Has anyone failed coursework requirement and got terminated from PhD program?
Yes, it happens. And it has to be this way.

We've had students who do not do sufficiently well in the coursework, but do so well in other regards that they are allowed to continue on to their Phd: the research committee is there to weigh up the positive and negative signs, within the regulations set out for them. Occasionally, we have students who pass the coursework and then struggle with self-guided research. So now we have two gateways: the coursework, and then a year later an upgrade report and seminar, which is their formal transition from an MPhil programme to a DPhil programme.

A department may not get many opportunities to formally remove a failing student. This will vary by institution and discipline, but it can be the case that there are not many opportunities within the trajectory of a single PhD to terminate cleanly and indisputably.

We never like to do it. It's the worst thing we can do. Apart from the alternative, when the alternative is letting a candidate go forwards into a drawn-out and ultimately unsuccessful attempt at completing the PhD. This is exacerbated if they might make increasing demands on staff, and/or might become increasingly disruptive to other students.

If the supply of good potential candidates is greater than the number of available places; or there are financial penalties when students fail later rather than earlier in the process; then the imperative to filter out weak candidates becomes stronger.

Coursework, research proposals, upgrade seminars and upgrade reports, are some of the small selection of tools we have to help us identify weak candidates. Writing a PhD thesis is indeed completely different to doing coursework. And there are candidates that excel at coursework, but could not write a doctoral thesis; and maybe there are candidates where the reverse is true. Nevertheless, the coursework gives us an opportunity to assess a candidate's skills and domain knowledge.

So that's why a justifiable proposal is not in and of itself sufficient (even when it's a self-funded candidate). If successful coursework is specified as a requirement, then the regulation doesn't need to say what happens if a student fails the coursework: if any requirement isn't met, then the candidacy doesn't have a right to proceed - that's the essence of a requirement. There might be alternatives to some requirements: these should be in the regulations somewhere. Your supervisors, or the faculty's graduate tutor, or the university's graduate school, should be able to advise.