in the manner and to the extent set out under this Agreement. The Buyer shall promptly notify the other Party of any proposed assignment pursuant to this Clause 12(B).

(C) The provisions of this Clause 12(B) are for the benefit of the Buyer’s

Financing Parties, and shall be enforceable by each of the Buyer’s Financing Parties. The Seller hereby agrees that none of the Buyer’s Financing Parties, or any participant for whom they may act, shall be obliged to perform any obligation or be deemed to incur any liability or obligation provided herein on the part of the Buyer or shall have any obligation or liability to the Seller with respect to this Agreement, except to the extent that such obligation or liability may be expressly assumed under Clause 12(B).

_______________________________


61

CLAUSE - 13 MISCELLANEOUS

13.1 Independent Contractor (A) The Seller shall at all times act as and be deemed to be an independent

contractor for all purposes of this Agreement and neither the Seller nor its subcontractors nor the employees of either shall act as or be deemed to be employees, representatives, agents or partners of the Buyer. The Buyer shall not have the right to control nor any actual, potential, or other control over the methods or means by which the Seller or any of its agents, representatives, sub-contractors or employees conducts it independent business operations. The Seller shall not perform any act nor make any representation to any Party to the effect that the Seller or any of its agents, representatives, sub-contractors or employees is the agent of the Buyer.

(B) The Buyer shall at all times act as and be deemed to be an independent

contractor for all purposes of this Agreement and neither the Buyer nor its sub-contractor nor the employees of either shall act as or be deemed to be employees, representatives, agents or partners of the Seller. The Seller shall not have the right to control nor any actual potential or other control over the means by which the Buyer or any of its agents, representatives, sub contractors or employees conducts its independent business operations. The Buyer shall not perform any act nor make any representation to any Party to the effect that the Buyer or any of its agents, representatives, sub-contractors or employees is the agent of the Seller.

13.2 Confidentiality The Seller and the Buyer shall retain in confidence the contents of this Agreement and any information obtained as a result of negotiation and performance of this Agreement which either Party identifies to the other as being proprietary or confidential in nature, except that the Buyer or the Seller may disclose such information to their respective professional advisors, MOC and to the Buyer’s Financing Parties and proposed Financing Parties and such persons agree to maintain the confidentiality of this Agreement. It is understood, however, that such information may also be disclosed when required by a Court, the Government, the Parliament, any Governmental agency or any other statutory authority who may rightfully demand the same.


62

The provisions of the preceding paragraph shall not apply to: (A) any information in the public domain otherwise than by breach of this

Agreement; (B) information in the possession of the receiving Party thereof before

divulgence as aforesaid, and which was not obtained under any obligation of confidentiality; and

(C) information obtained from a third Party who is free to divulge the same,

which is not obtained under any obligation of confidentiality. The provisions of this Clause 13.2 shall take effect from the Signature Date

and shall continue in effect for{3} years following termination or expiry of this Agreement.

13.3 Language The language of this Agreement shall be English. All documents notices, waivers and all other communications written otherwise between the Parties in connection with this Agreement shall be in English. 13.4 Amendments No amendment or modification of the terms of this Agreement shall be binding on either the Buyer or the Seller unless reduced to writing and signed by both Parties. Notwithstanding the foregoing, the Parties mutually agree to correct any typographical mistakes found in the Agreement. 13.5 Severability and Renegotiations Should any provision of this Agreement for any reason be declared invalid or unenforceable by final and unappealable order of any arbitral tribunal pursuant to Clause 11 or by a court of competent jurisdiction, such decision shall not affect the validity of the remaining provisions, which remaining provisions shall remain in full force and effect as if this Agreement had been executed with the invalid or unenforceable provision thereof eliminated. In the event any such provision of this Agreement is declared invalid or unenforceable, the Parties shall promptly renegotiate in good faith new provisions to eliminate such invalidity or unenforceability and to restore this Agreement as near as possible to its original intent and effect. 13.7 Other Agreements


63

This Agreement together with any documents referred to in it supersedes any and all oral and written agreements drafts, undertakings, representations, warranties and understandings heretofore made relating to the subject matter hereof and constitutes the entire agreement and understanding of the Parties relating to the subject matter hereof. 13.8 Captions All indices, titles, subject headings, Clause titles and similar items are provided for the purpose of reference and convenience and are not intended to be inclusive or definitive or to affect the meaning, content or scope of this Agreement. 13.9 Counterparts This Agreement may be executed in any number of counterparts and each counterpart shall have the same force and effect as the original instrument. 13.10 Further assurances The Parties shall execute and deliver such additional documents and shall cause such additional action to be taken as may be reasonably necessary to carry out the purpose and intent of this Agreement. 13.11 No Third Party Rights This Agreement and all rights hereunder are intended for the sole benefit of the Parties hereto and shall, subject to Clauses 9.2(A), 12(B) and 12 (C) not imply or create any rights on the part of or obligation to, any other entity or individual. 13.12 Notices (A) Any notice (which term shall in this Clause include any other

communication) required to be given under this agreement or in connection with the matters contemplated by it shall, except where otherwise specifically provided, be in writing in the English language.

(B) Each Party shall nominate a list of 6 representatives each of which is, until

notice of a replacement representative has been given in accordance with this Clause, empowered to accept personal delivery of any notice hereunder ("Representative(s)"). Each Party shall ensure that at all times during each Business Day from the Signature Date at least one of its Representatives is present at the Plant/colliery to accept service of notices. Each Party shall


64

ensure that the number of its Representatives does not at any time fall below 5. The Representatives of the Parties as at the Signature Date are listed in Annexure-11.

(C) Any such notice shall be addressed as provided in sub-Clause (D) and may

be:

(1) personally delivered to the Representative of the Party to be served at the Plant/Sellers mine or at the address of the Party to be served as set out in sub-Clause (D) marked for the attention of the Managing Director in which cases it shall be deemed to have been given upon delivery if it is delivered not later than 17.00 hours on a Business Day or, if it is delivered later than 17.00 hours on a Business Day or at any time on a day which is not a Business Day, at 08.00 hours on the next Business Day; or

(2) sent by pre-paid registered post, in which case it shall be deemed to

have been given five Business Days after the date of posting; or (3) sent by facsimile, in which case it shall be deemed to have been given

when dispatched, subject to confirmation of uninterrupted transmission by a transmission report, provided that any notice dispatched by facsimile after 17.00 hours on any Business Day or at any time on a day which is not a Business Day shall be deemed to have been given at 08.00 on the next Business Day.

(D) The addresses and other details of the Parties referred to in sub-Clause (C)

are, subject to sub-Clause (E):

Name: For the attention of: Address: Telephone Number: Facsimile Number: Name: For the attention of: Address: Telephone Number: Facsimile Number: (E) Either Party to this Agreement may notify the other Party of any change to

the address or any of the other details specified in sub-Clause (D), provided that such notification shall only be effective on the date specified in such notice or five Business Days after the notice is given, whichever is later and


65

provided also that any new address shall be in India. 13.13 Survival of Provisions The termination or expiration of this Agreement shall be without prejudice to any claims relating to or arising out of any antecedent breach of this Agreement and shall not affect any accrued rights of either Party or any of the provisions of this Agreement which are expressly or by implication to come into or to continue in force after such termination or expiration, including without limitation, Clause 13.2. IN WITNESS WHEREOF, the Parties hereto intending to be legally bound, have caused this Agreement to be signed by their respective officers duly authorized for that purpose as to the date and year first set out above. For and on behalf of Name Title In the Presence of: 1. 2. For and on behalf of Name Title In the Presence of: 1. 2.