30.09.2020 LPA No. 53/2020(Jammu) (EMG-LPA N

HIGH COURT OF JAMMU AND KASHMIR

AT JAMMU

Reserved on : 26.08.2020

Pronounced on: 30.09.2020

LPA No. 53/2020(Jammu)

(EMG-LPA No.2/2020)

EMG-CM No.4/2020 (Through Video Conferencing from

Jammu)

Rakesh Kumar Choudhary .....Appellant

Through :- Mr. Vikram Sharma, Advocate (On Video Conference from his residence

at Jammu)

Mr. Sunil Sethi, Sr. Advocate

with

Mr. Ravi Abrol, Advocate (On Video Conference from their residence

at Jammu)

V/s

Union Territory of J&K and Others .....Respondent(s)

Through :- Mr. F. A. Natnoo, AAG (On Video Conferencing from the High

Court at Jammu)

LPA No. 56/2020 (Jammu)

(EMG-LPA no.5/2020)

EMG-CM no.13/2020 (for

interim relief) (Through Video Conferencing)

Chaman Lal .....Appellants

Through :- Mr. P. N. Raina, Sr. Advocate with

Mr. J. A. Hamal, Advocate. (On Video Conferencing from office)

V/s

State of J&K (Now Union Territory of

J&K) & Others

.....Respondent(s)

Through :-

Mr. F. A. Natnoo, AAG (On Video Conferencing from the High

Court at Jammu)

2

LPA No.53/2020 & connected appeals

LPA No.61/2020 (Srinagar)

CM Nos.1978 & 1977/2020 (Through Video Conferencing from

Srinagar)

M/s Usman Construction and others .....Appellant

Through :- Mr. Altaf Naik, Senior Advocate (On Video Conferencing from High Court

at Srinagar)

V/s

Union Territory of J&K and Others .....Respondent(s)

Through :-

Mr. F. A. Natnoo, AAG (On Video Conferencing from High Court

at Jammu)


CM Nos.1979, 1980

& 1981/2020 (Through Video Conferencing from

Srinagar)

M/s Mohammad Ashore and others .....Appellant

Through :- Mr. Hakim Suhail Ishtiaq,

Advocate (On video conference from High Court at

Srinagar)

V/s

Commissioner/Secretary to Government

and Another

.....Respondent(s)

Through :- Mr. F. A. Natnoo, AAG (On Video Conferencing from High Court

at Jammu)

LPA no.63/2020(Srinagar)

CM Nos.1982, 1983

& 1984/2020 (Through Video Conferencing from

Srinagar)

Mohammad Farooq Lone & Others .....Appellants

Through :- Mr. Hakim Suhail Ishtiaq,

Advocate (On video conference from High Court at

Srinagar)

V/s

Union Territory of J&K & Others

3


.....Respondent(s)

Through :- Mr. F. A. Natnoo, AAG (On Video Conferencing from High Court

at Jammu)


CM Nos.1936, 1937 & 1938/2020 (Through Video Conferencing from Srinagar)

Vikar Ahmad Dar …...Appellants

Through:- Mr. Z. A. Shah, Sr. Advocate (On video conferencing from High Court at

Srinagar)

v/s

State of J&K and others …..Respondent(s)

Through:- Mr. F. A. Natnoo, AAG (On video Conferencing from High Court at

Jammu)

LPA No. 58/2020 (Jammu)

(EMG-LPA No.7/2020)

EMG-CM Nos.16/2020 (Through Video Conferencing from Jammu)

Nagar Singh …...Appellants

Through:- Mr. Abhinav Sharma, Advocate (On video conferencing from his office at

Jammu)

v/s

State of J&K and others …..Respondent(s)


Jammu)

LPA No. 77/2020 (Srinagar)

CM No.2361/2020 (Through Video Conferencing from Srinagar)

Shahnawaz Ahmad Bhat & anr. …...Appellants

Through:- Mr. Vivek Sharma, Advocate (On video conferencing)

v/s

Union Territory of J&K and others …..Respondent(s)


Jammu)

4


Coram:

HON’BLE THE CHIEF JUSTICE (On Video Conference from High Court at Srinagar)

HON’BLE MR. JUSTICE SANJAY DHAR, JUDGE

(On Video Conference from High Court at Srinagar)

JUDGMENT

Per Gita Mittal, CJ.

“6. Rivers, Forests, Minerals and such other resources

constitute a nation's natural wealth. These resources are not to

be frittered away and exhausted by any one generation. Every

generation owes a duty to all succeeding generations to develop

and conserve the natural resources of the nation in the best

possible way. It is in the interest of mankind. It is in the interest

of the Nation. It is recognised by Parliament. Parliament has

declared that it is expedient in the public interest that the Union

should take under its control the regulation of mines and the

development of minerals. It has enacted the Mines and Minerals

(Regulation and Development) Act, 1957.”

(Ref: (1981) 2 SCC 205, State of Tamil Nadu vs. Hind

Stone and Ors)

“9. Natural resources are ‘public goods’ and the

Doctrine of Equality must guide the State in determining the

actual mechanism for distribution of natural resources. It

takes into account the rights and obligations of the State vis-

à-vis its people and the demands that the people be granted

equitable access to natural resources and they are adequately

compensated for the transfer of these resources for public

domain and regulation of rights and obligations of the State

vis-à-vis private parties seeking to acquire the resources

which demands that the procedure adopted and distribution is

just and transparent.”

5


[Ref: Original Application No.360/2015,

National Green Tribunal Bar Association v.

Virendra Singh (State of Gujarat) and

connected applications decided on 26.07.2019.

(Page 141, Paras 9, 10 & 11)]

1. By way of the instant appeal, a challenge is laid to the common judgment

dated 1st May, 2020, passed by the learned Single Judge dismissing 16 writ

petitions filed before both the Wings of this Court inter alia challenging the

communication of the Department of Industries and Commerce of the Government

bearing No.Ind/legal-239/2018 dated 26.02.2019 conveying the approval of the

competent authority to the scrapping of the open auction carried under the J&K

Minor Minerals Concession, Storage, Transportation of Minerals and Prevention

of Illegal Mining Rules, 2016 and providing further that fresh auctions would be

carried out only through e-auction mode.

2. To avoid conflict of adjudication, a direction was made for clubbing of the

writ petitions and placing them before one court, with parties and counsels to be

joined on video conferencing, wherever necessary. After detailed hearings, the writ

petitions were decided by the common judgment dated 1st May, 2020. Aggrieved

thereby the above letters patent appeals came to be filed before both Wings of this

Court, which were directed to be consolidated for hearing and adjudication.

3. In view of the Covid-19 restrictions, these appeals have been heard on video

conferencing with this Bench holding court in the Jammu Wing. Learned Senior

Counsels as well as other counsels have made submissions from Srinagar and

Jammu on video conferencing.

4. It is noteworthy that after hearing in the rest of the appeals had concluded

and the matter was reserved for judgment on 30th June, 2020, another LPA

No.77/2020 came to be filed which was listed before the Court first time on 21st

6


August, 2020. On that date counsel for the respondent could not be joined on

account of connectivity issues. The matter was accordingly listed on 26th August,

2020 when counsel for the parties were heard and judgment reserved.

Headings

5. We propose to consider the several propositions placed by the parties in

seriatim. For expediency, we set down hereunder the headings under which we

have considered the challenge.

Sr. No. Headings Paragraph

Nos.

I. Judicial consideration of issues concerning mining

of minor minerals and Notifications of MOEF&CC,

Government of India

6-45

II. Relevant statutory provisions and the Rule position

so far as erstwhile State of Jammu and Kashmir

(now Union Territory of Jammu & Kashmir and

Ladakh)

46-47

III. Defiance of the law-Rule 104A - a special provision

in Jammu & Kashmir

48-94

IV. Chronology of relevant events, submissions of

appellants

95-201

V. Appeals pressed on grounds which were not urged

before the Ld. Single Judge, examination of

official records, opportunity to meet the same

202-229

VI. The consideration by the Government which lead

to the decision to scrap the auctions of 2017,

issuance of the communication dated 26th

February, 2019 and the Amendment to the Rules

230-272

VII. The Working of Rule 104A 273-295

VIII. An important ‘subsequent’ fact-conduct of e-

auctions

296-311

IX. Scope of judicial review in administrative action

and matters relating to award of contract/ tenders/

auctions

312-327

X. Can the Issue as to whether there is a concluded

contract be decided in writ proceedings?

328-344

XI. Whether in these cases there was a concluded

contract of the respondents with appellants and

whether time was of essence of the contract?

345-399

XII. Whether the respondents had the power to waive

or to extend time for compliance with the

conditions prescribed in the Rules as notified in

the LoI.

400-438

7


XIII. Whether processing of Environmental Clearances

was delayed by the respondents and impact

thereof

439-486

XIV. Whether the respondents had made a representation

and promise to the appellants and would stand

estopped from withdrawing from it?

487-509

XV. Cancellation of the entire auction process-

permissibility & validity

510-539

XVI. Failure to issue notice to show cause-whether

violation of principles of natural justice-impact on

impugned decision

540-567

XVII. Failure to give reasons-non compliance with

principles of natural justice- whether impacts

present cases

568-589

XVIII. Whether any remedial steps with regard to the

illegal mining- cost of reparation and compensation-

quantification and apportionment of liability?

590-621

XIX. Writ petitions liable to be dismissed for suppressio

veri

622-628

XX. Whether the issuance of the Letter of Intent (LoI)

resulted in grant of ‘quarrying licence’ or a

‘prospecting licence’

629-655

XXI. Whether any mining lease at all stands granted? 656-661

XXII. Whether the Learned Single Judge has failed to consider the Rule

55 (10) of SRO 105? If so, effect thereof 662-664

XXIII. Refund of the bid amount-enitlement to in the

facts of case

665-675

XXIV. Submission that the amendment to the Rules was

prospective and the pending applications of the

appellants had to be considered in accordance

with the unamended provisions

676-680

XXV. Conclusions 681

XXVI. Result 682

I. Judicial consideration of issues concerning mining of minor

minerals and Notifications of MOEF&CC, Government of India

6. Mining Activity, undertaken primarily for commercial reasons, has a far

reaching and irreversible impact on the environment. Minor minerals are declared

in Section 3(e) of the Mines and Minerals (Development and Regulation) Act,

1957 to include building stones, gravel, ordinary clay, ordinary sand other than

sand used for prescribed purposes, and any other mineral which the Central

Government may, by notification in official gazette declare to be a minor mineral.

8


These minor minerals are extracted in large quantities with devastating

consequences and has been the subject matter of authoritative judicial

pronouncements by the Supreme Court of India as well as the National Green

Tribunal.

7. So as to put the matter in perspective, and to understand the context, it is

essential to look into the law laid by the Supreme Court of India and orders passed

by the National Green Tribunal which have not only controlled parties but led to

legislations and Government notifications on matters relating to mining of

minerals with which this case is concerned.

8. So far as the relationship between the parties and their rights and obligations

are concerned, the statute which has a bearing is the Mines and Minerals

(Development and Regulation) Act, 1957. This statute aims at conservation and

the prudent and discriminating exploitation of minerals. (Ref.(1981) 2 SCC 205,

State of Tamil Nadu v. Hind Stone and Ors.).

9. So far as the framing of Rules in terms of Section 15 of the Mines and

Minerals (Development and Regulation) Act, 1957 is concerned, on 10th of April,

1962, the Government of Jammu & Kashmir issued the Jammu and Kashmir

Minor Mineral Concession Rules 1962 vide SRO 58 of 1962. These rules of 1962

did not contain any provision for Environmental Clearance and contracts for

mining were given on ‘first come first served’ basis.

10. On the 27th January, 1994, the Government of India issued a notification

SO60(E) laying down pre-requisite condition of having environmental clearance

(‘EC’ for brevity) for projects relating to major minerals. This was followed by a

notification SO133(E) dated 14th September, 2006 superceding the earlier

9


notification in many regards while laying down the requisite conditions of having

ECs for projects provided therein.

11. Removal of minor minerals/boulders/gravels/quarries etc from river beds is

recognized as a major cause of environment degradation. It is also considered a

threat to bio-diversity resulting from bed degradation, sedimentation, destruction

of riverine vegetation, erosion, pollution of water sources, amongst other

consequences thereof. Sand mining has also been regarded, as one of the causes of

environmental degradation as has been researched in several studies. It is also an

established fact that over the years, India’s rivers and riparian eco-systems have

been badly effected by the alarming rate of unrestricted sand mining resulting in

destruction of natural habitats, the riverine ecology and instability of surrounding

physical infrastructure. Indiscriminate sand mining on river beds also results in

increased river water salinity which stifles the breeding environment of aquatic life

and obstructs migration.

12. Mining Activity by its very nature envisages compliance with environment

protection and subordinate legislation. In this regard, Mr. F. A. Natnoo, learned

AAG has placed a notification dated 14th September 2006 of the Ministry of

Environment and Forests issued under Section 3(2)(1)(v) of the Environment

(Protection) Act, 1986 and Rule 5(3)(d) of the Environment (Protection) Rules,

1986, mandating the requirement of prior Environmental Clearance (‘EC’

hereafter for brevity) from the Central Government for certain construction

projects under clause (2); and the constitution of a State Level Environment

Impact Assessment Authority (referred to as ‘SEIAA’) constituted by the Central

Government under Section 3(3) of the Environment (Protection) Act, 1986. Clause

(4) has details about the categorization of projects and activities. In Clause (5), the

10


Expert Appraisal Committees (EAC) at the Central Government level and State

Expert Appraisal Committees (SEAC) at the State and UT level was mandated to

screen and appraise projects or activities. Clause (6) of the notification provides for

the nature of applications for Prior EC. Clause (7) provides the manner in which it

should be processed. Furthermore, Clause (8) provides for grant or rejection of the

prior EC, while clause (9) of the notification provides for validity of the EC.

13. A proposal of auctions by the auction notice dated 3rd June, 2011 for

excavation of minor minerals / boulders / gravel/ sand quarries in areas not

exceeding 4.5 ha in each case in different districts of Haryana was assailed before

the Supreme Court. This challenge was decided on 27th February, 2012 by the

judgment reported at (2012) 4 SCC 629, Deepak Kumar and anr. V. State of

Haryana.

14. In this case, it was contended that the Environment Impact Assessment

(EIA) Notification dated 14th September 2006 of the Ministry of Environment,

Forests and Climate Change (MOEF&CC) was being flouted by breaking

homogenous areas into land pieces of less than 5 ha in the States of Uttar Pradesh,

Rajasthan and Haryana. As the notification did not prescribe the requirement of EC

for areas less than 5 ha., no EIAs were being effected for what actually combined

into large tracts of land.

15. In its pronouncement on 27th, February, 2012, Deepak Kumar, the Supreme

Court noted the sharp increase in the demand for mining in and near stream beds

and its impact in the following terms:

“9. Extraction of alluvial material from within or near a stream bed

has a direct impact on the stream’s physical habitat characteristics.

These characteristics include bed elevation, substrate composition

and stability, instream roughness elements, depth, velocity, turbidity,

11


sediment transport, stream discharge and temperature. Altering these

habitat characteristics can have deleterious impacts on both instream

biota and the associated riparian habitat. The demand for sand

continues to increase day by day as building and construction of new

infrastructures and expansion of existing ones is continuous thereby

placing immense pressure on the supply of the sand resource and

hence mining activities are going on legally and illegally without any

restrictions. Lack of proper planning and sand management cause

disturbance of marine ecosystem and also upset the ability of natural

marine processes of replenish the sand.”

(Emphasis by us)

16. The Supreme Court noted that Section 15 of the Mines and Minerals

(Development and Regulation) Act, 1957 empowered the State Governments to

make rules in respect of minor minerals. While proposals of mining of major

minerals typically underwent EIA and EC procedures, similar attention had not

been given in case of minor minerals, since the EIA notification of 1994 of the

Central Government did not apply to this mining. Furthermore, under the ambit of

the EIA notification of 2006, it was only mining of minerals with a lease area of 5

ha and above which required prior EC.

17. It was noted by the Supreme Court that the attention of the Ministry of

Environment, Forest and Climate Change (MOEF&CC hereafter) was drawn to the

several instances across the country involving damage to lakes, river beds and

ground water leading to drying up of water beds and causing water scarcity. It was

also brought to notice that this happened on account of quarry/mining leases and

mineral concessions granted under the Mineral Concessions Rules framed by the

State Governments. The environmental impact of mining of minor minerals was

being neglected on account of the area being small despite the fact that the

collective impact in a particular area over a period of time could be significant.

12


18. The concerns on account of the impugned auction notices having been

issued without a study of the environmental impact of these auctions is noted in

Para 11 of the judgment as follows:

“11. We find that it is without conducting any study on the possible

environmental impact on/in the riverbeds and elsewhere the auction

notices have been issued. We are of the considered view that when we

are faced with a situation where extraction of alluvial material within

or near a riverbed has an impact on the river’s physical habitat

characteristics, like river stability, flood risk, environmental

degradation, loss of habitat, decline in biodiversity, it is not an

answer to say that the extraction is in blocks of less than 5 ha,

separated by 1 km, because their collective impact may be significant,

hence the necessity of a proper environmental assessment plan.”

(Emphasis by us)

19. The Supreme Court had also noted that vide order dated 24th March 2009,

the MOEF&CC had constituted a Core Group under the Chairmanship of the

Secretary (Environment and Forests) to look into all aspects of the impact on the

environment associated with the mining of minor minerals. This Core Group had

submitted a report on 29th January 2010 wherein it was clearly indicated that the

operation of the mines of minor minerals needed to be subjected to the same strict

regulatory parameters as that which applied to mines of major minerals. It also

indicated that the definition of ‘minor minerals’ per se required a re-look. In its

report, the Core Group had recommended that the States and UTs should see that

the mining of minor minerals is permitted only under a strict regulatory regime and

is carried out only under an approved framework of a mining plan which should

provide for reclamation as well as rehabilitation of people in the mined areas.

20. It appears that the Ministry of Mines, Government of India had also sent out

a communication dated 16th May 2011 called the ‘Environmental Aspects of

13


Quarrying of Mining Minerals –Evolving of Model Guidelines’ on the 30th June

2011. Draft Rules being the Minor Minerals Conservation and Development Rules,

2010, had also been put on the website.

21. In Para 24 of the pronouncement of Deepak Kumar, the Supreme Court

observed that ‘the Model Rules of 2010 issued by the Ministry of Mines are very

vital from the view point of the environment, ecology and bio diversity and

therefore the State Governments have to frame proper rules in accordance with

recommendations under Section 15 of the Mines and Minerals (Development and

Regulation) Act, 1957.

22. Grave concern was expressed by the Supreme Court in the following terms.

“25. Quarrying of river sand, it is true, is an important economic

activity in the country with river sand forming a crucial raw material

for the infrastructural development and for the construction industry

but excessive instream sand and gravel mining causes the degradation

of rivers. Instream mining lowers the stream bottom of rivers which

may lead to bank erosion. Depletion of sand in the streambed and

along coastal areas causes the deepening of rivers which may result

in destruction of aquatic and riparian habitats as well. Extraction of

alluvial material as already mentioned from within or near a

streambed has a direct impact on the stream’s physical habitat

characteristics.

26. We are of the considered view that it is highly necessary to have

an effective framework of mining plan which will take care of all

environmental issues and also evolve a long-term rational and

sustainable use of natural resource base and also the bio-assessment

protocol. Sand mining, it may be noted, may have an adverse effect

on biodiversity as loss of habitat caused by sand mining will affect

various species, flora and fauna and it may also destabilise the soil

structure of river banks and often leaves isolated islands. We find

that, taking note of those technical, scientific and environmental

14


matters, MoFF, Government of India, issued various

recommendations in March 2010 followed by the Model Rules, 2010

framed by the Ministry of Mines which have to be given effect to,

inculcating the spirit of Article 48-A and Article 51-A(g) read with

Article 21 of the Constitution.”

(Emphasis by us)

23. While considering the environmental impact on various rivers and adverse

effects on bio-diversity on account of the proposed quarrying, mining and removal

of sand (a minor mineral) from instream and upstream of several rivers across the

country, the Supreme Court in Deepak Kumar, issued several directions. In paras

28 and 29, the Supreme Court directed the Central Government as well as State

Governments in the following terms:

“28. The Central Government also should take steps to bring into

force the Minor Minerals Conservation and Development Rules,

2010 at the earliest. The State Governments and UTs also should take

immediate steps to frame necessary rules under Section 15 of the

Mines and Minerals (Development and Regulation) Act, 1957 taking

into consideration the recommendations of MoFF, Secretary, Ministry

of Mines, New Delhi; Ministry of Water Resources, Central

Government Water Authority; the Chief Secretaries of the respective

States and Union Territories, who would circulate this order to the

Department concerned.

29. We, in the meanwhile, order that leases of minor minerals

including their renewal for an area of less than five hectares be

granted by the States/ Union Territories only after getting

environmental clearance from MoFF. Ordered accordingly.”

(Emphasis supplied)

A period of six months was granted to give effect as above.

15


24. In view of the law laid down by the Supreme Court in Deepak Kumar, EC

was mandatorily required for all concessions, be it temporary licence or a quarry

licence or grant of a mining lease.

25. So how was the judgment of the Supreme Court complied with?

26. In purported compliance of the order dated 27th February 2012 in Deepak

Kumar and 13th January 2015 of the National Green Tribunal (NGT hereafter),

amendments were effected by the Central Government to the Environment Impact

Assessment Notification 2006 dated 14th September 2006 in exercise of the powers

under Sections 3(2)(i) and Section 3(2)(v) of the Environment (Protection) Act,

1986 and Rule 5(3) of the Environment (Protection) Rules, 1986.

27. The Central Government issued a notification dated 15th January, 2016

(amending the notification dated 14th September, 2006) constituting a District

Level Environment Impact Assessment Authority (DEIAA) under Sub section (3)

of Section 3 of the Environment (Protection) Act, 1986. Rule 3A(6) was included

in the notification constituting the District Level Expert Appraisal Committee

(DEAC). The DEAC was mandated to screen, scope and appraise projects or

activities in Category A, B1, B2 and B2 projects of minor minerals. Para 5 of the

notification dated 14th September, 2006 was substituted and amended to read that

the “same Expert Appraisal Committees at the Central Government, SEACS at the

State or Union Territory level and DEAC at the district level shall screen, scope

and appraise projects or activity in category ‘A’, ‘B1 and B2’ and ‘B2’ projects

for mining of minor minerals of lease area less than and equal to five hectare

respectively.” A provision for mandatory prior EC in all cases to be made by the

project proponent in the prescribed format was included in para 6.

16


28. In Para 7(iii), preparation of District Survey Report (DSR for brevity) for

sand mining or river bed mining and mining of other minor minerals was

prescribed.

29. Amendment in the notification to include qualifications and terms for the

Experts in DEIAA and DEAC were prescribed in Appendix VII while the

procedure for preparation of DSR was provided in Appendix X.

30. Mr. F. A. Natnoo, ld. AAG has drawn our attention to the procedure

prescribed which required that a survey is to be carried out by the DEIAA with the

assistance of the Geology Department or the Irrigation Department or the Forest

Department or the Public Works Department or the Ground Water Boards or the

Remote Sensing Department or the Mining Department etc in the district.

31. For the first time, the procedure for EC for mining of minor minerals,

including for cluster mining, was prescribed at Appendix XI. This was clearly in

terms of the pronouncement of the Supreme Court in Deepak Kumar.

32. It is pointed out that most of the appellants before us fall in the category of

0-5 ha while some are in the less than 10 ha category. As per Appendix XI, this

activity fell in the B2 category. EC was required for their mining activity which

was to be appraised and granted by the DEIAA/DEAC.

33. So far as the projects which were between 25-50 ha are concerned, approved

Mining Plan, [Environment Management Plan (EMP for brevity)] as well as EC

was mandatory which was to be considered and granted by the SEAC/SEIAA.

34. On 6th January, 2016, the erstwhile State of Jammu & Kashmir vide SRO

103 issued the Jammu and Kashmir Minor Mineral Concession, Storage,

Transportation of Minerals and Prevention of Illegal Mining Rules, 2016.

17


35. This was followed with a notification SO141(E) dated 15th January, 2016

issued by the MOEF&CC, Government of India, in compliance of the aforesaid

decision of the Supreme Court in Deepak Kumar’s case.

36. Mr F. A. Natnoo, ld. AAG, has also drawn our attention to the notifications

dated 20th January 2016 and 1st July 2016 amending the aforesaid notification

dated 14th September, 2006 issued by the MOEF&CC.

37. The notifications dated 15th January, 2016, 20th January, 2016 and 1st July,

2016 were challenged before the NGT, Principal Bench, New Delhi by way of

O.A.186/2016, Satendra Pandey v. Ministry of Environment, Forest & Climate

Change and anr. and several connected petitions. The challenge was inter alia

premised on the ground that, in the notification, the B Category projects and

activities as stood originally, had been broken into B-1 and B-2 category activities.

Mining of minor minerals for areas from 25 ha to 50 ha was within the B-1

category and between 0-25 ha was in B-2 category.

38. The grievance was that in this manner the notification dated 15th January

2016 exempted the B-1 category from the rigour of compliance of obtaining the

EIA and approval of EMPs. Whereas in the notification of 2006, these were

necessary for all activities from 5-50 ha. It was contended that this was contrary to

the mandate of the Deepak Kumar.

39. Additionally, it was complained that projects classified in the B.2 category

of 0-5 ha under individual and cluster category, stood exempted from the

requirements of preparing an EIA and EMP and that those more than 5 ha and less

than or equal to 25 ha, had been exempted from preparing EIA Report which was

also beyond what was provided in the notification of 2006. The submission was

that EIA/EMP was an integral and critical component of EC whereby potential

18


impact and risk of a project could be assessed and mitigation measures formulated

and adopted in the EMP.

40. The NGT considered the matters at length and in Para 9 & 10 of its order

dated 13th September 2018 is Satendra Pandey holding as follows:

“9. Upon consideration of the fact and circumstances set out in the

original application and upon hearing the Ld. Counsel for parties, we

find that the impugned Notification dated 15th January, 2016 is not

consistent with the decision of the Hon’ble Supreme Court in the

case of Deepak Kumar (supra). We find substance in the submissions

of the Ld. Counsel for the applicant that while breaking category B of

the mines to B-1 & B-2 may not per se be bad, it certainly dilutes the

stringent requirement of lease areas up to 25 ha being exempted

from the necessity of submitting EIA and EMP for grant of

Environmental Clearance. It is undisputed that the impugned

Notification is issued with the object to comply with the directions

passed in the case of Deepak Kumar (supra).

xxxxx

41. The NGT considered the impact of illegal riverbed mining on the banks of

River Subarnarekha in Odisha in O.A. No. 173/2018, Sudarsan Das v. State of

West Bengal and ors. We notice the proceedings in the case a little later hereafter.

42. The NGT also considered (in Satendra Pandey, 13-09-2018) the

requirements under the Sustainable Sand Mining Management Guidelines, 2016

prepared by the MoEF&CC. While considering the correctness of the prescriptions

made in the notification dated 15th January 2016 with regard to the splitting of

areas, exemptions from EIAs and public hearings, observed as follows:

“12. The only contention that require for us to consider in this case is

as to whether the Notification dated 15th January, 2016 would satisfy

the spirit of the directions issued in the case of Deepak Kumar

(supra). As already noted, EIA Notification dated 14th September,

19


2006 under the Schedule provided there to require all mining lease

area of equal to and up to 50 ha to seek Environment Clearance

requiring to submit EIA for appraisal from the SEIAA.

13. The impugned Notification dated 15th January, 2016, however,

would clearly indicate that Category B has been split into category B1

and B2 and again, category B2 has been further split into areas of 0-5

ha and 5-25 ha. Xxxx

15. Introduction of such procedure, in our view, is clearly not

consistent with the directions contained in the case of Deepak Kumar

(supra) and the spirit behind such direction. By the provision, mining

area up to from 5ha to 25 ha has been completely exempted from the

EIA and Public Consultation. For areas of 5 ha and below, apart

from the exemption, it has been made only subject to a separate

procedure of preparing a District Survey Report (DSR).These

provisions quite apparently are more mine-centric rather than

striving a balance between mining and environment especially with

regard to Form-1M which needs to be made more elaborate

incorporating environment related aspects.xxxx

17. Thus, even according to the Sustainable Sand Mining

Management Policy issued by the MoEF & CC, by dispensing with

Public Hearing, the judgment of the Hon’ble Supreme Court in the

case of Deepak Kumar (supra) will stand defeated.”

(Emphasis by us)

43. The NGT also emphasized the parameters for consideration of the fitness of

an area for mining while preparing the District Mining Plan and Report vis-à-vis

the EIA. The importance of public hearing for EIA was also highlighted thus:

“18. We also find that parameters for consideration while preparing

District Mining Plan (DMP) and District Survey Report (DSR)are

only for the purpose of ascertaining whether an area is fit for mining

which are quite different from the parameters laid down for EIA.

The consideration of the view point of the public by keeping DSR in

20


public domain is not a substitute of Public Hearing for consideration

of the view point of the public for EIA.

xxx xxx xxxx xxxx

21. Dispensing with the requirement of Public Hearing which forms

a part of the Public Consultation under Stage-III of the

Environmental Clearance process under EIA Notification,2006 for

areas measuring 0 to 25 ha for individual mine areas and in cluster

situation where public hearing has been provided, has resulted in

gross dilution of EIA Notification dated 14th September, 2006. Such

dilution would, in our view, result in its misuse by unscrupulous

elements and the situation would revert back to the lawless state

prevailing prior to the decision in the case of Deepak Kumar (supra).

Stringent measures are, therefore, necessary if the rampant

exploitation of the minor minerals is to be curbed. This apparently

was also the view of the Hon’ble Supreme Court in the case of Deepak

Kumar (supra).”

(Emphasis by us)

44. On 13th September, 2018, the NGT finally directed as follows:

“22. For all these reasons, we direct that the procedure laid down in

the impugned Notification be brought in consonance and in accord

with the directions passed in the case of Deepak Kumar (supra) by (i)

providing for EIA, EMP and therefore, Public Consultation for all

areas from 5to 25 ha falling under Category B-2 at par with

Category B-1 by SEAC/ SIEAA as well as for cluster situation

wherever it is not provided; (ii) Form-1M be made more

comprehensive for areas of 0 to 5 ha by dispensing with the

requirement for Public Consultation to be evaluated by SEAC for

recommendation of grant EC by SEIAA instead of DEAC/DEIAA;

(iii) if a cluster or an individual lease size exceeds 5 ha the EIA/EMP

be made applicable in the process of grant of prior environmental

clearance; (iv) EIA and/or EMP be prepared for the entire cluster in

21


terms of recommendation 5 (supra) of the Guidelines for the purpose

of recommendations 6, 7 and 8 thereof; (v) revise the procedure to

also incorporate procedure with respect to annual rate of

replenishment and time frame for replenishment after mining

closure in an area; (vi) the MoEF & CC to prepare guidelines for

calculation of the cost of restitution of damage caused to mined-out

areas along with the Net Present Value of Ecological Services

forgone because of illegal or unscientific mining.

24. It is reiterated that any attempt to split the lease area for the

purpose of avoiding the applicable regulatory regime shall be viewed

seriously. This in our view will be in the interest of the environment as

deliberated in detail in the case of Deepak Kumar (supra) and would

also satisfy the Precautionary Principle and the Principle of

Sustainable Development contemplated under Section 20 of the

National Green Tribunal Act, 2010.

25. The MoEF & CC shall, therefore, take appropriate steps to revise

the procedure laid down in the impugned Notification dated 15th

January, 2016 in terms of the above directions and observations so

that it is conformity with the letter and spirit of the directions passed

by the Hon’ble Supreme Court in Deepak Kumar (supra).The

applications stand disposed of.”

(Emphasis by us)

45. The impact of the judgment dated 13th September 2018 of the NGT was that

all ECs became required to be granted by the SEIAA instead of DIAA [Direction in

para 22(ii)] and public consultation for all areas of 5-25 ha falling in B2 category

at par with category B1 by the SEAC/SEIAA instead of DEAC/DEIAA, was made

mandatory.

22


II Relevant statutory provisions and the Rule position so far as

erstwhile State of Jammu and Kashmir (now Union Territory of

Jammu & Kashmir and Ladakh)

46. Before undertaking an analysis of the factual background and the issues

arising in these appeals, let us consider the relevant statutory provisions of the

Mines and Minerals (Development and Regulation) Act, 1957, (hereafter referred

to as the ‘Act’) as well as the applicable Rules framed thereunder as applicable to

the former State of Jammu & Kashmir, now Union Territory of Jammu &

Kashmir, against the background of the aforenoticed authoritative and binding

pronouncements of the Supreme Court of India as well as the NGT, and in the

context of the directions and notifications of the Central Government. This Act

was promulgated on 28th of May, 1957 and extended to the whole of India. Section

15 and 23 thereof enabled the State / Union Territory Governments to make rules

regarding minor minerals. We extract the relevant provisions hereunder which

have a bearing on our consideration.

“Section 3. Definitions.- In this Act, unless the context otherwise

requires:-

Section 3(a) “lease area” means the area specified in the mining lease

within which mining operations can be undertaken and includes the

non-mineralised area required and approved for the activities falling

under the definition of mines as referred to in clause (i).

Section 3(c) “mining lease” means a lease granted for the purpose

of undertaking mining operations, and includes a sub-lease granted

for such purpose.

Section 3(d) “mining operations” means any operations undertaken

for the purpose of wining any material.

Section 3(f) “prescribed” means prescribed by rules made under this

Act.

23


Section 3(g) “prospecting licence” means a licence granted for the

purpose of undertaking prospecting operations.

Section 3(ga) “prospecting licence-cum-mining lease” means a two

stage concession granted for the purpose of undertaking prospecting

operations followed by mining operations.

Section 3(h) “prospecting operations” means any operations

undertaken for the purpose of exploring, locating or proving mineral

deposits.

Section 4. Prospecting or mining operations to be under licence or

lease.- (1) No person shall undertake any reconnaissance,

prospecting or mining operations in any area, except under and in

accordance with the terms and conditions of a reconnaissance permit

or of a prospecting licence, or, as the case may be, of a mining lease,

granted under this Act and the rules made thereunder:

Provided that nothing in this sub-section shall affect any

prospecting or mining operations undertaken in any area in

accordance with the terms and conditions of a prospecting licence or

mining lease granted before the commencement of this Act which is in

force at such commencement:

Provided further that nothing in this sub-section shall apply to

any prospecting operations undertaken by the Geological Survey of

India, the Indian Bureau of Mines, [the Atomic Minerals Directorate

for Exploration and Research] of the Department of Atomic Energy of

the Central Government, the Directorates of Mining and Geology of

any State Government (by whatever name called), and the Minerals

Exploration Corporation Limited, a Government company within the

meaning of [clause (45) of Section 2 of the Companies Act, 2013(18 of

2013), and any such entity that may be notified for this purpose by the

Central Government]:]

[Provided also that nothing in this sub-section shall apply to

any mining lease (whether called mining lease, mining concession or

by any other name) in force immediately before the commencement of

this Act in the Union Territory of Goa, Daman and Diu.]

24


[(1-A) No person shall transport or store or cause to be

transported or stored any mineral otherwise that in accordance with

the provisions of this Act and the rules made thereunder.]

No [reconnaissance permit,] prospecting licence or mining

lease shall be granted otherwise than in accordance with the

provisions of this Act and the rules made thereunder.

[(3) Any State Government may, after prior consultation with

the Central Government and in accordance with the rules made under

Section 18, [undertake reconnaissance, prospecting or mining

operations with respect to any mineral specified in the First Schedule

in any area within that State which is not already held under any

reconnaissance permit, prospecting licence or mining lease].

Section 4-A. Termination of prospecting licences or mining lease.-

(1) Where the Central Government, after consultation with the State

Government, is of opinion that it is expedient in the interest of

regulation of mines and mineral development, preservation of natural

environment, control of floods, prevention of pollution, or to avoid

danger to public health or communications or to ensure safety of

buildings, monuments or other structures or for conservation of

mineral resources or for maintaining safety in the mines or for such

other purposes, as the Central Government may deem fir, it may

request the State Government to make a premature termination of a

prospecting licence or mining lease in respect of any mineral other

than a minor mineral in any area or part thereof, and , on receipt of

such request, the State Government shall make an order making

premature termination of such prospecting licence or mining lease

with respect to the area or any part thereof.

(2 ) Where the State Government is of opinion that it is expedient in

the interest of regulation of mines and mineral development,

preservation of natural environment, control of floods, prevention of

pollution or to avoid danger to public health or communications or to

ensure safety of buildings, monuments or other structures or for such

25


other purposes, as the State Government may deem fit, it may, by an

order, in respect of any minor mineral, make premature termination of

prospecting licence or mining lease with respect to the area or any

part thereof covered by such licence or lease.

(3) No order making a premature termination of a prospecting

licence or mining lease shall be made except after giving the holder of

the licence or lease a reasonable opportunity of being heard.

Section 7- Periods for which prospecting licences may be granted or

renewed:-

(1) The period for which a [reconnaissance permit or] prospecting

licence may be granted shall not exceed three years.

(2) A prospecting licence shall, if the State Government is satisfied

that a longer period is required to enable the licencee to complete

prospecting operations be renewed for such period or periods as that

Government may specify:

Provided that the total period for which a prospecting licence is

granted does not exceed five years;

Provided further that no prospecting licence granted in respect of a

mineral included in [Part-A and Part-B to] the First Schedule shall be

renewed except with the previous approval of the Central

Government.]

Section 9- Royalties in respect of mining leases.―(1) The holder of a

mining lease granted before the commencement of this Act shall,

notwithstanding anything contained in the instrument of lease or in

any law in force at such commencement, pay royalty in respect of any

1 [mineral removed or consumed by him or by his agent, manager,

employee, contractor or sub-lessee] from the leased area after such

commencement, at the rate for the time being specified in the Second

Schedule in respect of that mineral.

(2) The holder of a mining lease granted on or after the

commencement of this Act shall pay royalty in respect of any 1

[mineral removed or consumed by him or by his agent, manager,

26


employee, contractor or sub-lessee] from the leased area at the rate

for the time being specified in the Second Schedule in respect of that

mineral.

2 [(2A) The holder of a mining lease, whether granted before or after

the commencement of the Mines and Minerals (Regulation and

Development) Amendment Act, 1972 (56 of 1972) shall not be liable to

pay any royalty in respect of any coal consumed by a workman

engaged in a colliery provided that such consumption by the workman

does not exceed one-third of a tonne per month.]

(3) The Central Government may, by notification in the Official

Gazette, amend the Second Schedule so as to enhance or reduce the

rate at which royalty shall be payable in respect of any mineral with

effect from such date as may be specified in the notification: 3

[Provided that the Central Government shall not enhance the rate of

royalty in respect of any mineral more than once during any period of

4 [three years].

Section 15 Power of State Governments to make rules in respect of

minor minerals - (1) The State Government may, by notification in the

Official Gazette, make rules for regulating the grant of [quarry

leases, mining leases or other mineral concessions] in respect of

minor minerals and for purposes connected therewith.

[(1-A)] In particular and without prejudice to the generality of the

foregoing power, such rules may provide for all or any of the following

matters, namely:-

(a) The person by whom and the manner in which, applications for

quarry leases, mining leases or other mineral concessions may be

made and the fees to be paid therefor;

(b) The time within which, and the form in which, acknowledgement

of the receipt of any such applications may be sent;

(c) The matters which may be considered where applications in

respect of the same land are received within the same day;

27


(d) The terms on which, and the conditions subject to which and the

authority by which quarry leases, mining leases or other mineral

concession may be granted or renewed;

(e) The procedure for obtaining quarry leases, mining leases or

other mineral concessions;

(m) The reports and statements to be submitted by holders of quarry

or mining leases or other mineral concessions and the authority to

which such reports and statements shall be submitted.

47. The provisions of the Jammu and Kashmir Minor Mineral Concession

Storage, Transportation of Minerals and Prevention of Illegal Mining Rules,

2016 which have been relied upon before us, for expediency, are extracted below:

Chapter I-Preliminary

“ xxxx Rule 2(xi) Competent Authority means the authority

competent to grant of mining lease under rule 42 of these rules.

Rule(xii) Competitive Bid means an amount offered by the

participants in the open auction under these rules.

Rule 2(xxii) Environment Management Plan (EMP) means a plan

submitted by Lessee or Licencee falling in a cluster which is prepared

by Recognized Qualified Person approved by the Environment

Committee of Government of Jammu and Kashmir for providing

environmental safeguards.

Rule 2(xxiii) Excavation means extraction or digging and or

collection/removal of minor minerals from any land, river, nallah,

canal or hillock.

Rule 2(xxxiii) Letter of Intent (LoI) means a Letter of Intent issued to

the successful bidder on acceptance of the bid/application for grant of

a mining lease, quarry licence.

Rule 2(xxxvi) Minor Mineral Block means an area not less than 05

hectares and nor more than 50 hectares in a continuous stretch of

land/water body, having defined limits with the evidence of one or

more minor minerals than can be feasibly exploited.

28


Rule 2(xxxvii) Minor Mineral Plot means an area not less than 01

hectares and not more than 05 hectares in a continuous stretch of

land/water body, having defined limits with the evidence of one or

more minor minerals that can be feasibly exploited.

Rule 2(xxxviii)Minor Concession means a Mining Lease, Mining

Licence, Quarry Licence, Short Term Permit and Disposable Permit

in respect of minor mineral permitting the mining of minor mineral in

accordance with these rules.

Rule 2(xL) Mining Lease means a lease granted under these rules to

undertake excavation and to carry away any minor mineral specified

therein.

Rule 2(xLii) Mining Plan means a plan prepared by a Recognized

Qualified Person (RQP) on behalf of mineral concession holder of

minor mineral and includes progressive and final mine closure plans

duly approved under these rules and without which mining activity

cannot be undertaken.

Rule 2(xLviii) Open auction/e-auction Open Auction or e-auction

means bidding by the competitors online or through physical presence

before the auction committee for grant of mineral concessions.

Rule 2(Liv) Quarry means any area declared as such by the Director

or Officer Incharge as authorized by the Government in this behalf.

Rule 2(Lv) Quarry Licence means a licence granted under these

rules to excavate minor mineral from any specified mineral deposit or

plot.

Rule 2(Lxv) Unauthorized Mining means any mining operation

undertaken without any valid mineral concession granted under the

Act and rules made thereunder.

Chapter II Grant of Minor Mineral Concession

Rule 6. Mining Plan as a pre-requisite to the grant of minor mineral

concession.-

(1) No person shall be granted any minor mineral concession in any

area under these rules unless a mining plan is submitted and approved

under the provisions of these rules:

29


Provided that no such plan shall be required for short term

permit or disposal permit as defined in these rules.

(2) No person shall commence mining operations for minor

minerals in any area except and in accordance with a mining plan

approved under these rules.

Rule 11. Registration of Recognized Qualified Person (RQP).-

(1) No person shall be registered as a Recognized Qualified Person

by the Director, unless he possesses.-

(i) a degree in Mining Engineering or a postgraduate degree in

Geology granted by a University established or incorporated by or

under an Act of the Parliament or Act of State Legislature or any

institution recognized or incorporated by the University Grants

Commission established under section 4 of the University Grants

Commission Act, 1956 (3 of 1956) or any qualification equivalent

thereto granted by any University or Institution outside India and

possessing a professional experience of five years of working in a

supervisory capacity in the field of mining or mineral administration

after obtaining degree; or

(ii) a three year full time diploma certificate in Mining Engineering

awarded by a State Technical Education Board or a University or

Authority recognized by the Govt. of India and possessing professional

experience of 10 years of working in a supervisory capacity in the field

of mining or mineral administration after obtaining the diploma.

(2) Any person possessing the qualification and experience as

prescribed under sub-rule(1) may apply to the Director, for

registration as a Recognized Qualifying Person along with a fee of

Rs.10,000/- (Rupees ten thousand only).

(3) The Director may, after making such enquiry as deemed

appropriate, grant or refuse registration and where registration is

refused, the Director shall record the reasons therefore in writing and

communicating the same to the applicant.

(4) The registration granted under sub-rule (2) shall be valid for a

period of 10 years.

30


(5) The registration can be renewed on filing of application and

deposit of such fee as may be prescribed, from time to time, for a

further period of 10 years.

Rule 12. Approval of Mining Plan/Scheme of Mining.

(1) The Government or any Officer authorized by the Government

in this behalf shall approve the mining plan or such modified mining

plan or scheme of mining with or without any modification within a

period of forty-five days from the date of receipt or submission of such

application for approval of mining plan or modified mining plan or

scheme of mining, as the case may be.

(2) The officer authorized by the Government for purposes of

approving the mining plan/scheme under sub-rule (1) shall possess the

qualifications as prescribed under clause (XLVII) of rule 2 of the

rules.

Chapter III-Environmental safeguards

Rule 13. Protection of Environment.- Every holder of minor

mineral concession shall take all possible precautions for the

protection of environment and control of pollution while conducting

mining operations in the minor mineral concession area:

Provided that the concessionaire shall submit the Environment

Clearance from the District Environment Committee in respect of his

minor mineral concession area as per the notification issued by

Ministry of Environment and Forests (MoEF), GoI from time to time.

Provided that no such clearance shall be required in case of

Short Terms/Disposal Permit issued to the State Government/Central

Government agencies.

Rule 15. Environment Management Plan for Cluster of Quarries.

(1) For a cluster, Environmental Management Plan shall be

collectively prepared by the minor mineral concessionaire of the

cluster through a recognized qualified person and submitted to the

District Environment Committee for final approval by the Government

or the authorized officer of the Government in this behalf separately.

31


(2) Environment Clearance is to be sought from the Ministry of

Environment, Forest and Climate Change (MoEFCC), Government of

India in case of mining area/cluster is 50 hectares or more and from

the State Level Environment Impact Access Authority (SIEAAs) for

such areas/clusters less than 50 hectares, as per Impact Assessment

Notification, 2006 with amendment of 2009 and memorandum issued

by MOEFCC, GoI of May 18, 2012 for areas less than 5 hectares and

such other amendments as may be notified from time to time.

Chapter IV-Grant of Mining Leases

Rule 26. Restriction on grant and renewal of Mining Lease.––

(1) No Mining lease shall be granted by the competent

authority unless the authority is satisfied that there is evidence to show

that the area for which the lease is applied for has occurrences of

minor mineral.

(2) No lease shall be granted or renewed by the competent authority

unless there is a mining plan duly approved under these rules and

environmental clearance has been obtained by the applicant

irrespective of the size of the mining area.

Rule 27. Procedure for grant of mining lease.––Any minor mineral

deposits may be granted for a mining lease by the Competent Authority

for a period of not less than 05 years but not exceeding 15 years

depending upon the nature of the mineral deposit:

Provided that where minerals are deposited I the State land, the

lease shall be granted after following an open auction process as

provided under Chapter-VI of these rules excluding:

Provided also that where the minerals are not deposited in the

State and, permission shall be granted to the owner of the (Private

Land) or his authorized representative for mining/extraction only after

fulfilling the criteria provided under the provisions of these rules –

(i) the quarry areas ancestrally occupied and certified by the

revenue authorities in this regard; and

(ii) areas earmarked for operation by such public sector

undertaking as the Government may direct:

32


Provided further that Director shall constitute one or more

Committees for identification of minor mineral blocks having an area

not less than 05 hectares but not more than 10 hectares which shall be

put to open auction after approval from the competent authority.

Rule 28. Application for grant or renewal of mining lease of

minor minerals.-

(1) Every application for grant of mining lease shall be made to the

authorized officer in Form ML1.

(2) Every application for renewal of mining lease shall be made to

the authorized officer at least 12 months before the date of expiry of

such lease in Form ML2.

(3) Every application made under sub-rules (1) and (2) above shall

be accompanied by, -

(i) a non-refundable fee of Rs.50,000/ ;

(ii) a plan of the area on suitable scale connecting one or more of

the corner pillars with a fixed reference point in vicinity with accurate

bearings and distances and descriptions of the area applied for and

incorporated with title verification of the land;

(iii) a copy of No Due Certificate from officer authorized by the

Government in this behalf:

Provided that where any injunction has been issued by the Court or

any other authority staying recovery of any dues, the non-payment

thereof shall not be treated as a disqualification for the purpose of

granting or renewing the lease:

Provided further that No Due Certificate shall not be required where

a person has furnished an affidavit certified by a Civil Court to the

satisfaction of the department stating that he or any member of his

family does not or did not hold a mining lease or any other type of

mineral concession and no dues or the department are outstanding

against him or any member of this family.

(iv) an affidavit giving particulars of mineral-wise area already held

under mining lease/prospecting licence/quarry licnence, -

(a) by the applicant; or

33


(b) with any person having joint interest; or

(c) already granted but not yet executed/registered; or

(d) already applied but not yet granted.

(v) Income Tax Clearance Certificate/Income Tax Return of the

previous year;

(vi) Copy of ADHAR Card and PAN Card.

Rule 31. Renewal of Mining Lease applications and mining

leases. – The competent authority may refuse or grant or renew any

mining lease subject to reasons to be recorded and communicated to

the applicant in writing.

Rule 40. Execution of Lease.-

(1) Where the lease has been granted or renewed under these rules,

the lessee shall pay demarcation fee, deposit the security alongwith

one quarterly installment of annual dead rent and submit requisite

stamps for execution of formal lease deed in Form ML10 within 30

days from the date of issue of order of grant.

(2) The lease deed shall be executed within three months from the date

of issue of order of grant and the Director shall sign the lease.

(3) The lease deed shall be got registered by the lessee within a period

of one month from the date of execution of the lease deed and

registered lease deed shall be submitted immediately to the Director.

(4) Where the grantee fails to comply with the provisions of sub-rules

(1), (2), & (3) above, the order granting the lease shall be deemed to

have been revoked and amount of security and dead rent deposited by

him shall stand forfeited:

Provided that if the grantee applies before expiry of 30 days specified

in sub-rule (1) for extension of time for completing the formalities

mentioned therein, the competent authority may allow further time not

exceeding 30 days it is is satisfied that there are sufficient reasons to

believe that the grantee is not responsible for the delay in the

execution/ registration/submission of lease deed. The competent

authority may permit the execution/registration/ submission and return

of the lease deed within a reasonable time after expiry of aforesaid

34


period subject to payment of penalty @ 10% of annual dead rent for

every month of delay or part thereof.

(5) After the registration of duly executed lease deed under sub rule

(2) the Director or the Officer authorized by the Government shall

make arrangements at the expenses of the lessee for demarcation of

the granted area:

Provided that where the competent authority feels it necessary to

demarcate the area before issuing an order of grant for mining lease,

it may ask the applicant to deposit the demarcation charges as may be

determined within time specified by him and get the area demarcated:

Provided further that if the applicant fails to deposit demarcation

charges within the period specified in this regard by the competent

authority, the order for grant of lease shall stand cancelled.

Rule 42 Authority to granting Mining Lease. - The authority to

grant mining lease renew/terminate/transfer shall be Director for an

area up to 10 hectares.

Chapter V-Grant of Quarry Licence

Rule 44 Procedure for grant of Quarry Licence. - Any minor

mineral deposits which in the opinion of the Director are to be

operated under Quarry Licence, he may grant such licence for a

minimum period of the years which may extend up to five years. The

lease/quarry licence shall be renewed after expiry of five years and the

area shall be put to auction after expiry of the period of lease/licence:

Provided that where minerals are deposited in the State Land,

the lease shall be granted after following an open auction process as

provided under Chapter-VI of these rules excluding:

Provided also that where the mineral does not vest with the

Government (State Land), the licence for mining/extraction shall be

granted to the owner (Private Land) or his authorized representative

after fulfilling required conditions and procedure as provided under

these rules.

(i) The quarry areas ancestrally occupied and certified by the

revenue authorities in this regard; and

35


(ii) areas earmarked for operation by such public sector

undertaking as the Government may direct:

Provided further that the Director shall constitute one or more

Committee for identification of minor mineral plots having a minimum

area of 1 hectare and not exceeding 05 hectares which shall be put to

open auction after approval from the Competent Authority.

CHAPTER-VI Auction

Rule 52 Grant of Mining Lease/Quarry Licence.-Mining leases

and quarry licences shall be granted only through a process of open

auction by the authority competent to grant lease/licence:

Provided that the mining leases through open auctioin up to 5

hectares shall be granted only to permanent residents of Jammu and

Kashmir State and above 5 hectares, preference will be given to State

subject either individually or in Joint Venture with non-residents.

Rule 53 Auction Committee.- In each district grant of mining

concessions shall be conducted through auction by a Committee

consisting of following officers:-

1. Dy. Commissioner

concerned or an

officer authorized by

him not below the

rank of Additional

Deputy

Commissioner

(Chairman)

2. Superintending

Engineer (R&B) or

an officer authorized

by him not below the

rank of Executive

Engineer

(Member)

3. District Treasury

Officer

(Member)

4. Executive Engineer

(I&FC)

(Member)

5. Officer of the

department not

below the rank of

(Member)

36


Deputy

Director/Mining

Engineer

6. Officer Incharge of

the department of the

concerned district

(Member)

Rule 55 Terms and conditions for grant of Mineral Concession

through auction.-

“(1) The auction of mineral concession area shall be conducted at the

District headquarter of the concerned district by the Chairman of the

auction committee in presence of its members.

xxxxxxxx xxxxxxxxxxx xxxxxxxxxxxx

(6) The Chairman shall conduct the auction in the peaceful manner

and may direct any bidder to leave the auction premises in the event of

misbehavior during the course of auction and shall reject his bid or, if

necessary, debar him for a period of three years from the date of

misbehaving for grant of any Concession under these rules including

forfeiture of earnest money deposited by such bidder.

(7). On completion of the bid process i.e. fall of the hammer, the

Chairman may provisionally accept or reject the highest bid offered or

received during the auction proceedings and shall send his

recommendations to the Director. The highest bidder shall have to

deposit 50% of the bid amount after completion of the auction

process:

Provided that in case the auction proceedings are not conducted

under the Chairmanship of Deputy Commissioner, the

recommendations as required under clause (6) above shall be made

with the approval of the Dy. Commissioner concerned.

(8) No highest bid shall be regarded as accepted unless approved

by the Director in case the highest bid is up to Rs.150.00 lacs and by

the Government in case the highest bid is above Rs.150.00 lacs.

37


(9) Once a bid is provisionally accepted, Director shall issue Letter

of Intent (LoI) to the concerned bidder to complete the formalities as

required for the grant of mining lease or quarry licence under these

rules within a period of six months including deposition of

remaining bid amount. The concerned bidder shall not extract or

allow any extraction till such mining lease or quarry licence is

granted.

(10) The bid amount offered by the successful bidder shall be

considered as guarantee amount for grant of such mineral

concession.”

III Defiance of the law-Rule 104A - a special provision in Jammu &

Kashmir

48. There is one additional and unique event which took place in the erstwhile

State of Jammu and Kashmir. The order dated 27th February 2012 of the Supreme

Court of India in Deepak Kumar was forwarded by the Additional Registrar of the

Supreme Court of India to the then State Government. Steps were to be taken to

comply with the orders of the Supreme Court; the Report of 2010 of the

MOEF&CC and the Model Guidelines framed by the Ministry of Mines.

Deliberations commenced in the concerned Departments of the State which

continued from 2012 to 2016. Draft Rules though framed, remained under

consideration for several years interse the various authorities. We find that issues

relating to minor mineral’s concessions were receiving close attention in the

Geology and Mining Department which was concerned with the matter.

49. The respondents have placed their original file No.IND/Legal-27/2013-II

before us. From these records of the respondents with regard to the Rules, we find

a statement of Financial Commissioner (I&C) dated 12th February 2015 (at page 49

to 51) of the note sheet in the file, to the effect that State of Jammu and Kashmir

38


stood “endowed with mineral resources covering an area of 13334 sq. Kms, out of

which 60% are reported to be commercially viable for mining of various

minerals.”

50. With regard to the nature of the State’s mineral wealth, para 141[part of the

above noting dated 12.02.2015 of the Financial Commissioner (I&C)] in the note

sheet while forwarding the Draft Rules is enlightening. It is to the following effect:

“141. The Department of Geology and Mining, Jammu & Kashmir,

was established in 1960 to identify/locate minerals like Limestone,

Gypsum, Marble, Lignite, Granite, Bauxite, Coal, Magnesite, Slates,

Sapphire, Dolomite, Borax, Graphite, Quartzite etc. A number of

Cement based Industries as well as units for manufacture of plaster of

Paris, Marble and Granite cutting units, have been established in the

State. The Geology and Mining Department is authorized to receive

the royalty on the extraction of major as well as minor minerals as per

the scheduled rates, fixed by the Central Government in respect of

major minerals and State Government in respect of minor minerals.

There are large minor mineral deposits available within the State with

huge potential for commercially viable exploration and industrial

use.”

51. Vide SRO 58 of 1962 dated 10th April 1962, J&K Minor Mineral

Concession Rules, 1962 were framed and issued. These Rules also governed grant

of short term quarry permits, contracts in respect of the minor minerals and

royalty collections besides containing provisions for grant of certificates of

approval, prospecting licences and mining leases.

52. Interestingly, as noted above, these Rules prescribed grant of these licences

on ‘first come first served basis’ and were made as per the needs at that point of

time. For instance, the rate of royalty at the time of notification dated 10th April

39


1962 had to be calculated as per mules, horses and donkeys which, with passage of

time, had become redundant and meaningless.

53. Before the Srinagar Wing of this Court, the issue of non-compliance with

the judgment of the Supreme Court was also raised inter alia in PIL no.

1553/2011, Sofi Arif Maqbool v. State and others; PIL no. 10/2012 and OWP no.

461/2011.

54. In Sofi Arif Maqbool, the Court granted limited time period for

formulation/issuance of these rules.

55. After a detailed deliberation, the rules which were finalized i.e. Jammu &

Kashmir Minor Minerals Concession, Storage, Transportation of Minerals and

Prevention of Illegal Mining Rules, 2015, were assigned the number SRO 98

dated 31st March 2015 but not issued or published. These Rules were subject to

amendment with regard to conferment of powers for grant of leases, fixation of

royalty and other terms.

56. Thereafter SRO 3 of 2016 dated 06th January 2016 notified the Jammu and

Kashmir Minor Minerals Concession, Storage, Transportation of Minerals and

Prevention of Illegal Mining Rules, 2016 after seeking inputs from the relevant

departments, in exercise of power conferred by Section 15 read with Section 23-C

of the Mines and Minerals (Development and Regulation )Act, 1957.

57. This Government Order was assailed before this Court in OWP

No.283/2016, Surat Singh v. State of J&K and anr, complaining that these Rules

were unconstitutional.

58. We stand informed that almost four years after the pronouncement of the

Supreme Court in Deepak Kumar, the J&K State Government withdrew SRO 3 of

2016 dated 1st January, 2016 and on 31st March 2016, by a notification SRO 105

40


issued the J&K Minor Minerals Concession, Storage, Transportation of

Minerals and Prevention of Illegal Mining Rules, 2016 (Rules of 2016 hereafter).

By virtue of Rule 108 of these Rules, the Jammu and Kashmir Minor Mineral

Concession Rules, 1962 and the Jammu & Kashmir Minor Minerals Concession,

Storage, Transportation of Minerals and Prevention of Illegal Mining Rules, 2003

were repealed.

59. As per SRO 105, a mining lease/quarry licence could be granted only by an

open auction. These Rules were issued after inputs/ concurrence from Finance,

Forest and Irrigation and Flood Control Departments and approval by the then

Governor.

60. After the notification of the above Rules of 2016, an unusual discussion is to

be found in the original record which led to the issuance of Rule 104 A as a

transitory provision in the Rules. The file contains a noting dated 7th April 2016

(page 115) of the Deputy Secretary, I& C to the following effect:

“322. Noting from para 318 onwards.

It may be mentioned here that J&K Minor Mineral

Concession Rules notified vide SRO 105 dated 31-03-2016 where-

under every mining leases/quarry licences are to be granted through

open auction only. The Department have already conveyed approval

for conducting of auction of Minor mineral blocks of various districts

of the State.

324. The Director, G&M has requested that since the process will

take considerable time because the successful bidder has to obtain

several clearances/approvals like Mining Plan, Environmental

Clearances etc, therefore, Directorate of G&M may be authorized to

issue permission to the existing quarry holders/extractors/consumers

including projects of National/State importance and also to royalty

from carriers on spot for a period of one year as a breathing period.

41


Since rules does not permit such breathing time, it needs relaxation

by the competent authority.”

(Emphasis by us)

61. Based on this noting, a draft amendment to the Rules was prepared

proposing a transitory provision to be incorporated in the J&K Minor Minerals

Concession, Storage, Transportation of Minerals and Prevention of Illegal

Mining Rules, 2016 allowing the department to issue necessary permission for

extraction of minor minerals to existing quarry licencees, extractors and consumers

and also for transportation of such minerals on royalty basis for a period of six

months or till grant of concession under the Rules of 2016.

62. We find a noting of the Law Department in para 329 dated 15th April 2016

that the purpose of this draft was to ‘allow breathing period of six months to the

department to switch over to the new regime which required open auction of

minerals’.

63. It appears that the learned Advocate General of the State considered the

issue in the light of the pronouncement of the Supreme Court dated 27th February

2012 and opined as follows:

“In my opinion, the proposed SRO, if approved, should only by way

of one time exception, that too as a last resort under the compelling

circumstances otherwise its continuation would in breach of the

guidelines of the Hon’ble Supreme Court of India. I am also of the

opinion that the maximum period during which Rule 104-A may

remain operative should not exceed more than eight weeks from the

date of its commencement.”

64. We are appalled that violation of an authoritative and binding judgment of

the Supreme Court could be legally advised. Despite admitted knowledge of the

42


clear dicta of the Supreme Court, with impunity the Government of Jammu and

Kashmir vide SRO 133 of 2016 dated 20th April 2016 (page 350 CF) effected a

crucial amendment to the Rules of 2016 by inserting the following as Rule 104-A

in the Rules of 2016:

“104-A. Transitory Provision – As a transitory measure and in

order to ensure uninterrupted supply of minor minerals to the

consumers, the department may issue permission valid up to 31st of

July, 2016 for extraction of minor minerals to any existing quarry

holder or to any person extracting such minor minerals or for

transportation of such minerals on royalty basis.”

(Emphasis by us)

65. The above Rule thus permitted short term permits with compliance with the

explicit requirements of sanctioned mining plans and EC against payment of

advance royalty to:

(i) the existing quarry holders;

(ii) Or any other person extracting such minor minerals.

(iii) On spot collection of royalty at check points against the actual

dispatches from any person transporting such minor minerals.

66. Noticeably the only purpose of this transitory provision was to ensure

‘uninterrupted supply of minor minerals to the consumers’.

67. Unfortunately the respondents did not follow even the advise of the

Advocate General dated 27th February 2012 that Rule 104A should only be a “one

time exception”. In brazen defiance of the law, the respondents proceeded to issue

orders extending Rule 104-A as follows:

S. No. By SRO No. & date Rule 104-A

extended up to

(i) SRO 269 dated 12.8.2016 31st March 2017

43


(ii) SRO 163 dated 03.04.2017 30th June 2017

(iii) SRO 265 dated 30.06.2017 30th September 2017

(iv) SRO 375 dated 11.09.2017 31st December 2017

(v) SRO 31 dated 23.01.2018 31st March 2018

(vi) SRO 161 dated 06.04.2018 30th June 2018

(vii) SRO 164 dated 11.04.2018 30th June, 2018

(viii) SRO 424 dated 20.09.2018 31st December 2018

(ix) SRO 93 dated 01.02.2019 28th February 2019

68. Rule 104-A has, therefore, not been treated as a transitory provision so far as

the categories of persons covered thereunder are concerned but actually enables

extraction and transportation of the minor minerals without completion of the

prescribed process, preparation of mining plan and without obtaining EC.

69. In a noting dated 30th August 2017 (in paras 465-466 of the official

record), it is observed that the department has obtained approval of the Chief

Minister for the extension of the transitory provision with effect from 01.04.2017

till 31.03.2018 and it was decided that the transitory provision “shall be issued in

a phased manner to bring pressure on subordinate staff to complete the auction

process”.

70. Completely untenable grounds for extension of its validity thus are found on

the official record. The respondents have utilised the shield of interim orders in

OWP No. 572/2016, M/s Upkar Stone Crusher and other v. State and anr., and

their inability to conduct auctions for proposing to extend the provisions from 1st

April 2017 to 31st March 2018. Whereas efforts ought to have been made to seek

final adjudication in Upkar Stone Crusher.

71. Interestingly, one of the note sheets dated 10th April 2018 (para 544, page

161 of the Govt. file) notes that the recommendation was for extension of the

transitory provision in favour of successful bidders having approved mining plans

44


‘ancestrally occupied quarry belts/clusters and for emergent nature works/projects

of the State and national importance and not to all persons.’

72. Para 545 thereafter records that “due to oversight the transitory provision

has been extended to all existing quarry holders or any person extracting such

minor mineral or for transportation of such minerals on royalty basis”.

73. In view thereof, another significant development deserves to be noted. It is

important to note that a Govt order SRO 164 dated 11th April 2018 was issued by

the official respondents in purported exercise of powers under Section 15 read with

Section 23-A of the Act of 1957 expanding the applicability of Rule 104 A. This

order directed that the existing Rule 104-A shall be substituted by the following:

“104-A. Transitory Provision – As a transitory measure Rule 104-A is

extended upto 30th June, 2018 in favour of the successful bidders

having approved mining plans, ancestrally occupied quarry

belts/clusters and for emergent nature works/projects of Central and

State Government to lift and transport minor minerals on royalty

basis in order to ensure uninterrupted supply of minor minerals to the

consumers”.

(Emphasis supplied)

Thus, the benefit under Rule 104A was extended to “successful bidders”

and “ancestrally occupied quarry belts/ clusters”, again in blatant violation of the

law.

74. Mr Sethi, learned Senior Counsel, represents eight persons who had filed

CMP No.1038/2020 in OWP No.363/2019 before the learned Single Judge seeking

impleadment as party respondents on the ground that they were vitally interested in

the outcome of the writ petitions for that they favour the decision of the

Government to allot mining leases only by e-auction. The applicants were

permitted to intervene in the matter. For this reason we have also permitted

45


intervention by these applicants and heard Mr Sunil Sethi, Senior Advocate, on

their behalf.

75. Mr Sunil Sethi, ld. Senior Counsel, has challenged the authority, power and

jurisdiction of the then State Government to enact Rule 104-A.

76. Mr Sunil Sethi, has placed reliance on the pronouncement of the Rajasthan

High Court dated 9th April 2019 in Civil writ No. 2996 of 2018, Bajri Lease Lol

Holders Welfare Society & Ors. Vs. State of Rajasthan & Ors. In this case, a

challenge was laid to the vires of sub rule 4 of Rule 5 of the Rajasthan Minor

Mineral Concession Rules 2017 which provided that in cases covered by Rule 5,

the conditions of Letter of Intent (LoI) including execution and registration of the

mining lease, shall be fulfilled within a period of one year from the date of

commencement of the Rules of 2017 failing which the right of the LoIs shall be

forfeited and in such cases it would not be mandatorily for the Government to issue

any order in this regard.

77. The rules were amended by the Government of Rajasthan after the judgment

of the Supreme Court in Deepak Kumar in 2017. The pivotal question which was

considered by the court was whether the LoI issued in favour of the petitioners who

were successful bidders under the Rules of 1986, created any vested right in their

favour which though protected under Rule 5 (2) of the rule, was adversely effected

by Rule 5 (4) which restricted the time limit for fulfillment of the conditions of the

LoI within a period of one year from the date of commencement of the Rules of

2017. On failure of the bidder to comply with the LoI terms, the rules postulated

forfeiture of the application fee, premium amount and performance deposit

automatically. Placing reliance on the pronouncement of the judgment Rishi Kirin

46


Logistics Private Limited; Bhushan Power and Steel Limited Hind Stone and

Ors., the Rajasthan High Court was of the view that the Rule 5(3) and 16(4)

postulated opportunity of hearing on the question of forfeiture of the application

fee on account of non-fulfillment of the conditions of the LoI within the stipulated

period. It was held that as such rule 5 (4) of the rules of 2017 deserves to be

declared as constitutionally valid and the writ petition was dismissed.

78. Mr Abhinav Sharma, ld. counsel has pointed out that the judgment of the

Division Bench of the Rajasthan High Court stands assailed before the Supreme

Court of India by way of SLP(C) No. 3486/2020 and an interim order dated 20th

February, 2020 has been passed therein.

79. Rule 104A was relied upon by the appellants before the Ld. Single Judge in

support of their submission that once the respondants had realized the difficulty in

obtaining EC, it was unfair to scrap the whole process in one go without good

reason. In para 75 of the impugned judgment, the Single Judge, while discussing

the impact of substitution of Rule 104A as issue No. (vi), has held that Rule 104A

was not only in violation of the provisions of the Act of 1957 and the rules framed

thereunder but was a clear affront to the Environment (Protection) Act, 1986 and

the Rules framed thereunder.

80. It has been urged by all Counsels appearing in these appeals that there was

no challenge to the constitutionality and legality of Rule 104-A in the writ petitions

and that the learned Single Judge had no jurisdiction to comment as above thereon.

This submission is to be noted only for the purposes of rejection.

81. It is urged that the respondents were supporting the incorporation and

working of Rule 104A on court record. Our attention is drawn by Mr P.N. Raina,

ld Senior Counsel to a response of the official respondents in OWP 1176/2018,

47


Radha Krishan and others vs Union of India & others defending the validity of

Rule 104 A in the following terms:

“xxiv. That it is respectfully submitted that since the auction process

in terms of the new scheme enunciated vide SRO 105 of 2016 was to

take time and in order to ensure uninterrupted supply for

developmental works of State and Central Government agencies

besides feeding raw material to the minor mineral based units, the

Government of Jammu and Kashmir has brought amendment to the

extent of incorporating a transitory provision in the shape of Rule

104-A vide SRO 133 of 20.04.2016 thereby authorizing the answering

respondent-Department to issue permission valid upto 31st of July,

2016 to any existing quarry holder or to any person extracting such

minor minerals on royalty basis. It is submitted that the time frame

fixed in the aforesaid SRO’s No. 269, 163 and 265, 375 & SRO No.31,

came to be extended, copies whereof are enclosed herewith and

marked as Annexure-XXI collectively. It is submitted that the

extensions as above were continued by virtue of the aforesaid SRO’s

till March, 2018.”

(Emphasis by us)

82. The above defence of their actions by the respondents to Radha Krishan is

of no legal consequence or effect.

83. We are informed that during the pendency of the writ petitions before the

Ld. Single Judge, the petitioner in OWP No. 1176/2018 Radha Krishan v. Union of

India, filed an application being CM 677/2020 seeking withdrawal of the petitioner

on the ground that petitioners were no more interested in prosecuting the matter. In

this background, on 3rd February, 2020, the writ petition was dismissed as

withdrawn.

84. We have extracted above the relevant statutory provisions. We find that

Section 4(1) of the Mines and Minerals (Development and Regulation) Act, 1957

48


(Act of 1957) unexceptionally prohibits undertaking any reconnaissance,

prospecting or mining operations in any area except under and in accordance with

the terms and conditions of a mining lease granted under the provisions of the Act.

85. So far as grant of mining lease is concerned, Section 4(2) absolutely

prohibits grant of a mining lease otherwise than in accordance with the provisions

of the Act and the Rules thereunder. Rule 26(2) also prohibits grant of a lease

unless mining plan is approved and EC obtained. The Rules of 2016 have been

notified in exercise of powers conferred under Section 15 read with Section 23C of

the Statute which contain specific prohibition to grant of mining lease without

ECs. There is an explicit bar under Rule 55(9) to the effect that the bidder whose

bid is provisionally accepted “shall not extract or allow any extraction till such

mining lease” has been granted.

86. We have examined Section 15 of the Act of 1957, which empowers the State

Government to make the rules in respect of mining and minerals for regulating the

grant of mining lease or other mineral concessions with regard to the matters

enumerated thereunder. Additionally, Section 23C enables the State Government

to make rules for preventing illegal mining transportation and storage of minerals.

It is well settled that any rules made under Section 15 and 23C have to be in

consonance with the spirit, intendment and purpose and most importantly, the

specific provisions of the statute Rules made in exercise of statutory power and

cannot override specific prohibitions contained therein.

87. The working of Rule 104 A results in grave loss to public interest inasmuch

as environmental degradation is the consequence of the mining activity

undertaken, without EC, by a bidder utilizing the shield of Rule 104-A. The Rule

provides no mechanism for restitution in the event of ultimate rejection of the bid.

49


88. The very issuance of Rule 104-A enabled illegal mining activity by bidders

only for a period of six months. Certainly, it could also not have been extended in

the manner in which it has been extended.

89. The statutory provisions did not enable or empower the erstwhile State

Government to issue a rule in the nature of rule 104-A. The State Government did not

have the legislative competence to effect such amendment to incorporate Rule 104 A in the

Rules or extend the same.

90. In this regard, the manner in which mining and quarrying operations without

EC were being carried on in Jammu and Kashmir has been specifically noted by

the NGT also in its orders, which has specifically intervened in the matter.

91. Clearly Rule 104-A which enables mining activity to be undertaken while a

lease is being processed, even without EC is ultra vires the Act of 1957. It is in the

teeth of the judgment of the Supreme Court. It is in contradiction with rules 26(2)

and 55(9) of the very Rules wherein it stands incorporated.

92. The appellants are thus unable to point out as to how Rule 104-A is not an

affront to the provisions of the Act of 1957, the Rules of 2016; , the Mining and

Mineral Rules, 2016, violation of the decision of the Supreme Court in Deepak

Kumar and the repeated directions of the NGT extracted above whereby the

carrying out of mining and quarrying activities without EC is specifically and

strictly prohibited.

93. The learned Single Judge was conscious of and has also noted the fact that

Rule 104-A was not under challenge in the writ petitions. The learned Single Judge

was bound to examine the statutory provisions as also the rules in their entirety and

was not only justified but has correctly observed that Rule 104-A was in the teeth

of the requirement of the law. We completely agree with the learned Single Judge

50


that this Rule was contrary to the statutory provisions and has enabled bidders as

the appellants to indiscriminately exploit the minerals without compliance of the

requirement of law and, as held on issue (vi) in para 75 of the impugned judgment

that Rule 104A was an affront to the Environment Protection Act.

94. We shall consider the working and also the significant impact of the Rule

104 A on the conduct of the appellants later in this judgment.

IV Chronology of relevant events, submissions of appellants

95. As per the objections filed by the respondents in the writ petitions after the

issuance of SRO 105 of 2016, a process of identification of 231 minor mineral

blocks in various districts of the State was undertaken. After such identification,

respondents issued identical public notices on various dates in 2016 of the open

auctions to be conducted for grant of mining leases of minor minerals in the

mineral blocks.

96. For expediency, we extract as a sample the relevant portion of one such

auction notice issued by the Department of Geology and Mining as hereunder:

“Government of Jammu & Kashmir

Officer Incharge Geology & Mining Department (Member Secretary)

District Kupwara

Auction Notice

On behalf of the Governor of Jammu & Kashmir the open auction for

grant of Mining lease of Minor Minerals for a period of 05 years, as

per Jammu & Kashmir Minor Concessions, Storage, Transportation

of Minerals and Prevention of Illegal Mining Rules 2016 (SRO 105)

dated 31.03.2016) shall be conducted in the office of the Deputy

Commissioner, Kupwara (Chairman) on 11/12/2017 at 02.00 PM. The

details of the Minor Mineral blocks for open auction are as under:-

xxxx xxxx xxxx xxxxx xxxxx

51


The auction document (TERMS & CONDITIOINS) for conduct of

open auction and grant of Mining Lease alongwith plan of area can

be obtained from the office of the undersigned on any working day

during the office hours till 09/12/2017, against a cash payment of

Rs.1000/= (Non-Refundable)

DIPK-9663/17

Sd/-Office Incharge

Geology & Mining Department (member Secretary)

Distr. Kupwara.”

97. The auction notices published by the Department of Geology and Mining

clearly notified inter alia the following ‘Important Conditions’:

“A) Important Instructions:

xxx xxx xxx

m) On completion of the bid process i.e. fall of the hammer, the

Chairman may provisionally accept or reject the highest bid offered

or received during the auction proceedings and shall send his



process:

Provided that in case the auction proceedings are not concluded

under the Chairmanship of Deputy Commissioner, the

recommendations as required above shall be made with the approval

of the Dy. Commissioner concerned.

xxx xxx xxx

C) Procedure of Auction:-

xxxxx

iv) On completion of the bid process i.e. fall of the hammer, the

Chairman may provisionally accept or reject the highest bid

offered/received during the auction proceedings and shall send his



process.

52


v) The complete process shall be video graphed and kept in safe

custody for at least three years.

D) Terms of Auction

(i) The Bidder whose bid is provisionally accepted, Director

shall issue Letter of Intent (LoI) to complete the formalities as

required for the grant of Mining Lease or Quarry Licence under

these rules as the case may be within a period of six months,

including deposition of remaining bid amount.

xxxxxx

E) Condition of Lessee: Every mining lease shall be subject to the

following conditions:

xxx xxx xxx

(ix) The lessee shall commence mining operations within

three months from the date of execution of the lease and thereafter

carry on such operations effectively in a manner which will ensure

safety of labourers, conservation of mineral, removal of over burden

and its process dumping, storage, drainage of water and removal of all

valuable minerals from the mines in accordance with rules.”

(Emphasis by us)

98. Open auctions of 270 minor mineral blocks were conducted in the year

2017-18 while in 2018-19, open auctions of 12 minor mineral blocks were put to

auction pursuant to public notices.

99. Every aspect of the above auctions was challenged in this Court. One such

writ petition being OWP No.1176/2018 titled Radha Krishan and others v. Union

of India, was filed laying a challenge to the vires of Rule 52 and Rule 27 of the

Rules of 2016 (promulgated vide SRO 105 of 2016 dated 31st March 2016). Radha

Krishan sought the following reliefs in this petition:

“(a) Certiorari, to quash and set aside Standard Aution Document for

grant of mineral lease/ Quarry Lease issued by the respondent State for

being illegal, arbitrary and violative of Article 19(1)(g) of Constitution

of India.

53


(b) Writ of Mandamus for declaring Rule 52, sub rule (2) of Rule 27 of

J&K Mineral Concession, Storage, Transportation of Minerals and

Prevention of Illegal Mining Rules, 2016 vide WRO 105 of 2016 dated

31.03.2016 as ultra vires the Constitution of India, Notification issued

by Central Government, being contrary to the judgment of the Apex

Court in Deepak Kumar’s case with a further writ of mandamus for

declaring all the actions taken in pursuane of Auction document for

grant of Minor Mineral Concession and directing the respondents to

frame rules while strictly complying with the EIA Notification dated

14.09.2006 issued by the Ministry of Environment and Forest,

Government of IIndia and the directions issued by Hon’ble Supreme

Court vide judgment dated 27.02.2011 in Deepak Kumar and Ors Vs

State of Haryana and ors.

(c) Certiorari, to quash and set aside SRO 164 of 2018 dated

11.04.2018 with respect to J&K Minor Mineral, Storage,

Transportation of Minerals and Prevention of illegal Mining Rules,

by the issuance of writ, order or direction in the nature of certiorari.

(d) Certiorari, to quash and set aside by issuance of writ, order or

direction in the nature of certiorari.”

(Emphasis by us)

100. It was contended by Radha Krishan that under Rule 52, the mining leases

and quarry licences are permitted to be granted only through the process of open

auction by the competent authority. The petitioner submitted that in terms of the

definition given in Rule 2(xLViii), open auction/e-auction had been defined to

mean bidding by various bidders online or through physical presence before the

Auction Committee for grant of mineral concession. The petitioner submitted that

Rule 52 excluded grant of mining licences through e-mode which, on date, was the

most potent and transparent mode of distribution of largesse by the State to avoid

formation of cartels.

54


101. On a prima facie consideration of this objection, an interim order dated 19th

June 2018 was passed in Radha Krishan directing that “no licence of mining

leases and quarries shall be granted by the competent authority, otherwise than by

e-mode auction”.

102. In another petition being OWP No.2648/2018 titled Sarweshwar Sharma

and another v State of J&K and others, the entire process including the transitory

provision benefit whereof was being allowed to successful bidders, was

challenged. An interim order dated 26th December, 2018, was passed seeking a

detailed response from the respondents in permitting extraction of minor minerals

contrary to the mandate of the judgment in Deepak Kumar’s case and in violation

of provisions of SRO 105.

103. It is an undisputed position before us that so far as the appellants are

concerned, they were found to be the highest bidders in auctions with regard to

different blocks of minor minerals in terms of Rule 55(9) and their bids were

provisionally accepted. Thereafter the respondents issued a LoI on different dates

to each of the appellants. The LOIs were in identical terms.

104. Inasmuch as the entire case of the respondents rests on these Letters of

Intent, we extract one such communication hereunder:

“Subject:- Auction of approved Minor Mineral Blocks in District,

Jammu and Letter of Intent (LoI) thereof.

Whereas, Auction of approved Minor Mineral Blocks of

District, Jammu was conducted by District Auction Committee under

the Chairmanship of Dy. Commissioner, Jammu on 26/27th December,

2017.

Whereas, in the said auction you have emerged as

highest bidder in respect of Minor Mineral Block No.-61(5/36),

55


Chauki Chaura Downstream Chagial Bridge covering an area of 5.28

hectares in District, Jammu.

Whereas, Chairman District Auction Committee (Dy.

Commissioner, Jammu) has approved the highest bid amount offered

by you to the tune of Rs.40.00 lacs i.r.o the said Minor Mineral Block.

Whereas, under Rule 26(2) of the Jammu and Kashmir

Minor Mineral Concession, Storage, Transportation of Minerals and

Prevention of Illegal Mining Rules, 2016, Mining Plan and

Environmental Clearance is mandatory for grant of Mining Lease.

Whereas, the highest bid amount for the said Minor

Mineral Block offered by you has been provisionally accepted by the

Chairman, District Auction Committee (Dy. Commissioner, Jammu)

Now, therefore in view of the above and as per Rule

55(9) of these rules, the Letter of Intent (LoI) is issued with the

direction to submit Approved Mining Plan and Environmental

Clearance besides, deposition of remaining 50% bid amount within a

period of 06 months, enabling this office to grant mining lease in

your favour for extraction of minor minerals from the above said

block.”

(Emphasis supplied)

105. Apart from the three pre-conditions stipulated in the LoI, in view of the

directions made by the NGT and Guidelines issued by the State Pollution Control

Board, a letter dated 12th November, 2019 was issued by the Jammu & Kashmir

Pollution Control Board to the effect that no extraction of minor minerals be

carried out from the auction blocks without EC.

106. Unfortunately, none of the appellants were able to ensure compliance with

the three pre-requisites for grant of mining leases. Not a single appellant deposited

the 50% of the balance amount within six months from the issuance of LoIs to

them.

56


107. Though mining plans were gotten approved by most of the appellants,

however, not a single appellant got the EC from the concerned authorities in due

time.

108. The only appellants who were able to get the EC are the appellants in LPA

No. 64/2020, Vikar Ahmad Dar v. State of Jammu and Kashhmir and others.

This was also grossly belated. We shall consider the impact of this fact later in this

judgment.

109. On 26th February, 2019, a decision was taken by the authorities vide

communication No. IND/Legal-239/2018 to scrap the entire open auction process.

This communication reads thus:

“Government of Jammu and Kashmir

Industries & Commerce Department

Civil Secretariat, Jammu.

The Director,

Geology and Mining Department,

J&K Jammu.

No:-IND/Legal-239/2018 Dated: 26.02.2019

Sir,

I am directed to refer your letter no.203/MCC/DGm/MMB/7731

dated 07.02.2019 regarding the subject cited above and to convey the

following approval of the competent authority:

i) Open auction carried out under the 2016 has been scrapped and

fresh aucion be carried out, only through e-auction mode.

ii) Till the time fresh allotments are made, the existing mechanism

would continue.

iii) Procedure of mining plan approval, fixation of reserve bid

amount and frequency of royalty deposition would be addressed

by issuing directions under the existing Rules.

Yours faithfully,

Sd/-

57


(Mohammad Ayaz)

Under Secretary to Government

Industries & Commerce Department”

(Emphasis supplied)

110. The appellants have heavily relied on the letter dated 7th February, 2019

referred to in the above communication submitting that there is no connection

between the two.

111. This was a communication dated 7th February, 2019 addressed by the

Directorate of Geology and Mining Jammu to the Principal Secretary, Industries

and Commerce Department in the light of the consideration for e-auction of minor

mineral blocks, forwarding the status of auction in the left out districts of Kathua,

Doda, Ramban of the Jammu Province and Srinagar, Baramulla and Bandipora of

the Kashmir Province. A brief note on the aspect of conduct of e-auctions in the

districts was also enclosed for perusal. We extract the letter dated 7th February,

2019 hereunder as well:

“Government of Jammu and Kashmir

Directorate of Geology and Mining, Jammu.

The Principal Secretary to Govt.,

Industries and Commerce Deptt,

Civil Secretariat, Jammu.

No. 203/MCC/DGM/MMB/773 Dated:7.02.2019

Subject:- E-auction of Minor Mineral Blocks

Sir,

Kindly find enclosed herewith status of auction in left out

Districts i.e. Kathua, Doda, Ramban of Jammu Province and Srinagar,

Baramulla and Bandipora of Kashmir Province. A brief note on

58


conducting of e-auction in the said Districts is also enclosed for kind

perusal.”

Yours faithfully

Sd/-

Encl:- 5 Lvs Geology & Mining

J&K Govt. Jammu”

112. The above decision was followed with a communication bearing No.

IND/Legal-23/2018 dated 27th of March, 2019 issued by the Department of

Industries and Commerce of the Government of the Union Territory of Jammu &

Kashmir directing that the State/ Central Government agencies can undertake

mining activities from the un-auctioned blocks on royalty basis.

113. The existing mechanism with regard to the transitory provision in favour of

the successful bidders was extended with effect from 1st of March, 2019 upto 30th

of April, 2019. SRO 279 of 2019 was issued in this regard.

114. On 15th April, 2019, yet another communication bearing

No.IND/Legal/27/2013-II was issued allowing the mining of minerals by those

who had succeeded in the open auctions wheresoever such open auction had been

held, under close departmental supervision and under the supervision of the

Deputy Commissioner concerned.

115. In those districts where open auctions had not been conducted, it was

directed to allow mining under departmental supervision on first come first served

basis.

116. The above mining had to be interdicted as the Jammu & Kashmir Pollution

Control Board issued a stern letter dated 12th November, 2019

(SPCB/NGT/60/019/134-37) to the Director, Geology & Mining Department in the

light of the directions of the NGT as well as the Central Pollution Control Board

guidelines.

59


We extract this communication in extenso as below:

“With regard to your response under reference at ii to this office

Notice at reference No.i above, it is clear that out of 554 minor

mineral blocks, no block is fully compliant with the law governing

environmental protection on one count or the other as none is

consented by the Board while as only 15 minor mineral blocks have

the Environmental Clearance.

Secondly, as per your report, 231 blocks have been auctioned in open

auction and 5 in e-auction while as LOI in respect of 224 auction

minor mineral blocks has been issued in favour of successful bidders.

It may be clear from above that extraction of minor minerals from the

auctioned blocks has been permitted by your department dehorse of

law as one of the blocks is consented by the Board under Section 25

and 21 of the Water (Prevention & Control of Pollution) Act, 1974 and

Air (Prevention & Control of Pollution) Act, 1981 respectively, while

as only 15 such blocks have Environmental Clearance. It may be also

clear that most of the successful bidders carry out the mining

operation in absence of proper mining plan, thereby permission of

your department for mining is not only in brazen violation of laws

governing environmental protection but highly detrimental for

ecosystem and environment, as no scientific method in absence of

approved mining plan is adopted for extraction of minor minerals.

Interim arrangement made under communication No. IND/Legal/27/

2013-II dated 15-04-2019 for extraction of minor minerals can no

way be substitute to statutory requirements discussed above.

Since the activity permitted by your department is violative of laws

governing environmental protection and in clear defiance of the

directions of Hon’ble Supreme Court of India and Hon’ble NGT,

you are hereby directed to:-

60


i) Stop for auctioning such minor mineral blocks which are not

consented by the Board or have no prior Environmental Clearance

of the site.

ii) Rescind the permits approved/ ordered forthwith granted to the

successful bidders which do not have Environmental Clearance and

consent of the Board or either of the two.

iii) Ensure no extraction of minor minerals from today is done in

the state iin defiance of laws governing environmental protection.

Needless to clarify that in the event of your failure to comply with the

above said directions, you shall become liable for prosecution as well

as Environmental compensation on the basis of Polluter Pays’

Principle in light of the Hon’ble NGT directions and CPCB

guidelines.

For immediate compliance under intimation within a week’s time.”

(Emphasis by us)

117. The scrapping of the open auctions carried out under the Rules of 2016 and

the decision to conduct fresh auction through E-auction mode was challenged by

the appellants in both wings of the High Court in the following writ petitions:

S.No. Writ petition number Title LPA No.

Srinagar Wing

01. OWP No.363/2019

WP(C) No.1057/2019

Ashaq Hussain Paddar and

others. v. State of J&K and

others (Only petitioner No. 5

filed appeal

58/2020

02. OWP No.243/2019 Mohammad Iqbal Lone v.

State of J&K and others.

03. OWP No.259/2019 Vikar Ahmad Dar v. State of

J&K and others.

64/2020

04. OWP No.290/2019 M/s Usman Constructions

and others v. State of J&K

and others.

61/2020

05. OWP No.344/2019 Mohd. Farooq Lone and

others v. State of J&K and

63/2020

61


118. On the 13th March, 2019, in OWP no. 325/2019, the Ld. Single Judge

directed the Registrar Judicial to solicit orders for listing of the cases in both

Wings before the same Bench. As a result, these writ petitions were clubbed for

hearing before a Single Bench (Sanjeev Kumar, J) in Jammu. After detailed

hearing, by a judgment dated 1st May, 2020, the learned Single Judge has

dismissed the writ petitions. Aggrieved thereby some of the writ petitioners have

filed the present Letter Patent Appeals which have been consolidated for hearing.

others.

06. OWP No.477/2019 Mohammad Ashore Mir and

others v. State of J&K and

others.

62/2020

07. OWP No.517/2019 Abid Hussain Mir and others

v. State of J&K and others.

08. OWP No.2294/2018 Tariq Ahmad Sheikh v. State

of J&K and others.

09. WP(C) No.2410/2019 Rouf Rashid Bhat and others

v. State of J&K and others.

10. WP(C) No.2642/2019 Abdul Majeed Dar v. State of

J&K and others.

11. WP(C) No.3893/2019 Ashaq Hussain Paddar and

others v. UT of J&K and

others.

12. WP(C) No.67/2020 Abdul Rashid Bhat and

others v. UT of J&K and

others.

13. WP(C) No. 86/2020 Javid Ahmad Rather v. UT of

J&K and others.

S.No. Writ petition number Title LPA No.

14. WP(C) No.181/2020 M/s S. J. Constructions v. UT

of J&K and others.

17. OWP No.517/2018 Shahnawaz Ahmad Bhat &

anr. v. UT of J&K and others.

77/2020

Jammu Wing

15. OWP No.325/2019 Rakesh Kumar Choudhary v.

State of J&K and others.

53/2020

16. WP(C) No.563/2020 Rakesh Kumar Choudhary v.

UT of J&K and others.

62


119. We have heard Mr Z. A. Shah, Mr P. N. Raina, Mr Altaf Naik learned

Senior Advocates, Mr Vikram Sharma, Mr J. A. Hamal, Mr. Abhinav Sharma,

Advocates for the appellants, and Mr F. A. Natnoo, ld. AAG, for the respondents,

at length in these matters.

Let us now briefly examine the facts of each of the appellants.

(i) LPA No. 64/2020, Vikar Ahmad Dar v. State of Jammu and

Kashhmir and others (represented by Mr. Z. A. Shah, Senior

Advocate).

120. This appeal arises out of OWP 259/2019. This appellant had participated in

an auction for grant of mining lease of minor minerals in District Kulgam

conducted pursuant to the auction notice published by the Department of Geology

and Mining in the daily newspaper Greater Kashmir on 17th September 2017. The

appellant claims to have deposited earnest money worth Rs. 1.5 lakh for each

block prior to his participation. In the auctions which were held on 25th September

2019, the appellant was declared the highest bidder in two blocks and he deposited

amount of 50% of the bid amount.

121. As per Rule 55(9) of the Rules, the respondents issued LoIs dated 5th

October 2017 in respect of the two blocks regarding which the appellant had

emerged highest bidder informing him that his bid had been ‘provisionally

accepted’ by the Chairman, District Auction Committee (Deputy Commissioner

Kulgam). The LoI also notified that under Rule 26(2) of the Jammu and Kashmir

Minor Mineral Concession, Storage, Transportation of Minerals and Prevention of

Illegal Mining Rules, 2016, mining plan and EC was mandatory for grant of

mining leases.

63


122. The appellant was directed to submit the above two, besides ‘depositing

remaining 50% bid amount within a period of six months’ to enable the

respondents to grant mining lease to the appellant.

123. It has been contended by Mr. Z. A. Shah, Senior Advocate that so far as the

appellant was concerned, he was able to complete the three requirements laid down

in the LoI. It has been pointed out that despite the impugned order passed on 26th

February 2019, the Director, Department of Geology and Mining sent 15

‘complete files’ to the Government with the recommendation to grant permission

to grant mining leases to these 15 persons.

124. It is the submission of Mr. Shah that the NGT had also passed an order

imposing a requirement of getting clearance from the Pollution Control Board

before undertaking mining. A Circular dated 25th November 2019 stood issued by

the Pollution Control Board notifying the parties of this requirement. The

submission is that on 27th December 2019, the appellant even obtained this consent

from the Pollution Control Board.

125. It is submitted that the impugned order dated 26th February 2019 issued by

the Government merely states that the auction had been scrapped. No specific

order cancelling the bid of the appellant has been passed.

126. Mr. Shah, Senior Advocate has vehemently urged on behalf of this appellant

that the power to refuse grant of a lease is vested only under Rule 31 of the Rules.

Rule 31 envisages that the refusal of the application would be by the ‘competent

authority’ and requires reasons for the refusal to be recorded and communicated to

the applicant. Against the refusal, the remedy of an appeal to the Government is

provided under Rule 85 of the Rules.

64


127. The grievance is that the order discloses no reasons at all and as a result, the

appellant stands deprived of his statutory remedy of appeal provided under Rule 85

of the Rules.

128. The order dated 26th February 2019 is also assailed on the ground that the

same is vague, suffers from non application of mind and that the cancellation of his

bid was not communicated to the appellant. The submission is that in any case the

appellant had fulfilled all the requirements under Rule 26(2) of the Rules and that

appellant had vested right to grant of lease.

129. Mr. Shah, has contended at length that if the order was issued in exercise of

statutory powers, the same is bad for the reason that the doctrine of audi alteram

partem was violated and also the order failed to record any reasons. In support of

this ground, reliance has been placed on the pronouncement of the Supreme Court

reported at (1990) 3 SCC 280, Star Enterprises v. City and Industrial

Development Corporation of Maharashtra Ltd. (paras 9 & 10), and (2007) 2

SCC 181, Rajesh Kumar and others v. Dy. CIT and others (para 29).

130. The submission is that even if the order was issued in exercise of

administrative power, it remained illegal for failure to comply with the principles

of natural justice.

131. It has been contended that the respondents have failed to disclose the

material on which the impugned order was premised.

132. It is submitted that the order dated 26th February 2019 clearly stated that the

order shall operate prospectively and e-auctions would be conducted in future. As

another limb of the submission, it is contended that SRO 101 issued on 7th March

2019, which effected a prospective amendment to the Rules of 2016, cannot be the

65


basis of enbloc cancellation of the earlier auctions and bids including that in which

the appellant had participated and stood declared highest.

133. Challenging the affidavit filed by the respondents disclosing the

observations of the various authorities, it is pointed out that the Government

notings inter alia suggest that the reserve price which has been fixed was too low;

that the bids fetched were also not of the value which they ought to have fetched. It

is submitted that so far as the reserve price is concerned, the same is fixed under

Rule 54 of the Rules by the Government and the appellant has no role to play in

the same and that no fault can be attributed to the bidders for the same.

134. With regard to the suggestion in the government file of ‘cartelization’, it is

submitted that this submission is not based on any material.

135. It is further objected that the learned Single Judge has seen the records of the

respondents behind the back of the appellant and that the impugned judgment of

the learned Single Judge premised on such record was therefore bad in law.

136. Mr Shah submits that the impugned order refers to the competent authority.

So far as the ‘competent authority’ is concerned, the Rules prescribe Director,

Geology and Mining as the competent authority to grant mining leases on 5

hectares of land. A grievance is made that the order dated 26th February 2019 has

not been issued by the Director.

137. It is pointed out that the scrapping of the auctions appears to have been done

by the Government whereas, under the rules, the competent authority to refuse the

grant of the application was the Director of the Department of Geology and

Mining. The submission is that under Rule 85(2), appeal lay to the Government.

Therefore in the instant case, the order has not been passed by the competent

authority but by the appellate authority. Placing reliance on the pronouncement of

66


the Supreme Court reported at AIR 1952 SC 16, Commissioner of Police Bombay

v. Gordhandas Bhanji, it is submitted that such an order is not sustainable.

138. So far as the challenge pressed before us to the judgment of the ld. Single

Judge by the appellant on grounds which were never urged before the learned

Single Judge is concerned, Mr. Z. A. Shah, Senior Advocate has relied on the

precedent reported at (2015) 7 SCC 561 (para 36), Ariane Orgachem Private

Limited v. Wyeth Employees Union and Others, to submit that it is permissible.

139. Mr. Shah, also defended the introduction of Rule 104-A into the Rules on

the 20th April 2016 (effective till 31st March 2017 and the subsequent amendments

extending it from time to time). The submission is that it is not open to the

respondents to say that this rule was ultra vires the main statute. It is pointed out

that the appellant was not even in picture when this rule was framed and that Rule

104-A itself discloses the reason for its incorporation which was to ensure that a

supply chain of the minor minerals was in place and that permission under Rule

104-A was granted only for a limited period, such extension lastly being up to 28th

February, 2019.

140. Mr. Shah has urged that by the grant of the permission under Rule 104-A of

the rules, it has to be held that the Government extended the time for completion of

formalities under the LoI.

141. It is not disputed before us that the respondents filed similar objections

explaining the circumstances in which they took a similar stand.

142. Mr. Z. A. Shah, Senior Counsel, as well as other counsels, have also

submitted that even the counter affidavit filed by the respondents, discloses no

reasons at all to support the passing of the impugned order and that none of the

reasons suggested in the government notings are mentioned.

67


(ii) LPA No. 56/2020 (EMG- LPA No. 5/2020), Chaman Lal v. State of

J&K (represented by Mr. P. N. Raina, Sr. Advocate assisted by Mr.

J. A. Hamal, Advocate).

143. This appellant was arrayed as petitioner No. 3 in OWP No. 363/2019 had

submitted bids for the 17 blocks in the Reasi District. His bids for Rs. 64.22 lakhs,

were provisionally accepted being the highest. The appellant deposited the amount

of Rs. 32.50 lakhs at the drop of the hammer. The LoI on terms similar to those

issued to Vikar Ahmad Dar (as extracted in the factual narration) was issued to the

appellant on 11th October 2017. The prescribed period of six months for

compliance of the aforenoted three conditions expired on 10th April 2018

without this appellant complying with any of the conditions.

144. Appearing on behalf of the appellant, Mr. P. N. Raina, ld Senior Advocate

has submitted that the non deposit of the balance amount was immaterial inasmuch

as a statutory contract came into existence the moment appellant’s bid was

accepted. The submission of Mr. Raina has been that the entire field was covered

by legislation.

145. Mr. P. N. Raina, Senior Advocate has assailed the finding of the learned

Single Judge that the LoI created no rights and that even if the conditions had been

fulfilled, still there was no absolute right in favour of the bidder. In support of this

submission, reliance has been placed on the pronouncement of the Supreme Court

reported at (2017) 2 SCC 125 (Para 24), Bhushan Power and Steel Limited v. S.

L. Seal, Additional Secretary, Steel and Mines and others.

146. Mr F. A. Natnoo, ld. AAG, has pointed out to the facts which were before

the Supreme Court in (2017) 1 SCC 568 : Bhushan Power and Steel Limited v. S.

L. Seal, Additional Secretary, Steel and Mines and others. The facts have been

68


noted in para 22.1. While in para 22.3, the Supreme Court has noted that the

formalities stood completed in that case. It is not the position in the present case.

147. It is additionally urged that the appellant’s case before the ld Single Judge

was a challenge to the cancellation of only his bid. It is submitted that the ld Single

Judge has erred in not answering this challenge, and, instead, erroneously held that

the scrapping of the auction was a policy decision which could not be challenged.

148. The submission is that the relations between the parties were governed by

statutory provisions and the rules which were in the nature of delegated legislation.

Mr. Raina has vehemently contended that policy is a prerogative of the executive,

only in the absence of legislation and therefore the action of the respondents was

completely misplaced in the present case.

149. Taking the submission made by Mr. Z. A. Shah, Senior Advocate on this

aspect further, it is submitted that SRO 161 on 7th March, 2019, was issued by the

Govt. amending the statutory rules. It is submitted that there was therefore a

‘policy’ decision. For the reason that the writ court found that this amendment was

prospective, it is contended that the same could not have effected the petitioners

rights.

150. The submission of Mr. Raina that the ld Single Judge in Para 56 had framed

issue nos. 2 and 3 and returned a finding that none of the parties could be blamed

for delay in processing of the EC and, further, in para 58 of the impugned

judgment, held that the doctrine of frustration of contract cannot apply. It is urged

that, therefore, it had to be held that time was not of the essence to the contract.

151. Mr. P. N. Raina, ld. Senior counsel has also submitted that SO 1533 dated

14th September 2006 was issued by the Govt. of India whereunder ECs were

processed which was followed by another notification dated 15th January 2016

69


wherein the District Level Environment Committee was provided for. It was

submitted before us that, pursuant to the judgment in 2016 by the NGT, the Govt.

of India issued a notification in 2019 amending the prescribed conditions. In this

background, it was Mr. Raina’s contention that the respondents/lessor were always

aware that the conditions could not be complied with and that Rule 55(9) could not

be complied with within six months, and for this reason as well, time was not of

the essence to the contract. Mr. P. N. Raina, Ld. Senior Counsel, has contended

that Sections 55 and 56 of the Contract Act deserved to be brought into operation

for extending the period of compliance of the conditions.

152. In support of the submission that time was not of essence, Mr. Raina has

relied on the pronouncement of the Supreme Court reported at (1984) 3 SCC 634

(Paras 10 & 11), State of Haryana v. Lal Chand and (2011) 12 SCC 18 (Pr. 25),

Saradamani Kandappan vs. S. Rajalakshmi and others.

153. Mr. Raina has vehemently urged that the requirements for grant of mining

lease are to be found in Rules 6, 13 and Rule 26 of the Rules of 2016. Under rule

6, a mining plan has to be got approved while rule 13 postulates EC. Rule 26

speaks of only these two requirements. The submission is that no payment has

been prescribed under the rules. Defending the failure of the appellants in

depositing the balance 50% of the bid amount, it is submitted that making of this

payment was not a requirement under any statute, and, that the failure to do so,

was not so sacrosanct as to result in cancellation of the bid. Therefore, the

appellant could not have been denied the mining lease for failure to deposit the

balance payment.

154. Much stress has been laid by Mr. P. N. Raina, Sr. Advocate on the defence

set out by the respondents to the writ petition OWP no. 1176/2018, Radha

https://indiankanoon.org/doc/834739/

70


Krishan and others v. U.O. I. and others. This writ petition was filed by Radha

Krishan and some others challenging the auction in which the appellants had

participated. It is submitted by Mr. Raina that the respondents had staunchly

defended the legality of their action in holding the public auctions.

155. Mr Raina has placed heavy reliance on the counter affidavit filed by the

respondents therein submitting that the respondents have staunchily defended their

actions as lawful. For expediency, we extract the respondents’ defence of the

auctions (in consideration before us) and their action, by way of their counter

affidavit to the writ petition as follows:

“xi. That it is respectfully submitted that the Government of Jammu

and Kashmir on due deliberation of every aspect of the mining of

minor minerals and its effect on the environment has brought the

aforesaid rules vide SRO 105 of 2016. It is submitted that a detailed

plan has been worked out keeping in view the safeguard required for

protecting the natural resources. The block-wise extraction plan has

been prepared for the first time and a detailed study of all the river

beds have been conducted with great efforts of the committee

constituting technical experts in the field. A copy substantiating of the

above fact is enclosed herewith and marked as Annexure-IV.

xi. That it is submitted that after issuance of SRO 105 of 2016, the

answering respondent-department initiated the process of carving out

of minor minerals blocks in various districts of the State and in this

respect vide order issued under endorsement No. MEJ/L/EC/2016-

17/61-70 dated 26.04.2017, team of officers for both the provinces

viz. Kashmir Province and Jammu Province, who were nominated

for assisting the District Environment Impact Assessment Authority

(DEIAA in short) for facilitation in preparation of District Survey

Reports in the aforesaid context. Copy of the aforesaid order dated

26.04.2017 isenclosed herewith and marked as Annexure-V for kind

perusal of the Hon’ble Court.

71


xii. That it is submitted that the Committee of Officers in respect of

various districts as detailed above in Annexure-V above, has taken

into consideration the provisiosn of SRO 105 of 2016 relating to

various aspects for creation of minor minerals blocks and on detailed

survey of the areas concerned have prepared plan for minor

minerals blocks and it is only the areas which were falling within the

criteria as envisaged under SRO 105, the same were duly marked in

the plan so prepared in respect of each such area. As an example, the

answering respondent is placing on record one of such plan showing/

detailing of prepareation of minor minerals blocks in respect of an

area falling in Chenab Area (JERRI Area) of District Reasi, enclosed

herewith and marked as Annexure-VI, for kind perusal of this Hon’ble

Court. It is submitted that the same has been prepared in respect of

each such area which was found falling within the criteria for creation

of minor minerals blocks in whole of the State.

In the above context, the answering respondent further

places on record the following details in respect of minor minerals

blocks created in respect of each district of Jammu Province, enclosed

herewith as Annexure-VII for kind perusal of the Hon’ble Court.

xvi. That it is submitted that after conclusion of the aforesaid

process in respect of the identification and creation of minor

minerals blocks as per the criteria envisaged under SRO 105 and

exercise of minimum reserve price of each block, the same was

further submitted for approval to the higher authorities which was

accordingly communicated by the Competent Authority. The above

fact is further substantiated from the copies of communications dated

19.07.2017 and 10.07.2017 in respect of one of the district of the State,

which process was conducted in respect of each district, enclosed

herewith and marked as Annexure-XII for kind perusal of this

Hon’ble Court.

xvii. That it is submitted that accordingly on approval of the

aforesaid process by the Competent Authority, the auction notice in

respect of each district for grant of mining lease in respect of minor

72


minerals blocks identified for such districts were issued by the

concerned District Mineral Officer. Copy of one of such auction

notice in respect of district Reasi is enclosed herewith and marked as

Annexure-XIII for kind perusal of the Hon’ble Court.

xviii. That it is submitted that after conduct of the auction

proceedings, Deputy Commissioner of the concerned District in the

capacity of Chairman of the Auction Committee has submitted the

record relating to the auction proceedings which include the bid

sheets in respect of each block with 50% amount of bid offered for

grant of mining lease in favour of the successful bidder. The above fact

is further substantiated from the copy of communication No.

PS/DC/Rsi/160/2405-07 dated 27.09.2017 received from one of the

Chairman of District Auction Committee i.e. District Reasi is enclosed

herewith and marked as Annexure-XIV, for kind perusal of this

Hon’ble Court.

xx. That it is relevant to submit here that one of the relevant factor

which has to be taken into consideration for grant of mining lease to

the successful bidder in terms of the guidelines/notification of the

Ministry of Environment & Forest and Climate Change of Government

of India, environmental clearance from District Environment Impact

Assessment Authority (DEIAA) and State Environment Impact

Assessment Authority (SEIAA) in respect of mining blocks less than an

area of five (05) hectares and above five (05) hectares respectively.

Copy of the guidelines/notification is enclosed herewith and marked as

Annexure-XVII for kind perusal of this Hon’ble Court.

In the above context, it is further relevant to bring to the notice

of this Hon’ble Court that after conclusion of the process of bid, the

answering respondent-department in terms of the aforesaid guidelines

has to prepare the District Survey Report (DSR) and submit the same

to Deputy Commissioner of the concerned District, which has to be

notify by the said authority for calling objections within twenty one

(21) days and if the process relates to an area less than five (05)

hectares, the DEIAA shall have to issue Environmental Clearances.

73


However, if the area concerned is above five (05) hectares, the same

has to be further recommended to the SEIAA.

It is submitted that in the instant case the answering respondents

immediately after conclusion of the bid process has prepared the

District Survey Report in respect of such districts where the bid

process was initiated and concluded and further in terms of the

aforesaid guidelines/notification of the Ministry of Environment &

Forest and Climate Change of Government of India has submitted the

same to the concerned Chairman of DIEAA, who in turn after due

publication in official website of the said authority, has further

proceeded in the matter and has granted Environmental Clearance

in respect of all such cases where no objection has been received and

where the area was less than five (05) hectares, the said authority has

further recommended the cases of such successful bidder for grant of

environmental clearance to the SEIAA, where no objection was

found to have been raised and where the area was above five (05)

hectares. The above fact is further substantiated from the copy of one

of the survey report submitted by the answering respondent No.2,

enclosed herewith and marked as Annexure-XVIII for perusal of this

Hon’ble Court.

xxi. That it is submitted that as on date the position in respect of the

pendency of matter for grant of environmental clearance by the

aforesaid authority i.e. DEIAA and SEIAA regarding each district of

Jammu Province is further detailed in the chart, which shall be further

explained during the course of arguments, enclosed herewith as

Annexure-XIX for perusal of this Hon’ble Court.

xxii That it is submitted that since the answering respondent

department as detailed herein above has taken all the requisite steps

for streamlining the process and bringing the same within the fold of

directives passed by the Hon’ble Supreme Court in the matter of

grant of minor minerals mining lease but because of the delay caused

due to the conclusion of process for grant of environmental

clearance by the aforesaid authority viz DEIAA and SEIAA, the

74


answering respondent was thus under compulsion to resort the

transitory provisions as detailed below to fulfil the public demand and

also the mega projects of State as well as Central Agencies.”

(Emphasis by us)

156. It is Mr Raina’s submission that in this background the action in cancelling

the bid of the appellant by the respondents was completely arbitrary and illegal and

the impugned judgment of the ld Single Judge sustaining the same was also

erroneous.

157. Mr. Raina has drawn our attention to the finding of the learned Single Judge

in para 34 of the impugned judgment that the amendment to the rules by the State

to the effect that only e-auction would be conducted is prospective. It is pointed

out that the respondents have not assailed this judgment.

158. It is further submitted that the auction was admittedly lawful and the policy

decision to amend the rules having been held to be prospective, thus neither the

auction in which the appellant had participated nor the LoI issued to the appellant

could have been cancelled.

159. Ld Senior Counsel has also submitted that the aspect of grant of mining

leases was covered by the statute enacted by the Parliament of India and the Rules

stood framed thereunder by the State Government. There was thus no scope at all

for executive interference in such covered matters and that the action of the

respondents in effecting the amendment was clearly illegal and contrary to the

constitutional scheme.

160. Reliance was placed by Mr. P. N. Raina, ld Senior Counsel on the

pronouncement reported at (2015) 13 SCC 233, Rishi Kiran Logistics Private

Limited v. Board of Trustees of Kandla Port Trust and others.

75


(iii) Submission in LPA No.58/2020 Nagar Singh v. State of J&K

(represented by Mr Abhinav Sharma, Advocate)

161. The appellant had filed OWP No.363/2019 as petitioner no.5 (the petition

was titled as Ashaq Hussain Padder and others v. State of J&K and others).

162. Bids submitted by the appellant-Nagar Singh were provisionally accepted as

highest in respect of 27 blocks. In respect of these three LoIs were issued on 16th

December 2017 with the period of six months expiring on 15th June 2018 while 24

LoIs were issued on 26th February 2018 with the period of six months expiring on

25th August 2018.

163. It is admitted before us that in respect of the applicants for which LoIs dated

26th February 2018 were issued, the appellant submitted his mining plan on 10th

April 2018 which was approved by the respondents within two days on 12th April

2018.

164. This appellant has admittedly not cared to deposit 50% of the balance

amount till date.

165. In the writ petition, it is not disclosed whether the EC was applied for or

when, if it was so done. However, Mr. Abhinav Sharma, ld. counsel, has drawn our

attention to two letters, one letter dated 14th March 2018 which was addressed to

three persons including the appellant-Nagar Singh wherein reference was made to

the application of Mr. Nagar Singh for grant of EC for river bed mining project.

This letter was followed by a letter dated 18th April 2018 on the same subject. The

impact of these letters shall be considered later in this judgment. However, the

admitted position is that EC has not been granted to this appellant.

76


166. Appearing for the appellants, Mr. Abhinav Sharma has contradictorily set up

a plea that under Rule 6, a mining plan was the only pre-requisite for grant of

quarrying licence and that no EC was required to be obtained by the appellant. It

is submitted that by issuance of LoI, a “quarrying licence” stood granted to the

appellant.

167. In support of his submission, Mr. Sharma has relied on Chapter V of the

Rules of 2016 dealing with grant of quarry licence and Rule 43 thereof.

(iv) LPA No. 61/2020 (EMG LPA No. 41-A/2020, M/s Usman

Constructions and others v. State and others (argued by Mr.

Altaf Naik, Senior Advocate).

168. The four appellants in the instant appeal had filed OWP 290/2019. They

were the highest bidders for different mining blocks in Districts Kulgam, Jammu,

Poonch, Udhampur. For expediency, we may note that the earliest LoI issued to

them was on 30th August 2017 while the last was of 16th December 2017,

stipulating the six month periods for compliances, the earliest of these expiring on

1st March, 2018, while the last was 15th June 2018.

169. These appellants have complained that despite their fulfilling the

stipulations of the LoI, the respondents issued the impugned order dated 26th

February 2019 in gross violation of their rights whereby the entire auction of the

minor mineral blocks conducted in 2017 was cancelled.

170. The appellants had assailed the scrapping of the auction by way of writ

petition which was registered as OWP No. 290/2019 in the Srinagar Wing which

came to be clubbed with other matters raising the same challenge, all of which

were rejected by the common judgment dated 01st May 2020 of the learned Single

Judge. Aggrieved thereby, the appellant has filed the instant appeal contending that

77


the learned Single Judge has not examined all the provisions and the rules which

were relevant and has left out vital aspects from his consideration.

171. Mr. Naik, ld Senior Counsel has contended that the learned Single Judge has

failed to consider the impact of Rule 55(10) which mandates that if the bid amount

stood deposited, the bidder would be entitled to grant of the mining lease and that

this sub rule states that the bid amount offered by the successful bidder shall be

considered as a guarantee amount for the grant of the mineral concession.

172. Ld Senior Counsel has urged that the learned Single Judge has erred in the

observations made with regard to Rule 104-A of the Rules. The submission is that

this was a transitory provision which was not challenged but was supported by the

respondents who extended its application from time to time. It is contended that

the learned Single Judge has erred in application of the doctrine of frustration

which was not at all attracted in the present case.

173. In response to the observations in the notings in the official file that reserve

price was low, Mr. Altaf Naik, Senior Advocate has contended that the reserve

price stands fixed by the Government in terms of Section 9 of the Act. It is

submitted that the bidders have no concern, involvement or choice in that matter.

174. Mr. Altaf Naik would also submit that in the judicial precedent from

Rajasthan as was placed by Mr. Sunil Sethi, Senior Counsel, the petitioners in

whose favour LoIs had been issued by the Government, were permitted to

undertake mining activities.

175. So far as the appellants’ plea in LPA 61/2020 (Usman Constructions and

others) that they had fulfilled the conditions under the Rules and the LoI are

concerned, we have carefully scrutinized the record of this appeal. We find that out

of the four appellants, only the appellant No.1-M/s Usman Constructions (with

78


the six months from LoIs’ expiring on 4th April 2018 and 15th May 2018) deposited

the balance 50% of the bid amount on 29th June 2018 for two blocks which was

forwarded to the Director on 3rd July 2018 and the appellant No.4-Shabir Ahmed

Sheikh (with the six months expiring on 4th April 2018 and 15th May 2018)

deposited the balance 50% of the bid amount on 29th June 2018 which was

forwarded to the Director on 3rd July 2018. EC stood granted to the appellant No.1

on 11th April 2018 for his two blocks, again after the expiry of the six month

deadline for those blocks. The appellant No. 4 was granted EC for only one block

on 11th April 2018. These deposits and clearances were clearly way beyond the

period of six months given to the appellants.

176. We shall consider the impact of belated compliance of the required

conditions hereafter and also as to whether the respondents had the power to

condone the delay.

177. The other two appellants in LPA 61/2020 (namely Sajad Ahmad Shan and

Balbir Singh) have not complied with any of the conditions of the LoI.

(v) LPA No. 62/2020 (EMG-LPA No. 50-A/2020), M/s Mohammad

Ashore Mir and ors v. UT of J&K and others (represented by Mr.

Hakim Suhail Ishtiyaq, Advocate).

178. The appellants in LPA No.62/2020 had filed the writ petition OWP No.

477/2019. They had participated in auctions held on 8th and 14th November 2017

with regard to mining blocks in District Pulwama, were found to be highest

bidders and had deposited the 50% of the bid amount on the fall of the hammer.

179. LoIs were issued to Mohd. Ashore Mir, appellant No.1 and Manzoor Ahmed

Mir, appellant No.2 on 7th December 2017 with the period of six months expiring

on 6th June 2018 while the LoI was issued to Mohd. Shaban Bhat-appellant no.3 on

26th December, 2018, with the six months expiring on 25th June, 2019.

79


180. The mining plans of the appellants 1 and 2 got approved on 11th January

2018.

181. The appellant No. 3 Mohd. Shaban Bhat did not bother to even submit the

mining plan within prescribed period. He obviously has no approved mining plan

in his favour.

182. None of these appellants have till date even applied for EC. They have also

not deposited the 50% balance amount.

183. Learned counsel for these appellants has staunchly contended that the

issuance of the LoIs resulted in coming into existence of a statutory contract

because the LoI stood issued pursuant to the statutory provisions and the rules

framed thereunder. Once such contracts came into existence, they could have been

scraped only after compliance with the requirements of Rule 31 of the Rules.

184. Learned counsel contended that consequently the scrapping of the bids could

not have been effected without issuance of notices to show cause and grant of

hearing to them, therefore, was in violation of principles of natural justice.

185. Ld counsel has vehemently contended that the communication dated 26th

February 2019 was completely misconceived and without jurisdiction. Ld. counsel

would submit that this letter has been addressed to the Director, Department of

Geology and Mining of the then State of J&K by an Under Secretary of the State

Government. It is urged that this letter appears to be a response to a letter dated 7th

February 2019 which had been addressed by the Director, Department of Geology

and Mining.

186. Ld counsel would submit that the letter dated 7th February 2019 had merely

referred to the status of the auctions which were to be held in three districts

Kathua, Doda and Ramban of Jammu and Srinagar, Barmulla and Bandipora in the

80


Kashmir Province which had been left out of the previous auctions. Mr Naik

would submit that this communication did not relate to the auction or the bids of

the appellants, that the letter nowhere mentions scrapping of the auction which had

been held in 2017.

187. The submission is that Government orders have to be issued in accordance

with the Transactions of Business Rules. Ld counsel vehemently contended that

this letter dated 26th February 2018 was neither a government communication nor

was it in the nature of an order made in accordance with law.

188. The further submission is that the different clauses in the communication

were contradictory to each other. Ld. Counsel submits that the letter dated 26th

February 2019 shows that the government was cognizant of the auctions of 2017 as

is evident from clause (2) thereof which have stated that till fresh allotment,

‘existing mechanism would continue’. The existing mechanism was the mode of

open auctions.

vi) LPA No. 53/2020 (EMG-LPA No. 2/2020, Rakesh Kumar

Choudhary v. U.T. of J&K and others (represented by Mr.

Vikram Sharma, Advocate.)

189. This appeal has been filed by a single appellant- Rakesh Kumar Choudhary

(writ petitioner in OWP No.325/2019), contending that he was found the highest

bidder in auctions held for mining blocks held on 13th September 2017 in District

Rajouri and on 13th December 2019 in district Samba. So far as the 22 blocks in

Rajouri for which he was provisionally found to be the highest bidder, were

concerned, LoIs were issued on 5th October 2017 with the six months expiring on

4th April 2018. For 21 mining blocks in District Samba, LoIs were issued to the

appellant on 21st December 2018 with the six months expiring on 20th June 2019.

81


190. The appellant submitted mining plans for District Rajouri on 27th February

2018 which was approved within six days on 3rd March 2018. In respect of the

Samba District, he submitted mining plans on 30th January 2019 which was

approved within two days on 2nd February 2019.

191. Appearing for the appellant, Mr. Vikram Sharma, ld counsel submits that he

adopts all the arguments made by learned Senior Counsels in the connected

appeals. Mr. Sharma, clarified that the writ petitioners had challenged only the first

clause in the communication dated 26th February, 2019 and that they did not

challenge clause (2) of the letter which was in fact the continuation of Rule 104-A

of the Rules. It is submitted that the first clause was perse arbitrary.

192. Mr. Vikram Sharma, Advocate has submitted that under Rule 26(2), there

are only two prerequisites for grant of mining lease, the first being approval of a

mining plan and the second was grant of EC.

193. Ld. counsel has supported the submissions further adding that not only had

the LoI been issued to this appellant but his mining plan also stood approved. The

contention is that as such, the moment the mining plan stood approved under rule 6

of the Rules, the bidder became entitled to grant of mining lease. In addition, Mr.

Sharma submits that the highest bidder was permitted under rule 104-A to

undertake mining activity subject to payment of royalty as chargeable in

accordance with Section 9 of the enactment. The bidders having paid royalty, had

moved ahead from the stage of issuance of the LoI. It is Mr. Sharma’s submission

that upon grant of the permission under Rule 104-A, a binding contract between

the parties had come into existence.

194. Rakesh Kumar, the appellant in LPA 53/2020 does not inform us as to the

date when he applied for the EC. We are informed by Mr. F. A. Natnoo, AAG that

82


as per the web portal of JKEIAA, the applicant had submitted the application for

EC in respect of the three mining blocks in Rajouri on 28th February 2019; for 10

blocks on 27th September 2019; for two blocks on 28th September 2019; for three

blocks on 10th October 2019 and for three blocks on 11th October 2019.

195. So far as the District Samba blocks are concerned, some applications for the

clearance were made on various dates i.e. 11th, 16th, 17th, 19th and 20th September

2019. Thus, the appellant has for the first time applied for the mandatory and most

essential EC more than one year after the expiry of the period of six months from

the issuance of the LoI.

(vii) LPA No. 63/2020, Mohd. Farooq Lone and others v. State of J&K

and others. (represented by Mr Hakim Suhail Ishtiaq, Advocate)

196. The appellants in this case were co-petitioners in OWP No. 344/2019 and all

of them had participated in the auction held for grant of mining leases of minor

minerals in different blocks in District Kupwara.

197. The respondents have disclosed that the bids of the appellants being found

highest, LoIs each dated 4th January 2018, were issued to all of them. The period of

six months, from the issuance of these LoIs, was expiring on 3rd July 2018.

198. Mining plans were submitted by these appellants on different dates. We find

that the respondents have promptly responded to the submission of mining plans

wheresoever they were submitted by the bidders/appellants. Approvals appear to

have been accorded within one to three days of submission of the plan.

199. The facts on record establishes that most of the appellants chose to sit over

the matter of obtaining ECs and most of them did not even bother to apply for the

same. Out of the 15 appellants in this appeal, only 5 appellants have submitted

their applications for ECs on various dates between 2nd and 6th June 2018.

83


200. None of these appellants have bothered to deposit the balance 50% of the

bid amount which, in terms of the LoIs, was to be deposited within a period of six

months from the issuance of the LoI.

(viii) LPA No.77/2020 Shahnawaz Ahmad Bhat & Mohd Ayoub Bhat v.

Union Territory of J&K and others:

201. These appellants had filed OWP No.517/2018 as petitioners 7 and 8 and

claim to have been found the highest bidders for grant of mining leases in auctions

held on 26th May, 2018, for mineral blocks in Shopian. LoIs dated 29th November,

2018 were issued to them with the period of six months expiring on 28th may,

2019. The appellants claim to have completed formalities without delay for

seeking EC. No dates are forthcoming in either the appeal filed before us or the

writ petition. These appellants have also claimed that EIA Reports could not be

prepared because of default on the part of the respondents who had failed to submit

the DSRs of the blocks to the authorities. These appellants assail the judgment of

the learned Single Judge on the very grounds as have been pressed in the other

appeals. The respondents dispute the completion of formalities by these appellants.

The remaining bid amount has not been deposited.

We now examine in seriatum the various issues which arise in these appeals

under the following headings:

V Appeals pressed on grounds which were not urged before the Ld.

Single Judge, examination of official records, opportunity to meet

the same

202. Before examining the contentions of the appellants, it is necessary to note

two preliminary issues.

84


203. The issues pressed before this court in appeal were never raised before the

learned Single Judge. We are thus being called upon to test the correctness of the

view taken by the learned Single Judge on points and issues which were never

raised before the learned Single Judge. Is it permissible for us to do so?

204. In response, it has been urged by the appellants that they are arguing

questions of law which can be raised at any stage in the proceedings and that the

present appeal is an extension of the writ petition.

It has also been contended before us by the appellants that in case any of the

grounds finds favour, the matter may be remanded for consideration afresh to the

ld Single Judge.

205. A similar question was raised before the Supreme court in the

pronouncement reported at (2015) 7 SCC 561 (para 36), Ariane Orgachem

Private Limited v. Wyeth Employees Union and Others which has been placed by

Mr. Z. A Shah, Senior Advocate before us.

206. Reliance also stands placed on the pronouncement of the Privy Council in

the case reported at 1892 AC 473 (PC), Connecticut Fire Insurance Co. v.

Kavanagh, wherein it is observed as follows:

“36.1. In Connecticut Fire Insurance Co. v. Kavanagh [1892 AC 473

(PC)], Lord Watson has observed as under: (AC p. 480)

“… When a question of law is raised for the first time in a court of

last resort, upon the construction of a document, or upon facts either

admitted or proved beyond controversy, it is not only competent but

expedient, in the interests of justice, to entertain the plea.”

(emphasis supplied)

The aforementioned view of the Court of Appeal has been relied upon

by this Court in Gurucharan Singh v. Kamla Singh [(1976) 2 SCC

152] . Therefore, with regard to the abovementioned aspect regarding

85


the plea of the competency of the Deputy Labour Commissioner to

pass an order of refusal to make a reference, although is being raised

before this Court for the first time, is based on admitted facts. Hence,

in accordance with the view taken by the Court of Appeal

in Connecticut Fire Insurance Co. case [1892 AC 473 (PC)] and this

Court in Gurucharan Singh case [(1976) 2 SCC 152] , the argument

advanced by the first respondent Union deserves to be considered by

this Court.”

(Emphasis by us)

207. This view was relied upon by the Supreme court in (1976) 2 SCC 152,

Gurcharan Singh v. Kamla Singh; (2013) 6 SCC 278, V.L. S. Finance Ltd. v.

Union of India and (2010) 9 SCC 157, Greater Mohali Area Development

Authority v. Manju Jain.

208. In (2011) 12 SCC 695, National Textile Corporation Ltd. v. Naresh Kumar

Badri Kumar Jagad, it was held by the court that a new question raising a pure

legal issue for which no enquiry proof is required, can be raised at any stage.

Following these principles in Ariane Orgachem Private Limited’s case, the

Supreme Court rejected objection similar to the one raised before us.

209. In the present case, so far as facts are concerned, there is no dispute at all. In

fact the appellants have accepted the correctness of the facts stated by the

respondents with regard to their bids and subsequent conduct. Furthermore, the

submissions which are being raised for the first time are legal pleas. All such pleas

therefore can be examined by this court hearing the challenge assailing the

judgment passed by the writ court.

Whether the decision of the Learned Single Judge is contrary to the stand

of the respondents in court

86


210. There is another objection which needs to be noticed herein. A submission

was made by Mr. Z. A. Shah, Sr. Advocate, Mr. P. N. Raina, Sr. Advocate and Mr.

Abhinav Sharma, Advocate that the respondents have not made any complaint

against the appellants in their counter affidavits. It is further submitted that no

grounds in support of their decisions were laid out in the counter affidavit.

211. The appellants have assailed the judgment of the learned Single Judge on the

ground that the court has travelled beyond the pleadings of the parties and has

delivered a judgment dehors the pleadings. In support of this submission, learned

counsel appearing for the appellants in LPA No. 50/2020 has placed reliance on the

pronouncements reported at AIR 1953 SC 235 M/s Trojan & Co. Ltd. Vs. Rm. N

N Nagappa Chettiar; AIR 2002 SC 665 Om Prakash Gupta vs. Ranbir Goel: AIR

2005 SC 3165 Ishwar Dutt vs. LAC; AIR 2010, SC 1299 State of Maharashtra

vs. Hindustan Construction Company Private Limited and AIR 2011 SC 1127

(paras 18 to 20) Kalyan Singh Chouhan vs. C. P. Joshi;

212. Let us first examine the objections filed by the respondents in opposition to

the writ petition before the Ld. Single Judge. We were informed that respondents

filed identical responses to all writ petitions. For expediency, we extract relevant

portion of the objections filed by the respondents to OWP No.259/2019 Vikar

Ahmad Dar vs. State, hereunder:

“Preliminary objections

xxxx xxxx xxxxx

xii) That it is relevant to submit that the answering respondents-

Geology & Mining Department in order to ensure uninterrupted

supply of minor minerals for development of the State and Central

Government Agencies, besides effecting the various units has brought

amendment to the aforesaid SRO to the extent of incorporating

87


transitory period in the shape of Rule 104-A vide SRO 33 of 2016

thereby authorizing the concerned authorities to issue permission valid

up to certain dates, even by virtue of SRO 104 dated 06-04-2018 has

further extension of aforesaid transitory provision, the extraction was

allowed by the successful bidders which process came to be extended

from time to time by virtue of various SROs, such extension whereof

has come to an end on 28-02-2019. It is relevant to submit that during

the aforesaid period various writ petitions also came to be filed by

various persons challenging the standard auction documents as well

as rule 52 of SRO 105 of 2016, wherein this Hon’ble Court in OWP

No. 1176/2018 titled Radha Krishan and ors vs UOI and others vide

interim order dated 19-06-2018 has passed the following directions;

“…. Meanwhile, subject to objections and till next date of

hearing, it is provided that no licence for mining lease and quarries

shall be granted by the competent authority, otherwise than by the

mode of e-auction.”

xiii) That similarly in another petition bearing OWP No.

2648/2018 titled Sarweshwar Sharma and another v State of J&K

and others also came to be filed challenging the whole process

including the transitory provision allowed in favour of the successful

bidders, wherein this Hon’ble Court vide order dated 26-12-2018 has

sought detailed response from the State in allowing extraction of

minor minerals contrary to the mandate of judgment passed by the

Hon’ble Apex Court in Deepak Kumar’s case (supra) and also

contrary to the provisions of SRO 105 of 2016.

xiv) That it is submitted that the answering respondents

keeping in view the aforesaid facts and circumstances more

particularly the fact that out of total 321 mining blocks where the

process was issued, majority of the successful bidders have failed to

submit the environmental clearance within time prescribed in terms

of the aforementioned provision of SRO 105 and even beyond that as

well despite having even issued notice to them and also keeping in

view the aforesaid interim directions as on due consideration allowed

88


to each such aspect of the matter, more so the process being allowed

to continue contrary to the mandate of judgment of Hon’ble Apex

Court in Deepak Kumar’s case (supra), has thus vide order

impugned dated 26-02-2019 decided to scrap the process of open

auction directed in the year 2016 with further directions that the

process of functioning shall be carried out through e-auction mode.

In this context, it is further submitted that the answering respondents

in the meanwhile has also allowed substitution of the word “Open

Auction” as figuring in Rule 52 with “e-auction” by way of issuance

of SRO 161 dated 07-03-2019.

xv) That it is submitted that the petitioner herein, who was

amongst few successful bidders in the State, who had obtained

environmental clearance but in view of the aforesaid facts and

circumstances more particulars when majority of successful bidders

have failed to submit the environmental clearance and also because

of the interim directions restraining for issuance of any licence

without e-tendering, the answering respondent has thus taking into

consideration all the facts and circumstances detailed above directed

for scrapping of the process and further the process to be allowed to

e-tendering only. It is submitted that the petitioner admittedly has not

been granted any licence, as such, the petitioner has got no vested

right in him, either to challenge the order/decision impugned or to

seek continuation, more so such bald assertions/contentions which are

misconceived both in law as well as on facts.

In light of the aforesaid submissions, the present writ petition

filed by the petitioners is not maintainable and deserves to be

dismissed.”

213. In the parawise response to the writ petition, the respondents have stated as

follows:

“2-17. Averments made in paras 2 to 17 to the extent of that the

same relates to initiation of open auction process, conduct thereof and

the petitioner herein having remained successful bidders in the said

89


process, submission of mining plan and also depositing of 50% of the

bid amount, the same is not disputed. However, it is submitted that in

terms of the aforesaid provision of SRO 105 of 2016 read with the

contents of letter of intent (LOI) issued in favour of the successful

bidders, the successful bidders were required to submit the

environmental clearance from the competent authority to the

answering respondents-Geology & Mining Department which the

majority of successful bidders have failed to submit within the

prescribed period of six months and even beyond the said date as

well. Further in view of challenge thrown to Rule 52 as well as

standard auction document in the aforementioned writ petition and

also the interim directions passed by this Hon’ble Court in the above

titled writ petition and further the fact that the whole process was

found continued against the mandate of the judgment passed in

Pardeep Kumar’s case, the answering respondent thus taking into

account all the facts and circumstances has directed the scrapping of

the process and further allowing the process through e-tendering

only for which the answering respondent has even allowed

amendment to Rule 52 of SRO 105 of 2016. Therefore, none of the

rights of petitioner can be held to have been violated while passing the

decision/ order impugned dated 26-02-2019 by the answering

respondents.

18. Averment made in para 18 and so called grounds sought to be

urged under sub paras (A) to (I) need no further response in view of

the detailed submissions made herein above to which the answering

respondents shall refer to and rely upon. However, it is reiterated that

since the majority of successful bidders have failed to submit the

environmental clearance in terms of the mandate of aforementioned

provision of SRO 105 and the contents of letter of intent (LOI) issued

in favour of the successful bidders and further in view of the restraint

order passed by this Hon’ble Court in the afore titled writ petition, the

competent authority after considering the facts and circumstances in

totality including the interim directions passed by the Hon’ble Court

90


in the afore titled matters as well as mandate of the judgment of

Hon’ble Supreme Court in Pardeep Kumar’s case, has thus taken a

conscious decision for scrapping the open auction process carried

out in the year 2016 and directed for carrying out fresh auction

process through e-auction mode. The contentions/assertions to the

contrary sought to be projected by the petitioner under these ground

paras being incorrect are thus denied vehemently.”

(Emphasis by us)

The above extract makes it amply clear that short of extracting from their

official file, the respondents have taken the stand which was accepted and found

favour with Ld. Single Judge. These very contentions have been considered by us.

214. The pronouncement in AIR 2011 SC 1127 Kalyan Singh Chouhan vs. C. P.

Joshi was rendered in an election dispute, wherein the rules of pleadings apply

strictly and it was held by the Supreme Court that pleadings and particulars are

required to enable the court to decide the rights of the parties in the trial. It was

observed that pleadings are more to help the court in narrowing the controversy

involved and to inform the parties concerned of the question in issue, so that the

parties may adduce appropriate evidence on the said issue. The court reiterated the

well settled legal proposition that “as a rule relief not founded on the pleadings

should not be granted”. Therefore, it was held that a decision of a case cannot be

based on a ground outside the pleadings for the parties. In so holding, the Supreme

Court placed reliance on the precedents in Trojan & Co. Ltd; Om Prakash Gupta;

Ishwar Dutt and Hindustan Constructions Company Pvt. Ltd.

215. There can be no dispute at all with these well settled principles. However,

we are unable to agree with the objection on behalf of the appellants that the ld.

Single Judge has rendered the impugned judgment outside of the pleadings.

91


216. We have considered the concealment of material facts on the part of the

appellants and also the deliberate misjoinder of parties to persuade the court to

grant the relief to them when they were completely disentitled to do so. It is the

appellants who have failed to give the details or the extent of their breaches and

failure to comply with the Rules and the terms of the LoI.

217. The learned Single Judge has relied primarily on the statutory provisions,

the Rules as also the terms notified to the appellants under the LoIs and the

admitted violations by the appellants. This objection, therefore, is noted only for the

sake of rejection.

Opportunity to meet contents of official record

218. A vehement objection also stands made on behalf of all the appellants that

the ld. Single Judge examined the official records of the respondents and has

premised the impugned judgment thereon without the appellants having had

benefit of knowing the contents thereon.

219. On the other hand, Mr F. A. Natnoo, ld. AAG, has explained that the

original record was produced in support of the Govt. reply to the writ petitions and

the communications from the respondents. Mr. Natnoo has submitted that the

record was available in open court before the Ld. Single Judge right from the

beginning when the hearings commenced before the learned Single Judge. It is

submitted that none of the appellants even made a request to the learned Single

Judge for an opportunity to examine the same.

Mr Natnoo has further submitted before us that several queries were put to

the appellants on the basis of the original record and responses elicited. Mr.

Natnoo has submitted that no objection whatsoever was raised by and on behalf of

92


the appellants to the above procedure at any point of time. The objection of the

appellants to the procedure followed by the Ld. Single Judge is also unfounded.

220. This bunch of appeals was consolidated for hearing which commenced on

27th May, 2020. During the course of submissions on 28th May, 2020, it was also

contended that there was no material to support the Government action and order.

221. Appearing for the respondents, Mr Natnoo, disputed the contentions of the

appellants and submitted that the Government action and order was valid and in

accordance with law. In the objections, as extracted above, reference was made to

“taking into account all the facts and circumstances” and “conscious decision for

scrapping the open auction carried out in the year 2016” and “carrying out fresh

auction process through the e-mod.” The communication dated 26th February,

2019 also refers to approval of the “competent authority” and scrapping of the

open auction carried out under the Rules of 2016.

222. An objection of the appellants was pressed that the order is not in

accordance with Rules 11 and 12 of the Transaction of Business Rules. It is

noteworthy that the appellants did not challenge the decision of the Government

dated 26th February, 2019 whereby it was decided to grant mining leases by e-

mode. So far as rejection of an application is concerned, the same is provided

under the Rules of 2016. Mr. Natnoo, has further urged that the decision of the

respondents was taken in public interest to ensure compliance of the directions of

the Supreme Court and the NGT as also the notifications of the MOEF&CC of the

Government of India.

223. The order of scrapping and approval was not in the writ records before us.

Having regard to the contents of the communication dated 26th February, 2019 and

93


the above averments in the reply of the official respondents, in order to take a view

in the matter, we had deemed it necessary to examine the original record. Fairness

demanded that the appellants be granted an opportunity to examine the same and

make submissions thereon.

224. In order to obviate any prejudice to the appellants, by our order dated 20th

May, 2020, we had directed the respondents to produce before us all original

records which had led to the issuance of the communication dated 26th February,

2019. The respondents were directed to file an affidavit placing on record the

approval which was referred to in the communication dated 26th February, 2019

and copies of the extract of the relevant portion of the original record as well as

connected documents. The respondents were directed to give full details of the

manner in which the matter had been processed. This affidavit was directed to be

filed in LPA No.62/2020 and copy thereof served upon counsels appearing in all

the appeals who were given liberty to file response thereto.

225. The respondents had filed an affidavit dated 28th May, 2020. However, by

the order dated 29th May, 2020, this was rejected as incomplete and the

respondents were directed to file a fresh affidavit with liberty to the appellants to

respond thereto.

226. In compliance of the above, the respondents filed an affidavit dated 30th

May, 2020 of Shri Manoj Kumar Dwivedi, Commissioner/ Secretary to

Government, Industries and Commerce Department, placing the relevant extract

from the official file No. IND/Legal-239/2018 before us.

94


227. A response dated 01.06.2020 has been filed by Vikar Ahmed Dar (appellant

in LPA No. 64/2020) contending that the consideration by the Principal Secretary

(I&C) was based on no material.

228. We were also of the view that these appeals raise matters which do not

brook any delay. For this reason, we have permitted the appellants to press the

several grounds which are considered hereafter and examined the affidavits and the

records of the respondents.

229. Ld. Senior Counsels and counsels for the appellants appearing in these cases

have addressed submissions in detail as well as Mr. F. A. Natnoo, ld. AAG on

these affidavits and the records of the respondents at length.

VI The consideration by the Government which lead to the

decision to scrap the auctions of 2017, issuance of the

communication dated 26th February, 2019 and the

Amendment to the Rules.

230. Before us, all the appellants have contended that there was no material

before the respondents and that the impugned action stands taken and the decision

made without application of mind. It is further contended that the respondents

placed no pleadings even before the learned Single Judge to oppose the writ

petition or explain their action or stand.

231. The record shows that the filing of OWP 1176/2018 Radha Krishan vs.

Union of India and the passing of the order dated 19th June, 2018 therein catalyzed

the authorities into taking a close look into the entire matter of grant of mining

lease and quarries.

232. It appears that another writ petition- OWP No. 1249/2018, was filed by

Subash Chandra and anr in the Jammu Wing contending that notices issued vide

No. DIP/J/3008/18 dated 27th June 2018 were issued in violation of the above

95


order dated 19th June 2018 in OWP No. 1176/2018 Radha Krishan v. Union of

India. While issuing notice by the order dated 2nd July 2018, the learned Single

Judge had directed that ‘the impugned public notice dated 27th June 2018 (supra)

and all proceedings pursuant thereto shall stay and no auction shall be held/or

acted upon.’

233. This writ petition was directed to be listed along with OWP No. 1176/2018.

234. We may note that Subash Chander was the petitioner No. 2 in OWP No.

1176/2018. Instead of bringing the above fact regarding the notice dated 27th June

2018 by way of an appropriate application to the notice of the Bench seized of that

writ petition, the strange practice of filing a second writ petition appears to have

been followed.

235. In OWP No.2648/2018 Sarweshwar Sharma and others, the ld. Single

Judge by the order dated 26th December, 2018, while asking the State to explain its

position vis-à-vis Rule 104A, the transitory provision, passed the following order:

“Considering the importance of the matter, I request the learned

Advocate General of the State to assist this Court on the next date of

hearing. It is, however, made clear that although I am of the prima

facie view that the Transitory Provision does not in any manner

absolve the successful bidders to obtain environmental clearance

based upon the Transitory Provision, yet the issue will be considered

after an appropriate response is filed through the office of learned

Advocate General. In case, the response is not satisfactory, on the next

date of hearing, it may become necessary to permit the successful

bidders to conduct their minor mineral operatioins only if they have in

their possession an appropriate environmental clearance report. The

pendency of the present petition, therefore, would not prevent the

successful bidders, in the meantime, to get clearance, as require.”

(Emphasis supplied)

96


This writ petition is still pending.

The above order shows the concern of the court with the matter of ECs

which were mandatory.

236. Vide a letter dated 4th July 2018, the Directorate of Geology and Mining,

J&K proposed amendments in SRO 105 in the light of the order dated 19th June

2018 in OWP No. 1176/2018 Radha Krishan v. Union of India (which stood

clubbed with PIL no. 6/2016 Peoples Forum v. State and anr).

237. The Directorate of Geology and Mining in the Department of Industries and

Commerce, while taking steps to contest the OWP No. 1176/2018, also took up the

matter of Rule 52 of SRO 105 i.e. the Rules of 2016 and explored the possibility of

making ‘e-auctions’ a permanent method for auctions in the future.

238. The interim orders of this court in OWP No. 1176/2018 also led to the

Department of Industries and Commerce taking up the matter of development of

software, training staff, etc for conducting e-auctions.

239. It appears that in the light of the observations in the interim order dated 19th

June 2018 in Radha Krishan facts and figures were called for by the authorities in

the Department.

240. Mr. Natnoo has placed the Government file bearing No. IND/Legal-

239/2018 from the office of the Principal Secretary to the Government, Industries

and Commerce Department before us. It appears that the Directorate of Geology

and Mining had moved a proposal for amendment of the Rules, on which, after

examination, a draft notification stood vetted by the Department of Law, Justice &

Parliamentary Affairs (Para 17 & 18, noting dated 18th July 2018, N/4). The file

contains a detailed extract of the amendments which were proposed by the

Directorate of Geology and Mining including a tabulation of the rules requiring

97


amendment; the matter in principle; the existing statutory provisions and rules; the

proposed provisions and the justification for the same.

241. On 9th August 2018, comments of the Additional Secretary, Law were

obtained on this amendment.

242. The opinion of the Advocate General was sought on the following question:

“10. Whether the order of the Hon’ble High Court dated 19th June

2018 is applicable to the cases where e-auction process as already

concluded?”

243. On 10th December 2018 (page 178 of the Govt file), the Advocate General

opined as follows:

“In cases, the auctions prior to issuance of the aforementioned order

have been concluded i.e. the licences have already been granted, then

the order of the court would be deemed to be prospective in nature but

in case licences have not been granted till the date of passing of the

order dated 19.06.2018, then in that eventuality, it has to await the

final order of the court and the matter needs to be contested before the

court as the order dated 19.06.2018 is interim order and that too

subject to objections and till next date of hearing.”

244. So far as existing bidders were concerned, the proceedings for the issuance

of the mining leases stood interdicted by the interim order dated 19th June 2018.

245. It is also noteworthy that so far as the appellants are concerned the period of

six months as required by the Rules and LoIs for compliance of the conditions

thereunder was long over.

246. While examining the thrust of OWP 1176/2018, that the open auction was

fraught with cartelization/ intimidation, on 2nd January, 2018, the Principal

Secretary directed the Director (Geology and Mining) as follows:

98


“54. Seen. In the meanwhile, the main thrust of the petition is that

open auction is fraught with danger of cartelization/intimidation. I

have directed Dir (G&M) to put up information for each auction, in

formatted manner, to make an assessment regarding the

transparency aspect by 7th FN to me please, with the information from

Dir (G&M).”

247. The details of the minor minerals blocks and their auctions were submitted

by the Director of Geology and Mining, J&K Govt, Jammu under cover of a letter

dated 7th January 2019 to the Principal Secretary to Govt, Industries and

Commerce Department, Civil Secretariat, Jammu.

248. On 8th January 2019, the Additional Secretary (L) observed that in view of

the directions of the High Court to grant mining leases/licences by the mode of e-

auction, an amendment in SRO 105 may be considered by replacing the word

‘open auction’ with ‘e-auction’ to enable the Geology and Mining Department to

conduct auction of the un-auctioned blocks through e-auction mode.

This information was placed before the Principal Secretary as directed.

249. After an in-depth consideration of the material on file, the Principal

Secretary (I&C) of the Department concerned has proceeded to record the

following noting on the 8th February, 2019:

“58. In the Writ Petition No. OWP No. 1176/2018 titled Radha

Krishan S/o Bram Dev Vs Union of India, the Hon’ble High Court

has directed that no licence shall be granted other than by mode of

e-auction (refer Para 4).

59. The Department has carried out open auction of Mineral Block

from September 2017 onwards and the details are placed across. The

Gist (FLAG ‘X’) indicated that the successful bidders in a number of

blocks is same person. In this regard, a complaint was also received

and report has been obtained from Director (Geology and Mining)

99


(FLAG ‘Y’). It is noted that while apparently rules for open auction

have been followed but the highest bid shows very wide variation

even though minimum reserve bid (decided by the Department taking

potential into account) is of the same order. Also, it seems minimum

reserve bid has been fixed too low. The Government has received a

total of Rs.12.24 Crore by means of open auction of 231 (file placed

below IND/legal/27/2013-II) Mineral Blocks across the State while in

Districts of Kathua, Doda, Ramban, Baramulla, Bandipora &

Srinagar, the auction did not take place at all, and not of any cogent

reasons.

60. The Mineral Rules 2016 (Rule 52) mentions the mode of grant

of lease/licence only through process of open auction. These is no

doubt that e-auction would allow more competition and will address

the issue of cartelization and intimidation. Hence there is need to

immediately make necessary change in the Rules. The other changes

proposed in the Rules are of routine nature that need not detain us but

this change needs to be effected immediately, following the due

process.

61. As for the open auction undertaken by the Department; the

advice of the Ld. Advocate General has been sought by the Law

Department on the following question:-

Whether the order of the Hon’ble High Court dated 19.06.2018

is applicable to the cases wherein auction process has already been

concluded”.

The Ld. Advocate General has opined that in case licence have

not been granted till 19.06.2018, the matter needs to be contested

before the Hon’ble High Court.

62. It may be seen that the successful bidders have not yet

obtained Environmental Clearance despite lapse of more than a year

since they were allowed mining (subject to approval of mining plan).

Notices were issued by the Department to get Environmental

Clearance but they have approached the courts and have, it is learnt

100


from the Advocate, got relief as they claim the SEIAA is not in place

and that they are not at fault.

63. Looking at the entire grant of issues, it would be most

appropriate to scrap the open auction that had been carried out in

2017-18 onwards and instead go, for fresh auction, with the mode of

e-auction. Though that would entail returning the bid amount to

successful bidders but it is expected that e-auction would fetch much

higher amount of revenue for the Government. Moreover, it would

ensure transparency and also compliance to the directions of the

Hon’ble High Court.

64. It is therefore proposed that:-

i. Mineral Rules 2016 be amended suitably to indicate e-

auction as the only mode of lease/licence.

ii. Open auction carried out under the 2016 Rules be scraped

and fresh auction be carried out, only through e-auction.

iii. Till the time fresh allotments are made, the existing

mechanism would continue. This would require extension of

transitory provision by some time.

iv. Procedure of mining plan approval, fixation of reserve bid

amount and frequency of royalty deposition would be addressed by

issuing directions under the existing Rules.”

(Emphasis by us)

250. The noting dated 8th February, 2019 was considered by the Advisor on 11th

February, 2019 as per the forwarding note recorded in para 66. It was thereafter

sent for the views of the new Principal Secretary, Industries and Commerce

Department, who recorded noting on 14th February, 2018 as para 67 of the file

endorsing further course of action as recommended at note 64 and 65 and

recording that the e-auction was to be conducted irrespective of the status of the

proceedings for EC by the successful bidders of the open auction observing that

the bidding process in 2017 was not without possibility of

101


cartelization/intimidation. The above proposal was finally approved by the Advisor

on 18th February, 2018 as per para 68.

251. The above decision was conveyed by way of the communication dated 26th

February 2019 issued by the Department of Industries & Commerce to the

Director, Geology and Mining Department. We have extracted this letter above.

This communication thus only conveys the decision of the respondents.

252. As a result of the above consideration and decision, a the draft notification

was scrutinized and approved by the Department of Law, Justice and

Parliamentary Affairs leading to the issuance of the notification SRO 161 on the

7th March 2019 making the following amendments in Rules of 2016.

“1. clause (xLvii) of rule 2 shall be substituted by the following:-

“(xLviii) “e-auction” means bidding by the competitors online

for grant of mineral concessions;

2. In clause (xiii), (xxx) of rule 2, 27, 44 and 52 for the words

“open auction” wherever appearing, the words “e-auction” shall be

substituted.”

253. Mr. Z.A. Shah, learned Senior Counsel has submitted that the reserve price

for the auction was fixed under Rule 54 by the Government. In the noting dated 8th

February, 2019 in para 59, it has been noted that the reserve price was too low,

while in para 60, there is reference to the possibility of cartelization. Learned

Senior Counsel would contend that the counter affidavit filed before the court does

not disclose the reasons which weighed with the Government for scrapping of

auction as informed by the communication dated 26th February 2019.

254. We have extracted the counter affidavits of the respondents above and noted

that the respondents had made out their case therein. In any case, in view of the fact

102


that no rights had accrued in favour of the appellants, such objection is not available

to the appellants.

255. The consideration by the State Government has been placed on affidavit

before us and opportunity has been granted to the appellants to consider and

respond to the same.

256. The appellants have vehemently contended the respondents suggestion that

there was cartelization is without any basis. However, we have found that the

decision of the respondents is based on material and consideration.

257. We may note that in the official record, the material received by the

authorities pursuant to the Noting dated 2nd January, 2019 from the Director,

Geology and Mining regarding the Jammu Province runs in a tabulation of 9 pages

giving complete details of the auctions and the material received from Kashmir is a

tabulation which runs into 35 pages.

258. We find that the Principal Secretary (I&C) had the complete details of the

proceedings of the auction and the manner in which the bidding had taken place;

the highest bids obtained and the names of the bidders therein.

259. In the instant case as well, Mr F. A. Natnoo has drawn our attention to the

manner in which the bidding took place.

260. The material on record as above before the decision was taken, shows that

while the bid for one block out of a group of blocks auctioned may be considered

to be reasonably above the reserve price, the remainder of the bids by the same

person/ bidder are only notionally/ insignificantly above the reserve price as noted

by the authorities. The material also supports the Government observation that the

successful bidder in a larger number of blocks was the same person. These factors

have led to the authorities forming the view of possible cartelization.

103


261. So far as the view regarding cartelization is concerned, similar facts were

before the Supreme Court in (1972) 2 SCC 36 : State of Orissa v. Harinarayan

Jaiswal, wherein the Court also considered the issue as to whether an opinion by

the Government with regard to collusion among the bidders and adequacy of the

price would be subject to judicial review. In Para 13 of the judgment, the Supreme

Court has observed as followed:

“…….. The High Court erroneously thought that the Government was

bound to satisfy the Court that there was collusion between the

bidders. The High Court was not sitting on appeal against the order

made by the Government. The inference of the Government that there

was a collusion among the bidders may be right or wrong. But that

was not open to judicial review so long as it is not proved that it was

a make- believe one. The real opinion formed by the Government

was that the price fetched was not adequate. That conclusion is taken

on the basis of Government expectations. The conclusion reached by

the. Government does not affect any one's rights. Hence, in our

opinion the High Court misapplied the ratio of the decision of this

Court in Barium Chemicals Ltd. and anr. v. Company Law Board and

ors.[1966 Supp SCR 311] and Rohtas Industries Ltd. v. S. T. Agarwal

[(1969) 1 SCC 325] .”

(Emphasis supplied)

262. In Harinarayan Jaiswal, the Supreme Court was called upon to consider the

bindingness on the authorities of the highest bid received in an auction. We may

usefully advert to the observations of the Supreme Court in this case which read as

follows:

“13. xxxx. As held by this Court in Cooverjee Bharucha’s case

(supra), one of the important purpose of selling the exclusive right to

sell liquor in wholesale or retail is to raise revenue. Excise revenue

forms an important part of every State’s revenue. The Government is

the guardian of the finances of the State. It is expected to protect the

104


financial interest of the State. Hence quite naturally, the legislature

has empowered the Government to see that there is no leakage in its

revenue. It is for the Government to decide whether the price offered

in an auction sale is adequate. While accepting or rejecting a bid, it

is merely performing an executive function. The correctness of its

conclusion is not open to judicial review. We fail to see how the plea

of contravention of Art. 19(1)(g) or Art. 14 can arise in these cases.

The Government’s power to sell the exclusive privileges set out in s.

22 was not denied. It was also not disputed that those privileges could

be sold by public auction. Public actions are held to get the best

possible price. ‘Once these aspects are recognised, there appears to

be, no basis for contending that the owner of the privileges in

question who had offered to sell them cannot decline to accept the

highest bid if he thinks that the price offered is inadequate.- There is

no concluded contract till the bid is accepted. Before there was a

concluded contract, it was open to the bidders to withdraw their bids-

see Union of India and ors. V. M/s. Bhimsen Walaiti Ram [(1970) 2

SCR 594]……..”

(Emphasis by us)

263. A similar rejection of a bid/ tender where the highest bids were marginally

higher than reserve price was considered by the Supreme Court in the judgment

reported at 2016(1) SCC 724 : State of Punjab v. Bandeep Singh & Ors. In this

case, the Director, Industries and Commerce Department, in a noting dated 18th

June, 2004 had opined that the bids should not be confirmed as highest bids

offered were only marginally higher than the reserve price. The two respondents/

petitioners who were highest bidders and had deposited the earnest money together

with 25% of the auction bid which was admittedly only marginally higher the

reserve prices fixed by the competent authority. Without conveying reasons to the

appellants for not accepting their bid, the decision was taken by the respondents to

re-auction the properties.

105


264. The Supreme Court referred to an earlier pronouncement reported at 2004(8)

SCC 611 : Anil Kumar Srivastav v. State of UP and the view taken by the Madras

High Court in 1968 SCC (online) Madras 226 : B. Sushila v. Saraswathi Ammal,

to the effect that notwithstanding the fixation of an upset price and notwithstanding

the fact that the bidder has offered an amount higher than the reserved stock upset

price, the sale is still open to challenge on the ground that the property has not

fetched proper price and that the same be set aside. It was noted that this principle

was also upheld in Ram Kishan v. State of UP while cautioning that the

Government did not have a carte blanche; it cannot take any decision, it chooses; it

cannot take a capricious, arbitrary or prejudice decision. Its decision must be

informed and impregnated with reasons. In para-8 of Bandeep Singh, the Supreme

Court observed that “the presence of cartelization or “pooling” could be a reason

for cancellation of an auction process. In addition, a challenge on the ground

that the property has fetched too low a bid when compared to the prevailing

market price, would also be valid and permissible provided this approach has

been uniformly adhered to.”

265. Sufficiency of material before the authorities and the extent of their

consideration is completely beyond the pale of judicial review. The view that we

are taking finds strength from the observations of the Supreme Court in the

judgment reported at (1974) 2 SCC 687 (at page 694), M. A. Rashid v. State of

Kerala wherein the Supreme Court sustained the decision of the State Government

finding that there was material on record and that the opinion was not based on any

matter extraneous to the scope and purpose of the statutory provisions and also

that reasonable grounds existed for believing the existence of the state of affairs.

106


The court also found that the decision was in public interest. The following

observations in the above judgment would guide our consideration:

“21. The State Government found on materials that use of machines

affected the availability of retted coconut husks for equitable

distribution at fair prices. The notification is on the consideration of

relevant and useful material. The opinion of the State Government

cannot be said to be based on any matter extraneous to the scope and

purpose of the relevant provisions of the statute. The materials

supporting the subjective satisfaction indicate that there are

reasonable grounds for believing that the prescribed state of affairs

exists and a course of action is reasonably necessary for the given

purpose of equitable distribution of coconut husks at fair prices.

22. The notification is issued after due care and caution on the basis of

reliable and sufficient data obtained by proper investigation and

enquiries. The Government took notice of Section 38 of the Defence of

India Act. The Government became satisfied about the public interest.

The notification does not interfere with the avocations and enjoyment

of property any more than is necessary for those purposes of equitable

distribution of husks at fair price to the traditional sector.”

(Emphasis supplied)

266. Before us, there is no challenge to the authority of the respondents, to effect

the amendment to the rules or changes in the policy. There is not a single

allegation of malafide in the decision which has been taken by the respondents by

any of the appellants. No appellant has challenged the jurisdiction of the

respondents to change the policy.

267. Only a limited challenge is laid as to the cancellation (“scrapping”) of the

pending process for which auctions were held in 2017 in which the appellants were

declared highest bidders.

268. In any case, it is not open to this court in exercise of power of judicial

review to look into the view and decision of the official respondents, especially a

107


policy decision, or to conduct the nature of enquiry which Vikar Ahmad Dar-

appellant is calling upon this court to conduct.

269. Even if the reserve price had been fixed by the Government, it does not

stand prohibited from re-examining the same and voicing a concern that the same

was low.

270. The contention on behalf of the appellants that for intimidation of a possible

bidder, physical presence of a person is necessary, is completely misconceived. In

today’s time of e-communication, physical presence to intimidate any person is not

necessary.

271. So far as the contention on behalf of the appellants that there was no

material on record of the respondents is concerned, the same is, therefore, factually

unfounded. What stands established from the record produced before us is that

there was material on record to suggest the possibilities noted by the authorities.

Given the information and data collected on Government record and examined in

the detailed notings, it is manifest that the competent authorities have applied mind

to the relevant material before taking the well considered decision purely in public

interest.

272. The decision of the respondents therefore is based on facts, arrived at after

application of mind to the relevant material, is in public interest and cannot be

overruled on any legally tenable grounds.

VII The Working of Rule 104A

273. We have grave doubts that a person who has merely participated in an

auction for grant of mining lease could be covered within the meaning of the

expression ‘existing quarry holders’ or ‘person extracting such minor minerals’ as

incorporated in Rule 104 A.

108


274. A reading of the transitory provision contained in Rule 104A further shows

that the provision directs that the department ‘may’ issue permission for extraction

of minor minerals. It is certainly unassailable that the department is required to

accord consideration for issuance of permission. The use of the expression ‘may’

shows that even if he could be considered as covered under the categories

mentioned in the Rule, no person has an absolute right to the permission

contemplated under. Rule 104-A also does not enable the categories of persons

mentioned therein to ipso facto be entitled to undertake mining operations under

Rule 104-A.

275. The records of the instant case reveal a shocking state of affairs.

276. We have queried Mr. Natnoo and called upon him to place before us the

grant of permissions to any person enabling the extraction and transportation of

minor minerals envisaged as in Rule 104A.

277. Mr. Natnoo was unable to point out a single instance of consideration of any

person for grant of the permission under Section 104A.

278. We have asked the respondents for the details of the auctions conducted and

details of the mining leases which have been executed since the date 20th April

2016, when Rule 104A was incorporated. Nothing is forthcoming.

279. Our scrutiny of the record produced would also show that the respondents

neither have the practice of nor follow any procedure for grant of formal

permission as contemplated under Rule 104A.

280. Before us, the appellants have contended that after their bids were

provisionally accepted and LoIs issued, they have effected mining of the minor

109


minerals and paid the prescribed royalties. These appellants submit that in the

acceptance of these payments of royalty, is the accordance of tacit permission to

the bidders to mine for minerals.

281. A very interesting submission has been made by Mr. Raina before us. In

LPA 56/2020 Chaman Lal vs. State of J&K. It has been submitted that the

appellants have greatly contributed to public interest and during this period having

paid a whopping amount of Rs. 1,23,55,400/- towards royalty.

282. Mr. F. A. Natnoo, AAG has given the following details of the royalties paid

by all the appellants:

S. No. Appellant

Appellant No. in LPA No. Mineral extracted

in metric tonnes

(MT)

Total Royalty

Paid

(Rs. in lacs)

1. M/s Usman

Constructions

Abdul Gani Lone

Appellant No. 1

in LPA No. 41-A/2020 in

OWP 290/2019 Titled

Usman Constructions &

Others V/s State and Others

Nallah Muck 2493

Nallah Boulder 2270

Crushing Boulder 3325

Sand 590

RBM 8670

Total 17348

2.055

2. Sajad Ahmad Shan Appellant No. 2


OWP 290/2019 Titled



Nallah Muck 1050

Nallah Boulder 1075


Sand 675

RBM 885

Nallah Bajri 300

Total 4881

0.975

3. Balbir Singh Appellant No. 3


OWP 290/2019 Titled



Nallah Muck 507435.16

Nallah Boulder 81100

Sand 194640

Nallah Bajri 23171.43

Total 806346.50

199.85

4. Shabir Ahmad Shiekh Appellant No. 4


OWP 290/2019 Titled



Nallah Muck 160

Nallah Boulder 285


Sand 90

RBM 885

Total 1770

2.058

5. Rakesh Kumar

Choudhary

Appellant No. 1

in LPA No. 02/2020 in

OWP 325/2019 Titled

Rakesh Kumar Choudhary

V/s State and Others

Nallah Muck/RBM 1263353


Sand 689101

Nallah Bajri 82035

Total 2321614

574.70

6. Mohd. Ashore Mir Appellant No. 1


OWP No. 477/2019 titled

Mohd. Ashore Mir and

-- --

110



7. Manzoor Ahmad Mir Appellant No. 2





-- --

8. Mohd. Shaban Bhat Appellant No. 3





-- --

9. Vikar Ahmad Dar Appellant No. 1

in LPA No. 64/2020 in

OWP 259/2019 titled Vikar

Ahmad Dar V/s State and

Others

Nallah Muck 3690

Nallah Boulder 3296


Sand 2449

RBM 19160

Nallah Bajri 925

Total 38284

4.716

10. Nagar Singh Appellant No. 1

in LPA No. 07/2020 titled

Nagar Singh V/s UT of J&K

and Others

Nallah Muck 315920


Sand 172320

RBM 885


Total 580554.29

143.60

S. No. Appellant


in metric tonnes

(MT)

Total Royalty

Paid

(Rs. in lacs)

11. Chaman Lal Appellant No. 1


Chaman Lal V/s UT of J&K

and Others

Nallah Muck 287254.99

Nallah Boulder 65285.23

Sand 156684.54

RBM 885


Total 527875

130.57

12. Mohd. Farooq Lone Appellant No. 1

In LPA No. 63/2020 in

OWP 344/2019 titled Mohd.

Farooq Lone and others V/s

State and Others

Nallah Muck 4788 3.697

13. Riyaz Ahmad Sofi Appellant No. 2

in LPA No. 63/2020 in OWP

344/2019 titled Mohd.


State and Others


14. Ajaz Ahmad Magray Appellant No. 3




State and Others


15. Tariq Majnoon Mir Appellant No. 4




State and Others


16. Riyaz Ahmad Bhat Appellant No. 5




State and Others


17. Tanveer Ahmad Mir Appellant No. 6




State and Others


111


283. Our attention is drawn to the Schedule-I to the Rules of 2016 whereby the

Rates of Royalty of Minor Minerals [Rule 38(1(i)(ii), 50(I), 70] have been

18. Ab. Hamid Mir Appellant No. 7




State and Others


19. Abdul Ahad Wani Appellant No. 8




State and Others


20. Nazir Ahmad Mir Appellant No. 9




State and Others


21. Mohd. Amin Bhat Appellant No. 10




State and Others


22. Rahil Mohiuddin Dar Appellant No. 11




State and Others


S. No. Appellant


in metric tonnes

(MT)

Total Royalty

Paid

(Rs. in lacs)

23. Tariq Ahmad Sheikh Appellant No. 12




State and Others


24. Shakeel Ahmad Bhat Appellant No. 13




State and Others


25. Firdous Ahmad Mir Appellant No. 14




State and Others


26. Ab. Rashid Lone Appellant No. 15




State and Others


27. Shahnawaz Ahmad

Bhat

Appellant No. 1


Shahnawaz Ahmad Bhat

and Others V/s UT of J&K

and Others


28. Mohd. Ayoub Lone Appellant No. 2


Shahnawaz Ahmad Bhat

and Others V/s UT of J&K

and Others


112


prescribed by the Govt. So far as nallah boulders, bajri, sand are concerned, the

rates stretch from Rs. 20/MT for nallah boulders to Rs. 30/MT for screened sand.

For ordinary nallah sand and nallah which has been extracted by the appellants,

royalty stands fixed at Rs.25/MT.

284. We made an attempt to assess the value of the extracted material. Mr Sunil

Sethi, ld. Senior counsel, appearing for the interveners has informed us that so far

as the cost of a single tipper of the minor mineral (sand) is concerned, the miner

sells the same @ Rs. 15000/ per tipper. At the above rate of royalty, against

payment of royalty of rupees one lakh by a bidder, the quantity of minerals which

would have been mined would be to the tune of 4000 tonnes. Assuming that one

tipper carries a load of 5 tonnes, then 4000 tonnes translated into 800 tippers.

These 800 tipper loads, at the rate would have earned Rs 15000/ tipper would thus

fetch Rs. 15000 x 800 = 1,20,00,000.00 to the bidder, that too on a very rough

estimate.

285. The above tabulation manifests the extent to which the appellants have thus

exploited the minor minerals without the required formal order permitting them to

do so, most importantly without EC.

286. Mr Sunil Sethi, has submitted that the second clause of the communication

dated 26th February 2019 to the effect that the existing mechanism would continue

was also contrary to the prohibition contained in Section 4 of the Act of 1957 as

well as the pronouncement of the Supreme Court in Deepak Kumar and cannot be

permitted.

There is merit in this submission.

113


287. We have noted above that the last extension of Rule 104-A was upto 28th

February, 2019. Did the extraction of minor minerals by the bidders (present

appellants) of 2016 auctions cease thereafter?

288. It appears that in the writ petitions which were filed, the learned Single

Judges of the Court granted interim orders in favour of the writ petitioners/

appellants. For instance in OWP 259/2019, filed by Vikar Ahmad Dar, an interim

order dated 13th March, 2019 was passed restraining the respondents from acting

upon the condition No.1 of the impugned communication dated 26.02.2019. An

interim order dated 1st April, 2019 was passed in OWP 363/2019 filed by Ashaq

Hussain Padder (Nagar Singh was petitioner no.5 in this order). Similar orders

were passd in the other writ petitions as well.

289. We are informed that utilizing the shield of the second clause of the

impugned letter dated 26th February, 2019 and the interim orders by Ld. Single

Judges in the writ petitions, these bidders continued with their illegal activity.

290. In this background, it appears that the J&K Pollution Control Board was

compelled to address a letter dated 12th November, 2019 to the Director of the

Geology and Mining Department (extracted above). This letter contains a reference

to a previous notice dated 16th October, 2019 from the Pollution Control Board to

the authority and its response dated 21st October, 2019. The letter dated 12th

November, 2019 from the J&K Pollution Control Board speaks volumes about the

manner in which the Geology and Mining Department of the Government of

Jammu and Kashmir has conducted itself. This letter interalia directed the

respondents to ensure that no extraction of minor minerals “from today” is done in

the State in defiance of the laws governing environmental protection.

114


291. The respondents now had no choice but to comply with the communication

from the Pollution Control Board. It is noteworthy that none of the appellants have

challenged the letter dated 12th November, 2019.

292. We have before us a copy of one application being IA No.7798/2019 in

OWP No.363/2019 which was filed on 24th December, 2019 by the respondents

seeking modification of the interim order dated 1st of April, 2019 passed by the

Court in OWP. Along with this application, the afore noticed orders of the NGT

and a copy of the letter dated 12th November, 2019 of the J&K Pollution Control

Board had been filed. It appears that no order came to be passed on this

application.

293. We may note that we have no information from these appellants as to

whether they complied with the directions contained in the letter dated 12th April,

2019.

294. The learned Single Judge has observed in para 74 of the impugned judgment

that he did not have the above information with regard to the extent of the

environmental degradation caused by indiscriminate mining operations carried out

by the appellants under the shield of Rule 104-A. We have attempted above an

estimation of the extent of mining undertaken by the appellants, the impact

whereof would need a scientific evaluation by experts.

295. While deriving such huge commercial profits, these appellants have

deprived the State of valuable financial resources in terms of the unpaid balance

bid amount which was to be paid within a period of six months of the issuance of

the LoI. Clearly, instead of serving public interest, these appellants have in fact

caused grave loss to public interest.

115


VIII An important ‘subsequent’ fact-conduct of e-auctions

296. After the passing of the impugned judgment dated 1st May, 2020, the

respondents put all the blocks to e-auction pursuant to public notices issued

between 27th May, 2020 to 1st June, 2020. For the e-auctions, the respondents had

fixed reserve prices which were either almost equal to or way higher than the

reserve prices fixed for the auctions of 2016/2017.

297. Some of the instant appeals had been filed and were under consideration

before us. We had declined any interim orders interdicting the e-auctions. We are

informed that these auctions stand concluded.

298. We have been informed that the appellants unconditionally and unreservedly

participated in the e-auctions and submitted bids.

299. Mr. Natnoo, has placed before us a comparative tabulation of the details of

the minor mineral blocks relating to the minimum reserve prices’ and the highest

bids offered in the open auctions in 2017 as well as in the e-auction conducted in

2020. It is submitted by Mr. Natnoo, ld AAG that copies of these documents have

been furnished to all the counsels.

For expediency we extract hereunder some of these details.

S.

No

Name of appellant Block

no.

Area in

hactare

Open Auction E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)

District Poonch

1 Appellant No.3 in

LPA No.41-A/2020

titled Usman

Constructions &

Ors. V. State and

others

4 8.86 4.41 4.61 15.95 55.75

2 -do- 8 6.09 3.13 3.50 10.96 108.36

116


3 -do- 9 8.80 4.38 4.82 15.84 60.14

4 -do- 18 7.00 0.77 0.85 12.60 37.00

5 -do- 20 6.25 0.68 16.01 11.25 80.25

District Rajouri 6 Appellant No.1 in

LPA No.02/2020 in

OWP 325/2019 titled

Rakesh Kumar

Choudhary V/s State

and ors.

1/1 8.61 5.52 6.25 17.05 150.25

7 -do- 1/2 7.89 5.04 6.00 15.62 80.52

8 -do- 1/5 9.51 5.09 5.80 18.83 226.53

9 -do- 2/1 7.37 2.72 3.80 14.59 72.09

10 -do- 2/2 9.52 3.13 4.25 18.85 85.65

11 -do- 2/6 9.34 3.06 4.10 18.49 73.89

12 -do- 3/4 9.61 3.10 3.90 19.03 167.93

13 -do- 3/5 9.62 3.10 4.00 19.05 201.85

14 -do- 3/7 8.36 3.00 3.90 16.55 143.15

S.

No


no.

Area in

hactare

Open Auction

E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)

District Kishtwar

15 Appellant No.1 in

LPA No.02/2020 in

OWP 325/2019 titled

Rakesh Kumar

Choudhary v. State

and Ors.

III/2 2.00 0.33 1.00 3.60 111.70

District Jammu


LPA No.07/2020

titled Nagar Singh V.

UT of J&K and Ors.

5/6 9.90 1.25 26.01 22.95 300.25

17 -do- 5/7 9.98 1.10 25.40 23.13 226.93


LPA No.41-A/2020

in OWP 290/2019

titled Usman

Constructions &

Ors. V. State and Ors.

5/21 9.67 3.10 5.71 21.24 100.14

19 -do- 5/23 9.98 3.20 4.76 21.92 120.12

20 -do- 5/32 9.80 1.20 2.25 21.52 45.12


LPA No.07/2020

titled Nagar Singh

1/7 9.25 1.0 13.00 21.44 40.04

117


V. UT of J&K & Ors.

22 -do- 5/3 9.94 1.50 170.00 23.04 308.44

23 -do- 5/4 9.32 1.25 141.00 21.60 285.60

24 -do- 5/13 8.69 0.70 1.00 19.08 38.38

25 -do- 5/29 9.89 2.00 3.00 21.72 44.12

District Reasi 26 Appellant No.1 in

LPA No.05/2020

titled Chaman Lal v.

UT of J&K & Ors.

7 9.60 4.51 5.26 24.54 70.74

27 -do- 10 6.28 1.39 1.65 16.05 58.25

28 -do- 13 9.80 2.16 2.60 25.05 103.25

29 -do- 14 9.51 2.10 2.60 24.31 125.01

30 -do- 15 9.08 2.01 2.51 23.21 128.71

31 -do- 16 8.20 1.81 2.50 20.96 101.36

District Samba


LPA No.02/2020 in

OWP 325/2019 titled

Rakesh Kumar

Choudhary v. State

& Ors.

1/4 9.23 4.67 5.00 21.93 161.23

S.

No


no.

Area in

hactare

Open Auction

E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)

33 -do- 1/5 9.51 4.81 5.10 22.60 100.20

34 -do- 1/6 9.58 4.84 5.50 22.76 125.06

35 -do- 1/11 9.66 4.89 5.60 22.95 120.15

36 -do- 1/13 9.98 5.05 5.75 23.71 285.41

37 -do- 2/2 6.80 14.65 18.75 17.05 785.05

38 -do- 2/4 9.59 20.65 21.00 24.05 328.35

39 -do- 3/1 9.28 14.78 16.00 23.37 205.57

40 -do- 3/2 9.23 14.90 16.50 23.15 130.35

41 -do- 3/3 9.55 15.21 16.50 23.95 201.15

District Kulgam


LPA No.41-A/2020

in OWP 290/2019

Titled Usman

Constructions & Ors.

V. State & Ors

12 4.46 2.10 2.20 6.82 84.32


LPA No.41-A/2020

in OWP 290/2019

titled Usman

Constructions &

Ors. V. State & Ors.

18 4.09 2.0 2.20 6.25 128.85


LPA No.41-A/2020

19 9.52 4.40 4.70 14.55 111.15

118


in OWP 290/2019

titled Usman

Constructions &

Ors. V. State & Ors.


LPA 64/2020 in

OWP 259/2019 titled

Vikar Ahmad Dar V. State & Ors.

22 4.27 2.0 2.20 6.53 56.93

46 In LPA No.41-

47A/2020 in OWP

290/2019 titled

UsmanConstruction

s & Ors. V. State &

Ors.

23 9.09 4.20 4.75 13.90 137.00

District Kupwara


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. V. State &

Ors.

5 4.33 2.10 2.50 6.60 76.80

S.

No


no.

Area in

hactare

Open Auction

E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)


LPA No.63/2020 in

OWP No.344/2019

titled Mohd. Faroq

Lone & Ors. V. State

& Ors

6 3.39 1.70 2.00 5.20 134.00


LPA No.63/2020

titled Mohd. Farooq

Lone & Ors v. State

and others.

7 9.76 1.20 1.50 14.90 156.30


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors.

8 8.29 1.00 1.20 12.70 81.80


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. V. State &

Ors.

9 9.40 1.10 1.30 14.40 125.20

53 Appellant No.9 in 10 10.00 1.20 1.40 15.30 133.20

119


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors.


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors.

11 2.41 0.30 0.50 3.70 108.30


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

12 4.20 0.50 0.70 6.40 64.20


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

14 6.38 3.60 3.90 10.40 177.70

S.

No


no.

Area in

hactare

Open Auction

E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

15 2.73 1.50 1.90 4.20 100.80


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

16 8.89 4.60 5.10 13.60 101.60


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

17 8.82 4.60 5.00 13.50 118.40


LPA No.63/2020 in

OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

18 10.00 5.20 5.60 15.30 31.50


LPA No.63/2020 in

19 3.39 1.80 2.20 5.20 56.70

120


OWP 344/2019 titled

Mohd. Farooq Lone

& Ors. Vs. State &

Ors

District Shopian


LPA No.____/ 2020

titled Shahnawaz

Ahmad Bhat & Ors.

V. UT of J&K & Ors.

19 9.68 2.30 3.00 14.7988 54.0988

District Pulwama


LPA No.50-A/2020

in OWP No.477/2019

titled Mohd. Ashore

Mir & Ors. V. State

& Ors.

1 4.62 2.66 35.10 7.10 225.50


LPA No.50-A/2020

in OWP No.477/2019

titled Mohd. Ashore

Mir & Ors. V. State

& Ors.

2 4.63 2.60 32.00 7.10 370.00

S.

No


no.

Area in

hactare

Open Auction

E-Auction

Minimum

Reserve

Bid (Rs.in

lacs)

Highest

Bid

offered

(Rs.in

lacs)

Minimu

m

Reserve

Bid (Rs.

in lacs)

Highest

Bid

offered

(Rs. in

lacs)


LPA No.50-A/2020

in OWP No.477/2019

titled Mohd. Ashore

Mir & Ors. V. State

& Ors.

4 4.07 2.30 31.10 6.20 237.90

300. The working of the e-auctions manifests that the decision to auction mining

leases by e-mode was in the best interest of the State and has certainly lead to

maximization of the revenue.

301. The outcome of these e-auctions illustrates and underlines another huge

deficiency in the available capacities as well as capabilities of the Union

Territory of Jammu and Kashmir. The above tabulation reveals an

astounding state of affairs. For instance, with regard to Block 8 in District

Poonch, whereas in the open auction of 2016 the appellant no.3 in Usman

Constructions & Others v. State of J&K, had submitted the highest bid of Rs.

121


3.50 lakhs (against reserve price of Rs.3.13 Lakhs) in the e-auction for the

same block, he has offered a bid of Rs. 108.36 lakhs (against the reserve price

of Rs. 10.96 lakhs).

302. With regard to Block 2/2 in District Samba, in the open auction of 2016,

Rakesh Kumar Choudhary (appellant no.1 in LPA 2/20) had submitted the

highest bid of Rs.18.75 lakhs (against reserve price of Rs. 14.65 lakhs). Now in

the e-auction he has offered the highest bid of Rs. 785.05 lakhs (against

reserve prices of Rs. 17.05 lakhs).

303. In his affidavit dated 1st June, 2019, Vikar Ahmad Dar has stated that the

notings in para 63 of the official file to the effect that e-auction would fetch higher

amount of revenue than the open auction, is merely a speculation. The above

figures establish the truth in what was apprehended by the Government authorities.

304. The above tabulation in fact establishes some more critical factors.

305. The first is that the suspicion of the respondents that cartelization controlled

the earlier auction was not unfounded. The levels of the highest bids fetched in

the e-auction; their ratios vis-à-vis the reserve prices and the highest bids for those

very blocks by the same bidder in earlier auctions of 2016/2017.

306. We find a second important aspect which needs to be urgently addressed.

The fixation of the minimum reserve price for grant of mining leases in

accordance with Rule 54 of the Rules of 2016, by the respondents regarding the e-

auctions is not optimal or realistic. It appears to be much lower than the market

price and hence detrimental to public interest as well as the fiscal interest of the

Union Territory.

307. Even though the respondents appear to have raised the minimum reserve

price for conducting e-auctions in 2020 from the reserve price fixed for open

122


auction conducted in 2016, still from the bids which have been fetched, it appears

that the prices are unrealistically low.

308. It is evident, therefore, that the respondents do not have the expertise or the

capacity to evaluate the optimum level at which the reserve prices ought to be

fixed. In the e-auctions of 2020 though the bids are much higher than the bids of

2017, still there may be possibility of even higher bids.

309. It appears that a professional and qualified agency is urgently needed to

examine this matter and advise the respondents as grave financial prejudice results.

310. The terms and conditions on which auctions are conducted do not

incorporate basic reservations ensuring public interest and efficiency in the

responses of bidders and deserve a professional relook.

311. Clearly very urgent measures are needed to secure the financial interests of

the Union Territory and hence public interest.

IX Scope of judicial review in administrative action and matters

relating to award of contract/ tenders/ auctions

312. It is necessary to conduct an examination on the limits of the powers of

judicial review of the writ court in such matters. The appellants have called upon

us to examine the decision of the respondents in scrapping an entire auction. Is it

permissible for this Court to conduct judicial review into the questions urged?

313. It has been held in a catena of judgments that in exercise of its power of

judicial review, into state action, be it legislative, executive, administrative or

quasi judicial, the court is not entitled to consider the correctness of the decision on

its independent judgment and the exercise of power of judicial review by the court

is limited to considering the ‘reasonableness’ of the finding reached by the

authority which must be on application of mind to all relevant matters and in good

123


faith. We may usefully extract the following observations of the Supreme Court in

the judgment reported at (1990) 3 SCC 233 (at page 252), Sri Sita Ram Sugar Co.

Ltd v. U. O. I:

“46.Any arbitrary action, whether in the nature of a legislative or

administrative or quasi-judicial exercise of power, is liable to attract

the prohibition of Article 14 of the Constitution. As stated in E.P.

Royappa v. State of Tamil Nadu & Anr., [ 1974) 4 SCC 3 : 1974 SCC

(L&S) 165 : (1974] 2 SCR 348], "equality and arbitrariness are sworn

enemies; one belongs to the rule of law in a republic while the other,

to the whim and caprice of an absolute monarch." Unguided and

unrestricted power is affected by the vice of discrimination: Maneka

Gandhi v. Union of India & Anr., [1978] 1 SCC 248, 293-294 ; AIR

1978 SC 597]. The principle of equality enshrined in Article 14 must

guide every state action, whether it be legislative, executive, or quasi-

judicial: Ramana Dayaram 'Shetty v. The International Airport

Authority of India & Ors., [1979] 3 SCR 1014 at 1042; Ajay Hasia &

Ors. v. Khalid Mujib Sehravardi & Ors.. [1981] 1 SCC 722 and D.S.

Nakara & Ors. v. Union of India, [1983] SCC (L&S) 145].

47.Power delegated by statute is limited by its terms and subordinate

to its objects. The delegate must act in good faith, reasonably, intra

vires the power granted, and on relevant consideration of material

facts. All his decisions, whether characterised as legislative or

administrative or quasi-judicial, must be in harmony with the

Constitution and other laws of the land. They must be "reasonably

related to the purposes of the enabling legislation". See Leila

Mourning v. Family Publications Service, [411 US 356, 36 L Ed.

2d318]. If they are manifestly unjust or oppressive or outrageous or

directed to an unauthorised end or do not tend in some degree to the

accomplishment of the objects of delegation, courts might well say,

"Parliament never intended to give authority to make such rules; they













124


are unreasonable and ultra vires". per Lord Russel of Killowen, C.J. in

Kruse v. Johnson, [1898] 2 Q.B. 91, 99: 78 LT 647].

48. The doctrine of judicial review implies that the repository of

power acts within the bounds of the power delegated and he does not

abuse his power. He must act reasonably and in good faith. It is not

only sufficient that an instrument is intra vires the parent Act, but it

must also be consistent with the constitutional principles: Maneka

Gandhi v. Union of India, [1978] 1 SCC 248, 293-94 : AIR 1978 SC

597] (SCC pp. 314-315).

49.Where a question of law is at issue, the Court may determine the

rightness of the impugned decision on its own independent judgment. If

the decision of the authority does not agree with that which the Court

considers to be the right one, the finding of law by the authority is

liable to be upset. Where it is a finding of fact, the Court examines

only the reasonableness of the finding. When that finding is found to be

rational and reasonably based on evidence, in the sense that all

relevant material has been taken into account and no irrelevant

material has influenced the decision, and the decision is one which any

reasonably minded person acting on such evidence, would have come

to, then judicial review is exhausted even though the finding may not

necessarily be what the Court would have come to as a trier of fact.

Whether an order is characterised as legislative or administrative or

quasi-judicial, or, whether it is a determination or law or fact, the

judgment of the expert body, entrusted with power, is generally

treated as final and the judicial function is exhausted when it is

found to have "warrant in the record" and a rational basis in law:

See Rochester Tel. Corp. v. United States, [1939] 307 U.S. 125, 83 L.

Ed. 1147. See also Associated Provincial Picture Houses Ltd. v.

Wednesbury Corporation, [1948] 1 K.B. 223 : (1947) 1 All ER 498].



125


50.As stated by Lord Hailsham of St. Marylebone L.C., (H.L.) in Chief

Constable of the North Wales Police v. Evans, [1982] 1 WLR 1155 at

1160-61:

"The function of the court is to see that lawful authority is not

abused by unfair treatment and not to attempt itself the task

entrusted to that authority by the law .......... The purpose of judicial

review is to ensure that the individual receives fair treatment, and

not to ensure that the authority, after according fair treatment,

reaches on a matter which it is authorised by law to decide for itself a

conclusion which is correct in the eyes of the court".

In the same case Lord Brightman says:

"Judicial review, as the words imply, is not an appeal from a

decision, but a review of the manner in which the decision was

made".

51.A repository of power acts ultra vires either when he acts in excess

of his power in the narrow sense or when he abuses his power by

acting in bad faith or for an inadmissi- ble purpose or on irrelevant

grounds or without regard to relevant considerations or with gross

unreasonableness. See Associated Provincial Picture Houses Ltd. v.

Wednesbury Corporation, [1948] 1 K.B. 223. In the words of Lord

Macnaghten in Westminster Corporation v. London and North

Western ' Railway, [1905] AC 426, 430: 93 LT 143]

" ..... It is well settled that a public body invested with statutory powers

such as those conferred upon the Corporation must take care not to

exceed or abuse its powers. It must keep within the limits of the

authority committed to it. It must act in good faith. And it must act

reasonably. The last proposition is involved in the second, if not in the

first.....".

In The Barium Chemicals Ltd. & Anr. v. The Company Law Board &

Ors., [1966] Supp. SCR 311, this Court states:



126


" ..... Even if (the statutory order) is passed in good faith and with the

best of intention to further the purpose of the legislation which confers

the powers, since the Authority has to act in accordance with and

within the limits of that legislation, its order can also be challenged if

it is beyond those limits or is passed on grounds extraneous to the

legislation or if there are no grounds at all for passing it or if the

grounds are such that no one can reasonably arrive at the opinion or

satisfaction requisite under the legislation. In any one of these

situations it can well be said that the authority did not honestly form

its opinion or that in forming it, it did not apply its mind to the relevant

facts".

(Emphasis supplied)

314. In Sri Sita Ram Sugar Co. Ltd , the Supreme Court has finally concluded as

follows:

“52.The true position, therefore, is that any act of the

repository of power, whether legislative or administrative or quasi-

judicial, is open to challenge if it is in conflict with the Constitution

or the governing Act or the general principles of the law of the land

or it is so arbitrary or unreasonable that no fair minded authority

could ever have made it [See the observation of Lord Russel in Kruse

v. Johnson, [1898] 2 Q.B. 91 and that of Lord Greene, M.R. in

Associated Provincial Picture Houses Ltd. v. Wednesbury

Corporation, [1948] 1 K.B. 223; See also Mixnam Properties Ltd. v.

Chertsey U.D.C., [1965] AC 735; Commissioners of Customs and

Excise v. Cure and DeeIcy Ltd. [1962] 1 Q.B. 340; McEldowney v.

Forde, [1971] AC 632 (H.L.); Carltona Ltd. v. Commissioners of

Works, [1943] 2 All ER 560, 564; Point of Ayr. Collieries Ltd. v. Lloyd

George, [1943] 2 All ER 546; Scott v. Glasgow Corporation, [1899]

AC 470, 492; Robert Baird L.D.v. City of Glasgow, [1936] AC 32, 42;

Manhattan General Equipment Co. v. Commissioner, [1935] 297 US

129, 134; Yates (Arthur) & Co. Pty. Ltd. v. Vegetable Seeds



127


Committee, [1945-46] 72 CLR 37; Bailey v. Conole, [1931] 34 WALR

18; Boyd Builders Ltd. v. City of Ottawa, [1964] 45 DLR (2d) 211; Re

Burns and Township of Haldimand, [1966] 52 DLR (2d) 10 14 and

Lynch v. Tilden Produce Co. 265 US 3 15,320-322].”

(Emphasis by us)

315. The parameters of a court’s power of judicial review of administrative or

executive action or decision also stand considered by the Supreme Court of India

in its judgment reported at (1988) 4 SCC 59, State of U.P. v. Renusagar Power

Co. The Supreme Court referred to the authoritative text on administrative law in

Wade on Administrative Law, 5th Edition, pages 506/507 and Bennion on

Statutory Interpretation, 1984 Edition, pages 140-141 and Principles of Australian

Administrative Law, 6th Edition;, pp. 210-212 and observed as follows:

“…….The exercise of power whether legislative or administrative

will be set aside if there is manifest error in the exercise of such

power or the exercise of the power is manifestly arbitrary. Similarly,

if the power has been exercised on a non- consideration or non-

application of mind to relevant factors the exercise of power will be

regarded as manifestly erroneous. If a power (whether legislative or

administrative) is exercised on the basis of facts which do not exist and

which are patently erroneous, such exercise of power will stand

vitiated. See Commissioner of Income Tax v. Mahindra & Mahindra

Ltd. Ors., [1983] 3 S.C.R. 773 at 786- 787: AIR 1984 SC 1182: (1983)

54 Com Cas 6511......”

(Emphasis by us)

316. Much light is shed on the examination which the court would undertake on

the exercise of power by public authorities in the judgment of the Supreme

reported at (1974) 2 SCC 687 (at page 690), M. A. Rashid v. State of Kerala,

wherein it is held as under:



128


“7. There is no principle or authority in support of the view that

whenever a public authority is invested with power to make an order

which prejudicially affects the rights of an individual whatever may

be the nature of the power exercised, whatever may be the procedure

prescribed and whatever may be the nature of the authority

conferred, the proceedings of the public authority must be regulated

by the analogy of rules governing judicial determination of disputed

questions (see Sadhu Singh v. Delhi Administration. AIR 1966 SC 91).

8. Where powers are conferred on public authorities to exercise the

same when “they are satisfied” or when “it appears to them”, or when

“in their opinion” a certain state of affairs exists; or when powers

enable public authorities to take “such action as they think fit” in

relation to a subject matter, the courts will not readily defer to the

conclusiveness of an executive authority's opinion as to the existence

of a matter of law or fact upon which the validity of the exercise of the

power is predicated.

9. Where reasonable conduct is expected the criterion of

reasonableness is not subjective, but objective. Lord Atkin

in Liversidge v. Anderson 1942 AC 206, 228-229 said:

“If there are reasonable grounds, the Judge has no further duty of

deciding whether he would have formed the same belief any more

than, if there is reasonable evidence to go to a jury, the Judge is

concerned with whether he would have come to the same verdict.”

The onus of establishing unreasonableness, however, rests upon the

person challenging the validity of the acts.

10. Administrative decisions in exercise of powers even if conferred

in subjective terms are to be made in good faith on relevant

consideration. The courts inquire whether a reasonable man could

have come to the decision in question without misdirecting himself

on the law or the facts in a material respect. The standard of

reasonableness to which the administrative body is required to

conform may range from the courts' own opinion of what is

reasonable to the criterion of what a reasonable body might have

decided. The courts will find out whether conditions precedent to the

formation of the opinion have a factual basis.

https://www.casemine.com/judgement/in/5609ab40e4b014971140c012

129


11. In Rohtas Industries Ltd. v. S.D Agarwala 1969 1 SCC 325 an

order under Section 237 (b) (i) and (ii) of the Companies Act for

investigation of the affairs of the company was challenged on the

ground that though the opinion of the Government is subjective, the

existence of the circumstances is a condition precedent to the

formation of the opinion. It was contended that the Court was not

precluded from going behind the recitals of the existence of such

circumstances in the order, but could determine whether the

circumstances did in fact exist. This Court said that if the opinion of

an administrative agency is the condition precedent to the exercise of

the power, the relevant matter is the opinion of the agency and not the

grounds on which the opinion is founded. If it is established that there

were no materials at all upon which the authority could form the

requisite opinion, the Court may infer that the authority passed the

order without applying its mind. The opinion is displaced as a relevant

opinion if it could not be formed by any sensible person on the

material before him.”

(Emphasis by us)

317. So far as change of policy in exercise of executive power (also in issue

before us) and a challenge thereto is concerned, again the power of judicial review

is restricted. Valuable light is thrown on the exercise of its discretion in the

judgment of the Supreme Court reported at (2003) 5 SCC 437 (at pages-445 &

447), Union of India v. International Trading Co. in the following terms:

“15. While the discretion to change the policy in exercise of the

executive power, when not trammelled by any statute or rule is wide

enough, what is imperative and implicit in terms of Article 14 is that a

change in policy must be made fairly and should not give impression

that it was so done arbitrarily or by any ulterior criteria. The wide

sweep of Article 14 and the requirement of every State action

qualifying for its validity on this touchstone irrespective of the field of

activity of the State is an accepted tenet. The basic requirement of

Article 14 is fairness in action by the State, and non-arbitrariness in

https://www.casemine.com/judgement/in/5609ab4fe4b014971140c2e7

130


essence and substance is the heartbeat of fair play. Actions are

amenable, in the panorama of judicial review only to the extent that

the State must act validly for a discernible reason, not whimsically

for any ulterior purpose. The meaning and true import and concept of

arbitrariness is more easily visualized than precisely defined. A

question whether the impugned action is arbitrary or not is to be

ultimately answered on the facts and circumstances of a given case. A

basic and obvious test to apply in such cases is to see whether there is

any discernible principle emerging from the impugned action and if

so, does it really satisfy the test of reasonableness.

16. Where a particular mode is prescribed for doing an act and

there is no impediment in adopting the procedure, the deviation to act

in different manner which does not disclose any discernible principle

which is reasonable itself shall be labelled as arbitrary. Every State

action must be informed by reason and it follows that an act

uninformed by reason is per se arbitrary.

X x x x

22. If the State acts within the bounds of reasonableness, it would

be legitimate to take into consideration the national priorities and

adopt trade policies. As noted above, the ultimate test is whether on

the touchstone of reasonableness the policy decision comes out

unscathed.”

(Emphasis by us)

318. We may usefully extract the binding principles on the scope of judicial

review in matters of award of Govt. contracts as have been laid down in the

celebrated judgment of the Supreme Court reported at (1994) 6 SCC 651, Tata

Cellular v. Union of India, in which it has been held as under:

“94. The principles deducible from the above are: (1) The

modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews

the manner in which the decision was made.

131


(3) The court does not have the expertise to correct the

administrative decision. If a review of the administrative decision is

permitted it will be substituting its own decision, without the necessary

expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial

scrutiny because the invitation to tender is in the realm of contract.

Normally speaking, the decision to accept the tender or award the

contract is reached by process of negotiations through several tiers.

More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other

words, a fair play in the joints is a necessary concomitant for an

administrative body functioning in an administrative sphere or quasi-

administrative sphere. However, the decision must not only be tested

by the application of Wednesbury principle of reasonableness

(including its other facts pointed out above) but must be free from

arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden

on the administration and lead to increased and unbudgeted

expenditure.

Based on these principles we will examine the facts of this case since

they commend to us as the correct principles.”

(Emphasis supplied)

The above authoritative principles have guided adjudication in challenges to

administrative action.

319. We may usefully advert to the illuminating consideration, on the exercise of

power of judicial review in commercial matters including tenders and award of

contracts, by the Supreme Court in the judgment reported at (2007) 14 SCC 517,

Jagdish Mandal v. State of Orissa. In Para 22, it was held as under:

“22. Judicial review of administrative action is intended to prevent

arbitrariness, irrationality, unreasonableness, bias and mala fides. Its

purpose is to check whether choice or decision is made “lawfully”

132


and not to check whether choice or decision is “sound”. When the

power of judicial review is invoked in matters relating to tenders or

award of contracts, certain special features should be borne in mind.

A contract is a commercial transaction. Evaluating tenders and

awarding contracts are essentially commercial functions. Principles

of equity and natural justice stay at a distance. If the decision

relating to award of contract is bona fide and is in public interest,

courts will not, in exercise of power of judicial review, interfere even

if a procedural aberration or error in assessment or prejudice to a

tenderer, is made out. The power of judicial review will not be

permitted to be invoked to protect private interest at the cost of public

interest, or to decide contractual disputes. The tenderer or contractor

with a grievance can always seek damages in a civil court. Attempts

by unsuccessful tenderers with imaginary grievances, wounded pride

and business rivalry, to make mountains out of molehills of some

technical/procedural violation or some prejudice to self, and

persuade courts to interfere by exercising power of judicial review,

should be resisted. Such interferences, either interim or final, may

hold up public works for years, or delay relief and succour to

thousands and millions and may increase the project cost manifold.

Therefore, a court before interfering in tender or contractual matters

in exercise of power of judicial review, should pose to itself the

following questions:

(i) Whether the process adopted or decision made by the authority is

mala fide or intended to favour someone;

OR

Whether the process adopted or decision made is so arbitrary and

irrational that the court can say: “the decision is such that no

responsible authority acting reasonably and in accordance with

relevant law could have reached”;

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference

under Article 226. Cases involving blacklisting or imposition of penal

133


consequences on a tenderer/contractor or distribution of State

largesse (allotment of sites/shops, grant of licences, dealerships and

franchises) stand on a different footing as they may require a higher

degree of fairness in action.”

(Emphasis by us)

320. On the aspect of challenge to and scope of judicial review (as at present) of

decisions relating to laying down of conditions of award of tenders, valuable

guidance is provided by the authoritative pronouncement of the Supreme Court in

the judgment reported at (2012) 8 SCC 216, Michigan Rubber (India) Ltd. V.

State of Karnataka, the Supreme Court has observed as follows:

“23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the

State, and non-arbitrariness in essence and substance is the

heartbeat of fair play. These actions are amenable to the judicial

review only to the extent that the State must act validly for a

discernible reason and not whimsically for any ulterior purpose. If

the State acts within the bounds of reasonableness, it would be

legitimate to take into consideration the national priorities;

(b) fixation of a value of the tender is entirely within the purview

of the executive and courts hardly have any role to play in this

process except for striking down such action of the executive as is

proved to be arbitrary or unreasonable. If the Government acts in

conformity with certain healthy standards and norms such as

awarding of contracts by inviting tenders, in those circumstances, the

interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document

and awarding a contract, greater latitude is required to be conceded

to the State authorities unless the action of tendering authority is

found to be malicious and a misuse of its statutory powers,

interference by Courts is not warranted;

134


(d) Certain preconditions or qualifications for tenders have to be

laid down to ensure that the contractor has the capacity and the

resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in

public interest in awarding contract, here again, interference by

Court is very restrictive since no person can claim fundamental right

to carry on business with the Government.

24. Therefore, a Court before interfering in tender or contractual

matters, in exercise of power of judicial review, should pose to itself

the following questions:

(i) Whether the process adopted or decision made by the authority

is mala fide or intended to favour someone; or whether the process

adopted or decision made is so arbitrary and irrational that the court

can say: the decision is such that no responsible authority acting

reasonably and in accordance with relevant law could have reached;

and

(ii) Whether the public interest is affected. If the answers to the

above questions are in negative, then there should be no interference

under Article 226.”

(Emphasis by us)

321. These are the considerations which would weigh with us while undertaking

an examination of the grounds pressed before us.

322. The Supreme Court had noted the scope of judicial review in the matter

relating to award of contract in the judgment reported at AIR 2009 SCW 470,

Seimens Public Communication Networks (P) Limited v. Union of India,

wherein it has been held that in such a case, certain special features have to be

considered. A contract is a commercial transaction and evaluating tenders and

awarding contracts are essential commercial functions. In such cases, principles of

equity and natural justice stay at a distance. If the decision relating to award of

135


contracts is bonafide and is in public interest, Courts will not exercise the power of

judicial review and interfere even if it is accepted for the sake of argument that

there is procedural lacuna.

323. In the pronouncement of the Supreme Court in (2015) 13 SCC 233, Rishi

Kiran Logistics Pvt. Ltd v. Board of Trustees of Kandla Port Trust and ors., also

the Supreme Court considered the validity of enbloc cancellation of the entire

tenders.

324. In para-20 of the judgment, the Supreme Court observed that ‘it was obvious

that larger public interest demand a fresh tender process in order to receive

maximum amount as the premium of Rs.612/sq.meter originally fixed and even

the quotation of the appellant which had been found to be highest was far below

the market rate in 2010”. The Supreme Court also noted that even when the total

premium amount to be paid by the appellant was to the tune of several crores for

these plots at which the LoI was issued in the year 2006, the appellant had paid

only Rs. 3 lakhs by way of earnest money deposited in each case. No further

amount was paid for want of the allotment letter.

325. In para 21, the Supreme Court held that in the above facts, there was

“hardly any scope for argument that the decision of the Port Trust is arbitrary. It

is based on valid considerations.”

326. The court considered precedents and held as follows (in Rishi Kiran

Logistics):

“26. In Tejas Constructions and Infrastructure (P) Ltd. v.

Municipal Council, Sendhwa & Anr.; 2012 (6) SCC 464, the Court

was dealing with the case of challenge to the awarding of contract to

the 2nd respondent in the writ petition on the ground that he had not

136


complied with eligibility requirements in NIT. Paragraph 17 of that

case reads as follows:

“17. In Raunaq International Ltd. v. IV.R. Construction Ltd. (1999)

1 SCC 492, this Court reiterated the principle governing the process

of judicial review and held that the writ court would not be justified

in interfering with commercial transaction in which the State is one

of the parties to the same except where there is substantial public

interest involved and in cases where the transaction is mala fide.”

27. In so far as argument of malafides is concerned, apart from

bald averment, there are no pleadings and there is not even a

suggestion as to how the aforesaid decision was actuated with

malafides and on whose part. Even at the time of arguments Mr. Vikas

Singh did not even advert to this aspect. In fact, the entire emphasis of

Mr. Vikas Singh was that since there was a concluded contract

between the parties, cancellation of such a contract amounted to

arbitrariness. As already pointed out above that can hardly be a

ground to test the validity of a decision in administrative law. For the

sake of argument, even if you presume that there a concluded

contract, mere termination thereof cannot be dubbed as arbitrary. A

concluded contract if terminated in a bonafide manner, that may

amount to breach of contract and certain consequences may follow

thereupon under the law of contract. However, on the touch stone of

parameters laid down in the administrative law to adjudge a decision

as are arbitrary or not, when such a decision is found to be bonafide

and not actuated with arbitrariness, such a contention in

administrative law is not admissible namely how and why a

concluded contract is terminated.

28. We, therefore, reject this contention of the appellant.”

(emphasis supplied)

137


327. Before us, the appellants do not even remotely suggest any malafide in the

action and decision making by the respondents. Other than the submission that the

enbloc cancellation of the auctions in their entirety being perse arbitrary and hence

not legally sustainable, no other substantive ground of challenge has been urged. It

is, therefore, well settled that the State must act validly for a discernible reason not

whimsically for any ulterior purpose. Such action then satisfies the test of

reasonableness. It is legitimate to take into consideration public interest and

national priorities. We are required to test the plea on the above well settled

parameters.

X Can the Issue as to whether there is a concluded contract be decided

in writ proceedings?

328. In all these appeals, it is urged that this court must hold that a concluded

contract has come into existence and this court must protect binding rights of the

appellants thereunder.

The respondents staunchly repudiate that there is any contract, let alone any

enforceable rights of these appellants.

329. Before examining this plea pressed on behalf of the appellants, we need to

consider as to whether such plea can be gone into in extraordinary writ jurisdiction.

330. The Supreme Court of India has repeatedly cautioned that the issue

regarding the existence of a concluded contract between parties falls squarely in

the realm of contract law without any hue or shade of any public law. If it is urged

by one side that there is a concluded contract, a position which is disputed by the

other side, it is not open to the Court to exercise extra-ordinary jurisdiction under

138


Article 226 of the Constitution of India to go into this question. (Ref: (1996) 10

SCC 405, Rajasthan Coop. Dairy Federation Ltd. v. Maha Laxmi Mingrate

Marketing Service Pvt. Ltd, Pr. 40).

331. Mr Vikram Sharma, learned counsel for the appellant in (LPA No.53/2020

Rakesh Kumar Chowdhary v. Union Territory of Jammu & Kashmir) has staunchly

submitted that a binding contract came into existence after the respondents had

approved the mining plan and accepted royalty from the appellant under Rule 104-

A of the Rules of 2016. In support of his submission that the writ petition would be

maintainable, Mr Vikram Sharma has relied on the pronouncements of the

Supreme Court reported at 2006 (10) SCC 236 Noble Resources Limited v. State

of Orissa & Anr and 2004 (3) SCC 533 ABL International Ltd. & anr vs. Export

Credit Guarantee.

332. In Noble Resources Limited, the core question which was argued before the

Supreme Court was as to whether a writ petition was maintainable in contractual

matters. In this case, the respondent no.2 was held to be a State within the meaning

of Article 12 of the Constitution of India. The Supreme Court observed that “its

conduct in all fields including a contract is expected to be fair and reasonable. It

was not supposed to act arbitrarily, capriciously or whimsically.”

So far as the question under consideration is concerned, the Supreme Court

held as follows:

“15. It is trite that if an action on the part of the State is violative the

equality clause contained in Article 14 of the Constitution of India, a

writ petition would be maintainable even in the contractual field. A

distinction indisputably must be made between a matter which is at the

threshold of a contract and a breach of contract; whereas in the

former the court's scrutiny would be more intrusive, in the latter the

court may not ordinarily exercise its discretionary jurisdiction of



139


judicial review, unless it is found to be violative of Article 14 of the

Constitution. While exercising contractual powers also, the

government bodies may be subjected to judicial review in order to

prevent arbitrariness or favouritism on its part. Indisputably,

inherent limitations exist, but it would not be correct to opine that

under no circumstances a writ will lie only because it involves a

contractual matter.

16. This dicta of law was laid down by this Court as far back in1977,

wherein this Court in Radhakrishna Agarwal and Others vs. State of

Bihar and Others [(1977) 3 SCC 457] accepted the division of types of

cases made by the Patna High Court in which breaches of alleged

obligation by the State or its agents could be set up. It read as under :

"(i) Where a petitioner makes a grievance of breach of promise on the

part of the State in cases where on assurance or promise made by the

State he has acted to his prejudice and predicament, but the agreement

is short of a contract within the meaning of Article 299 of the

Constitution;

(ii) Where the contract entered into between the person aggrieved and

the State is in exercise of a statutory power under certain Act or Rules

framed thereunder and the petitioner alleges a breach on the part of

the State; and

(iii) Where the contract entered into between the State and the person

aggrieved is non-statutory and purely contractual and the rights and

liabilities of the parties are governed by the terms of the contract, and

the petitioner complains about breach of such contract by the State."

17. It was further observed :

"In the cases before us, allegations on which a violation of Article 14

could be based are neither properly made nor established. Before any

adjudication on the question whether Article 14 of the Constitution

could possibly be said to have been violated, as between persons

governed by similar contracts, they must be properly put in issue and

established. Even if the appellants could be said to have raised any

aspect of Article 14 of the Constitution and this Article could at all be

140


held to operate within the contractual field whenever the State enters

into such contracts, which we gravely doubt, such questions of fact do

not appear to have been argued before the High Court. And, in any

event, they are of such a nature that they cannot be satisfactorily

decided without a detailed adduction of evidence, which is only

possible in ordinary civil suits, to establish that the State, acting in its

executive capacity through its officers, has discriminated between

parties identically situated. On the allegations and affidavit evidence

before us we cannot reach such a conclusion. Moreover, as we have

already indicated earlier, the correct view is that it is the contract and

not the executive power, regulated by the Constitution, which governs

the relations of the parties on facts apparent in the cases before us."

18. It may, however, be true that where serious disputed questions of

fact are raised requiring appreciation of evidence, and, thus, for

determination thereof, examination of witnesses would be necessary; it

may not be convenient to decide the dispute in a proceeding under

Article 226 of the Constitution of India.”

(Emphasis by us)

333. It has thus been held that only if the limited area of dispute can be resolved

by examination of the terms of the contracts without consideration of any other

oral or documentary evidence, that is, to say, if the claim does not require any

external aid, the dispute may be settled by the writ court.

334. This was further expounded upon by the Supreme Court in the

pronouncement reported at 2004 (3) SCC 533 ABL International Ltd. & anr vs.

Export Credit Guarantee, wherein it was held that such a writ petition would be

maintainable even if it involved some disputed questions of fact and that there was

no decision laying down an absolute rule that in all cases including those involving

disputed questions of fact, the parties should be relegated to the civil court. In this

pronouncement, the Supreme Court considered several judicial pronouncements

141


including the judgments reported at 1955(1) SCR 305 : K. N. Guruswamy vs. The

State of Mysore and others; 1971 (3) SCC 864 : The D.F.O, South Kheri & Ors.

V. Ram Sanehi Singh; 1986 (1) SCC 264 : Life Insurance Corporatiion of India

Vs. Escorts Ltd. & Ors; 2002 (1) SCC 216 : State of Bihar & Ors. Vs. Jain

Plastics and Chemicals Ltd.; 1969 (3) SCC 769 : Smt. Gunwant Kaur & Ors. Vs.

Municipal Committee, Bhatinda and others; 1970 (1) SCC 582 : Century

Spinning and Manufacturing Company Ltd. & anr. vs. The Ulhasnagar

Municipal Council & anr; and 2001 (1) SCC 298 : VST Industries Ltd. vs. VST

Industries Workers’ Union & Anr. We find that on consideration of the

aforementioned precedents, if the question which the court has to pose when an

authority has to perform a public function or a public duty is, has it failed to do so?

If it has, a writ petition under Article 226 of the Constitution would be

maintainable.

335. In 1991 (1) SCC 212 : Kumari Shri Lekha Vidyarthi & Ors. V. State of

U.P. & Ors., the Supreme Court held as follows:

"The impact of every State action is also on public interest. It is really

the nature of its personality as State which is significant and must

characterize all its actions, in whatever field, and not the nature of

function, contractual or otherwise which is decisive of the nature of

scrutiny permitted for examining the validity of its act. The

requirement of Article 14 being the duty to act fairly, justly and

reasonably, there is nothing which militates against the concept of

requiring the State always to so act, even in contractual matters."

xxxx

“Even assuming that it is necessary to import the concept of presence

of some public element in a State action to attract Article 14 and

permit judicial review, we have no hesitation in saying that the

ultimate impact of all actions of the State or a public body being



142


undoubtedly on public interest, the requisite public element for this

purpose is present also in contractual matters. We, therefore, find it

difficult and unrealistic to exclude the State actions in contractual

matters, after the contract has been made, from the purview of judicial

review to test its validity on the anvil of Article 14.”

(Emphasis by us)

336. In (2008) 12 SCC 500, Kisan Sahkari Chini Mills Ltd. Vardan Linkers, the

question that arose for consideration in the writ was whether the cancellation order

dated 24.4.2004 passed by the Secretary (Sugar), of the allotment letter dated

26.3.2004, was arbitrary and irrational or whether it violated any administrative

law principles. The Court observed that the question whether there was a

concluded contract or not, was only incidental to the question as to whether

cancellation order dated 24.4.2004 by the Secretary (Sugar), was justified. The

Supreme Court considered the matter and finally in para 24 held that the case

involved several disputed questions in regard to the existence of the contract itself,

and that the High Court ought to have referred the first respondent to a civil court.

It was opined that “the High Court in exercise of its writ jurisdiction, proceeded as

if it was dealing with a pure and simple civil suit relating to breach of contract.”

The Supreme Court has held as follows:

“23. If the dispute was considered as purely one relating to existence

of an agreement, that is whether there was a concluded contract and

whether the cancellation and consequential non- supply amounted to

breach of such contract, the first respondent ought to have

approached the civil court for damages. On the other hand, when a

writ petition was filed in regard to the said contractual dispute, the

issue was whether the Secretary (Sugar), had acted arbitrarily or

unreasonably in staying the operation of the allotment letter dated

26.3.2004 or subsequently cancelling the allotment letter. In a civil


143


suit, the emphasis is on the contractual right. In a writ petition, the

focus shifts to the exercise of power by the authority, that is, whether

the order of cancellation dated 24.4.2004 passed by the Secretary

(Sugar), was arbitrary or unreasonable. The issue whether there was a

concluded contract and breach thereof becomes secondary. In

exercising writ jurisdiction, if the High Court found that the exercise

of power in passing an order of cancellation was not arbitrary and

unreasonable, it should normally desist from giving any finding on

disputed or complicated questions of fact as to whether there was a

contract, and relegate the petitioner to the remedy of a civil suit.”

(Emphasis by us)

337. In Kisan Sahkari Chini Mills case, the Supreme Court laid down the

manner in which the High Court should proceed in writ proceedings even if it

found that the cancellation was of a valid contract, observing as follows:

“23.………Even in cases where the High Court finds that there is a

valid contract, if the impugned administrative action by which the

contract is cancelled, is not unreasonable or arbitrary, it should still

refuse to interfere with the same, leaving the aggrieved party to work

out his remedies in a civil court. In other words, when there is a

contractual dispute with a public law element, and a party chooses

the public law remedy by way of a writ petition instead of a private

law remedy of a suit, he will not get a full fledged adjudication of his

contractual rights, but only a judicial review of the administrative

action. The requisition whether there was a contract and whether

there was a breach may, however, be examined incidentally while

considering the reasonableness of the administrative action. But where

the question whether there was a contract, is seriously disputed, the

High Court cannot assume that there was a valid contract and on that

basis, examine the validity of the administrative action.”

(Emphasis supplied)

144


338. It is therefore clear that even if we agree with the appellants that there were

concluded contracts in favour of the appellants which were cancelled by the

respondents, only a very limited judicial review of the action of the respondents is

available to us. Given the conclusions reached by us hereafter, it would be

unnecessary to even undertake this exercise.

339. So far as issues with regard to contracts involving the State, its agencies or

public authorities, the jurisdiction of the High Court in exercise of powers under

Article 226 of the Constitution of India is very limited. Light is shed on the

contours of the jurisdiction of this court in Rishi Kiran Logistics Private Limited,

wherein while considering a plea of promissory estoppel based on the LoI, the

Supreme Court considered authoritiative precedents observing on the limitations of

exercise of writ jurisidcition as follows:

“29. Again, we clarify at the outset that even the principle of

PROMISSORY estoppel is in the field of administrative law and

while entertaining the arguments and discussion on this issue, the

question as to whether there was a concluded contract or not has to

be kept aside. Precisely this was done in Kisan Sehkari Chini Mills

Case (Supra).

xxxxxxx

33. We have already indicated above that the of the doctrine of

fairness as well as promissory estoppel are in the realm of

administrative law, whereas the issue as to whether a concluded

contract was entered into between the parties and if so, the question

of enforcement of such a contract would be in the field of law of

contract. Bearing in mind this distinction becomes more important as

the High Court was dealing with the petition filed by the appellant

under Article 226 of the Constitution.

34. Before proceeding further in the matter we would again like to

discuss the judgment of this court in Kisan Sahkari Chini Mills Ltd. &

145


Ors. (Supra) which has been earlier referred to. This case

unambiguously explains the approach which the High Court will

have in such a petition filed under Article 226 of the Constitution,

dealing with the arguments predicated on contractual aspects.”

(Emphasis supplied)

340. Referring to the prior judgment in Kisan Sahkari Chini Mills Ltd. & Ors.,

in Rishi Kiran Logistics Ltd., the Supreme Court observed as follows:

“37. The question before the Supreme Court were: (I) Whether the

High Court was right in concluding/ assuming that there was a valid

contract? And (ii) Whether the High Court was justified in quashing

the order of the Secretary (Sugar)? This court answered the aforesaid

questions in the negative and set aside the judgment of the High Court

holding that:

“Ordinarily, the remedy available for a party complaining of breach

of contract lies for seeking damages. He would be entitled to the relief

of specific performance, if the contract was capable of being

specifically enforced in law. The remedies for a breach of contract

being purely in the realm of contract are dealt with by civil courts.

The public law remedy, by way of a writ petition under Article 226 of

the Constitution, is not available to seek damages for breach of

contract or specific performance of contract. However, where the

contractual dispute has a public law element, the power of judicial

review under Article 226 may be invoked.

It is clear that the aforesaid case is closest to the facts of the present

case.”

(Emphasis supplied)

341. In Rishi Kiran Logistics, the Supreme Court summed up the applicable

principle thus:

“38. It thus stands crystalised that by way of writ petition under

Article 226 of the Constitution, only public law remedy can be

146


invoked. As far as contractual dispute is concerned that is outside the

power of judicial review under Article 226 with the sole exception in

those cases where such a contractual dispute has a public law

element.”

39. We have already held that the impugned decision of the Port

Trust was not arbitrary, unreasonable or malafide and further that

the doctrine of promissory estoppel has no application in the present

fact situation.xxxxx”

(Emphasis supplied)

342. So far as application of the above principles to the situation was concerned,

in Rishi Kiran Logistics, the Supreme Court held as follows:

“40. In so far as the issue regarding concluded contract in the

present case is concerned, this falls squarely in the realm of the

contract law, without any hue or shade of any public law. In fact, that

is not even pleaded or argued. At the same time, whether there was a

concluded contract or not is seriously disputed by the respondents and,

therefore, in the first instance it was not even necessary for the High

Court to go into this issue and could have relegated the appellant to

ordinary civil remedy. We are conscious of the position that merely

because one of the authorities raises a dispute in regard to the facts,

it may not be always necessary to relegate the parties to a suit. This

was so stated in ABL International Ltd. & Anr. v. Export Credit

Guarantee Corporation of India Ltd. & Ors.; JT 2013 (10) SC 300 in

the following manner:

“37. In our opinion, this limited areas of dispute can be settled by

looking into the terms of the contract of insurance as well as the

export contract, and the same does not require consideration of any

oral evidence or any other documentary evidence other than what is

already on record. The claim of the contesting parties will stand or fall

on the terms of the contracts, interpretation of which, as stated above,

does not require any external aid.”

147


41. At the same time, as already noted in Kisan Sahkari

(Supra) this court had taken a view that where the question whether

there was a contract or not is seriously disputed, the court is not to

assume that there was a valid contract and on that basis examine the

validity of the administrative action. Therefore, keeping in view the

aforesaid understanding of the law, a very limited inquiry on this

aspect is permissible.”

(Emphasis supplied)

343. So far as the decision of the Kandla Port Trust in Rishi Kiran Logistics, to

cancel the entire bidding is concerned, the Supreme Court rejected the challenge

holding as follows:

“xxxxxxx

45. We again emphasise that the issue of the argument of there

being a concluded contract is raised in a petition filed under Article

226 of the Constitution and not by way of suit. The issue whether

there was a concluded contract and breach thereof become

secondary and is examined by us with that limited scope in mind. In

such proceedings main aspect which has to be is as to whether

impugned decision of the Port Trust was arbitrary or unreasonable. It

is also important to remark that in a given case even if it is held that

there was a concluded contract, whether specific performance can be

ordered or not would be a moot question in writ proceedings. The

appellant took the calculated risk in not going to the civil court and

choosing to invoke extraordinary jurisdiction of the High Court, which

is also discretionary in nature.”

(Emphasis by us)

The jurisdiction of the court in a writ raising issues arising out of a contract

is thus limited to consideration of the public element only.

344. The above principles laid down by the Supreme Court in Rishi Kiran

Logistics squarely apply to our consideration in these appeals. In the case in hand

148


as well, the writ court, therefore, did not have the jurisdiction to go into the factual

dispute over whether, in the facts of the case, there was a concluded contract or

not.

XI Whether in these cases there was a concluded contract of the

respondents with appellants and whether time was of essence

of the contract?

345. We have discussed above the limitations of the power of the writ court to

examine this submission. Our consideration of this issue has to rest on admitted

facts.

346. Without exception, in the present cases, all appellants rely on the only one

communication addressed to them by the respondents. This communication

captioned as a ‘Letter of Intent’ (‘LoI’) stands addressed to all the respondents in

identical terms. Inasmuch as the appellants are sourcing their rights to this letter, it

is necessary to consider the same in detail.

347. The LoI is not unique or peculiar to the transactions under consideration but

is a document of widespread use in commercial transactions. In some commercial

transactions, a ‘letter of support’ or ‘letter of comfort’ is also found to be in

existence.

348. In the literal sense, the Black's Law Dictionary defines a 'letter of intent' as

a letter customarily implied to reduce to writing 'a preliminary understanding of

parties who intend to enter into a contract, or to intend to take some other

action.'

349. The expression 'letter of intent' is defined by Chitty on Contract in its 26th

Edition (para 116 on page 114) thus:

149


"LETTER of intent: There is as yet no clear authority on the legal

effect of the practice whereby the parties to a transaction exchange

"letters of intent" on which they act pending the preparation of

formal contracts. The terms of such letters may, of course, negative

contractual intention. But where this is not the case, it would be open

to the courts to hold the parties bound by the terms of such letters,

especially if the parties had acted on those terms for a long period of

time or if they had expended considerable sums of money in reliance

on them......"

(Emphasis by us)

350. It is emphasized by the learned author that there is no clear authority on the

legal effect of the practice whereby the parties to a transaction exchanged a ‘letter

of intent’ on which they act, pending the preparation of formal contracts. At page

181, it is stated that "where the language of such a document does not negative

contractual intention, it is open to the courts to hold the parties bound by the

document; and they will, in particular, be inclined to do so where the parties

have acted on the document for a long period of time or have expended

considerable sums of money in reliance on it. The fact that the parties envisage

that the letter is to be superseded by a later, more formal, contractual document

does not, of itself prevent it from taking effect as a contract".

351. In a judgment reported at (1971) 222 E.G. 169 Turriff Construction Ltd. vs.

Regalia Knitting Mills, the letter of intent was held to be a collateral contract to

pay for the preliminary work.

352. In yet another pronouncement reported at 1986 (1) Lloyd's Rep. 378 Wilson

Smithett & Co. (Sugar Co.) v. Bangladesh Sugar Industries Limited, the court

held that the LoI had contractual significance.

150


353. In the "Law of Contract", Butterworths Common Law Series, at page 327

of the text, it is mentioned that:

"A letter of intent may expressly state that it is not to have

contractual effect. In Drake and Scull Engineering Limited Vs. Higgs

and Hill Northern Limited, another building contract case, the parties

had reached agreement on all terms apart from day rates when a letter

of intent was issued. However, the letter expressly stated that there

should be no binding contract between the parties until contracts

were formalised. The court held that in accordance with its terms the

letter was therefore not contractual, with the result that on the facts

the employer was not entitled to deduct liquidated damages which

would have been payable under agreed contract terms. However, it is

submitted that it will take clear words to prevent a letter of intent

being regarded as an offer or acceptance of a contract if all

important terms have been agreed and one party commences

performance in reliance on the letter."

(Emphasis supplied)

354. The principles in English law so far as a LoI are concerned were

authoritatively summarised in the pronouncement reported in 33 PC 29 Hatzfeld

Wildenburg v. Alexander thus:

"It appears to be well settled by the authorities that if the

documents or letters relied on as constituting a contract contemplate

the execution of a further contract between the parties, it is a

question of construction whether the execution of the further

contract is a condition of term of the bargain or whether it is a mere

expression of the desire of the parties as to the manner in which the

transaction already agreed to will in fact go through. In the former

case there is no enforceable contract either because the condition is

unfulfilled or because the law does not recognize a contract to enter

into a contract. In the latter case there is a binding contract and the

reference to the more formal document may be ignored."

(Emphasis supplied)

151


355. It is trite that it is the express intent of the parties which controls the rule of

contract formation, rather than mere form.

356. In the judgment reported at 147 F Supp. 193, 204 (S.D.N.Y. 1956) Banking

& Trading Corporation Vs. Reconstruction Finance Corporation, affirmed in

257 F. 2d 765 (2nd Cir. 1958), the court had stated that "if the agreement is

expressly subject to the execution of a formal contract, this intent must be

respected and no contract found until then".

357. In Texas Inc Vs. Pennzoil Co. 729 SW 2d 768, the court placed reliance on

a pronouncement reported at 301 N.Y. 110, 92, N.E. 2D 914 (1950) F.W. Berk &

Co. Vs. Derecktor. In this matter, the very acceptance of the plaintiff's order by

the defendants was made subject to the occurrence of certain events. The court

defined the phrase "subject to" as being the equivalent to "conditional upon or

depending on" and held that making the acceptance of an offer subject to a

condition was not the kind of assent required to make it a binding promise.

However, making the acceptance of an offer conditional or expressly making an

agreement itself conditional is a much clearer expression of an intent not to be

bound than the use of the more ambiguous word "transaction".

358. Our attention stands drawn to the pronouncement of the Supreme Court

reported at (2006) 1 SCC 751 Dresser Rand S.A. Vs. Bindal Agro Chem Limited

wherein the court was of the view that the letter of intent made it clear that if the

projects order was not placed and a letter of credit was not issued by a particular

date, the other party was at liberty to alter the price and the delivery schedule. The

court therefore held that it may not be possible to treat the LoI as the projects

order. It was further held thus:

"Agreeing upon the terms subject to which offer is to be made and

accepted, is itself a complicated and time-consuming process. But,

152


reaching an agreement as to the terms subject to which a purchase

will be made, is not entering into an agreement to purchase."

32. Parties agreeing upon the terms subject to which a contract

will be governed, when made, is not the same as entering into the

contract itself. Similarly, agreeing upon the terms which will govern

a purchase when a purchase order is placed, is not the same as

placing a purchase order. A prelude to a contract should not be

confused with the contract itself. xxxx.

39. …a letter of intent merely indicates a party’s intention into a

contract with the other party in future. A letter of intent is not

intended to bind either party ultimately to enter into any contract. …

40. It is no doubt true that a letter of intent may be constructed as a

letter of acceptance if such intention is evident from its terms. It is

not uncommon in contracts involving detailed procedure, in order to

save time, to issue a letter of intent communicating the acceptance of

the offer and asking the contractor to start the work with a stipulation

that the detailed contract would be drawn up later. If such a letter is

issued to the contractor, though it may be termed as a letter of intent,

it may amount to acceptance of the offer resulting in a concluded

contract between the parties. But the question whether it is a final

acceptance of the offer thereby leading to a contract, is a matter that

has to be decided with reference to the terms of the letter.

When the LoI is itself hedged with the condition that the

final allotment would be made later after obtaining CRZ and other

clearances, it may depict an intention to enter into contract at a later

stage. Thus, we find that on the facts of this case it appears that a

letter of intention to enter into a contract which could take place after

all other formalities are completed. However, when the completion of

these formalities had taken undue long time and the price of land, in

the interregnum, shot up sharply, the respondent had a right to

cancel the process which had not resulted in a concluded contract. "

(Emphasis supplied)

153


359. The above view has been relied upon by the Supreme Court in its decision

report at (2015) 13 SCC 233 : Rishi Kiran Logistics Pvt. Ltd. v. Kandla Port

Trust and others.

360. Mr. P. N. Raina, ld Senior Counsel has placed the judgment reported at

(2017) 2 SCC 125 (Para 24), Bhushan Power and Steel Limited v. S. L. Seal,

Additional Secretary, Steel and Mines and others, before us. In this case, the

application of the petitioner for grant of mining lease was rejected on account of a

statutory amendment. The application was made prior to the statutory amendment.

The petitioner had challenged the rejection inter alia on the ground that ‘since the

letter of intent stood issued by the State Govt. for grant of mining lease, the

petitioner’s application stood protected’. The Supreme Court had considered the

effects of the issuance of the LoI in para 24 of the judgment observing as follows:

“24. No doubt, having regard to the words “by whatever name

called”, the expression “letter of intent” is to be given wider

connotation. It means that nomenclature of the letter would not be the

determinative factor. It is the substantive nature of the letter in

question that would determine as to whether it can be treated as the

letter of intent. For this purpose, it is first necessary to find the

meaning that has to be attributed to the term “letter of intent”. As per

the legal dictionary, “letter of intent” is a document that described the

preliminary understanding between the parties who intend to make a

contract or join together in another action. This term has come up for

interpretation on few occasions before this Court.”

(Emphasis by us)

361. Mr F. A. Natnoo, has submitted that the appellants are mis-reading the

judicial pronouncement when they have no application in the present case. Mr

Natoo, submits that the manner in which a judicial precedent has to be read and

applied has been laid down by the Supreme Court in the judgment reported at 2004

154


(8) SCC 579 : Bharat Petroleum Corporation Limited & Anr., v. N. R.

Vairamani & Anr., as follows:

“9. Courts should not place reliance on decisions without discussing

as to how the factual situation fits in with the fact situation of the

decision on which reliance is placed. Observations of Courts are

neither to be read as Euclid's theorems nor as provisions of the statute

and that too taken out of their context. These observations must be

read in the context in which they appear to have been stated.

Judgments of Courts are not to be construed as statutes. To interpret

words, phrases and provisions of a statute, it may become necessary

for judges to embark into lengthy discussions but the discussion is

meant to explain and not to define. Judges interpret statutes, they do

not interpret judgments. They interpret words of statutes; their words

are not to be interpreted as statutes. In London Graving Dock Co. Ltd.

V. Horton (AC at p.761), Lord Mac Dermot observed: (All ER p.14C-

D)

"The matter cannot, of course, be settled merely by treating the

ipsissima vertra of Willes, J., as though they were part of an Act of

Parliament and applying the rules of interpretation appropriate

thereto. This is not to detract from the great weight to be given to the

language actually used by that most distinguished judge......"

10. In Home Office v. Dorset Yacht Co. (All ER p.297g-h) Lord Reid

said, "Lord Atkin's speech.....is not to be treated as if it was a statute

definition it will require qualification in new circumstances." Megarry,

J in (1971) 1 WLR 1062 observed: "One must not, of course, construe

even a reserved judgment of Russell L.J. as if it were an Act of

Parliament." And, in Herrington v. British Railways Board (1972 (2)

WLR 537) Lord Morris said: (All ER p.761c)

"There is always peril in treating the words of a speech or judgment as

though they are words in a legislative enactment, and it is to be

155


remembered that judicial utterances made in the setting of the facts of

a particular case."

11. Circumstantial flexibility, one additional or different fact may

make a world of difference between conclusions in two cases. Disposal

of cases by blindly placing reliance on a decision is not proper.

12. The following words of Lord Denning in the matter of applying

precedents have become locus classicus:

"Each case depends on its own facts and a close similarity between

one case and another is not enough because even a single significant

detail may alter the entire aspect, in deciding such cases, one should

avoid the temptation to decide cases (as said by Cordozo) by matching

the colour of one case against the colour of another. To decide

therefore, on which side of the line a case falls, the broad resemblance

to another case is not at all decisive.

* * *

Precedent should be followed only so far as it marks the path of

justice, but you must cut the dead wood and trim off the side branches

else you will find yourself lost in thickets and branches. My plea is to

keep the path to justice clear of obstructions which could impede it."”

362. We have extracted the LoI issued by the respondents to the appellants in the

cases in hand heretofore. This LoI clearly informed the appellant that their bids

had been “provisionally” accepted. It reminded the bidders of the mandate of Rule

26 of the Rules of 2016. This LoI directed the appellants to submit the approved

Mining Plan and EC (as required under Rule 26(2)) as also to deposit the

remaining 50% of the bid amount within the period of six months (as stipulated in

Rule 55(9)). The LoI clearly informed that these compliances were necessary to

156


enable the respondents to “grant mining lease” to the bidder for extraction of the

minor minerals.

363. An examination of Rule 40 shows that after the completion of the above

formalities, a formal order of “grant” of the lease has to be issued. Once this is

ordered, the bidder is required under Rule 40(1) to pay demarcation fee, deposit

the security along with one quarterly installment of the annual deed rent and

submit requisite stamps for execution of formal lease deed within 30 days from the

date of issue of the grant. Rule 40(2) mandates that the lease deed “shall” be

executed within three months from the date of issue of the grant. “Such lease deed

is required to be got registered by lessee within a period of one month from the

date of execution of the lease deed.”

364. Under Rule 40(1), the lease is a formal document executed in the formal

prescribed in Form ML 10. It enables the lessee to extract minor minerals from a

specified area of land.

365. In this background, the issuance of the LoI [under Rule 26(2)] is merely

notification to the bidder that his bid was the highest and stands provisionally

accepted. The LoI in absolutely clear terms thus reminds the bidder of the

formalities that he is required under the statutory rules [Rule 26(2), 55(9)] to

complete as well as the time frame within which they must be completed to enable

the authorities to grant the mining lease. The Rules clearly postulate that after

compliance by the bidder, a formal order of grant of the lease [Rule 40(1)] has to

be issued; completion of the prescribed formalities [Rule 40(1)], execution of the

mininig lease [Rule 40(2)] in the prescribed format Form ML10 by the Director

and thereafter its registration as per the notified schedule.

157


It needs no elaboration that it is this registered document which is the

contract between the parties. A highest bidder is only thereafter statutorily

permitted (Section 4 of the Act) to undertake mining activity.

366. In the judgment reported at (2009) 1 SCC 475, Speech & Software

Technologies (India) (P) Ltd. V. Neos International Ltd. it has been held that it is

a well settled legal position that the agreement to enter into contract is not

enforceable nor does it confer any rights on the parties.

367. By the issuance of the LoI the respondents have thus neither conveyed final

acceptance of the bid nor the terms on which a mining lease would be granted to

the bidder.

368. We may consider individual arguments addressed before us. Mr Vikram

Sharma in LPA No. 53/2020 has vehemently advanced the submission that once a

LoI stood issued to the appellant, the mining plans submitted by the appellant

approved, the right of grant of lease immediately accrued under Rule 6 to the

appellant. It is contended that on working of Rule 104-A and the appellants

extracting minor minerals against payment of royalty (as defined under Section 9

of the Minor Mineral Development Act) the appellants had moved ahead from the

stage of issuance of LoI. Mr Sharma would content that upon receipt of the

royalty, a binding contract had come into existence.

369. The Rules of 2016 are in the public domain. The public notice of the

auctions, conducted thereunder (extracted by us) unequivocally notified the

participants of the terms and conditions on which the auction would be conducted.

The rules are also clearly referred to in the LoI issued to each of the appellants as

well. That final acceptance of the bids had to be considered only after completion

of the three prerequisites, stood in clear terms informed to the appellants.

158


370. It is an admitted position that none of the appellants fulfilled these

conditions in the present cases. In this background, is it possible to hold, as

contended by Mr Vikram Sharma that there was a concluded contract in favour of

the appellants and that the bidder had any vested interest in getting the mining

lease?

371. In (1972) 2 SCC 36 State of Orissa v. Harinaryan Jaiswal, the Supreme

Court has ruled on the question as to whether the bidder acquires any vested right

merely by giving bids. In this regard in Para 13, it was further stated thus:

“13………By merely giving bids, the bidders had not acquired any

vested rights. The fact that the Government was the seller does not

change legal position once its exclusive right to deal with those

privileges is conceded. If the Government is the exclusive owner of

those privileges, reliance on Art. 19(1)(g) or Art. 14 becomes

irrelevant. Citizens cannot have any fundamental right to trade or

carry on business in the properties or rights belonging to the

Government, nor can there be any infringement of Art. 14, if the

Government tries to get the best available price for its valuable

rights. The High Court was wholly wrong in thinking that purpose of

ss. 22 and 29 of the Act was not to raise revenue. Raising revenue as

held by this Court in Cooverjee Bharucha's case (supra) was one of

the important purposes of such provisions. The fact that the price

fetched by the sale of country liquor is an excise revenue does not

change the nature of the right. The sale in question is but a mode of

raising revenue. Assuming that the question of arbitrary or unguided

power can arise in a case of this nature, it should not be forgotten

that the power to accept or reject the highest bid is given to the

highest authority in the State i.e. the Government which is expected

to safeguard the finances of the State. Such a power cannot be

considered as an arbitrary power. If that power is exercised for any

collateral purposes, the exercise of the power will be struck down. It

159


may also be remembered that herein we are not dealing with a

delegated power but with a power conferred by the legislature…..”

(Emphasis supplied)

372. With regard to the impact of the submission of a bid, we may advert to the

findings of the Supreme Court in the case reported at (1975) 1 SCC 737, Har

Shankar v. Dy. Excise & Taxation Commissioner, wherein it is held under:

“16. Those interested in running the country liquor vends offered

their bids voluntarily in the auctions held for granting licences for the

sale of country liquor. The terms and conditions of the auctions were

announced before the auctions were held and the bidders

participated in the auctions without a demur and with full knowledge

of the commitments which the bids involved. The announcement of

conditions governing the auction were in the nature of an invitation

to an offer to those who were interested in the sale of country liquor.

The bids given in the auctions were offers made by prospective

vendors to the Government.

............Those who contract with open eyes must accept the burdens

of the contract along with its benefits. Xxxxxxxxxx”

(Emphasis by us)

373. A challenge to a cancellation of the entire tender, similar to the decision

under challenge before us, was before the Supreme Court in the judgment reported

at (2015) 13 SCC 233, Rishi Kiran Logistics Private Limited v. Board of Trustees

of Kandla Port Trust and others. The respondent No.1 had invited tenders on

12.03.2005 for allotment of plots on leasehold basis on a basic premium of Rs.612

per square meter for construction of liquid storage tanks. Bids were to be

accompanied by earnest money of Rs. 3 lakhs. Price bids were opened on

30.08.2005 which were scrutinized by the tender committee. The appellant was

found technically qualified. Recommendations were placed before the Board of

160


Trustees in the meeting held on 08.12.2005. After completion of procedural

aspects, a LoI dated 07.01.2006 was communicated to the appellant wherein it was

clearly mentioned that the ‘formal letter of allotment would be issued after getting

CRZ clearance’. The appellant had bid for three plots at premiums of Rs.3200,

3150 and 3120 respectively. This CRZ clearance was received after a long gap of

five years on 16th August 2010. This prolonged time lag resulted in the Board of

Trustees taking the decision by way of resolution no.108 on 09.12.2010 deciding

to cancel the entire tender process which had commenced in the year 2005. The

decision of the Board of Trustees was conveyed to the appellant as well as to other

tenderers. The cancellation of bids was challenged by way of writ petition being

SCA No.1877/2011.

374. Nikhil Adhesives Limited, had filed a writ petition being SCA No.286/2011

in the Gujarat High Court which was dismissed by a reasoned judgment dated 4th

February, 2011 [2011 SCC online Gujarat 897 : (2011) 2 GLH 283]. Another

SCA No.1328/2011 filed by IMC Limited was dismissed by the Gujarat High

Court by another reasoned order on 7th February, 2011.

375. In Nikhil Adhesives Limited,tThe Gujarat High Court was of the view that

the petitioner could not succeed merely on the basis of the LoI dated 12th January

2006 which had been issued by the Kandla Port Trust. It was also observed that no

effective steps had been taken by the petitioner even to facilitate obtaining the

CRZ clearance despite several communications from the respondents. The court

held that it could not be held that there was any concluded contract between the

petitioner and the respondent-Port Trust. The LoI was merely an expression of

intention issued by the respondent which imparted information to the petitioner

that it stood as the highest bidder and on receipt of the CRZ clearance, a formal

161


LoI would be issued. Even before such an event could occur, the earlier tender

process stood cancelled. It was specifically held that while cancelling the earlier

tender process, the Kandla Trust Port neither acted arbitrarily nor its action would

amount to any malafide exercise of discretionary powers. The decision had been

taken to fetch a realistic market price in accordance with the present market value

of land.

376. Another fact which had weighed in favour of the respondents was the fact

that, other than making payment of Rs.3 lakhs by way of earnest money, the

bidders had not incurred any other expenditure or suffered any liability to

implement the project of construction and maintenance of the tanks; that even if

the LoI could be considered as tantamounting to a promise given by the Port Trust,

the petitioner had not altered its position to such an extent which could lead the

court to take a decision that holding the promissor to its representation was

necessary to do justice between the parties. Thus equity demanded that the Port

Trust was allowed to rescind, looking to the facts and circumstances of the case.

377. The writ petition filed by the Rishi Kiran Logistics Pvt. Ltd. (SCA

1877/2011) was also dismissed for the reasons detailed in the above judgment

dated 4th February, 2011.

378. The main ground of challenge to the cancellation before the Gujarat High

Court in Nikhil Adhesives Limited (and the other matters including Rishi Kiran

Logistics) was that the respondents were instrumentalities of the State and being

‘other authority’ under Article 12 of the Constitution, just as in the present case, it

was urged that they were bound to act fairly, and that, their action was not based

on any rationale or relevant principle.

162


379. The entire thrust of the submission of all the writ petitioners was that there

was a concluded contract between the parties and that cancellation of such contract

perse amounted to arbitrariness in action. The cancellation was challenged also on

grounds of promissory estoppel.

380. The Gujarat High Court negated all the aforesaid propositions. Answering

the first argument that there was a concluded contract between the parties, the

High Court held that the LoI issued by the Port Trust was just information that the

addressee (the petitioner therein) had been declared highest bidder for the plot for

which it had submitted its tender. This letter further informed that the formal

allotment letter shall be issued after the receipt of CRZ clearance in general by the

Port Trust for tank forms and also informed that additional CRZ clearance if

required for installation, safety, pollution control etc, had to be obtained by the

said petitioner, from time to time at its cost. This letter also mentioned that the

payment would be made by the said petitioner after obtaining the CRZ clearance

for the individual premises allotted to it or within 3 months of issuance of

allotment letter, whichever was earlier. In the opinion of the High Court the LoI

did not result in any concluded contract.

381. Rishi Kiran Logistics Pvt. Ltd., challenged the decision of the Gujarat High

Court before the Supreme Court of India, which was rejected by the judgment

dated 21st April, 2014.

382. The Supreme Court had noted that though in the NIT dated 12th March,2005,

the premium was fixed at Rs.612/ sq.meter, prices of property in the five years

taken to obtain the CRZ clearance had taken a quantum jump. In 2010, when the

clearance was obtained, it was more than Rs. 8000/ sq. meter.

163


383. The Supreme Court also considered and rejected the plea of estoppel in

Rishi Kiran Logistics Pvt. Ltd. In para 30, the Supreme Court noted that in this

case, the total premium amount in respect of the three plots (which ran into several

crores of rupees in each case) was not to be paid on issuance of the LoI. This was

for the reason that the formal LoI or lease documents were to be executed only

after the CRZ clearance. For this reason, the appellant was required to pay the

premium amount only after receipt of the CRZ clearance in general and after

issuance of allotment letter as well as individual CRZ clearance and on execution

of these documents. Before any of these events could happen, the Port Trust

decided to cancel the entire process. It was held that except making payment of

Rs.3 lakhs by way of earnest money, the appellant did not incur any other expenses

and had also not suffered any liability or taken any steps. It was held by the High

Court that even if it could be assumed that the issuance of LOI tantamounted to a

promise given by the Port Trust, the appellants did not alter their position to their

prejudice pursuant thereto to such an extent that it could inspire the court to take

the decision that holding the promissor to its representation is necessary to do

justice between the parties. This view of the High Court was upheld by the

Supreme Court.

384. We find from the factual narration above that, as in the present case, in Rishi

Kiran Logistics Pvt. Ltd, there was an admitted position that, a LoI stood issued in

favour of the bidders which clearly informed the bidder that the formal allotment

shall be issued after the receipt of the CRZ clearance in general. The Supreme

Court sustained the finding of the High Court that the LoI did not amount to a

promise but was only in the nature of information that the addressee had been

declared the highest bidder for the plot for which it had submitted its tenders.

164


385. In (2015) 13 SCC 233 Rishi, Kiran Logistics Private Limited v. Board of

Trustees of Kandla Port Trust and others, it was held as follows:

“42. Having considered the matter from this limited angle in exercise

of powers of judicial review, we are of the view that on the facts of this

case, no interference is required. The case of the appellant is that

with the issuance of LoI a concluded contract was entered into. He

had submitted that only CRZ clearance was required and even if LoI,

which amounted to acceptance of the offer given by the appellant in

his bid was contingent based on CRZ clearance, even that clearance

was granted by the competent authority ultimately. However, what is

lost sight of, in the entire process is that the said clearance was

delayed by a period of 5 years. Because of that neither any final LoI

could be issued, nor possession of the plots given of the payments

received. It is also to be borne in mind that apart from general CRZ

clearance, specific clearance on individual basis in this behalf were

also to be obtained.”

(Emphasis by us)

386. The fact situation in Rishi Kiran Logistics Private Ltd. is on all fours with

the cases in hand. In the present cases, the appellants were unable to secure ECs

within the stipulated time. Their bids had also been only provisionally accepted.

This was clearly stated in the LoI. Final acceptance had not yet been accorded. The

submission of the appellants that on issuance of the LoI, a concluded contract

came into existence is completely misconceived and has to be rejected.

387. The judgments relied upon by the appellants are distinguishable and do not

lay down any absolute proposition of law. In (1984) 3 SCC 634 (Paras 10 & 11),

State of Haryana v. Lal Chand, the court was considering an absolute acceptance

of a bid. The case relates to auction sale of liquor vends.

165


388. Lal Chand was concerned with an auction for grant of licences for sale of

liquor in the State of Haryana. So far as these auctions are concerned, on

acceptance of the bid, as per the rules and notified conditions, a binding contract

came into existence and the bidders became entitled to the licences. These rules do

not postulate provisional acceptance. The rules in Haryana do not prescribe any

pre-conditions to be complied with. Lal Chand is inapplicable to the cases in hand.

389. So far as the judgment reported at (2011) 12 SCC 18, Saradamani

Kandappan v. S. Rajalakshmi and others is concerned, it relates to sales of

immovable property. This judgment has no relevance at all to the present case. The

court has drawn a distinction between a contract executed in exercise of executive

power and contracts which are statutory in nature.

390. As pointed out above, in the present case, the applicable rules postulate only

provisional acceptance and issuance of LoI setting out the conditions laid down

under the rules which have to be complied with. It is only thereafter that the

validity of the bid has to be considered and may give rise to a final acceptance

which culminates in execution of a formal mining lease. It cannot be said in the

instant case, on fall of the hammer or issuance of the LoI, a binding contract

between the parties had come into existence.

391. In our view, the reliance on Section 9 of the Act of 1957 is also completely

misconceived. On examination of the scheme of the Statute, we find that Section 9

explicitly states that royalty is payable only by the holder of a mining lease.

Persons who had merely participated in the auction and were yet to comply with

the requirements of Rule 26(9) and Rule 55(9), had not become entitled to mining

leases. As such, they could not have been permitted to extract the minerals or pay

royalty.

166


392. We have no manner of doubt that in the present case, there was no

concluded binding contract in favour of any of the appellants.

393. In these circumatances, the reliance placed by Mr Vikram Sharma on the

pronouncement in AIR 1991 SC 537 : Kumari Shri Lekha Vidyarthi & Ors. V.

State of U.P. & Ors, is misconceived. In this case, by a general order, issued by

the Government of State of Uttar Pradesh, the appointments of all the Government

counsels (civil, criminal, revenue) in all districts of State of UP were terminated

and preparation of fresh panels to make appointments in place of the existing

incumbents was directed.

394. Mr F. A. Natnoo, ld. AAG, has pointed out that the facts in question which

were before the Court in Kumari Shri Lekha Vidyarthi are different from the

present consideration. In the instant case, there is no contract between the parties.

For the same reason the reliance placed by Mr Vikram Sharma, on AIR 1971 SC

1021: Century Spinning & Manufacturing Company Ltd., & anr. v. The

Ulhasnagar Municipal Council and anr, is misplaced as, in the present case,

there is no concluded contract between the parties.

395. We find that Rule 104-A is a “transitory measure” and applicability thereof

so far as the appellants, who were bidders in auctions, could hold only “for

completion of auction process, preparation of mining plan and obtaining

environmental clearance from the competent authority by the successful bidder.”

396. The claims of the appellants of vested rights having accrued in their favour

on account of extraction and payment of royalty under Rule 104-A are therefore

completely misplaced and hereby rejected.

397. So far as the submissions premised on time being not of essence of the

contract are concerned, it is well settled that it is not open to a court in exercise of

167


extra-ordinary powers under Article 226 of the Constitution of India to go into

pure and undiluted questions of civil liability under a contract unless any objection

based on binding principles of administrative law and public interest arises for

consideration.

398. In any event, the time for compliance of the conditions was appointed under

the statutory Rules. There is no question of any change in this requirement. The

principle of time not being of essence is neither attracted nor applicable to the

present cases.

399. The learned Single Judge has considered as issue no.i the question as to

whether on issuance of LoI and acceptance of the 50% of the bid amount and

approval of the mining plans, a right has been created in favour of the petitioners

to claim grant of mining leases. In view of the above factual narration, the learned

Single Judge has, therefore, rightly held that the right to claim grant of lease and

execution of formal leases would accrue to the petitioners only if the aforesaid

requisite formalities were completed within the statutory prescribed period in

accordance with Section 4 of the Act of 1957 read with Rule 26(2) of the Rules of

2016. We uphold the conclusion of the learned Single Judge that no right

whatsoever had accrued to the appellant at any point of time to grant of mining

leases.

XII Whether the respondents had the power to waive or to extend time

for compliance with the conditions prescribed in the Rules as

notified in the LoI.

400. Varying, in fact contradictory, submissions have been made by the learned

Senior Counsels and Counsels in these appeals. Mr. P. N. Raina, Senior Counsel

has urged that though there was a concluded contract, however, time was not of

168


essence of the contract and that, in any case time for compliance stood extended by

the respondents themselves.

401. On the other hand, it has been urged by Mr. Z. A. Shah, learned Senior

Counsel that the stipulation of complying with the notified conditions within six

months from the date of LoI was not an essential or a mandatory condition for

grant of the mining lease.

402. The submission of Mr. Vikram Sharma, ld. Counsel is that, in the given

facts and circumstances, the appellants were entitled to extension of time which

could have been granted under Rule 40 of the Rules of 2016.

403. The question which therefore arises for consideration is as to whether the

stipulations made in the Rules and by the authorities in the notice inviting tenders

or the LoIs issued on a provisional acceptance of a bid, especially the time

stipulation within which the prerequisites have to be fulfilled, are not a binding

requirement. If this is answered in the negative, the question which has to be

answered is as to whether the respondents had any jurisdiction or power to extend

the period of six months which was stipulated as a precondition.

404. As a corollary, the further question which has to be answered is as to what is

the impact of the failure of the appellants to comply with the said requirements?

405. Lastly, we have to consider what is the impact of Rule 40 on these cases.

406. These issues are not res integra, have arisen before the Supreme Court

repeatedly and stand conclusively answered.

407. We may first and foremost refer to the pronouncement of the Supreme Court

reported at (2000) 5 SCC 287, Monarch Infrastructure Private Limited v.

Commissioner, Ulhasnagar Municipal Corporation and others which sheds

valuable light on the matter. In this case, one of the conditions of eligibility in the

169


notice inviting tenders was deleted after the expiry of the time limit for submission

of tenders but before opening thereof. The contract was awarded to a tenderer who,

at the time of submission of the tenders, did not meet the condition which was

amended. The award of this contract was set aside by the High Court holding that

on account of the restricted application of the modified tender conditions to only

the existing bidders, the Municipal Corporation stands deprived of the opportunity

which it could have had of obtaining higher and better bids from those who did not

participate earlier. The court had reiterated the well settled principles of the scope

of judicial review in award of contracts. In para 10 of the judgment, it was held

that ‘ultimately what prevails with the courts in these matters is that while public

interest is paramount there should be no arbitrariness in the matter of award of

contract and all participants in the tender process should be treated alike’. In para

11 of the judgment, it was further stated that ‘ the courts would not interfere with

the matter of administrative action or changes made therein, unless the

Government’s action is arbitrary or discriminatory or the policy adopted has no

nexus with the object which it seeks to achieve or is malafide’.

408. So far as our consideration is concerned, the fact situation brought out in

para 13 of this judgment is material. One of the conditions in the ‘notice inviting

tenders’ in Monarch Infrastructure was that the tender should be accompanied by

demand draft/pay order or cash and in no other form. One Ramchand Mahadeo

Rao had also submitted his bid which was rejected. Mr. Rao claimed that he had

got prepared a cheque for Rs. 1.70 crores which he misplaced and he was under

wrong impression that a photocopy of the draft duly notarized would be sufficient

and therefore he had submitted a photocopy of the demand draft along with

relevant documents.

170


409. The Supreme Court held that it would be naive to accept such a mere

statement that the demand draft for the sum of Rs.1.70 crores obtained for the

purpose of submission alongwith the tender document could be misplaced in the

manner suggested in the application. It was also held that the Municipal

Corporation was justified in rejecting such tender offer as not fulfilling the

conditions of the tender notice.

410. Where would then be an occasion in the present cases, for the respondents to

condone failure by the bidders/ appellants to comply with the conditions as the

requirements for ECs and deposit of the balance bid amount as stand mandated by

statutory rules, informed in the auction notices and also individually notified in the

LoIs admittedly received by each of them?

411. We may examine this issue from another perspective. Even if it could be

accepted that there were concluded contracts in favour of these appellants, would

the appellants be permitted to contend that the three conditions notified in the LoI

were not binding? The answer is to be found in a subsequent pronouncement of the

Supreme Court reported at (2007) 10 SCC 33, Puravankara Projects Ltd. V. Hotel

Venus International and others. Herein allotment of certain plots had been made

by public auction in Kerala with the understanding that the land ceiling exemption

would be obtained in due course by the Development Authority without it having

been made a condition precedent. Clause 10 of the tender terms and conditions

required submission of a bank guarantee. The respondent-Venus was the

successful bidder in respect of some of the auctioned plots including Plot Nos. D-

3, D-4 and D-5. The appellant was the second highest bidder in respect of the Plot

Nos. D-3, D-4 and D-5.

171


412. Venus-the respondent did not furnish the bank guarantee. The appellant

knowing that Venus had not furnished the bank guarantee, matched his highest

offer with regard to the plots concerned and agreed to pay the entire amount in

lump sum. As the authorities did not respond to the offer, the appellant moved to

High Court of Kerala with a writ petition praying that the tender of Venus in

relation to the said plots be treated as cancelled as the bank guarantee was not

furnished.

413. The Development Authority also issued a letter of confirmation dated 21st

May 2005. This was challenged by a writ petition filed by Venus.

414. In the meantime, the notification of exemption on the land under Section

81(3)(b) of the Kerala Land Reforms Act, 1963 was issued by the authorities. Both

the Single Judge and the Division Bench in appeal held that exemption of the land

under Section 81(3)(b) of the Kerala Land Reforms Act, 1963 was a condition

precedent to issuance of the tender and as such accepted Venus’ contention that it

could be called upon to submit the bank guarantee only after the exemption was

granted by the Government.

The Supreme Court accepted the challenge by the appellants to these

judgments of the Kerala High Court.

415. On the issue of parties being bound by terms of the offer, the Supreme Court

in Puravankara Projects’ had held thus:

“30. By observing that there was implied term which is not there in

the tender, and postponing the time by which the bank guarantee has

to be furnished, in essence the High Court directed modification of a

vital term of the contract.

31. In New Bihar Biri Leave Co. V. State of Bihar, (1981) 1

SCC 537, it was observed at para 48 as follows: (SCC p. 558)

172


“48. It is fundamental principle of general application that if

a person of his own accord, accepts a contract on certain terms and

works out the contract, he cannot be allowed to adhere to and abide

by some of the terms of the contract which proved advantageous to

him and repudiate the other terms of the same contract which might

be disadvantageous to him. The maxim of qui approbat non reprobate

(one who approbates cannot reprobate). This principle, though

originally borrowed from Scots law, is now firmly embodied in English

common law. According to it, a party to an instrument or transaction

cannot take advantage of one part of a document or transaction and

reject the rest. That is to say, no party can accept and reject the same

instrument or transaction (per Scrutton, L.J., Verschures Creameries

Ltd. V. Hull & Netherlands Steamship Co., (1921) 2 KB 608 (CA); see

Douglas Menzies v. Umphelby, 1908 AC 224; see also Stroud’s

Judicial Dictionary, Vol. I, P.169, 3rd (Edn.).”

32. In Assistant Excise Commissioner v. Isaac Peter, (1994) 4 SCC

104, this Court highlighted that the concept of administrative law and

fairness should not be mixed up with fair or unfair terms of the

contract. It was stated in no uncertain terms that duty to act fairly

which is sought to be imported into a contract to modify and/or alter

its terms and/or to create an obligation upon the State Government

which is not there in the contract is not covered by any doctrine of

fairness or reasonableness. The duty to act fairly and reasonably is a

doctrine developed in administrative law field to ensure the rule of law

and to prevent failure of justice when the action is administrative in

nature.”

(Emphasis supplied)

416. Indubitably the appellants before us cannot be heard to say that upon

issuance of the LoI, they became entitled to mine for minor minerals without

obtaining the ECs or depositing fifty percent of the bid amount.

173


417. In their submissions, both Mr. Z. A. Shah and Mr. P. N. Raina, ld Senior

Counsels submit that it is necessary to draw a distinction with regard to the nature

of the order and the power which was exercised. Distinction has been drawn

between exercise of administrative or quasi judicial power.

418. Given the non-compliances of the mandatory prescriptions by the appellants,

it is completely unnecessary for this court to undertake the exercise on this issue

which would be only an academic exercise in the factual situation which obtains.

As discussed above, the appellants in LPA 56/2020 respresented by Mr P.N.Raina,

Sr. Counsel, did not care to comply with any of the conditions while the appellants

in LPA No.64/2020 on whose behalf Mr Shah has made submissions, were

grossly belated in completing the requirements.

419. Before us, these appellants were informed of both the formalities and the

time limit of six months for completion thereof for entitlement of grant of mining

leases. The appellants contend that these were not sacrosanct or binding

requirements. The question which therefore arises for consideration is whether the

said conditions or the time limit could be deviated from?

420. A fact situation similar to the present case was before the Supreme Court in

the case reported at (1996) 10 SCC 405, Rajasthan Co-operative Dairy

Federation Ltd. v. Shri Maha Laxmi Mingrate Marketing Service Pvt. Ltd. and

others. In this case, the appellant had invited applications on or about 19th

November 1988 for appointment of selling agents for its products in different

areas. On 1st June 1990, a LoI was issued by the appellant in favour of the

respondent No. 1 for its appointment as a selling agent. This LoI required the

respondent to sign an agreement on 12th June 1990 on a non-judicial stamp paper

and the arrangement was to be enforceable from the date when a legally executed

174


contract came into being. Additionally, the respondent was required to submit an

irrevocable bank guarantee for a sum of Rs.15 lakhs in favour of the appellant;

submit profit and loss account and balance sheet for the past years before the

execution of the agreement and a letter duly signed by the respondents was

required to reach the appellant by 5th June 1990.

421. The respondent No.1 in the above case acknowledged receipt of the LoI.

However, it failed to fulfill its obligation to furnish the bank guarantee or execute

the contract within the stipulated period. It also failed to submit the documents in

the nature of profit and loss account to the appellant. Consequently, as the

respondent No. 1 failed to fulfill its obligations within the stipulated period, the

LoI was revoked by the appellant. This revocation was challenged before the High

Court of Rajasthan by way of writ petition inter alia on the ground that the

cancellation was arbitrary as well as malafide and that the appellant had

violated the principles of audi alteram partem.

422. This submission was accepted by the learned Single Judge holding that the

appeal against the Single Bench decision before the Division Bench also failed.

The challenge to these two judgments by the appellant was accepted by the

Supreme Court holding that the cancellation could not have been effected without

compliance of principles of natural justice. It was held that the LoI merely

expressed an intention to enter into a contract. The Supreme Court further held as

follows:

“5. In its letter of 16th of July, 1990 cancelling the Letter of Intent

issued in favour of respondent No.1, the appellant had given several

reasons for cancelling the Letter of Intent. Respondent No.1 had not

submitted to the appellant its profit and loss account and balance-

sheet for the previous year as requested by the appellant. Respondent

175


No.1 had wrongly held itself out as the sole selling agent of the

appellant. These are clearly circumstances which are relevant to the

cancellation of the Letter of Intent. Also the Letter of Intent clearly

set out the conditions which respondent No.1 had to fulfil. One such

condition was submitting an irrevocable bank guarantee for Rs. 15

lacs. This was also not done. Respondent No.1 contends that it had

informed the appellant that it would submit the bank guarantee within

three days of the signing of the contract. The appellant, however, is

within its rights in insisting that the bank guarantee should be

submitted before the contract is signed. The appellant, as a prudent

businessman is entitled to satisfy itself about the financial position of

the party whom the appellant is appointing as its selling agent. If

respondent No.1 has not submitted the requisite documents in this

connection and has held itself out as the sole selling agent when to its

knowledge, there was no intention of appointing respondent no.1 as

the sole selling agent, these are valid circumstances which the

appellant can take into account in deciding whether to enter into a

contract and bind itself legally with respondent No.1 or not. In these

circumstances, if the contract has been cancelled it cannot be

considered as arbitrary action on the part of the appellant violative of

any Fundamental Rights of respondent No.1.”

(Emphasis by us)

423. In the present case as well, it is an admitted position that none of the

appellants were able to fulfill the preconditions notified to them under the LoI

within the period of six months as was stipulated. None of the appellants have

addressed a single representation to the respondent to the effect that they have

fulfilled their obligations as required under the LoI or that the matter should

proceed to consideration and grant of mining lease in their favour.

424. On the contrary, before us, (just as in Shri Maha Laxmi Mingrate Marketing

Services Pvt. Ltd.), it is submitted by Mr. Vikram Sharma that the obligation to pay

176


the balance 50% of the bid amount arose only after the grant of EC by the

authorities.

425. Mr. P. N. Raina, Sr. Advocate has urged that on issuance of LoI, a binding

and concluded contract had come into existence between the parties. Therefore,

non-payment of the balance bid amount was inconsequential.

426. The positions taken by the appellants are completely contrary to the

requirements stipulated under the applicable Rules.

427. Drawing our attention to Rule 40, Mr. Vikram Sharma ld counsel had

submitted that the right to ‘grant’ and ‘execution’ of lease are two entirely

different matters. Mr. Vikram Sharma would rely on Rule 40 to submit that in the

background, the appellant was entitled to extension of time for execution of the

lease in accordance with Rule 40(4) of the Rules of 2016.

428. No other plea in support of entitlement of the appellants to extension of time

for complying with the terms of the LoI was made before us.

429. Before us, it is an admitted position that the auction of the mineral blocks

was conducted pursuant to and in terms of the Rules of 2016. Rule 6 mandates the

requirement of the approved mining plan and Rule 13 imposes the need for EC for

the mineral blocks. By virtue of Rule 26(2) these have been stipulated as pre-

conditions for grant of mining leases. Towards provisional acceptance of the bid,

the authorities would issue a LoI to the bidder calling upon it to complete the

formalities “within a period of six months including deposition of the remaining

bid amount.”

430. So far as the stipulation in the LoI is concerned, Rule 55(9) of the Rules thus

makes a mandatory direction to issue a LoI to the bidder to complete the

formalities as required within the stipulated period. This sub rule also contains a

177


prohibition that the concerned bidder ‘shall not extract or allow any extraction till

such mining lease’ is granted.

431. The submission premised on Rule 40(4) has to be noted only for the sake of

rejection. Rule 40 opens with the expression ‘Execution of Lease’. Sub rule (1)

opens with the words ‘where the lease has been granted or renewed under these

rules’. In the cases in hand, other than the LoI whereby the bids of the appellants

had only been ‘provisionally’ accepted, there is not a single communication

informing the appellants that the authorities had agreed to grant mining leases to

them. Clearly, the stage of execution of lease was nowhere near in sight.

432. The only sub rule referring to extension of time is sub rule (4) of Rule 40.

This rule applies only to a grantee. The appellants were not ‘grantees’ as their bids

had not been finally accepted and mining leases had not been granted to them. The

further reference in the Rule is to ‘extension of time’ for completing the formalities

as mentioned in sub rule (1). Thus the extension of time referred to in Rule 4 is

only with regard to the contingencies mentioned in Rule 40(1) (2) & (3) of the

Rules of 2016. This provision does not relate to extension of time for complying

with the terms and conditions of the LoI.

433. Mr F. A. Natnoo, ld. AAG, has also drawn our attention to the terms and

conditions of the auction. The terms of the auction as set down in part-E

specifically stipulated the period of six months.

It needs no elaboration that the terms on which the auction was conducted or

bids invited are held to be in the realm of invitation to make offers to contract as

per rules.

178


434. We may usefully advert to the pronouncement of the Supreme Court

reported at (2001) 2 SCC 451, W.B. SEB v. Patel Engineering Co. Limited

wherein it was held as under:

“24. The controversy in this case has arisen at the threshold. It

cannot be disputed that this is an international competitive bidding

which postulates keen competition and high efficiency. The bidders

have or should have assistance of technical experts. The degree of

care required in such a bidding is greater than in ordinary local bids

for small works. It is essential to maintain the sanctity and integrity of

process of tender/bid and also award of a contract. The appellant,

Respondents 1 to 4 and Respondents 10 and 11 are all bound by the

ITB which should be complied with scrupulously. In a work of this

nature and magnitude where bidders who fulfil prequalification

alone are invited to bid, adherence to the instructions cannot be

given a go-by by branding it as a pedantic approach, otherwise it will

encourage and provide scope for discrimination, arbitrariness and

favourtism which are totally opposed to the rule of law and our

constitutional values. The very purpose of issuing rules/instructions

is to ensure their enforcement lest the rule of law should be a

casualty. Relaxation or waiver of a rule or condition, unless so

provided under the ITB, by the State or its agencies (the appellant) in

favour of one bidder would create justifiable doubts in the minds of

other bidders, would impair the rule of transparency and fairness

and provide room for manipulation to suit the whims of the State

agencies in picking and choosing a bidder for awarding contracts as

in the case of distributing bounty or charity. In our view such

approach should always be avoided. Where power to relax or waive a

rule or a condition exists under the rules, it has to be done strictly in

compliance with the rules. We have therefore, no hesitation in

concluding that adherence to the ITB or rules is the best principle to

be followed, which is also in the best public interest. Xxxx

179


30. Though Clause 29 in this case appears to be similarly

worded as in the bid document in Spina Case a close reading of these

clauses shows that no power of waiver is reserved in the case on

hand. Xxx”

(Emphasis supplied)

435. The stipulations made in the Rules as notified to the appellants in the LoI

were unexceptionally binding on all bidders.

436. The appellants are unable to point out any statutory provision or rule or

regulation or a term in the auction notice or the LoI enabling the respondents either

to waive or to extend the time of six months for compliance of the conditions.

Clearly, the respondents or their agents, have no power or authority at all to

modify the preconditions in any manner or grant extension of the time stipulation

laid down in the Rules.

437. The contention of the appellants that their obligation to deposit the balance

50% bid amount only after grant of EC has been rightly rejected by the Ld. Single

Judge (Para 63 of the impugned judgment)

438. Therefore, it has to be held that the respondents have no power either to

waive or modify the preconditions detailed in the LoI or to extend the time to

comply with the same.

XIII Whether processing of Environmental Clearances was delayed by

the respondents and impact thereof

439. So far as the EC is concerned, Mr. Naik, ld. Senior Counsel (in LPA

61/2020) has contended that all steps thereof stood taken and the required amount

stood deposited with the authorities by the appellants. Mr. Naik submits that no

180


fault can be attributed to the appellants for delay in grant of the EC and that it was

the respondents who were responsible for the delay.

440. Mr. Z. A. Shah, ld Senior Counsel has submitted before us, that the

appellants in LPA No. 64/2020 (Vikar Ahmad Dar v. UT of Jammu and Kashmir)

had complied with all the conditions required by the Rules and the stipulations in

the LoI. We find, however, that other than the submission of the mining plan, the

other two compliances were admittedly beyond the stipulated period.

441. It is noteworthy that the letter dated 23rd December 2019 also extracted from

the LoI that it had notified the appellants to submit an approved mining plan and

EC besides deposit of remaining 50% of the amount within a period of six months.

442. Mr Shah, has urged that the District level environmental impact committees

were provided by the Government of India in its notification dated 15th January

2016 which also prescribes the procedure which was to be followed. It is submitted

that a case came to be filed in 2016 before the NGT which had pronounced the

judgment on September 2018, wherein in para 22, the Tribunal had held that the

procedure must be laid down in terms of the judgment of the Supreme Court in

Deepak Kumar.

443. Mr Shah, has further submitted that it was based on this judgment that the

government of India has issued a notification in 2019 which had to be complied

with by the appellants. It is the submission of Mr Shah that in this background, the

appellant cannot be faulted for the five days delay in getting EC.

444. Defending the appellants who do not have the required clearances, our

attention stands drawn by Mr Naik to letter dated 18th April 2018 from the

MOEF&CC to five bidders (namely Balbir Singh who is appellant No.6 in LPA

No.61/2020 and Rakesh Kumar Choudhary, Nagar Singh, Chaman Lal and

181


Jorawar Singh-who are not appellants in LPA No.61/2020) reminding them of an

earlier letter dated 26th March 2018, advising the addressees to await the

formalization of the DSR by the concerned agency.

445. In support of his submissions, Mr. Altaf Naik, ld. Senior Counsel has also

drawn our attention to the letter dated 14th March 2018 addressed by the SEIAA to

three persons i.e. Rakesh Kumar Choudhary, Balbir Singh and Nagar Singh

(appellant in LPA No.53/2020) who had applied for grant of EC for the river bed

mining projects. The authority had notified these persons that since the DSR was

awaited, it would not be possible to process the case in its absence thereof. Mr.

Naik would contend that in this background, no fault can be attributed to the

appellants.

446. Mr. Naik has further submitted that the appellants had completed all

formalities including the requirements imposed under orders of the NGT of even

obtaining clearance from the J&K Pollution Control Board. In this regard, a letter

dated 6th January 2020 has been brought to our notice. This is a letter addressed by

the J&K Pollution Control Board to Shri Balbir Singh and Shri Nagar Singh

Choudhary requiring a deposit of Rs.3.50 lakhs for processing of a public hearing

for two blocks. It is Mr. Altaf Naik’s submission that this amount was also

deposited.

447. Mr. Vikram Shama, Advocate and Mr. Abhinav Sharma, Advocate have

also drawn our attention to the communications dated 14th March 2018 and 18th

April 2018 by the SEIAA, Government of India to some of the appellants

submitting that the addressees had sought the EC.

448. It has been contended by Mr. Vikram Sharma, Advocate that the delay in

consideration of the applications for EC was attributable to the State Government

182


whose officers delayed the issuance of the DSR. Some delay is also attributed to

the amendment of rules at the level of the MOEF&CC requiring changes in

compliances by the applicants.

449. It is noteworthy that the letter dated 18th April 2018 was addressed to five

persons (Rakesh Kumar Choudhary, Balbir Singh, Nagar Singh, Chaman Lal and

Zorowar Singh) and the letter dated 23rd December 2019 was addressed only to

two persons (Balbir Singh and Nagar Singh Choudhary). Only Balbir Singh

(addressee in both the letters), is an appellant in LPA No.61/2020. Clearly in LPA

No.61/2020, the other two appellants, namely, Sajad Ahmad Shah & Sabir Ahmad

Sheikh had not even applied for the EC.

450. We find that the letter dated 18th April 2018 also informed the addressees

about a gateway available to the addressees in case they were not willing to await

the DSR. The Member Secretary of the SEIAA had informed the addressees

therein that in case they were not willing to await the DSR, they were free to join

hands with other projects proponents desirous of mining activities in the same

areas/stream and to submit EIA and EMP for the entire stream.

451. These authorities had informed the addressees that their cases for EC could

not be considered in the absence of either the DSR or, in the alternative, of the EIA

and EMP.

452. Before us, none of the appellants have contended that the alternative

suggested was not viable or possible. The appellants were thus not only aware of

the fact that they were required to complete the formalities within six months but

also they had available a gateway and alternative to the requirement of DSR. It was

thus not necessary for the appellants to wait for the DSR and they had an option

available to them.

183


453. In the present case, the LoIs were clear. The three conditions were clearly

declared as required to be complied with by every applicant within a time limit. It

is an admitted position that not one of the appellants has complied with the three

conditions within time stipulated.

454. We have found that the earliest LoI to any of the appellants before us was

issued on 12th September 2017, while the last LoI was issued on 11th June 2018.

The other LoIs were issued in between. The period of six months for the first letter

of intent ended on 11th March 2018, and period for the last letter of intent ended on

10th December 2018. While for the others, the periods ended in between. After the

10th December 2018, (i.e. last expiry of the six months), all bidders had lost the

right to consideration of their application.

455. The appellant in LPA No.53/2020 Rakesh Kumar Choudhary v. State of

J&K and others, obtained approval of the mining plan, claims to have made

applications for EC to the SEIAA but did not receive the clearance and this

appellant has failed to deposit remaining 50% of the bid amount within the

stipulated time.

456. We also find that from the dates which have been mentioned it appears that

Rakesh Kumar Choudhary applied for EC within two months of the receipt of the

issuance of LoI for some blocks. However, with regard to the applications for

District Rajouri, while the LoI was issued on 5th October 2017, the EC was applied

after expiry of six months on 14th April 2018 for some blocks and thereafter for

others.

457. Mr F. A. Natnoo, learned AAG, has pointed out that with respect to the LoI

issued on 5th October, 2017, Rakesh Kumar Chaudhary, waited five months before

submitting his mining plan on 27th February, 2018. Mr. Natnoo points out that just

184


like in all other cases, the respondent did not delay the approval of the mining plan

which was given on 4th March, 2018 i.e., within three days of submission of the

mining plan. The period of six months from the date of issuance of the LoI was

expiring on 4th April, 2018. Rakesh Kumar Chowdhary applied for the EC only on

27th September, 2019 i.e., almost one year and seven months after approval of the

mining plan.

458. On the same aspect, a letter dated 10th August 2018 from the Principal

Secretary of Government, Department of Industries and Commerce addressed to

Shri Ramesh Kumar, Deputy Commissioner, Jammu has been placed by the

appellants before us wherein it is stated that hard and soft copies of the DSR/data

prepared by the Geology and Mining Department for posting on the Districts

website stood sent to his office on the 2nd July 2018 and immediate action as

necessary was directed.

459. It has additionally been submitted by Mr. Vikram Sharma, Advocate that so

far as the EC is concerned, no fault for the delay in processing could be attributed

to the appellants. It is submitted that even the ld Single Judge has noted the fact

that the Govt. of India had appointed the SEIAA for a period of three years and

that between the periods 28th January 2019 to 4th July 2019 there was no SEIAA

which could have issued the EC.

460. The EC had to be given by the Committee constituted by the Central

Government. None of the appellants have made any grievance or sought directions

from any court for constitution of the SEIAA when it was not in existence.

Therefore, the delay in grant of EC cannot be foisted upon the authorities of the

erstwhile State who stand impleaded as respondents before us.

185


461. A letter dated 23rd December 2019 addressed by the J&K Environment

Impact Assessment Authority has noted that the LoIs stood issued to these

appellants on various dates in 2017 and 2018. It was clearly observed in this letter

that the period of six months had lapsed in all the eight cases in which these two

appellants in LPA No. 61/2020 (Balbir Singh and Nagar Singh) had applied for EC

and advised them to submit a revalidated LoI from the agency concerned before

grant of the EC.

462. Let us consider the facts regarding the only appellant who was able to get

the mining plan processed, EC and made the deposit of 50%, Vikar Ahmad Dar

(LPA No. 64/2020 filed in the Srinagar Wing) who also admits that he has failed to

do so within the period required under the LoI.

463. We are informed that this appellant (Vikar Ahmad Dar) submitted the

mining plan on 13th November 2017 (more than a month after issuance of the LoI)

which was promptly approved by the competent authority on 15th November 2017

within two days of submission. The period of six months for compliance by Vikar

Ahmed Dar, of the three conditions in the LoI expired on 5th April 2018.

464. According to Mr F. A. Natnoo, ld. AAG, as per the web portal of the

DEIAA, Vikar Ahmad Dar has submitted his application for EC, only on the 11th

April 2018 almost five months after approval of the mining plan. The mandatory

period of six months from issuance of the LoI had also expired by this date.

465. It is urged by Mr. Z. A. Shah, Senior Advocate that the appellant was

granted EC on the 11th April 2018, which does not appear to be correct. No

material in support is forth coming on record.

186


466. So far as the deposit of the balance 50% of the bid amount the appellant

Vikar Ahmad Dar is concerned, it is again orally submitted that he deposited the

same on 29th July 2018 (almost ten months after issuance of the LoI).

467. On the other hand, the respondents have submitted that the balance 50% of

his bid amount was received by the DMO and forwarded to the Joint Director,

Kashmir only on the 29th June 2018 which was forwarded to the Director on 3rd

July 2018. Even this was beyond the six month period under the LoI.

468. The clearance from the Pollution Control Board was obtained on 27th

December, 2019. It is noteworthy that this was more than two years and four

months after issuance of the LoI on 5th October 2017.

469. The above narration of facts in LPA 56/2020 Chaman Lal v. State manifests

that behind all these vehement legal submissions, is the hard reality that the

appellants in this appeal have not cared to fulfill any of the conditions prescribed

under the Rules or as stipulated in the LoI.

470. We have also noted above that none of the appellants in LPA 62/2020

(Mohd. Ashore Mir & Ors. V. Union Territory) have deposited the balance bid

amount. They have also not applied for EC. Mohd. Shaban Bhat-appellant No.3

did not even submit a mining plan.

The position qua the other appellants is not much different.

471. Mr Natnoo has drawn our attention to the communication dated 4th January,

2019, informing Rakesh Kumar Chaudhary that he had failed to comply with the

rules and called upon him to deposit the balance 50% bid amount and obtain EC

within one month failing which appropriate action would be taken in the matter.

472. This communication dated 4th January, 2019 was assailed by Rakesh Kumar

Chaudhary by way of a second writ petition being OWP no.50/2019. Directions

187


were inter alia sought for and execution of mining leases in favour of the writ

petitioner and quashing of the communication dated 4th January, 2019; approval of

the DSR; issuance of the EC. The appellant also objected to the requirement for

public consultation required by the JK State Pollution Control Board.

473. OWP 50/2019 was listed before the Ld. Single Judge on 15th January, 2019,

when while ordering notice, the respondents were directed to finalize the case of

the EC of the petitioner Rakesh Kumar Chaudhary by the next date. A further

order was passed on 1st February, 2019 directing that the writ petition be listed

with OWP No.2648/2018 and that the respondent No.2 shall not act upon the

impugned notice dated 4th January, 2019. This writ petition is still pending.

474. OWP No.50/2019 was filed on 10th January, 2019 again long after expiry of

the period of six months after the issuance of the LoI on 5th Ocotber, 2017.

475. We find that in their absolute arrogance, the appellants who did not deposit

the balance fifty percent of the bid amount, do not give a whit of an explanation or

excuse for the same.

476. In this background, these appellants cannot be heard to say that the

appellants have conducted themselves with diligence and expedition, and, that the

respondents are responsible for the delay in the matter.

477. We find that the issue of delay being attributed to the State Government in

the processing of applications for grant of EC and consequentially the applicants

being entitled to consideration of their applications for renewal of concessions

dehors this requirement under the applicable rules was pressed before the Supreme

Court in the judgment reported at (1981) 2 SCC 205 (Para 13), State of Tamil

Nadu v. Hind Stone and Others. The Supreme Court rejected the submissions

with the following observations:

188


“13. Another submission of the learned counsel in connection with the

consideration of applications for renewal was that applications made

sixty days or more before the date of G.O.Ms. No. 1312 (2-12-1977)

should be dealt with as if Rule 8C had not come into force. It was also

contended that even applications for grant of leases made long before

the date of G.O.Ms. No. 1312 should be dealt with as if Rule 8C had

not come into force. The submission was that it was not open to the

Government to keep applications for the grant of leases and

applications for renewal pending for a long time and then to reject

them on the basis of Rule 8C notwithstanding the fact that the

applications had been made long prior to the date on which Rule 8C

came into force. While it is true that such applications should be

dealt with within a reasonable time, it cannot on that account be said

that the right to have an application disposed of in a reasonable tune

clothes an applicant for a lease with a right to have the application

disposed of on the basis of the rules in force at the time of the

making of the application. None has a vested right to the grant or

renewal of a lease and none can claim a vested right to have an

application for the grant or renewal of a lease dealt with in a

particular way, by applying particular provisions. In the absence of

any vested rights in anyone, an application for a lease has

necessarily to be dealt with according to the rules in force on the date

of the disposal of the application despite the fact that there is a long

delay since the making of the application. We are, therefore, unable

to accept the submission of the learned counsel that applications for

the grant of renewal of leases made long prior to the date of G.O.Ms.

No. 1312 should be dealt with as if Rule 8-C did not exist.”

(Emphasis by us)

478. We have elaborately considered the issue as to whether the respondents had

the power to either grant exemption from compliance with the conditions laid

down in the LoIs or to extend the period for compliance thereof, and have held that

no such power lay with the respondents to do so. Therefore, even if fault for the

189


delay in finalizing of the DSR and consequential inability in processing of the

application for EC could be laid at the door of the respondents, so far as the

appellants are concerned, nothing turns in their favour as a result.

479. In this background, any change effected to procedural requirements on

account of a judgment of the NGT also does not assist any of the bidders (the

appellants before us). Even otherwise, the appellant has not cared to approach the

court within six months period prescribed by in the rules and by the LoI.

480. Most appellants applied for ECs almost at the verge of expiry of the six

months period and delay for the same cannot be attributed to the respondents.

Delays on part of the Govt. officers, if any, in the instant case are inconsequential.

481. Significantly no reminder was sent for issuance of the DSR for which there

was an alternative as per the letters dated 14th March & 18th April, 2018 as above

by any of the appellants. Not a single highest bidder filed a petition within a period

of six months seeking any direction from this court to the respondents to ensure

that DSR was expedited and the EC granted within the period required by the rules

482. Clearly having commenced mining using the shield of Rule 104-A, the

appellants were not bothered about compliances with any of the mandatory

conditions laid down in the Rules, as notified in the auction notice and the LoIs.

We have no manner of doubt that these appellants were least interested in making

good their financial obligations of the huge amount owed by them as 50% of the

balance bid amount.

483. We completely agree with the observation of the learned Single Judge in

para-63 of the impugned judgment that the writ petitioners had an absolute and

legal obligation to deposit the remaining 50% of the bid amount irrespective as to

whether they have been granted EC or not by the SEIAA.

190


484. All those persons who have failed to deposit the 50% balance amount of the

bid amount and/ or obtain the clearances within the period of six months from the

date of LoI lost even the right of consideration for their applications and have to be

non-suited.

485. There is no cavil in saying that the compliance was delayed by a mere day,

or a month or few months. Delay is delay, irrespective of its extent and

consequences thereof know no exception or exemption.

486. For the foregoing reasons, we are unable to agree with the conclusion of the

learned Single Judge in para-46 of the judgment while dealing with issue No.(ii)

that the writ petitioners had a remedy in common law to seek compensation or

with the finding on issue No. iv that the appellants were not responsible for the

delay. For the reason that no contract had come into existence, the doctrine of

frustration was neither attracted nor applicable.

These conclusions are, therefore, set aside.

XIV Whether the respondents had made a representation and

promise to the appellants and would stand estopped from

withdrawing from it?

487. It has been contended before us by the appellants that the respondents had

held out the promise of grant of mining lease in the auction notice, that the

appellants were declared highest bidders in the auction and that they had deposited

amounts pursuant thereto. The appellants have vehemently contended that the

respondents are bound by their representations and promise to these bidders and

estopped from back tracking therefrom.

488. Mr Vikram Sharma, learned counsel for the appellant in LPA 53/2020, has

submitted that in the instant case, premised on the representation of the

respondents, that the appellant was entitled to a mining lease, he has materially

191


altered his position. It is submitted that there was an obligation on the respondents

to ensure that they facilitated fulfillment of the preconditions within the six months

period and granted mining lease to the appellant. In support of his submission, Mr.

Vikram Sharma placed reliance on the pronouncement of the Supreme Court

reported at AIR 1971 SC 1021 : Century Spinning & Manufacturing Company

Ltd., & anr. v. The Ulhasnagar Municipal Council and anr.

489. The question which arises is as to whether the respondents had at all made a

representation or held out a promise to grant mining leases to the appellants? And

further, even if it could be held that there was a promise or representation made by

the authorities to the appellants, does it give rise to any basis for holding the

government bound by the same? Even if made, what are the circumstances in

which the government can withdraw from its representation/ promise or change its

policy? The answer to all these questions is well settled.

490. In the cases in hand, we do not find a single submission in the writ petitions

setting out any representation or un-conditional promise on the part of the

respondents that the highest bidders would be granted mining leases irrespective of

whether they comported to the requirements of the Rules of 2016 or not. The very

Rules relied upon by the appellants prescribe the manner in which the lease has to

be granted and executed. This has not been done. On the contrary, the appellants

have admittedly failed to comply with the requirements under the rules.

491. Importantly there is also no averment at all as to how and where the

appellants have altered their position. Even on application of the principles in

Century Spinning Mills, there is thus no promise binding the respondents to grant

mining leases to the appellants.

192


492. The answer to this question is to be found in the pronouncement of the

Supreme Court in Century Spinning & Manufacturing Company Ltd., & anr. v.

The Ulhasnagar Municipal Council and anr, wherein the court held as follows:

“Public bodies are as much bound as private individuals to carry out

representations of facts and promises made by them, relying on

which other persons have -altered their position to their prejudice.

The obligation arising against an individual out of his representation

amounting to a promise may be enforced ex contractu by a person who

acts upon the promise : when the law requires that a contract

enforceable at law against a public body shall be in certain form or

be executed in the manner prescribed by statute, the obligation may

be if the contract be not in that form be enforced against it in

appropriate cases in equity. 'In Union of India & Ors. v. Mls.

IndoAfghan Agencies Ltd.(1) this Court held that the Government is

not exempt from the equity arising out of the acts done by citizens to

their prejudice, relying upon the representations as to its future

conduct made by the Government. This Court held that the following

observations made by Denning, J., in Robertson v. Minister of

Pensions(1) applied in India "The Crown cannot escape by saying that

estoppels do not bind the Crown for that doctrine has long been

exploded.

Xxxx xxxxx xxxx

If our nascent democracy is to thrive different standards of conduct

for the people and the public bodies cannot ordinarily be permitted.

A public body is, in our judgment, not exempt from liability to carry

out its obligation arising out of representations made by it relying

upon which a citizen has altered his position to his prejudice. xxx

xxx”

(Emphasis by us)

193


493. On this aspect, we may usefully also advert to the judgment of the Supreme

Court reported at (1997) 3 SCC 398, Shrijee Sales Corporation and Anr. V.

Union of India, wherein the Supreme Court observed that once public interest is

accepted as the superior equity which can override individual equity the principle

would be applicable even in cases where a period has been indicated for operation

of the promise. If there is a supervening public equity, the Government would be

allowed to change its stand and it has the power to withdraw from a representation

made by it which induced persons to take certain steps which may have gone

adverse to the interest of such persons on account of such withdrawal. Moreover,

the Government is competent to rescind from the promise even if there is no

manifest public interest involved, provided no one is put in any adverse situation

which cannot be rectified.

494. In the judgment of the Supreme Court reported at (2006) 13 SCC 708, M. P.

Mathur v. D.T.C, the Supreme Court has held that promissory estoppel is based on

equity or obligations and is not a vested right. The Court has to strike a balance in

equity between individual rights on the one hand and the larger public interest on

the other. It has been held that if “there is a supervening public equity, the

Government would be allowed to change its stand and it has the power to

withdraw from a representation made by it which induced persons to take certain

steps, which may have gone adverse to the interest of such persons on account of

such withdrawal.” It was held that merely because the resolution was announced

for a particular period, it did not mean that the Government could not amend and

change the policy under any circumstances. If the party claiming application of

doctrine acted on the basis of a notification, it should have known that such

194


notification was liable to be amended or rescinded at any point of time, if the

Government felt that it was necessary to do so in public interest.

495. Let us examine the other part of the government decision. The respondents

have also taken the decision to henceforth grant mining licences only by e-auction.

So far as this change of policy is concerned, it would impact grant of mining leases

which fall in the realm of contractual matters.

496. The principles which apply to State functioning in matters of policy in

contractual matters have been considered in the pronouncement of the Supreme

Court reported at AIR 1991 SC 537: Kumari Shri Lekha Vidyarthi & Ors. V.

State of U.P. & Ors. It was observed as follows:

“It can no longer be doubted at this point of time that Article 14 of the

Constitution of India applies also to matters of governmental policy

and if the policy or any action of the Government, even

in contractual matters, fails to satisfy the test of reasonableness, it

would be unconstitutional. See Ramana Dayaram Shetty v. The

International Airport Authority of India and Ors., [1979] 3 SCR

1014 and Kasturi Lal Lakshmi Reddy v. State of Jammu and

Kashmir & Anr., [1980] 3 SCR 1338. In Col. A.S. Sangwan v. Union

of India and Ors., [1980] Supp. SCC 559, while the discretion to

change the policy in exercise of the executive power, when not

trammelled by the statute or rule, was held to be wide, it was

emphasised as imperative and implicit in Article 14 of the

Constitution that a change in policy must be made fairly and should

not give the impression that it was so done arbitrarily or by any

ulterior criteria. The wide sweep of Article 14 and the requirement of

every State action qualifying for its validity on this touch-stone,

irrespective of the field of activity of the State, has long been settled.

Later decisions of this Court have reinforced the foundation of this

tenet and it would be sufficient to refer only to two recent decisions of

this Court for this purpose.”

(Emphasis supplied)

497. The learned Single Judge has placed reliance on the following observations

of the Supreme Court in the judgment reported at AIR 1997 SC 2233: Premium

Granites vs. State of Tamil Nadu in support of the decision of the respondents,

wherein it was held as under:










195


“It is not the domain of the court to embark upon unchartered ocean

of public policy in an exercise to consider as to whether a particular

public policy is wise or a better public policy can be evolved. Such

exercise must be left to the discretion of the executive and legislative

authorities as the case may be. The court is called upon to consider

the validity of a public policy only when a challenge is made that such

policy decision infringes fundamental rights guaranteed by the

Constitution of India or any other statutory right.

xxxxx”

In the case in hand, the appellants are unable to make out violation of any

right by the decision of the respondents.

498. Mr F. A. Natnoo, ld. AAG, has placed reliance on the pronouncement of the

Gujarat High Court reported at 2014 (3) GLH 425 (paras 6.6, 10.10 and 10.12)

Patel Vishnubhai Maganbhai v. State of Gujarat. In this case the Government

changed the mode of disposal of minor minerals on the policy of first come first

served contained in Rule 8 of the Rules of 2010 to a public auction by issuance of

directions which was upheld. The observations recorded by the High Court read

thus:

“6.6 It is further submitted that though Chapter VIII under the heading

‘Miscellaneous’ contains Rules 69 and 70 provide for ‘disposal of

minor minerals by public auction in certain cases’ and ‘power of

government to give direction’, however, will not defeat right accrued

to the applicants under Rule 8 of the Rules, 2010. As per law, rules

prevalent at the time of receiving applications will apply, and any

inconsistency contained in the guidelines/directions issued by the

authorities of Department of Industry and Mines of State of Gujarat

with that of Act, 1957 and/or Rules, 2010 is to be ignored, and will

have no applicability whatsoever to the pending applications on

31.03.2010. Even Rule 69 does not empower any such authority to

196


issue direction or guidelines or to take any administrative action

contrary to Rule 8 of the Rules, 2010. There is no rationale behind

doing away with policy of first come first serve defeating the legitimate

expectation of petitioners for grant of mining lease in accordance with

Rules, 2010 and prevalent policy in larger public interest.

xxxxx

10.10 That affidavit filed by the respondent authority clearly revealed

that before issuance of instructions/guidelines/ directions, the matter

was placed for due deliberation including approval and sanction of

the higher authority of the Department and it was considered by task

force and Coordination cum Empowered Committee held under the

Chairmanship of the Chief Secretary on 09.09.2010 and thereafter it

was decided that all mineral bearing areas be put up in public

domain and procedure to be followed, and accordingly the

Commissionerate of Geology and Mining issued guidelines on

06.04.2011 qua disposal of applications received after 31.03.2010 for

major/minor mineral concession through blocks/auction and a

clarificatory instructions/ communication dated 01.10.2011 cannot be

said to be in any manner contrary to law. The said guidelines dated

06.04.2011 received approval of highest authority of the Department

of Mines and Industry as per note dated 01.04.2011 and the

contention raised by learned advocates for the petitioners that the

Collector is the only competent authority to issue

instructions/guidelines in the case of minor mineral is misconceived

and decision taken by highest authority cannot be faulted on such

contention. Therefore, it cannot be said that even any flaw is noticed

in decision making process.

10.12 The decisions viz. Central For Public Interest

Litigation [supra] and [ii] Natural resources Allocation [supra] for

which law laid down by Their Lordships of Apex Court in view of what

is interpreted and held in the foregoing paragraphs of of this judgment

on the context of Rules 8(4), 69 & 70 of the Rules, and particularly

197


when the State Government authorities have decided to put minor

minerals in public domain in a fair and transparent manner, it

cannot be said that law laid down by the Apex Court in the above two

decisions have any bearing on the facts of these cases.”

(Emphasis by us)

499. Coming to the issue of permissibility of change of policy, we note that the

legal position is that the Government stands permitted to change even industrial

policy if the situation so warrants. Such decisions changing policy had come up for

consideration in the judgments reported at AIR 1997 SC 3910 Pawan Alloys and

Casting Pvt. Ltd. V. U. P. State Electricity Board and others and (1990) 1 SCC

572, Sales Tax Officer and another v. Shree Durga Oils Mills and another.

500. In Pawan Alloys and Casting Pvt. Ltd., it has been observed by the

Supreme Court that merely because a resolution stood announced for a particular

period, it did not mean that the government could not amend and change the policy

under any circumstances. The notification can be amended or rescinded at any

point of time if the government felt that it was necessary to do so in public interest.

501. In Shri Durga Oil Mills and another, it was held that even an industrial

policy resolution can be changed if there is overriding public interest involved. In

this case, the State had contended that various notifications granting sales tax

exemptions to the dealers resulted in severe resource crunch. On a reconsideration

of the financial position, it was decided to limit the scope of the exemption

notifications issued under Section 6 of the Orissa Sales Tax Act. The Supreme

Court upheld the withdrawal of notification holding that it was done in public

interest and that the Court would not interfere in any action taken by the

Government in public interest. It was further observed that public interest must

198


override any consideration of private loss or gain and, therefore, the plea of change

of policy on the basis of resource crunch was sufficient for dismissing the case of

the assessee which was based on the doctrine of promissory estoppel.

502. The questions raised before this court find a complete answer in the words

of Supreme Court in the judgment reported at (2002) 2 SCC 188, Sharma

Transport v. Government of A.P and others, even in a case where a promise or

representation stood made. The Supreme Court has laid down the disclosure which

the government would be required to make before the court to enable it to take the

decision on the inequity which would result if the government was held to its

representation. It was held as follows:

"If it can be shown by the Government that having regard to

the facts as they have transpired, it would be inequitable to hold the

Government or public authority to the promise or representation

made by it, the court would not raise an equity in favour of the

promise and enforce the promise against the Government. The

doctrine of promissory estoppel would be displaced in such a case,

because on the facts, equity would not require that the Government

should be held bound by the promise made by it. But the Government

must be able to show that in view of the fact as has been transpired,

public interest would not be prejudiced. Where the Government is

required to carry out the promise the Court would have to balance the

public interest in the Governments carrying out the promise made to

the citizens, which helps citizens to act upon and alter their position

and the public interest likely to suffer if the promises were required

to be carried out by the Government and determine which way the

equity lies. It would not be enough just to say that the public interest

requires that the Government would not be compelled to carry out the

promise or that the public interest would suffer if the Government were

required to honour it. In order to resist its liability the Government

would disclose to the court the various events insisting its claim to be

199


exempt from liability and it would be for the court to decide whether

those events are such as to render it inequitable to enforce the

liability against the Government."

(Emphasis by us)

503. In this regard Mr F. A. Natnoo, ld. AAG, has placed reliance on

pronouncement of the Supreme Court reported at (1996) 5 SCC 268 : PTR

Exports (Madras) Pvt. Ltd. & Ors. v. Union of India & Ors. In this case the

petitioner was challenging a change in Government policy with regard to grant of

export licence contending that it had a legitimate expectation to consideration and

grant of his application in terms of the Government policy prevailing at the time

the application was made. The court rejected the contention of the petitioner and

held that the court would not bind the Government to its previous policy by

invoking the doctrine of legitimate expectation of the applicant for the licence

unless the change in policy is vitiated by malafide or abuse of power which the

applicant must plead and prove to the satisfaction of the court. The court also held

that doctrine of promissory estoppel is equally inapplicable to the facts and

circumstances of the case. We usefully extract the observations of the court as

follows:

“2.Shri Vaidyanathan, learned counsel, contended that the

Government had promised to grant MEE and NQE quotas for those

who upto date their quality of products by purchasing new machines

after expiry of 5 years life span or given promise that all those who

performed their applications MEE were entitled to NQE quota and

that, therefore, the respondents are estopped to recile from the

promise made to them. They cannot act in a way detrimental to their

legitimate expectations. We find no force in the contention. It is seen

that the change in the policy is as a result of GATT agreement with all

contracting countries. The quota system was available to export

200


garments and clothing to European countries, viz., U.S.A, Canada,

Norway etc. The Government took the policy that with a view to meet

more competitive quality in the foreign markets introduced FCFS

system giving 20% of the export. PPE was provided with 80% of the

export. The new dynamism in the policy would make the trade more

competitive and it will be in the best interest of the country and to

boost in export potentiality and foreign exchange, on account thereof

MEE and NQE quotas were eliminated and large allocation was

issued to PPE system and rest of 20% was marked for FCFS system. It

was also pointed that the Government encountered that MEE system

was beset with floods of false declarations of the productive capacity

by unscrupulous traders masquerading as exporters. Though action

was being taken against persons who committed fraud but it became

difficult to stop misutilisation of the scheme completely.

Consequently, MEE system was eliminated. The Government,

therefore, took policy to abolish NQE system so that the genuine

quota exporters could do business so as to stop the malady and to

preserve PPE and FCFS system.

3. In the light of the above policy question emerges whether the

Government is bound by the previous policy or whether it can revise

its policy in view of the changed potential foreign markets and the

need for earning foreign exchange? It is true that in a given, set of

facts, the Government may in the appropriate case be bound by the

doctrine of promissory estoppel evolved in Union of India Vs. Indo-

Afghan Agencies [(1968) 2 SCR 366]. But the question revolves upon

the validity of the withdrawal of the previous policy and introduction

of the new policy. The doctrine of legitimate expectations again

requires to be angulated thus: whether it was revised by a policy in

the public interest or the decision is based upon any abuse of the

power? The power to lay policy by executive decision or by

legislation includes power to withdraw the same unless in the former

case, it is by malafide exercise of power or the decision or action

taken is in abuse of power. The doctrine of legitimate expectation

201


plays no role when the appropriate authority is empowered to take a

decision by an executive policy or under law.xxxxxx It is therefore, by

exercise of the power given to the executive or as the case may be,

the legislature is at liberty to evolve such policies.

4. An applicant has no vested right to have export or import licences

in terms of the policies in force at the date of his making application.

For obvious reasons, granting of licences depends upon the policy

prevailing on the date of the grant of the licence or permit. The

authority concerned may be in a better position to have the overall

picture of diverse factors to grant permit or refuse to grant permission

to import or export goods. The decision, therefore, would be taken

from diverse economic perspectives which the executive is in a better

informed position unless, as we have stated earlier, the refusal is

mala fide or is an abuse of the power in which event it is for the

applicant to plead and prove to the satisfaction of the Court that the

refusal was vitiated by the above factors.

5. It would, therefore, be clear that grant of licence depends upon the

policy prevailing as on the date of the grant of the licence. The Court,

therefore would not bind the Government with a policy which was

existing on the date of application as per previous policy. A prior

decision would not bind the Government for all times to come. When

the Government are satisfied that change in the policy as necessary

in the public interest, it would be entitled to revise the policy and lay

down new policy. The Court therefore would prefer to allow free play

to the Government to evolve fiscal policy in the public interest and to

act upon the same. Equally, the Government is left free to determine

priorities in the matters of allocations or allotments or utilisation of

its finances in the public interest. It is equally entitled, therefore,. to

issue or withdraw or modify the export or import policy in

accordance with the scheme evolved. We, therefore, hold that the

petitioners have no vested or accrued right for the issuance of permits

on the MEE or NQE, nor the Government is bound by its previous

202


policy. It would be open to the Government to evolve the new schemes

and the petitioners would get their legitimate expectations

accomplished in accordance with either of the two schemes subject to

their satisfying the conditions required in the scheme. The High Court

therefore; was right in its conclusion that the Government are not

barred by the promises or legitimate expectations from evolving new

policy in the impugned notification.”

(Emphasis by us)

504. In this case the submission by the petitioner was interestingly premised on

pointing out the distinction between an agreement to lease and agreement of lease

and rested on the precedent of the Supreme Court reported at (1994) 2 SCC 497,

State of Maharashtra v. Atur India Private Limited. It was held herein that a

contract for a lease would be merely an agreement that such a conveyance shall be

entered into at a future date. The petitioner had pointed out that in case of a lease,

there must be a demise.

505. The respondents have amended the rules restricting auctions to e-mode only.

No challenge has been laid thereto.

506. The change of policy was thus not only bonafide but completely in public

interest and absolutely necessary.

507. Furthermore, none of the present appellants have argued that they were put

to any losses or adverse situation, let alone a position which cannot be rectified. As

noted, the appellants do not allege malafide against the respondents. Before us, the

appellants have utilized the shield of Rule 104-A of the Rules of 2016. Even

though the respondents have not granted any permission thereunder.

508. The appellants have illegally extracted and commercially exploited minerals

from the sites for which they had bid. The appeallants have thereby derived huge

203


commercial profits while appropriating the national resource to their individual

interest. Certainly, there is no alteration of position to their prejudice by the

appellants which could justify this court taking the decision that the respondents

must be held to their “representation”, if any, in the LoI to do justice between the

parties. The principles laid down in Rishi Kiran Logistics Pvt Ltd squarely apply

to the present cases.

509. We agree with the finding of the learned Single Judge on issue No. (iii) in

para (i) at page 36 of the impugned judgment and hold that the doctrine of

promissory estoppel is neither attracted nor has any application to the present

cases.

XV Cancellation of the entire auction process- permissibility &

validity

510. We now turn to an examination of the issue of the cancellation of the entire

bidding process by the respondents. We find that the instant appeals are not the

first cases where entire auctions stand cancelled. Prior hitherto auctions also have

been cancelled and the highest (or the lowest, as the case may be) bidders took the

cancellations to court. Authoritative pronouncements laying down both the

permissibilities and the boundaries of both the grounds of challenge and the

consideration by the court have been examined by us. We discuss hereafter the

principles laid down by the Supreme Court of India in these precedents.

511. In the judgment of the Supreme Court reported at (2016) 4 SCC 716, State

of Uttar Pradesh and another v. Al Faheem Meetex (P) Ltd, while considering

the validity of the cancellation of the entire tender process at the instance of the

bidders who had participated in the tender process for construction of a modern

204


slaughter house the Supreme Court also set down the legal principles of

permissibility of judicial interference in such matters.

512. A few necessary facts first. By a notice dated 26th May 2010, the Nagar

Nigam, Meerut invited tenders for Request for Qualification (RFQ) for

establishment of a new modern slaughterhouse at Village Ghosipur, Meerut on

Build-Operate and Transfer (BOT) basis. Three firms had submitted financial and

technical bids and the consultant had found all the three bids to be deficient. Bids

were invited afresh by a notice dated 29th June 2010. Five bids were received out

of which four companies were permitted to participate in the RFQ stage. The

Nagar Nigam issued the RFP on 29th September 2010 pursuant whereto tenders

were submitted by three firms. In its meeting dated 8th September 2010, the Bid

Evaluation Committee (BEC) had selected Al Faheem Meetex (P) Ltd.- respondent

No.1 as a developer out of the only two firms whose bids were found eligible for

consideration. Before the recommendations of the BEC could be placed before the

Cabinet of Ministers (the competent authority), the Finance Department pointed

out certain procedural irregularities. In this background, the BEC had taken a

decision on 22nd November 2010 cancelling its earlier decision dated 8th September

2010.

513. The Supreme Court held that the BEC (which had selected the respondent

No.1) was only a recommendatory body and that the matter had not reached the

competent authority for final decision. The action of the BEC in cancelling the

selection was sustained also for the reason that there were insufficient bidders and

it was necessary that the bidding process became more competitive. For this

reason, the Supreme Court decided that the decision could not be held to be unfair,

malafide or based on irrelevant considerations and held that the High Court had

205


gone wrong in finding fault with the decision of the BEC that it could not have

taken a decision without notice to the BEC.

514. A factor which had weighed with the Supreme Court was that it was almost

six years when the notice inviting tenders was published and that fresh tendering

was essential to ensure establishment of a modern slaughterhouse. In these appeals

as well the auctioning commenced in 2017, almost three years before the

cancellation of the auction.

515. A situation of cancellation of bidding and change of policy regarding

disposal of properties arose before the Supreme Court in the judgment reported at

(2007) 2 SCC 588, Ramchandra Murarilal Bhattad v. State of Maharashtra. In

this case, the decision was taken to reject all bids received regarding a public

project after the petitioner had satisfied their minimum eligibility criteria, the

technical and financial bids stood opened and the appellants had been found to be

the highest bidder. Thereafter, all tenders were cancelled which was challenged in

court. The Supreme Court had noted the issue arising for consideration (which was

similar to the issue raised in the present case) in the following terms:

“53. In this case, highest offer has not been rejected. A new policy

decision has been taken. Question as noticed herein is not as to

whether the offer of the Appellants should have been rejected but is

as to whether the Authority in law could have altered its policy in

regard to disposal of its properties. 'Public Trust Doctrine' was also

sought to be invoked by Mr. Nariman against the Authority and in this

behalf reliance has been placed on Bangalore Medical Trust Vs. B.S.

Muddappa & Ors. [(1991) 4 SCC 54]. This Court therein was dealing

with a master plan in the light of justifiability of exercise of

discretionary jurisdiction under the Town Planning Act. Having

regard to the provisions contained in Sub-Section (4) of Section 19 of

the Bangalore Development Authority Act, 1976 as also the fact that

206


the discretionary jurisdiction had been arbitrarily exercised, this

Court invoked the 'public trust doctrine' saying that although the State

is required to keep a vigil on the local body, but, thereby the power

thereunder cannot be stretched so as to entitle the Government to alter

any scheme and convert any site or power specifically reserved in the

statute in the Authority”.

(Emphasis by us)

516. In (2010) 6 SCC 303, Shimnit Utsch India Pvt. Ltd. And anr v. West

Bengal Infrastructure Development Corporation Ltd and ors, the first NIT was

issued in July 2003 by the States of West Bengal and Orissa for manufacture and

supply of HSRP fixing 06-08-2003 as the last date for submission of tender papers.

Four bidders participated, however, the finalization of the tender process could not

take place because of the interim order passed by the Supreme Court. The cases

could be decided by the Supreme Court finally only on 30th November 2004. Of

the four bidders who had initially participated in the tender process, one withdrew.

As regards another (Promuk), Shimnit objected to their eligibility and approached

the Calcutta High Court obtaining an interim order from a Single Judge that the

tender process be not finalized.

517. As a result of the litigation, no substantial progress took place for two years

in finalization of process for which NIT was issued in July 2003 and practically

only two bidders in the entire tender process remained in fray.

518. During this period, a considerable number of indigenous manufacturers

obtained the requisite TAC from the approved institutions as per the statutory

requirements and thereby acquired the capacity and ability to manufacture the

product. In this background, the State Government formed an opinion that by

increasing competition, greater public interest could be achieved and accordingly

decided to cancel the first NIT and proceed afresh, doing away with conditions like

207


experience in foreign countries and prescribed minimum turnover from their

business.

519. This decision of the State Government was challenged before the Calcutta

High Court which observed that there was no challenge to the changed policy on

any of grounds of Wednesbury reasonableness or principle of legitimate

expectation or arbitrariness or irrationality. On the issue of sufficiency of

circumstances justifying departure from the previous stand, in Shimmit Utsch Ltd,

the Calcutta High Court recorded a finding that the reasons stated by the State

Government for departure from the condition of the first NIT did exist and

accepted the Government’s contentions that by increasing the area of competition,

greater public interest would be sub-served because of financial implications.

520. The Supreme Court repelled the challenge by Shimmit Utsch Ltd, to the

decision of the Calcutta High Court including on the ground of malafide, holding

as follows:

“52. We have no justifiable reason to take a view different from the

High Court insofar as correctness of these reasons is concerned. The

courts have repeatedly held that government policy can be changed

with changing circumstances and only on the ground of change,

such policy will not be vitiated. The government has a discretion to

adopt a different policy or alter or change its policy calculated to

serve public interest and make it more effective. Choice in the

balancing of the pros and cons relevant to the change in policy lies

with the authority. But like any discretion exercisable by the

government or public authority, change in policy must be in

conformity with Wednesbury reasonableness and free from

arbitrariness, irrationality, bias and malice.”

(Emphasis supplied)

208


521. The Supreme Court also laid down binding principles in Shimmit Utsch Ltd

on the manner in which authorities should proceed in the following manner:

“64. It is true that the State or its tendering authority is bound to

give effect to essential conditions of eligibility stated in a tender

document and is not entitled to waive such conditions but that does not

take away its administrative discretion to cancel the entire tender

process in public interest provided such action is not actuated with

ulterior motive or is otherwise not vitiated by any vice of

arbitrariness or irrationality or in violation of some statutory

provisions. It is always open to the State to give effect to new policy

which it wished to pursue keeping in view `overriding public interest’

and subject to principles of Wednesbury reasonableness.”

(Emphasis by us)

522. The Supreme Court has also had occasion to rule on the scope of judicial

review into the cancellation/discharge of a tender process after submission of

bids/tenders in the judgment reported at (2014) 3 SCC 760, Maa Binda Express

Carrier and another v. North East Frontier Railway and another. So far as the

right of participants in the bid is concerned, in para 8 of the judgment, the Supreme

Court has ruled as follows:

“8. The scope of judicial review in matters relating to award of

contract by the State and its instrumentalities is settled by a long line

of decisions of this Court. While these decisions clearly recognize that

power exercised by the Government and its instrumentalities in

regard to allotment of contract is subject to judicial review at the

instance of an aggrieved party, submission of a tender in response to

a notice inviting such tenders is no more than making an offer which

the State or its agencies are under no obligation to accept. The

bidders participating in the tender process cannot, therefore, insist

that their tenders should be accepted simply because a given tender is

the highest or lowest depending upon whether the contract is for sale

209


of public property or for execution of works on behalf of the

Government. All that participating bidders are entitled to is a fair,

equal and non-discriminatory treatment in the matter of evaluation

of their tenders. It is also fairly well-settled that award of a contract is

essentially a commercial transaction which must be determined on

the basis of consideration that are relevant to such commercial

decision. This implies that terms subject to which tenders are invited

are not open to the judicial scrutiny unless it is found that the same

have been tailor made to benefit any particular tenderer or class of

tenderers. So also the authority inviting tenders can enter into

negotiations or grant relaxation for bona fide and cogent reasons

provided such relaxation is permissible under the terms governing

the tender process.”

(Emphasis supplied)

523. We have already noticed above that cancellation of the entire bidding on

account of public interest in obtaining the best “realistic market price” stands

sustained by the Supreme Court in para 20 of the pronouncement in (2015) 13

SCC 233 : Rishi Kiran Logistics Pvt. Ltd v. Board of Trustees of Kandla Port

Trust & Ors. In para 21 it was ruled that the decision of the Port Trust therefore

was not arbitrary.

524. The applicable principle on which such cancellation must be tested is stated

in para 22 of Rishi Kiran Logistics thus:

“22. When competing claims are private interest v. public interest,

then in the case of disposal of public property the question would

be whether the right of the person, who has earned the right to the

public property in a public auction, is to be preferred over the right

of the public in ensuring that valuable public assets were not

disposed of except for a fair price and in a fair and transparent

manner. Whether this court should, in judicial review, sit in

210


judgment over the decision of a public body which is of the view

that it need not go further ahead with the tender process. It is true

if such a decision is taken without any reasons to support it, or

mere ipsi dixit, it would be arbitrary. In this case there are reasons.

The High Court analysed the reasons and has taken the view that

those reasons are valid. In our view in matters, particularly to the

disposal of valuable assets by the State when the State seeks to

explore the possibility of getting higher price.”

(Emphasis by us)

The Supreme Court has thus held that the action of the Port Authority was

not arbitrary or unreasonable being in over riding public interest. Clearly, it is open

to an authority to cancel an entire process of bidding or tendering for good reason,

public interest in obtaining optimal rates providing just cause for doing so.

525. Several judicial authorities are also available wherein the Supreme Court has

upheld decisions of authorities to reject a lowest bid or refuse to accept the highest

bid. The reasons and circumstances in which this was sustained shed valuable light

on the matters in hand. We consider some of such precedents hereafter.

526. In (2001) 1 SCC 451, W.B. SEB v. Patel Engineering Co. Limited, the

Corporation had chosen to reject the lowest tender. This decision was upheld by

the Supreme Court emphasizing the public interest in adherence to the rules and

conditions on which bids are invited, observing as follows:

“31. The submission that remains to be considered is that as the price

bid of Respondents 1 to 4 is lesser by 40 crores and 80 crores than that

of Respondents 11 and 10 respectively, public interest demands that the

bid of Respondents 1 to 4 should be considered. The Project

undertaken by the appellant is undoubtedly for the benefit of the public.

The mode of execution of the work of the Project should also ensure

that the public interest is best served. Tenders are invited on the basis

211


of competitive bidding for execution of the work of the Project as it

serves dual purposes. On the one hand it offers a fair opportunity to

all those who are interested in competing for the contract to execution

of the work and , on the other hand it affords the appellant a choice to

select the best of the competitors on a competitive price without

prejudice to the quality of the work. Above all, it eliminates

favourtism and discrimination in awarding public works to

contractors. The contract is, therefore, awarded normally to the lowest

tenderer which is in public interest. The principle of awarding contract

to the lowest tenderer applies when all things are equal. It is equally in

public interest as to adhere to the rules and conditions subject to

which bids are invited. Merely because a bid is the lowest the

requirement of compliance with the rules and conditions cannot be

ignored. It is obvious that the bid of Respondents 1 to 4 is the lowest of

bids offered. As the bid documents of Respondents 1 to 4 stand without

correction there will be inherent inconsistency between the particulars

given in the annexure and the total bid amount, it (sic they) cannot be

directed to be considered along with the other bids on the sole ground

of being the lowest.”

(Emphasis supplied)

527. A challenge to the cancellation of an entire tender came up for consideration

before the Supreme Court in the judgment reported at (2007) 2 SCC 588,

Ramchandra Murarilal Bhattad v. State of Maharashtra, wherein the court had

laid down the following parameters.

“49............ While exercising its jurisdiction of judicial review, the

Court is required to decide the cases before it, keeping the well

known principles therefor in mind and having regard to the fact

situation obtaining therein. No hard and fast rule can be laid down

therefor. Recently, in Noble Resources Ltd. Vs. State of Orissa and


212


Anr. [2006 (9) SCALE 181] this Court has noticed the power of

judicial review vis-a-vis contractual disputes, opining :

“28. Although terms of the invitation to tender may not be

open to judicial scrutiny, but the courts can scrutinize the

award of contract by the Government or its agencies in

exercise of their power of judicial review to prevent

arbitrariness or favouritism. [See Directorate of Education

and Ors. V. Educomp Datamatics Ltd. And Ors. 2004 (4) SCC

19]. However, the court may refuse to exercise its

jurisdiction, if it does not involve any public interest.

29. Although the scope of judicial review or the development

of law in this field has been noticed hereinbefore particularly

in the light of the decision of this Court in ABL International

Ltd. (supra), each case, however, must be decided on its own

facts. Public interest as noticed hereinbefore, may be one of

the factors to exercise power of judicial review. In a case

where a public law element is involved, judicial review may

be permissible.” xxxxx

51. The expansive role of Courts in exercising its power of judicial

review is not in dispute. But as indicated hereinbefore, each case

must be decided on its own facts.

xxxxx”

“10. In recent times, judicial review of administrative action

has become expansive and is becoming wider day by day. The

traditional limitations have been vanishing and the sphere of

judicial scrutiny is being expanded. State activity too is

becoming fast pervasive. As the State has descended into the

commercial field and giant public sector undertakings have

grown up, the stake of the public exchequer is also large

justifying larger social audit, judicial control and review by




213


opening of the public gaze; these necessitate recording of

reasons for executive actions including cases of rejection of

highest offers. That very often involves large stakes and

availability of reasons for action on the record assures

credibility to the action; disciplines public conduct and

improves the culture of accountability. Looking for reasons in

support of such action provides an opportunity for an

objective review in appropriate cases both by the

administrative superior and by the judicial process. The

submission of Mr. Dwivedi, therefore, commends itself to our

acceptance, namely, that when highest offers of the type in

question are rejected reasons sufficient to indicate the stand

of the appropriate authority should be made available and

ordinarily the same should be communicated to the

concerned parties unless there be any specific justification

not to do so.”

(Emphasis by us)

528. In Meerut Development Authority v. Assn. of Management Studies; (2009)

6 SCC 171, the decision related to disposal of public property by an

instrumentality of the State and the rights of a person submitting a tender. In this

context, the Court reiterated the essentiality of fairness and transparency in the

process inter alia holding as follows:

“26. A tender is an offer. It is something which invites and is

communicated to notify acceptance. Broadly stated it must be

unconditional; must be in the proper form, the person by whom tender

is made must be able to and willing to perform his obligations. The

terms of the invitation to tender cannot be open to judicial scrutiny

because the invitation to tender is in the realm of contract. However, a

limited judicial review may be available in cases where it is

established that the terms of the invitation to tender were so tailor

214


made to suit the convenience of any particular person with a view to

eliminate all others from participating in the biding process.

27. The bidders participating in the tender process have no other

right except the right to equality and fair treatment in the matter of

evaluation of competitive bids offered by interested persons in

response to notice inviting tenders in a transparent manner and free

from hidden agenda. xxxxx

28. It is so well settled in law and needs no restatement at our

hands that disposal of the public property by the State or its

instrumentalities partake the character of a trust. The methods to

be adopted for disposal of public property must be fair and

transparent providing an opportunity to all the interested persons

to participate in the process.

29. The authority has the right not to accept the highest bid and

even to prefer a tender other than the highest bidder, if there exist

good and sufficient reason, such as, the highest bid not

representing the market price but there cannot be any doubt that

the Authority's action in accepting or refusing the bid must be free

from arbitrarinesses or favouritism.”

(Emphasis supplied)

529. On the issue of fairness in procedure to maximize public interest, we may

also usefully refer to the pronouncement of the Supreme Court reported at (1993) 1

SCC 71, Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries in

which it was held that even the highest bid can be ignored. In this case, Food

Corporation of India (FCI) and instrumentalities of the State invited tenders for

stock of damaged food grains in accordance with the terms and conditions

contained in the tender notice. The respondents’ bid was highest. But the appellant

being not satisfied about the adequacy of the amount offered in the highest tender,

instead of accepting any of tenders received by it, invited all the tenderers to

215


participate in negotiations. The respondent refused to revise the rate offered in its

tender. In the negotiations, FCI was offered an excess amount of Rs.20 lakhs. The

respondents filed a writ petition challenging FCI’s refusal to accept the tender

submitted by it contending that FCI having chosen to invite tenders, it could not

dispose of the stocks of damaged food grains by subsequent negotiations rejecting

the highest tender on the ground that the action was arbitrary and violative of

Article 14. The High Court had accepted the challenge.

530. The Supreme Court overturned the High Court decision and held that the

State and all its instrumentalities have to conform to Article 14 and that there is no

unfettered discretion in public law. It was held that the public authority possessed

powers only to be used for public good which imposed the duty to act fairly and to

adopt a procedure which is fair play in action. To satisfy the requirement of non

arbitrariness in State action, it is necessary to consider and give due weight to the

reasonable or legitimate expectations of the persons likely to be affected by the

decision or else that unfairness in the exercise of the power may amount to an

abuse or excess of power apart from affecting the bona fides of the decision in a

case where such decision could be exposed to challenge on the ground of

arbitrariness. The requirement of due consideration of legitimate expectation also

forms part of the principle of non-arbitrariness, a necessary concomitant of the rule

of law.

531. So far as the view of the authorities regarding adequacy of the price offered

by a tenderer, the claim of the highest tenderer and the challenge to the

negotiations with the other tenderers is concerned, in para 10 of the judgment, the

Supreme Court upheld the action of the procedure adopted by FCI observing as

follows:

216


“10. From the above, it is clear that even though the highest

tenderer can claim no right to have his tender accepted, there being

a power while inviting tenders to reject all the tenders, yet the power

to reject all the tenders cannot be exercised arbitrarily and must

depend for its validity on the existence of cogent reasons for such

action. The object of inviting tenders for disposal of a commodity is

to procure the highest price while giving equal opportunity to all

the intending bidders to compete. Procuring the highest price for

the commodity is undoubtedly in public interest since the amount

so collected goes to the public fund. Accordingly, inadequacy of the

price offered in the highest tender would be a cogent ground for

negotiating with the tenderers giving them equal opportunity to

revise their bids with a view to obtain the highest available price.

The inadequacy may be for several reasons known in the

commercial field. Inadequacy of the price quoted in the highest

tender would be a question of fact in each case. Retaining the

option to accept the highest tender, in case the negotiations do not

yield a significantly higher offer would be fair to the tenderers

besides protecting the public interest. A procedure wherein resort is

had to negotiations with the tenderers for obtaining a significantly

higher bid during the period when the offers in the tenders remain

open for acceptance and rejection of the tenders only in the event of

a significant higher bid being obtained during negotiations would

ordinarily satisfy this requirement. This procedure involves giving

due weight to the legitimate expectation of the highest bidder to have

his tender accepted unless outbid by a higher offer, in which case

acceptance of the highest offer within the time the offers remain open

would be a reasonable exercise power for public good.”

(Emphasis supplied)

532. The Supreme Court has also had occasion to examine a challenge to the

relaxation of the eligibility criteria in the case reported at (1999) 1 SCC 492,

Raunaq International Ltd. V. I.V.R. Construction Ltd. And others. The Court

217


noted that the challenger I.V.R. Construction Ltd also did not fulfill the qualifying

criteria. So far as award of contract by both private and public bodies are

concerned, the Supreme Court had considered the paramount considerations in

Para 9 in the following terms.

“9. The award of a contract, whether it is by a private party or by a

public body or the State, is essentially a commercial transaction. In

arriving at a commercial decision considerations which are of

paramount importance are commercial considerations. These would

be:

(1) The price at which the other side is willing to do the work;

(2) Whether the goods or services offered are of the requisite

specifications;

(3) Whether the person tendering has the ability to deliver the goods

or services as per specifications. When large works contracts

involving engagement of substantial manpower or requiring specific

skills are to be offered, the financial ability of the tenderer to fulfill the

requirements of the job is also important;

(4) the ability of the tenderer to deliver goods or services or to do the

work of the requisite standard and quality;

(5) past experience of the tenderer, and whether he has successfully

completed similar work earlier;

(6) time which will be taken to deliver the goods or services; and

often

(7) the ability of the tenderer to take follow up action, rectify defects

or to give post contract services.

Even when the State or a public body enters into a commercial

transaction, considerations which would prevail in its decision to

award the contract to a given party would be the same. However,

because the State or a public body or an agency of the State enters

into such a contract, there could be, in a given case, an element of

public law or public interest involved even in such a commercial

transaction.”

218


(Emphasis supplied)

533. In para 10, given the nature of the work involved in the case, the court

expounded on what would constitute element of public interest observing as

follows:

“10. What are these elements of public interest? (1) Public money

would be expended for the purposes of the contract; (2) The goods or

services which are being commissioned could be for a public

purpose, such as, construction of roads, public buildings, power

plants or other public utilities. (3) The public would be directly

interested in the timely fulfillment of the contract so that the services

become available to the public expeditiously. (4) The public would

also be interested in the quality of the work undertaken or goods

supplied by the tenderer. Poor quality of work or goods can lead to

tremendous public hardship and substantial financial outlay either in

correcting mistakes or in rectifying defects or even at times in re-

doing the entire work – thus involving larger outlays or public

money and delaying the availability of services, facilities or goods.

e.g. A delay in commissioning a power project, as in the present

case, could lead to power shortages, retardation of industrial

development, hardship to the general public and substantial cost

escalation.”

534. On the issue as to whether the price offered should be the sole criteria for

awarding a contract, in Raunaq International, the Supreme Court has made an

important declaration of the binding principles when it stated as follows:

“16. It is also necessary to remember that price may not always be

the sole criterion for awarding a contract. Often when an evaluation

committee of experts is appointed to evaluate offers, the expert

committee’s special knowledge plays a decisive role in deciding

which is the best offer. Price offered is only one of the criteria. The

219


past record of the tenderers, the quality of the goods or services

which are offered, assessing such quality on the basis of the past

performance of the tenderer, its market reputation and so on, all play

an important role in deciding to whom the contract should be

awarded. At times, a higher price for a much better quality of work,

can be legitimately paid in order to secure proper performance of

the contract and good quality of work-which is as much in public

interest as a low price. The court should not substitute its own

decision for the decision of an expert evaluation committee.”

(Emphasis supplied)

535. It is therefore well settled that public property has to be disposed of by a

process that is open and transparent. The participants in the auction or tender

process are entitled only to fair, equal and non-discriminatory treatment in

evaluation of their offer. The award of the contract has to be tested on commercial

considerations. Even the highest bidder/lowest tenderer cannot claim an absolute

or exclusive right to award of the contract. The authority calling for bids/tenders

is bound by the terms thereof. However, it has the discretion to cancel the process

subject to its action not being motivated by malafide or ulterior motive. Its action

should not be arbitrary or irrational or subject to Wednesbury unreasonableness.

The cancellation of process should also be free from favouritism. The cancellation

of the process could be the result of a change of policy and rejection of a bid or

tender could be guided by larger concerns of public interest.

536. In the present case, we are concerned with distribution of a valuable natural

resource and regulation of rights to exploit the same for commercial purposes.

Undeniably the interests of the public at large, preservation of the resources and

protection of the environment must override all individual interests emanating

from a individual commercial profit motives.

220


537. The above facts establish that Auctions by the e-mode are the most efficient,

efficacious and transparent mode of award of contracts. An e-auction enables wide

geographic participation by the most talented and experienced bidders, maximizes

competition and ensures fetching of best rates enhancing public interest, and

increasing revenues. Not a word has been addressed before us by the appellants

assailing this decision of the respondents. The e-auction ensures widest possible

circulation of the auction notice. The process is much faster than the physical

auction. The platform of e-auction ensures lawful playing field to all the

participants subjectivity in the evaluation of the bids is completely eliminated and

selection of the best bidder is by objective process. The minimization of human

interaction and interface eliminates subjective association. There can be no manner

of doubt that the e-mode of conducting an auction is completely principle based,

efficacious and most accessible inasmuch as participants do not have to physically

travel to the place of auction and face no barriers.

538. The learned Single Judge has found that the respondents have held

threadbare discussions and obtained reports from all relevant quarters; kept the

pending litigation and interim directions issued in the case of Radha Krishan in

their consideration and thereafter taken the informed decision to the effect that the

provision in the Rules permitting grant of mining leases by open auction was

required to be amended and competitive bidding should be invited by seeking e-

auction only. The learned Single Judge has also considered the material before the

authorities regarding possibility of cartelization and intimidation having laid down

in the process of open auction and also the default by the bidders who had

participated in the auctions and had failed to complete the formalities despite

repeated opportunities.

221


539. In this background, the learned Single Judge in para 68 of the impugned

judgment has concluded that the decision to scrap the earlier auction of 2016/2017

and the policy decision to allot mining leases only by e-auction was the most

potent, fair, transparent and viable mode of grant of public largess.

Nothing has been pointed out to us which could enable this Court to take a

contrary view.

XVI Failure to issue notice to show cause-whether violation of

principles of natural justice-impact on impugned decision.

540. All the appellants in the instant cases have assailed the action of the

respondents for failing to abide by principles of natural justice on two pronged

objections. We examine the first objection on behalf of the appellants that they

were not put to notice regarding the action of the cancellation of the bids. In

support of this submission, reliance is placed on the pronouncement of the

Supreme Court reported at (2007) 2 SCC 181 (para 29), Rajesh Kumar and others

v. Dy. CIT and others.

541. Let us first and foremost remind ourselves of the procedure which was

required to be followed by the respondents. This procedure is laid down in the

Jammu and Kashmir Minor Mineral Rules 1962 framed under legislative

mandate. The terms and conditions for grant of mineral concession through auction

are stipulated in Rule 55. Sub rule (7) of Rule 55 clearly mandates that on

completion of the bid process i.e. fall of the hammer, the Chairman may

‘provisionally’ accept the highest bid offered and send his recommendations to the

Director. As per sub rule (9) of Rule 55, once a bid is ‘provisionally’ accepted, the

Director shall issue LoI to the bidder to complete the formalities as are required for

grant of minor minerals under Rules within a period of six months.

222


542. It is only after the formalities laid under Rule 26(9) and 55, have been

completed in terms of Rule 55(9) that the bid would be finally accepted and the

occasion for consideration of the application for grant of mining lease be arise.

543. So far as the disposal of the application for grant of mining lease is

concerned, Rule 30 prescribes that the same shall be within twelve months from

the date of its receipt.

544. It is Rule 31 which prescribes that the competent authority may refuse to

grant any mining lease “subject to reasons to be recorded and communicated to

the applicant in writing”’. Thus, the rules specifically prescribe both the stage at

which and extent of compliance with the principles of natural justice. Under the

Rules, it is only after the bidder has completed the formalities and pre-conditions,

the bid has been finally accepted and consideration is being accorded for grant of

mining lease, that reasons have to be recorded and communicated to the applicant

in writing.

545. Significantly, and it is admitted before us that, the appellants failed to

comply with the requirements of the LoI within the mandatory period of six

months.

546. We have found that no authority had the power of extending the time for

compliance of these conditions. Clearly, the stage of issuance of the notice to show

cause and an opportunity to do so would have arisen only if the bidders had

complied with the mandatory conditions under the LoI.

547. Is there substance, therefore, in the absolute proposition urged by the

appellants that the respondents under all circumstances have to comply with the

principles of natural justice?

223


548. The principles on which these contentions must be examined are best stated

in the words of Justice V. R. Krisha Iyer in the judgment reported at (1977) 2 SCC

256, The Chairman, Board of Mining Examination and Chief Inspector of

Mines and another v. Ramjee when it was held as follows:

“13. …….. Natural justice is no unruly horse, no lurking landmine,

nor a judicial cure-all. If fairness is shown by the decision-maker to

the man proceeded against, the form, features and the fundamentals of

such essential processual propriety being conditioned by the facts and

circumstances of each situation, no breach of natural justice can be

complained of. Unnatural expansion of natural justice, without

reference to the administrative realities and other factors of a given

case, can be exasperating. We can neither be finical nor fanatical

but should be flexible yet firm in this jurisdiction. No man shall be

hit below the belt — that is the conscience of the matter.

14. ……... But then we cannot look at law in the abstract or natural

justice as a mere artifact. Nor can we fit into a rigid mould the

concept of reasonable opportunity………..

15. These general observations must be tested on the concrete facts of

each case and every minuscule violation does not spell illegality. If

the totality of circumstances satisfies the Court that the party visited

with adverse order has not suffered from denial of reasonable

opportunity the Court will decline to be punctilious or fanatical as if

the rules of natural justice were sacred scriptures.”

(Emphasis by us)

549. We find that it is well settled that principles of natural justice do not

mandatorily have to apply to every decision taken by the authorities. In the

judgment of the Division Bench of High Court of Andhra Pradesh reported at AIR

1981 AP 165, Sri Rama Engineering Contractors v. Construction Engineer,

Civil Engineering, Department of Space, Govt. of India, Sriharikota, Nellore

and another, the tender submitted by the petitioner had been found to be lowest,

224


yet the contract was awarded to the respondent No. 2 whose tender was above that

of the petitioners. The court was called upon to consider the validity of the

acceptance of a tender of the second respondent for construction of a group of

houses for housing the employees of the space project and issuance of directions to

the respondents to accept the petitioners tender. The petitioner had challenged this

decision of the construction engineer inter alia on grounds of violation of

principles of natural justice. The court observed as follows:

“16. …..There is a practical reason also why rules of natural justice

should not apply to the facts of this case. The petitioner was only one

among several tenderers. His tender was rejected on the basis of his

relative unsuitability. If principles of natural justice should apply to

this case, notices should go to all the competing tenderers inviting

their claims and objections. Their replies must be collected, collated

and considered. Relative assessment of tenderers should be made. All

that certainly means postponement of the decision by a few months to

award the contract to build houses. This is a wholly unreasonable way

of going about building houses and certainly not at all the way to build

bridges. Natural justice applied to such situations would" turn into a

stumbling-block for the efficient and effective exercise of State

power. Natural justice must be envisaged by the Courts as a canal

through which State power may freely flow releasing its energy for

the benefit of the citizens and not as a dam to hold it back. This time-

consuming and self-defeating process would clearly rule out the

applicability of principles of natural justice to the facts of this case.

De Smith did say, "clearly not every decision affecting individual

interests has to be preceded by a priori notice and an opportunity to

be heard." (see De Smith's Constitutional Law and Administrative

Law, III Edition, page 566.)”

(Emphasis by us)

225


550. In (2007) 2 SCC 181 : Rajesh Kumar and others v. Dy. CIT and others, the

Supreme Court has observed that exceptions to these rules are required to be

provided for either expressly or by necessary implication. The Supreme Court has

specifically observed that ‘while complying the principles of natural justice, the

Court must bear in mind the theory of useless formality and the prejudice

doctrine.’

551. It is trite that principles of natural justice cannot be mechanically applied. In

the judgment reported at AIR 1968 SC 851, Union of India and others v. P. K.

Rao and others, the Supreme Court had ruled that “the extent of an application of

the doctrine of natural justice cannot be imprisoned within the straitjacket of a

rigid formality. The application of the doctrine depends on the nature of the

jurisdiction conferred on the administrative authority, upon the character of the

rights of the persons effected, the scheme and policy of the statute and other

relevant circumstances disclosed in the particular case.”

552. In this regard, we may also usefully advert to the pronouncement of the

Supreme Court reported at (2006) 8 SCC 647, Punjab National Bank and others

v. Manjeet Singh and anr. The case arose in a proceeding in which trade unions

had participated. The decision ultimately reached by the Industrial Tribunal was

assailed by individual workmen contending that they had not been made party to

the reference and submitted that there was violation of principles of natural justice.

This plea was rejected by the Supreme Court holding that:

“17. In an industrial dispute referred by the Central Government

which has an all-India implication, individual workmen cannot be

made party to a reference. All of them are not expected to be heard.

The unions representing them were impleaded as parties. They were

heard. Not only were the said unions heard before the High Court, as

226


noticed hereinbefore from a part of the judgment of the High Court,

they had preferred appeals before this Court. Their contentions had

been noticed by this Court. As the award was made in the presence of

the unions, in our opinion, the contention of the respondents that the

award was not binding on them cannot be accepted. The principles of

natural justice were also not required to be complied with as the

same would have been an empty formality. The court will not insist on

compliance with the principles of natural justice in view of the binding

nature of the award. Their application would be limited to a situation

where the factual position or legal implication arising thereunder is

disputed and not where it is not in dispute or cannot be disputed. If

only one conclusion is possible, a writ would not issue only because

there was a violation of the principles of natural justice.”

(Emphasis by us)

553. It is well settled that a judicial precedent has to be examined and applied in

the context of the fact situation which was raised therein. Mr. F. A. Natnoo, ld.

AAG, has relied on the pronouncement of the Supreme Court in (2004) 8 SCC 579

Petroleum Corporation Ltd. Vs. N. R. Vairamani & Others (para 9) and (2003)

11 SCC 584 Ashwar Kumar Singh Vs. UPSC (Para 10) in support of this

submission.

554. One very important factor in the present case is that there is no dispute to

any of the material facts. While the writ petitioners/appellants made no disclosure

of facts in their writ petitions, they do not dispute the factual narration laid down

by the respondents regarding their failure to complete the formalities as required

under Rule 26(2) and Rule 55(9).

555. An exception to the requirement of compliance with the principles of natural

justice stands drawn also where the facts (as in the present cases) are undisputed.

227


556. We extract hereunder the binding principles of the law laid down by the

Supreme Court reported at (1999) 6 SCC 237, M. C. Mehta v. Union of India

hereafter. It was held in para 22 (Pages 246, 247) as follows:

“More recently Lord Bingham has deprecated the ‘useless formality’

theory in R. v. Chief Constable of the Thames Valley Police Forces, ex

p Cotton [1990 IRLR 344] by giving six reasons. (See also his article

‘Should Public Law Remedies be Discretionary?’, 1991 PL, p. 64.) A

detailed and emphatic criticism of the ‘useless formality theory’ has

been made much earlier in ‘Natural Justice, Substance or Shadow’ by

Prof. D.H. Clark of Canada (see 1975 PL, pp. 27-63) contending

that Malloch [Malloch v. Aberdeen Corpn., (1971) 1 WLR 1578 :

(1971) 2 All ER 1278 (HL)] and Glynn [Glynn v. Keele University,

(1971) 1 WLR 487 : (1971) 2 All ER 89 (Ch D)] were wrongly

decided. Foulkes (Administrative Law, 8th Edn., 1996, p. 323), Craig

(Administrative Law, 3rd Edn., p. 596) and others say that the court

cannot prejudge what is to be decided by the decision-making

authority. De Smith (5th Edn., 1994, paras 10.031 to 10.036) says

courts have not yet committed themselves to any one view though

discretion is always with the court. Wade (Administrative Law, 5th

Edn., 1994, pp. 526-30) says that while futile writs may not be issued,

a distinction has to be made according to the nature of the decision.

Thus, in relation to cases other than those relating to admitted or

indisputable facts, there is a considerable divergence of opinion

whether the applicant can be compelled to prove that the outcome will

be in his favour or he has to prove a case of substance or if he can

prove a ‘real likelihood’ of success or if he is entitled to relief even if

there is some remote chance of success. We may, however, point out

that even in cases where the facts are not all admitted or beyond

dispute, there is a considerable unanimity that the courts can, in

exercise of their ‘discretion’, refuse certiorari, prohibition,

mandamus or injunction even though natural justice is not followed.

We may also state that there is yet another line of cases as in State

228


Bank of Patiala v. S.K. Sharma [(1996) 3 SCC 364 : 1996 SCC (L&S)

717] , Rajendra Singh v. State of M.P. [(1996) 5 SCC 460] that even

in relation to statutory provisions requiring notice, a distinction is to

be made between cases where the provision is intended for individual

benefit and where a provision is intended to protect public interest. In

the former case, it can be waived while in the case of the latter, it

cannot be waived.”

(Emphasis by us)

557. Again in (2005) 5 SCC 337, Viveka Nand Sethi v. Chairman, J&K Bank

Ltd, it was held that when facts are admitted, an enquiry would be an empty

formality. The principles of natural justice are thus required to be complied with

in a case having regard to the fact situation obtaining therein. It cannot be applied

in a vacuum without reference to the relevant fact and circumstances.

558. In the pronouncement of the Supreme Court reported at (2005) 3 SCC 409,

Karnataka State Road Transport Corporation and another v. S. G. Kotturappa

and another, also, it was held that the principle of natural justice are not required

to be complied with if it will lead to compliance with an empty formality.

559. We note that apart from vehement submissions that there was no compliance

with the principles of natural justice, the appellants before us have not been able to

point out as to how the action or decision of the respondents could have been

different if they had been granted a hearing.

560. For the reasons that the appellants had failed to comply with prescription of

Rule 26(2) and Rule 55(9) and the LoI, the stage for consideration and acceptance

of the bid had not even arisen. The appellants have not asserted any loss or

prejudice on account of any act or omission on the part of the respondents. There is

not the remotest suggestion that the process adopted or the decision taken is either

229


malafide or that it is intended to favour someone. It is not appellants’ case that it is

based irrelevant consideration or is contrary to any statutory provion. Given the

material considered by the respondents, it cannot be said that the decision taken

was arbitrary or irrational. On the contrary, the decision taken is in public interest.

In taking the decision, the authorities have acted both reasonably and responsibly

in the matter.

561. In similar facts as at present, in its judgment reported at (1996) 10 SCC 405,

Rajasthan Cooperative Diary Federation Ltd v. Shri Maha Laxmi Mingrate

Marketing Service Pt. Ltd and others, the Supreme Court also rejected the

objection of the respondent regarding violation of principles of natural justice for

the reason that no prefixation hearing was given. In this regard, in para 7, the

Supreme Court held as follows:

“7. The High Court was also not right in importing the doctrine of

audi alteram partem in these circumstances. If the conduct of

respondent No.1 was such that it did not inspire any confidence in

the appellant, the appellant was entitled to decline entering into any

legal relationship with respondent No.1 as its selling agent. The

Letter of Intent merely expressed an intention to enter into a

contract. If the conditions stipulated in the Letter of Intent were not

fulfilled by respondent No. 1 and if the conduct of respondent No.1

was otherwise not such as would generate confidence, the appellant

was entitled to withdraw the Letter of Intent. There was no binding

legal relationship between the appellant and respondent No. 1 at this

stage and the appellant was entitled to look at the totality of

circumstances in deciding whether to enter into a binding contract

with respondent No 1 or not.”

(Emphasis supplied)

230


562. We may usefully advert to the judgment of the Supreme Court reported at

(2016) 6 SCC 408 : Centre for Public Interest Litigation v. Union of India (para

21) which has been placed before us by Mr F. A. Natnoo, learned AAG. In para 21

of this judgment, the Supreme Court held thus:

“41. The power of judicial review of the executive and legislative

action must be kept within the bounds of constitutional scheme so that

there may not be any occasion to entertain misgivings about the role of

judiciary in outstepping its limit by unwarranted judicial activism

being very often talked of in these days. The democratic set-up to

which the polity is so deeply committed cannot function properly

unless each of the three organs appreciate the need for mutual respect

and supremacy in their respective fields.’

xxxxxxxx

138. However, we hasten to add and do not wish to be

misunderstood so as to infer that howsoever gross or abusive may

be an administrative action or a decision which is writ large on a

particular activity at the instance of the State or any other authority

connected with it, the Court should remain a passive, inactive and a

silent spectator. What is sought to be emphasised is that there has

to be a boundary line or the proverbial “laxman rekha” while

examining the correctness of an administrative decision taken by

the State or a central authority after due deliberation and

diligence which do not reflect arbitrariness or illegality in its

decision and execution. If such equilibrium in the matter of

governance gets disturbed, development is bound to be slowed

down and disturbed specially in an age of economic liberalisation

wherein global players are also involved as per policy decision.”

(Emphasis by us)

563. The situation before us is akin to consideration of tenders for construction

contracts wherein preconditions for eligibility are laid down and technical and

financial bids are invited. It is only if a tenderer satisfies the eligibility conditions,

his technical bid is evaluated and, if found feasible, that the authority inviting

tenders proceeds to examine the tenderers’ financial bids. If a person fails at either

of the previous stages, there would be no question of considering his financial bids.

231


564. Similarly in the present case, upon failing to comply with the essential

conditions laid down in the Rules, notified in the notices of auction and reiterated

in the LoI, would the bidder be entitled to consideration of his offer? Having failed

to comply with the preconditions, the issues and stage for consideration of the

applications of the appellants did not arise. There was, therefore, also no need to

follow the procedure prescribed under the Rule 31.

565. Furthermore, as no bid had been finally accepted, there was no occasion for

cancellation thereof. The violations also being admitted, there was no requirement

to issue notice to show cause or grant hearing to the appellants. In this background,

to insist upon compliance of principles of natural justice despite the admitted

breach by the appellants, would really be in the nature of requiring compliance of a

useless and empty formality.

566. In this regard, we may note the view taken by the Supreme Court in (2016) 4

SCC 716 : State of Uttar Pradesh v. AL Faheem Meetex P Ltd, wherein the court

was examining a challenge to a similar cancellation of the bidding process before

award of the contract. The Supreme Court held that inasmuch as there was no

acceptance of bid of the appellant by the competent authority, the decision

making process had not reached finality. Therefore, there was no requirement of

issuing notice to the appellant. It is the same position in the case in hand.

567. In the facts of the present cases, we are, therefore, unable to hold that the

action of the respondents was bad for the reason that there was violation of

principles of natural justice as the requirement of issuance of notice was not

complied with by the respondents inviting interference by us.

232


XVII Failure to give reasons-non compliance with principles of natural

justice- whether impacts present cases

568. The second objection of violation of principles of natural justice is premised

on the requirement of giving reasons for the impugned order. The submission is

that respondents have violated this requirement.

569. Elaborate arguments have been made by Mr. Z. A. Shah, Mr. Altaf Naik,

Mr. P. N. Raina, ld. Senior Counsels, as well as Mr. Abhinav Sharma, Mr. Vikram

Sharma and Mr. Hakim Suhail Ishtiyaq, Advocates that the respondents were

required to record reasons and communicate them to the bidders in writing under

Rule 31 before rejecting the highest bids.

570. Mr Z.A. Shah, learned senior counsel has placed reliance on the

pronouncement of the Supreme Court in AIR 1952 SC 16 Commissioner of Police

vs. Gordhan Dass Bhanji to contend that the orders scrapping of auction was not

passed by the competent authority.

571. It has further been submitted by Mr Z. A. Shah, learned Senior Counsel that

upon scrapping of the auction by the order dated 26th February 2019, a

consequential order under Rule 31 refusing the mining lease to the bidders by the

Competent Authority i.e., Director was mandatorily required.

572. In this regard, Mr. Z. A. Shah, Senior Advocate has placed reliance on the

pronouncement of the Supreme court reported at (1990) 3 SCC 280 (paras 9 & 10),

Star Enterprises v. City and Industrial Development Corporation of

Maharashtra Ltd.

573. Mr Abhinav Sharma ld. Counsel has placed reliance on the judgment of the

Supreme Court reported at AIR 1976 SC 789 (para 18) Hukum Chand Shyam Lal

vs. Union of India & Ors. in support of his submission that once a statute requires

something to be done in a particular manner or mode, it has to be done in that mode

233


or not at all. The submission is that in the instant case, under Rule 42, only the

Director, Geology was the competent authority to pass the orders in the present

case.

574. There can be no dispute at all with the well settled principle that once a

statute requires a thing to be done in a particular manner, it has to be done in that

manner or not at all. However, in the instant case, the stage for consideration of the

applications under Section 31 did not reach as the appellants and bidders failed to

comply with the requirements of the Rules and as communicated in the LoI’s

issued to them.

575. It has been additionally urged by Mr Vikram Sharma that in the present

case, the order dated 26th February, 2019 only says that the auction was “scrapped”

and that this was impermissible. In support of his submission, Mr Sharma has

placed reliance on the pronouncement of the Supreme Court reported at AIR 1991

SC 537 : Kumari Shri Lekha Vidyarthi & Ors. V. State of U.P. & Ors.

576. Mr Vikram Sharma, ld. counsel, has contended that under Rule 42, the

authority to grant mining lease for areas upto 10 hectares has been designated as

the Director. It is urged that, in the instant cases, only the director as the competent

authority could have refused to grant the mining lease that too, strictly in

accordance with Rule 31. It is pointed out that the letter dated 7th February, 2019

which was issued by the Director. Mr. Sharma, contends that the letter dated 26th

February, 2019 has been issued by an officer of the designation of Under Secretary

and not the Director.

A similar objection (as in the present case) was taken in (2007) 2 SCC 588

Ramchandra Murarilal Bhattad v. State of Maharashtra, that the cancellation of

tenders was effected by the Govt. whereas the Commissioner was the competent

234


authority. We extract hereunder the illuminating factual observations in this case

which read thus:

“55. Lastly, it was urged that the petition is incompetent because the

provisions of section 46 of the Specific Relief Act have not been

complied with, namely, the petitioner has not shown that he made a

demand for justice and that it was denied.

56. The demand and denial which section 46 requires are matters

of substance and not of form. In our opinion, there was a substantial

demand here and it is clear that there was a denial. Soon after the

order of cancellation was intimated to the petitioner he instructed his

solicitors to write to the Commissioner and enquire why the

permission granted had been so arbitrarily cancelled. This was on the

18th November, 1947. The reply dated 3/4th December, 1947, was that

the cancellation was under the orders of Government and that they

should be approached in the matter. Government was approached. The

petitioner's solicitors wrote to the Home Minister on the 9th

December, 1947, and said :-

"Our client has not been informed of any reasons which had moved the

Government to direct the cancellation of the permission. Our client

was really entitled to be heard in the matter...Our client desires to

present his case before you and he shall feel obliged if you give him an

interview..."

57. The Secretary to the Home Department replied on the 12th of

January, 1948, that the Commissioner was directed to cancel the

permission in view of numerous protests which Government received.

This was replied to on the 16th of February, 1948, and the petitioner's

solicitors said :-

"Our client feels that he has not been treated fairly and that justice has

been denied to him."

58. The only reply to this was :-



235


"I am directed to inform you that Government does not wish to add

anything to the reply already given to you."

59. The correspondence read as a whole contains a clear demand

for justice and a denial. It is true the actual demand was not made to

the Commissioner nor was the denial by him but he clearly washed

his hands of the matter by his letter of the 3rd/4th December, 1947,

and referred the petitioner to Government under whose orders he

said he was acting. The demand made to Government and the denial

by them were therefore in substance a demand made to the

Commissioner and a denial by him.”

(Emphasis by us)

577. We have held in the present case above that the stage for cancellation of the

bids of the appellants did not reach, and hence no decision was required even if it

was so, the decision was by an authority higher than the director, only

communicated by a subordinate and cannot be invalidity on the ground of

competency.

578. Mr Vikram Sharma has further contended that upon royalty being charged

from the appellant, the LoI had taken the character of lease and that its termination

could only be on satisfaction of stipulations contained in sub-rule 15, 16, 17 and 19

of Rule 38.

579. Mr F. A. Natnoo, learned AAG, has submitted that the reliance placed by

Mr P. N. Raina, ld. senior counsel, on Rules 6, 13 and 38 is completely

misconceived. Mr Raina has relied on Rule 38(XVI) which refers to “breach on

the part of the lessee”. Mr Natnoo has emphasized the fact that appellants are not

lessees before this Court and, therefore, the Rule has no application.

580. Rule 38 stipulates the “Conditions of the Lease” and is placed in Chapter IV

captioned “Grant of Mining Lease” and contains Rules 26 to 42-a. We have noted

236


that the appellants have failed to comply with rule 26. Thereafter the appellants

had to complete requirements under Rule 27 (procedure for grant of mining lease

which includes a deposit of Rs.50,000/-) and Rule 36 (which requires deposit of

the security deposit). Execution of the lease requires compliance with Rule 40.

Admittedly, the stage for these did not arrive as the appellants failed to complete

the pre-conditions under Rules’ 26 and 55. In the instant case, the appellants

therefore could not be considered for grant of lease and no leases have been

executed in their favour. As such, Rule 38 has no application at all.

581. Let us examine the principles laid down by the Supreme Court in judicial

precedents on the essentiality of recording reasons for administrative and executive

orders and actions as well as the contours of such requirement. In the judgment

reported at (1990) 3 SCC 280, Star Enterprises & Ors. vs. City and Industrial

Development Corporation of Maharashtra & Ors, relied upon by Mr. Shah, ld.

Senior Counsel, the court was called upon to examine the correctness of the action

of the respondents in rejecting the highest offer received in response to an

invitation to bid by a public authority. We find from a reading of para 5.8 of this

pronouncement that in this case, the highest bid received had been rejected by the

respondents. It was in this background that the Supreme Court had observed as

follows:

“5. It is not disputed that the scheme which is operating provides that

"respondent No. 1 reserves the right to amend, revoke or modify the

scheme at its discretion as well as to reject any or all offers for

allotment without assigning any reason." Obviously, it is in exercise of

this power that the highest tenders have not been accepted.

8. The State is certainly entitled to look for the best deal in regard to its

properties. This has been accepted by several decisions of this Court



237


with reference to State action under the Excise Laws. There is no

allegation of mala fides in the conduct of respondent no. 1 in refusing

to accept the highest offer. We must, therefore, proceed on the footing

that respondent no. 1 acted bona fide and in refusing to accept the

highest offers of the appellants in regard to specific plots has been

actuated by the consideration of looking for better offers for the specific

plot in the economic interests of respondent no. 1.

xxx

10. In recent times, judicial review of administrative action has

become expansive and is becoming wider day by day. The traditional

limitations have been vanishing and the sphere of judicial scrutiny is

being expanded. State activity too is becoming fast pervasive. As the

State has descended into the commercial field and giant public sector

undertakings have grown up, the stake of the public exchequer is also

large justifying larger social audit, judicial control and review by

opening of the public gaze; these necessitate recording of reasons for

executive actions including cases of rejection of highest offers. That

very often involves large stakes and availability of reasons for actions

on the record assures credibility to the action; disciplines public

conduct and improves the culture of accountability. Looking for

reasons in support of such action provides an opportunity for an

objective review in appropriate cases both by the administrative

superior and by the judicial process. The submission of Mr Dwivedi,

therefore, commends itself to our acceptance, namely, that when

highest offers of the type in question are rejected reasons sufficient

to indicate the stand of the appropriate authority should be made

available and ordinarily the same should be communicated to the

concerned parties unless there be any specific justification not to do

so.”

(Emphasis by us)

In the instant case, the Rules do not prescribe any procedure for a decision

for cancellation of an entire auction. Given the breaches of the Rules, we have held

238


Government did not have to record a specific order in this regard. The judgment in

Commissioner of Police v. Gordhan Dass Ghaaji has therefore no application in

the present case.

582. In Ramchandra Murarilal Bhattad also, the Supreme Court had observed

that the individual tender of the appellant had not been rejected but all tenders had

been cancelled and that, for the reason that there was change in policy, no reason

for the cancellation was required to be given.

583. So far as the decision of the respondents to amend the Rules and to

incorporate the requirement of conducting auctions of mining leases by e- mode is

concerned, the same was in the nature of a policy decision and stands taken by the

competent authorities. The appellants do not challenge the authority of the

respondents to amend the rules or the competency of the authority to take the

decision to do so. This objection is therefore untenable and of no consequences.

584. There can be no dispute at all with the well settled proposition that when the

authority, administrative or quasi judicial adjudicates on a dispute and if its order

is appealable or subject to judicial review, it would be necessary to spell out the

reasons thereof. Furthermore, if as a result of action on the part of the statutory

authority, civil or evil consequences ensue, principles of natural justice are

required to be followed.

Such occasion has not risen in the present cases.

585. In the present cases, after failure of the bidders to comply with the terms of

the LoI and the requirement of the rules, the bids of 2016 and 2017 were non- est

and of no consequence and effect. The bidders had no surviving right whatsoever

pursuant to the provisional acceptance of the bids. The occasion for consideration

of the bids of the appellants for final acceptance and for grant of mining lease by

239


the Director (the authority designated under Rule 42 to grant the mining lease) or

passing of order therefore under Rule 31 never arose. As such, the appellants have

not been deprived of any right under Rule 85 or the statutory remedy of appeal

prescribed thereunder. Since the bids had not received final acceptance, no separate

orders for cancellation of the individuals bids were necessary.

586. This fact, coupled with the respondent’s estimation that the reserve price

was not optimum and finding suggestion of cartelization in the auctions, the

authorities scrapped the auctions in their entirety. It is noteworthy that this was

communicated by the letter dated 26th February, 2020. A policy decision was taken

to maximize public interest by holding e-auctions only in the future. There is no

case where the highest offer stands overlooked or rejected or there is refusal to

accept a lower bid. In this background the requirement of recording reasons for

rejecting the highest bids did not arise.

587. For these very reasons, the reliance placed on the pronouncement reported at

(2007) 2 SCC 181, Rajesh Kumar and others v. Dy. CIT and others in support of

the contention that the basic principle of natural justice being the recognition of a

duty to assign reasons, having been violated in the present case, is misconceived.

588. Inasmuch as the auction as a whole was being scrapped and a new policy

being put in place, no reason individually was required to be assigned.

589. The plea that the action of respondents is liable to be quashed for the reason

that no reasons were given for rejection of the bids and the principles of natural

justice therefore violated, is misconceived and hereby rejected.

240


XVIII Whether any Remedial steps with regard to the illegal mining-

cost of reparation and compensation- quantification and

apportionment of liability?

590. The instant case reveals glaring illegalities, non compliance with judgments

of the Supreme Court, directions of the NGT and violations of the law committed

with absolute impunity. The matter could have ended with dismissal of the

appeals. However, what is not condonable is the fact that public and national minor

mineral resources stand ruthlessly exploited for commercial profits by a group of

bidders without any compunction. Can we overlook such illegalities?

591. The present appeals arise out of the refusal to exercise extraordinary writ

jurisdiction under Article 226 of the Constitution of India read with Section 103 of

The Jammu & Kashmir Constitution, by the learned Single Judge in favour of the

appellants.

592. The Supreme Court of India had occasion to rule on the the power of the

High Courts in exercise of extra ordinary writ jurisdiction under Article 226 of the

Constitution of India in the judgment reported at AIR 1966 SC 81 Dwarka Nath

Vs. Inicome Tax Officer, Sspecial Circle in the following terms:

“4………This article is couched in comprehensive phraseology and it ex

facie confers a wide power on the high court to reach injustice wherever it

is found. The constitution designedly used a wide language in describing the

nature of the power, the purposes for which and the person or authority

against whom it can be exercised. It can issue writs in the nature of

prerogative writs as understood in England; but the scope of those writs also

is widened by the use of the expression "nature", for the said expression does

not equate the writs that can be issued in India with the those in England, but

only draws in analogy from them. That apart, High Courts can also issue

directions, orders or writs other than the prerogative writs. It enables the

High Courts to mould the reliefs to meet the peculiar and complicated

requirements of this country. xxxxxxxxx"

(Emphasis supplied)

241


593. While considering the permissibility of a writ court examining

proportionality/ penalty imposed on a person in disciplinary proceedings, in the

judgment reported at (1995) 6 SCC 749 B. C. Chaturvedi v. Union of India and

others, we find an illuminating illucidation of the power of the High Court to do

complete justice in the concurring judgment of Hansaria, J, who had observed as

follows:

“21. I am in respepctful agreement with all the conclusions reached by

learned brother Ramaswamy, J. This concurring note is to express my

view on two facets the case. The first of these relates to the power of the

High Court to do "complete justice", which power has been invoked in

some cases by this Court to alter the punishment/penalty where the one

awarded has been regarded as dispropotionate, but denied to the High

Courts. No doubt, Article 142 of the Constitution has specifically

conferred the power of doing complete justice on this Court, to achieve

which result it may pass such decree or order as deemed necessary; it

would be wrong to think that other courts are not to do complete

justice between the parties.

xxxxxxxxx

23. It deserves to be pointed out that the mere fact that there is no

provision parallel to Article 142 relating to the High Courts, can be no

ground to think that they have not to do complete justice between the

parties, the same cannot be ordered. Absence of provision like Article

142 is not material, according to me. This may be illustrated by

pointing out that despite there being no provision in the Constitution

parallel to Article 137 conferring power of review on the High Court,

this Court held as early as 1961 in Shivdeo Singh's case, AIR 1963 SC

1909, that the High Courts too can exercise power of review, which

inheres in every court of plenary jurisdiction. I would say that power to

do complete justice also inheres in every court, not to speak of a court

of plenary jurisdiction like a High Court. of course, this power is not






242


as wide which this Court has under Article 142. That, however, is a

different matter.

xxxxx

26. I had expressed my unhappiness qua the first facet of the case, as

Chief Justice of the Orissa High Court in paras 20 and 21 of Krishna

Chandra v. Union of India, AIR 1992 Orissa 261 (FB), by asking why

the power of doing complete justice has been denied to the High Courts

? I feel happy that I have been able to state, as a Judge of the Apex

Court, that the High Courts too are to do complete justice. This is also

the result of what has been held in the leading judgment.”

(Emphasis supplied)

594. The principles laid down in the Dwarka Nath were reiterated in the

judgment reported at (1989) 2 SCC 691 Andi Mukta Sadguru Shree Muktajee

Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Ors., Vs. V.R.

Rudani and others.

595. It is, therefore, well settled that this court hearing appeals in its writ

jurisdiction is adequately empowered to mould reliefs to do complete justice. In

fact, we are duty bound to ensure that law is complied with. We have noted above,

the law laid down by the NGT and its directions which are binding on all persons.

596. Jammu & Kashmir has seen some of the worst natural disasters in the recent

times. While the earthquake in Uri in 2005 would be a natural disaster, the drastic

consequences of the flooding of 2014 in Kashmir and of River Tavi in Jammu as

well as its causes are still alive in the minds of the people. Despite the deep

concerns with regard to the impact and consequences of unregulated extraction of

minor minerals along rivers are engaging the attention of the Supreme Court of

India and are under the continuous monitoring by the NGT, illegal mining of




243


minor minerals and sand quarrying activities are rampant and continuing with

impunity in Jammu and Kashmir. The irreversible damage and impact on the

environment as well as the implications thereof to society at large clearly visisble

and are in public domain.

597. The NGT is closely monitoring the action taken by the various States and

Union Territories, with regard to the illegal sand, mining from the river beds,the

lead case being OA No. 360/2015, National Green Tribunal Bar Association v.

Virendra Singh (State of Gujarat) and the connected petitions.

598. The drastic impact of unregulated river bed mining in West Bengal noted by

the NGT in its order dated 15th April, 2019 in OA 360/2015 NGT Bar Association

v. Virendra Singh is extracted below:

11. When the State holds a resource that is freely available for the

use of public, it provides for a high degree of judicial scrutiny on

any action of the State in dealing with the subject in a prudent

manner. It is the duty of the State to provide complete protection to

the natural resources as a trustee of the public at large. Moreover,

a policy to give free sand must be justified as a welfare measure

but even this consideration cannot justify unregulated and

unscientific mining unmindful of impact on environment. If in the

course of mining, damage is caused, cost of the same must be

recovered from such violators. In any case, the authorities cannot

avoid their duty under the environmental law to prevent and

restore the damage which is an inalienable duty of the State.

Sudarsan Das v. State of West Bengal

Vide order dated 04.09.2018 in O.A No. 173/2018, Sudarsan Das v.

State of West Bengal & Ors, the Tribunal considered the issue of

unchecked mechanised sand mining on the banks of river

Subarnarekha by use of suction pumps, earth movers and netting in

an area falling under Jaleshwar Tehsil, Balasore District, Odisha

on the Odisha – West Bengal Boarder area and neighbouring

244


district of West Medinapur in the State of West Bengal. The mining

was being done by a method whereby ground water is allowed to

seep into excavation of 40 to 50 feet beneath the river and collected

in sumps and pumped away for disposal. No environmental

clearance had been taken nor consent taken from the Pollution

Control Board. This was impacting the ecology of the river

including its channel geometry, bed elevation, substratum

composition and stability, instream roughness of the bed, flow

velocity, discharge capacity, sediment transpiration capacity,

turbidity, temperature, etc. Such indiscriminate mining was the

cause of the river Subarnarekha changing its course every year

and made susceptible to flooding during every monsoon,

threatening the safety of the villages situated along the river bank

due to the banks being severely eroded in villages Rajnagar,

Mankia, Kanrpur, Totapada, Beherasahi and Praharajpur. The

authorities confirmed that illegal mining was taking place at large

scale without any Environmental Clearance under the Environment

(Protection) Act, 1986 or Consent under the Water (Prevention and

Control of Pollution) Act, 1974 or the Air (Prevention and Control

of Pollution) Act, 1981. Sustainable Sand Mining and Management

Guidelines, 2016 were also not being followed. There was adverse

impact on the ecology. No Management Plan was prepared for

replenishment of preventive steps. Safeguards suggested in the

report of High-powered Committee in September, 201612 were also

not been adopted.”

(Emphasis supplied)

599. Can these illegal activities be permitted to continue without consequence of

reparation and compensation for the illegal mining? The observations made by the

Tribunal in its order dated 5th April, 2019 in O.A. No.360/2015 National Green

Tribunal Bar Association v. Virender Singh (State of Gujarat) in this regard

deserve to be considered in extenso and read thus:

245


“6. The grievance before the Tribunal is that the river bed mining was

taking place at several locations in violation of judgment of the

Hon’ble Supreme Court either without any valid lease or under

leases given without following the strict regulatory regime in terms

of judgment of the Hon’ble Supreme Court or in violation of lease

conditions.

Proceedings before NGT

7. This Tribunal passed several orders in the present matter since

05.08.2013 to check illegal sand mining from the riverbeds without

environmental clearance or in violation of terms of environmental

clearance. The State of Uttar Pradesh was directed to frame a policy

to check illegal sand mining. MoEF&CC was also directed to

prepare comprehensive guideline on the subject. The Tribunal

considered regulatory regime applicable in some of the States in the

light of the judgment of the Hon’ble Supreme Court in Deepak Kumar

(supra), including in the States of Uttar Pradesh, Haryana, Madhya

Pradesh, Maharashtra, Karnataka, Gujarat, West Bengal and Odisha.

The MoEF&CC issued Sustainable Sand Mining Guidelines 2016,

vide notification dated 15.01.2016. Thereafter, further directions were

issued by the Tribunal in the light of the report of the High-powered

Committee.

8. Despite this the menace of illegal sand mining in India continues

unabated. As per reports the sand business in India employs over 35

million people and is valued at well over $126 billion per annum. In

the year 2015-2016, there were over 19,000 cases of illegal minor

minerals including sand in the country. In Uttarakhand, a 115 years

old bridge collapsed due to overloaded sand trucks. In Maharashtra,

26,628 cases of illegal sand mining were recorded in the year 2017.

The State of Maharashtra has the highest number of cases of non-

compliance of Sustainable Sand Mining Management Guidelines,

2016. The State of Kerala suffered hugely in 2004 Tsunami and 2018

floods which several report explain were aggravated by illegal sand

extraction. The issue of illegal sand mining is also rampant in the

246


states of Goa, Bihar, Tamil Nadu, Uttarakhand, Telangana, Jammu

and Kashmir amidst others.”

(Emphasis by us)

In the light of the above facts, the NGT noted the duty of the State in

protecting natural resources and recovery of damage from the violators in the

following terms:

10. Public Trust Doctrine primarily rests on the principle that certain

resources like air, sea, water and forest have great importance to

public as a whole and it is wholly unjustified to make them a subject

of private ownership. The public trust doctrine enjoins upon the

Governments to protect the resources for enjoyment of general

public rather than to permit the use for private ownership of

commercial purposes.”

(Emphasis by us)

600. In Para 45 of the order dated 05th April 2019 in O. A. No. 360/2015 titled

National Green Tribunal Bar Association v. Virender Singh (State of Gujarat)

the NGT noted that the illegal sand mining in violation of the Sustainable Sand

Mining Guidelines 2016 has been widely reported in several states including

Jammu and Kashmir amongst others and that general directions may be necessary

which would apply to other states facing the same issue. It also referred to an

article published in ‘Daily Greater Kashmir’ which is available at

https://greaterkashmir.com/article/news.aspx?storyid=309365&catid=2&mid

=53&AspxAutoDetectCookiesSupport.

601. The NGT then considered measures which could be effective for preventing

the illegal mining and quarrying among other remedial measures including

https://greaterkashmir.com/article/news.aspx?storyid=309365&catid=2&mid=53&AspxAutoDetectCookiesSupport

https://greaterkashmir.com/article/news.aspx?storyid=309365&catid=2&mid=53&AspxAutoDetectCookiesSupport

247


recovery of compensation. In this regard in paras 51 and 52 (of the order dated 5th

April, 2019), it was observed as follows:

“51. We have found in the discussion above, particularly in paras 8 to

11, 20, 21, 23, 29, 32, 33, 36, 39, 41 and 43 with regard to factual

position in various States that monitoring mechanism preventive and

remedial measures is not effective and illegal sand mining is

continuing. The same needs to be reviewed in the light of above

discussion. The States may review monitoring mechanism in terms of

several directions of the Tribunal and guidelines of MoEF&CC. As

regards monetory compensation, the same has to be not only equal to

cost of mined material and penalty to evade royalty but also to meet

cost of restoration and NPV of eco services fore gone forever.

Seizure of vehicles or other equipment may be dealt with as per rules

and directions in Threat to life arising out of Coal Mining in South

Garo Hills District (supra).

Re (iv): Directions in Individual Cases Listed Today. For the

discussion and observation hereinabove, case is made out for issuing

directions following discussion on the subject.

52. In Sudarsan Das (supra) one of the directions was that the Chief

Secretaries of West Bengal and Odisha will prepare a restoration plan

in consultation with the Central Pollution Control Board (CPCB),

Indian School of Mines, Dhanbad and the Respective State Pollution

Control Boards (SPCBs). We are informed that Indian School of

Mines, Dhanbad declined to comply with the 35 order. This may call

for remedial action against defiance by the said institution. Order of

this Tribunal is a decree of the Court and can be executed in the

manner provided under Section 51 CPC by ordering civil

imprisonment or adopting other norms. Violation of order of this

Tribunal is also a criminal offence punishable by imprisonment and

fine. The Head of the Department concerned is liable to be

proceeded against. Thus, the Director Indian School of Mines,

Dhanbad will have to be required to appear in person to explain why

action be not taken for violation of order of this Tribunal. The State of

248


West Bengal, Orissa, Punjab and Gujarat need to send further action

taken reports by 30.06.2019.”

(Emphasis by us)

602. The NGT had further considered optimum scale of compensation in paras

55 to 57 of the order dated 5th April, 2019 in O. A. No. 360/2015 titled National

Green Tribunal Bar Association v. Virender Singh (State of Gujarat) which

reads as follows:

“55. We have held that the scale of compensation proposed by the

State of Gujarat does not fully comply with the ‘Polluter Pays’

principle which envisages that polluter is required to pay for

complete restoration of the environment. This principle has been

articulated further by the Hon’ble Supreme Court of India in T.N.

Godavarma Thirumulpad vs Union of India & Ors, (2006) 1 SCC 1

in the context of forests. In this matter, the Hon’ble Supreme Court

appointed a committee of experts and following directions were given:

(i) To identify and define parameters (scientific, biometric

and social) n the basis of which each of the categories of

values of forest land should be estimated.

(ii) To formulate a practical methodology applicable to

different biogeographical zones of India for estimation of

the values in monetary terms in respect of each of the

above categories of forest values.

(iii) To illustratively apply this methodology to obtain actual

numerical values for different forest types for each

biogeographical zone in the country.

(iv) To determine on the basis of established principles of

public finance who should pay the costs of restoration

and/or compensation with respect to each category of

values or forests.

(v) Which projects deserve to be exempted from payment of

NPV.”

249


56. Similar criteria may have to be taken into account for arriving

at an appropriate scale of compensation. The compensation is to

include not only the full value of the illegally mined material but also

cost of restoration of environment as well as cost of ecological

services foregone forever. It should be deterrent so as not to render

such illegal activity profitable. In Sudarsan Das Vs. State of West

Bengal & Ors. (supra), it was held that full value of the material, the

cost of restoration and the NPV should form part of the

compensation to be recovered. There has also to be action against the

polluters and the erring officers. The vehicles or any other

equipment used for illegal mining are required to be confiscated and

to be released only on payment of atleast 50% of the showroom value

as laid down in Original Application No.220(THC)/2012, Threat to

life arising out of coal mining in South Garo Hills District v. State of

Meghalaya & Ors. This scale can then apply for all States, as far as

possible.

57. We consider it necessary to constitute a Committee comprising

representatives of the MoEFF&CC, Central Pollution Board

(CPCB), Indian Institute of Forest Management, Bhopal, Institute of

Economic Growth Delhi and Madras School of Economics to prepare

a scale of compensation, after including the above components which

can then be adopted in whole of the country. The report may be

furnished within three months to the Tribunal by email at

[email protected]. The nodal agency for compliance and

coordination will be CPCB. The Committee may also take professional

service of an expert/institution in the matter if it so desires.”

(Emphasis by us)

603. On 5th April, 2019, the NGT thereafter summed up its time bound directions

to the States including the erstwhile State of Jammu and Kashmir as follows:

“58. We sum up our directions as follows:

mailto:[email protected]

250


a) MoEF&CC may now take necessary steps in the matter in terms of

order dated 04.09.2018 in Sudersan Das (supra) latest by June 30,

2019 and file compliance report by 15.07.2019, as already directed.

b) The States of West Bengal, Gujarat, Karnataka, Maharashtra,

Punjab, Uttar Pradesh, Haryana, Madhya Pradesh, Andhra Pradesh,

Bihar, Uttarakhand, Jammu and Kashmir, Goa, Kerala, Telangana

and Tamil Nadu and Himachal Pradesh may take steps in terms of

orders dated 04.09.2018 in Sudarsan Das v. State of West Bengal &

ors, 05.09.2018 in, 13.9.2018 in Mushtakeem v. MoEF&CC & Ors.

and 16.01.2019 in Compliance of Municipal Solid Waste Management

Rules, 2016. The Chief Secretaries may monitor and furnish reports

as earlier directed.

(c) The States of West Bengal, Gujarat, Karnataka, Maharashtra,


Bihar, Uttarakhand, Jammu and Kashmir, Goa, Kerala, Telangana

and Tamil Nadu and Himachal Pradesh may review monitoring

mechanism in terms of directions of the Tribunal and guidelines of

MoEF&CC.

(d) The Director Indian School of Mines, Dhanbad may appear in

person on 26.07.2019 to explain why action be not taken for violation

of order of this Tribunal.

(e) The State of West Bengal, Gujarat, Karnataka, Maharashtra,


Bihar, Uttarakhand, Jammu and Kashmir, Goa, 39 Kerala,

Telangana and Tamil Nadu and Himachal Pradesh may send further

action taken reports by 30.06.2019.

(f) The Committee in terms of para 59 above may furnish its report

within three months to the Tribunal by email at

[email protected].”

(Emphasis by us)

604. In the above order, the NGT noted the amendment notification dated 15th

January 2016 to the Environment Impact Assessment Notification, 2006.We find

mailto:[email protected]

251


that, amongst others, the then State of J&K was directed to take steps in terms of

the order dated 4th September 2018 in OA No. 173/2018 in Sudershan Das v.

State of West Bengal and others; orders dated 5th September 2018 and 13th

September 2018 in Mushtakeem v. MoEF&CC and Ors. in OA No. 44/2016 and

the Chief Secretaries to monitor and furnish reports as earlier directed. The State

of Jammu and Kashmir was directed to review its monitoring mechanism as well.

605. Our attention has been drawn to a further order dated 26th July 2019 passed

in OA No.360/2015 National Green Tribunal Bar Association vs. Virendra Singh

(State of Gujarat) & connected petitions (including those filed by Dr. Sarrabhaun,

Bagali, Mushtakeen & Others).

606. It appears that no compliance report was filed by the State of Jammu and

Kashmir as noted in the order dated 26th July 2019 and last opportunity was given

by the NGT to file appropriate response.

We have not been informed as what has happened to this matter thereafter.

607. The principles of law which are to guide measures for reparation;

quantification of compensation and action for violations and illegal mining are

absolutely unambiguous. They have been laid down in binding judicial precedents

and the respondents have no choice in the matter of compliance with them. Despite

this position, it is quite evident that nothing appears to have been done by the

respondents in this regard.

608. Is there any statutory provision relating to compensation for environmental

degradation? The legislature has empowered the NGT to order relief,

compensation and restitution for environmental damages and pollution for victims

in Sections 15 and 20 of the National Green Tribunal Act, 2010. Some guidance

on the components of compensation and measures for restitution may be derived

252


from the wisdom of the legislature. We, therefore, extract these provisions which

read as follows:

“15. Relief, compensation and restitution.—(1) The Tribunal may, by

an order, provide,—

(a) relief and compensation to the victims of pollution and other

environmental damage arising under the enactments specified in the

Schedule I (including accident occurring while handling any

hazardous substance);

(b) for restitution of property damaged;

(c) for restitution of the environment for such area or areas, as the

Tribunal may think fit.

(2) The relief and compensation and restitution of property and

environment referred to in clauses (a), (b) and (c) of sub-section (1)

shall be in addition to the relief paid or payable under the Public

Liability Insurance Act, 1991 (6 of 1991).

(3) No application for grant of any compensation or relief or

restitution of property or environment under this section shall be

entertained by the Tribunal unless it is made within a period of five

years from the date on which the cause for such compensation or relief

first arose: Provided that the Tribunal may, if it is satisfied that the

applicant was prevented by sufficient cause from filing the application

within the said period, allow it to be filed within a further period not

exceeding sixty days.

(4) The Tribunal may, having regard to the damage to public health,

property and environment, divide the compensation or relief payable

under separate heads specified in Schedule II so as to provide

compensation or relief to the claimants and for restitution of the

damaged property or environment, as it may think fit.

(5) Every claimant of the compensation or relief under this Act shall

intimate to the Tribunal about the application filed to, or, as the case

may be, compensation or relief received from, any other court or

authority.

253


20. Tribunal to apply certain principles.—The Tribunal shall, while

passing any order or decision or award, apply the principles of

sustainable development, the precautionary principle and the

polluter pays principle.”

(Emphasis by us)

609. Thus, the legislative guidance by way of Section 20 is extremely broad and

the NGT is required to apply the principle of sustainable development, polluter

pays principle and the precautionary principle while passing an award or order in

favour of an applicant. The Tribunal is required to assess the environmental

damage as well in a case while coping with the scientific uncertainty which is

involved in this assessment.

610. Some guidance in the approach which is to be followed can be found in the

judgment of the Supreme Court in Writ Petition (Civil) No.435/2012 : Goa

Foundation v. Union of India. In this case, the court was considering an issue of

determination of environmental damage caused on account of illegal mining

activity in Goa. The Court was guided by the consideration of the issue that the

mining could not be completely stopped due to its contribution towards

employment and revenue generation for the State. The Supreme Court thus was

concerned with an activity which was making a major contribution to the State’s

revenue. It was, therefore, held that if mining had to continue, determining

compensation on the basis of sale proceeds would be apt as it would directly affect

the profitability of the project. In this case, the Supreme Court created a special

purpose vehicle- “Goan Iron Ore Permanent Fund” for depositing the

compensation. However, this cannot be an absolute principle in assessment of

adequate compensation for the detriment and damage to the ecology and

environment.

254


611. As noted by the Supreme Court in Deepak Kumar, illegal mining has the

effect of causing irreparable damage to the ecology. We also have instances of the

NGT assessing “environmental penalty” equivalent to the percentage of 5% of the

project cost.

612. While the contribution of the revenue towards the State has weighed with

the Supreme Court while according consideration in Goa Foundaion case,

however, in the case in hand, the damage is irreparable and also irreversible and

extremely serious. An instance of similar damage was noted by the Supreme Court

in the judgment reported at (2019) 8 SCC 177 : State of Meghalaya v. All Dimasa

Students Union, Dima-Hasao District Committee. In this case illegal mining

operations in the Jaintia Hills in the State of Meghalays had not only caused

serious and irreparable damage to the ecology, water bodies including underwater

plants and socio economic conditions of the concerned areas including of Dimal

Hasao district of Assam but had also resulted in serious erosion/ corrosion of the

machineries and equipment of the Kopili Hydro Power Project of the North

Eastern Electric Power Corporation of India. The court, noticing that there was

huge environmental degradation and pollution of the water in the State of

Meghalaya, observed that serious steps were required to be taken for cleaning

polluted water bodies. With these objectives, the court authorized the State

Government to collect 10% of the market value of the coal in addition to the

royalty payable to it.

613. The judgments of the Supreme Court and the orders of the NGT have also

considered proportion of sale proceeds or the project cost as a measure of quantum

of compensation and provide guidance on the parameters on which compensation

in such cases could be evaluated.

255


614. We find that even the legislature was sensitive to requirement of restoration

and rehabilitation measures for the benefit of the community in and around the

areas where mining activities are undertaken. Section 15A of the Act of 1957 was

incorporated by amendment with effect from 12.01.2015 which empower the State

Government to collect funds for District Mineral Foundation in case of minor

minerals of the District in which mining operations are carried on.

615. We find that even the Government of Jammu & Kashmir was not ignorant

about the possible need for such measures. The Rules of 2016 include Chapter X

captioned ‘Mines and Minerals Development Restoration and Rehabiliation

Fund.’ This postulates creation of a fund known as the Mines and Minerals

Development, Restoration and Rehabilitation Fund (MMDRRF) under the

administrative control of the Department to which rehabilitation charges payable

under Section 15A of the Act shall be credited. Rule 73(i) incorporates the

objective of funding of the restoration or rehabilitation works in the sites affected

by mining operations. Under Rule 74, 10% of the royalty paid to the State shall be

charged from the mineral concession holder in the nature of other charges for

restoration and rehabilitation works and credited to the account payable to the

Government. This amount under Rule 74(2) has to be remitted by the mineral

concession holder along with royalty. We have no information before us as to

whether payments were effected by the appellants or the other bidders who

extracted the minerals as above.

616. An analysis of the judgments and orders on the subject shows that it is

essential to determine compensation on a case by case basis so as to not only dis-

incentivise the violator but enable protection of the environment and also its

256


restoration wherever there has been significant illegal activity. We find that

evaluation of the fair and necessary balance between the default and consequential

liability of the defaulter in instances of environmental degradation is not an easy

task. It depends on several indeterminate factors and imponderables. It is,

therefore, necessary to undertake a scientific determination of the environmental

damage before quantifying a fair compensation.

617. We have no manner of doubt that this Court lacks the expertise to quantify

the environmental damage.

618. We also find that respondents have exhibited complete lack of will to abide

by the judgment of the Supreme Court and the orders passed by the NGT or to

enforce binding statutory provisions.

619. In the present case, the appellants not only used the shield of Rule 104A

over the years, failed to follow the mandate of this rule and carried on with illegal

mining activities. Even the limited information and record available before us,

clearly speaks volumes about the commercial profits which have been derived by

the appellants from the illegal activity.

620. The Ld. Single Judge has in para 74 of the impugned judgment noted the

lack of material regarding the resultant environmental degradation on account of

the illegal activities of the writ petitioners.

621. In view of the facts brought on record, it is essential for the respondents to

effectively evaluate the cost of the illegal mining undertaken by the appellants

after provisional acceptance of their bids pursuant to the auctions of 2016.

Effective, imperative and scientific measures need to be scientifically taken by the

respondents to determine damage, assess value, apportion liability and effect

257


recovery thereof which act as a deterrant, discourage and bring illegal mining to a

halt in the Union Territory of Jammu & Kashmir.

XIX Writ petitions liable to be dismissed for suppressio veri

622. It is an elementary principle of law that every writ petitioner must make a

complete and fair disclosure of all relevant facts. Failure to do so would

tantamount to concealment of material facts.

623. Misjoinder of parties and non-joinder of necessary parties are also

established procedural requirements. Every petition must ensure compliance with

the above.

624. In the instant matters, wherein the appellants are aggrieved by the action of

the respondents in cancelling an entire auction process, the factual details relating

to the auction notice; terms and conditions of the auction; the details of the

conditions stipulated in the LoI; the dates on which the writ petitioners took steps

for compliance of the requirements and when the requirements were completed are

material and essential facts necessary for complete and effective adjudication.

Not a single writ petitioner has given these basic facts in totality.

625. We have had to undertake a close scrutiny of the counter affidavit of the

respondents as well the official records to ascertain these essential facts. We have

no doubt that the whole effort was to conceal material facts which went to the root

of the matter and clearly disentitled the writ petitioners to grant of any relief. These

writ petitioners deserved to be non-suited at the very threshold for concealment of

necessary and material facts.

626. Mr F. A. Natnoo, ld. AAG, has placed the judicial precedent reported at

(2012) 6 SCC 430 A Shanmugan Vs. Ariya Kshatriya Rajakula Vamsathu

258


Madalaya Nandhavana Paripalanai, relying on the following observations of the

court:

“43.4. Once the court discovers falsehood, concealment, distortion,

obstruction or confusion in pleadings and documents, the court should

in addition to full restitution impose appropriate costs. The court must

ensure that there is no incentive for wrong doer in the temple of justice.

Truth is the foundation of justice and it has to be the common

endeavour of all to uphold the truth and no one should be permitted to

pollute the stream of justice.”

627. Yet another circumstance which in our view is completely dishonest is the

manner in which the writ petitions having multiple petitioners, each with separate

facts, were joined as co-petitioners in single writ petitions. While one out of the

many co-petitioners may have completed some of the requirements of the LoI,

bidders who have not completed any of the requirements with utter impunity have

been joined as co-petitioners. This is a deliberate and dishonest attempt to mislead

the court into overlooking the defaults.

628. This is yet another circumstance which merited the writ petitioners to

summary dismissals of the writ petitions.

XX Whether the issuance of the Letter of Intent (LoI) resulted in

grant of ‘quarrying licence’ or a ‘prospecting licence’

629. As noted above, it has been vehemently contended by Mr Abhinav Sharma ,

ld. counsel in LPA No. 7/2020 that by the issuance of the LoI a ‘quarrying licence’

stood granted to the petitioners. Mr Abhinav Sharma has relied on the definitions

contained in Section 3, (a), (c), (f), (g), and (ga) of the Mines and Minerals

(Development & Regulation) Act, 1957.


259


630. Ld. counsel submits that there is a distinction between a mining lease and a

quarrying/prospecting licence as is evidenced from Rule 26. Before this court, it is

contended by Mr. Abhinav Sharma that by issuance of the LoI, the appellant had

been granted quarry licence in accordance with Rule 55(Lx).

631. On behalf of the appellant, it was also orally urged that with the issuance of

the LoI, a ‘prospecting licence [under section 3(g)] stood granted to them.

632. Mr. Abhinav Sharma has adverted to Section 3(g)(a) of the Act which

defines ‘prospecting licence cum mining lease’ to point out the difference between

a prospecting licences and a mining lease which prescribes two stages, the first

stage requiring undertaking prospecting operations which are followed by mining

operations. Mr. Sharma, has also drawn our attention to the definition of

prospecting operations in Section 3(h) of the Act. It is pointed out that under

Section 7 of the Act, a ‘prospecting licence’ is granted for not more than three

years.

633. Mr Altaf Naik, ld Senior Counsel appearing in LPA No. 61/2020 placed

reliance on Sections 3, (g), (h) and section 7 of the Act and has contended that

upon issuance of the LoI, a ‘prospecting licence’ stood granted to the appellants

which licence, according to ld. Senior Counsel, could be terminated only in

accordance with Section 4-A of the said Act. It is argued that there is no order of

termination of the prospecting licence.

634. Mr F. A. Natnoo, ld. AAG, has emphasized that in SRO 105, there is

nothing in the nature of a “prospecting licence”.

635. In order to deal with these submissions, it is essential to understand the

difference between ‘prospecting’, ‘quarrying’ and ‘mining’. The second basic issue

260


which has to be understood is the distinction between a ‘licence’ and a formal

mining ‘lease’.

636. Mr Sunil Sethi, ld Senior Counsel who appears for the intervenors in these

matters has drawn our attention to an important fact that there is no reference to

‘quarrying licence’ in the Act of 1957. A quarrying licence is for the first time

mentioned in Rule 2 (LV) of SRO 105 of 2016 framed by the Government of

Jammu and Kashmir which has been extracted above. Another important fact is

that these rules do not refer to a ‘prospecting licence’.

637. The manner in which an application for a ‘quarrying licence’ has to be

made, is provided under Rule 46. It is noteworthy that Rule 46 (4) requires that an

application for grant of a quarrying licence must be accompanied by “the consent

of owner or occupier of the applied area.”

We therefore find substance in the submission of Mr Sethi that a quarrying

licence envisages excavation of mining minerals in private lands.

638. On the other hand, ‘mining operations’ are defined in section 3(d) of the Act

and mean any operations undertaken for the purposes of mining any material. A

‘mining lease’ is defined under Section 3 (c) and means a lease granted for the

purposes of undertaking mining operation.

639. Mr Sethi has pointed out yet another distinction between grant of a ‘licence’

and a ‘lease’. It is pointed out that a ‘licence’ is granted only for the purposes of

prospecting operations undertaken to identify and ascertain existence of minerals

on a piece of land whereas a ‘lease’ confers specific rights for undertaking mining

in identified areas.

640. This is supported by the provisions incorporated as Section 3 (g-a) of the

261


Act which postulates a ‘prospecting licence cum mining lease’. This is defined as a

two stage concession granted for the purpose of undertaking prospecting

operations followed by mining operations.

641. It is important to note that again SRO 105 i.e., the Rules of 2016 do not make

any reference to a ‘prospecting licence’. The explanation for this, as advanced

before us, is that in the erstwhile Stae (now Union Terriory) of Jammu and

Kashmir, prospecting is undertaken by the State only. There appears strength in

this submission as well.

642. We also find differences in the manner in which a ‘quarrying licence’ is

applied for and the manner in which a ‘mining lease’ are applied for. An

application for a ‘mining lease’ in terms of Rule 28 has to be made in the model

format prescribed as Form ML1. The acknowledgement for this application is in

the format prescribed as form ML3. On the other hand, an application for grant

/renewal of a quarrying licence under Rule 46 has to be made in the format

prescribed as Form QL1. A mining lease deed is issued in Model Format

prescribed in Form ML-10 under Rule 40(1). The proforma of the Quarrying

Licence under Rule 48(ii) is in the format prescribed as Form QL2.

643. There are material differences in the essential requirements for the two as

well. The legislature has put in stringent requirements in the nature of duly

approved mining plan and EC under Rule 26 for grant of mining lease. As against

this, for grant of a quarrying licence, under the proviso to Rule 43 in Chapter V,

only an environmental management plan is needed.

644. It is undisputed that quarrying licences and mining leases fall under distinct

categories of concessions under the Rules. Mr F. A. Natnoo, ld. AAG, has drawn

our attention to Rule 45 which prescribes the period and area of a quarrying

262


licence. Rule 45(2) prohibits grant of a quarrying licence to an area exceeding 05

hectares.

645. Let us now examine the argument of Mr Altaf Naik that on issuance of the

LoI, a prospecting licence under Section 3(g) stood granted to the bidders

including the appellant for the periods prescribed under Section 4 and 7.

646. In the submissions made in rejoinder to the arguments of Mr. F. A. Natnoo,

learned AAG, yet another claim was projected. Placing reliance on Section 3(g)

and 3(h) of Mines and Mineral Development Act, and Rule 6, it was contended by

Mr. Naik that, till the lease was granted, the appellants were prospecting licencees.

The submission was that if such licence has to be terminated, it has to be

terminated in accordance with Section 4. Mr. Naik had also referred to the

definition of prospecting licence as laid down in Section 4(a) and Section 7 of the

Act.

647. This submission makes it necessary to understand as to what is entailed in

“prospecting operations.” This is statutorily recognized under Section 3 (h) which

provides that prospecting operations means “any operations undertaken for the

purposes of exploring, locating, approving mineral deposits. Clearly, prospecting

operations do not envisage mining activity. A prospecting operation is clearly a

stage which is prior to undertaking mining operations as defined in Section 3 (d).

648. The appellants having applied for a mining lease cannot be heard to say that a

prospecting licence under section 3 (g) for a period of three years (as per Section

7) stood issued which could be terminated.

649. We have extracted above, as a sample, one of the public notices issued by

the respondents notifying the public of the scheduling of the public auctions for

grant of mining leases. The appellants had participated in auctions for grant of

263


mining leases in specified blocks.

650. The LoIs also clearly refer to the mandatory requirements under Rule 26(2)

for grant of mining lease. The LoI notifies the appellant that it was issued under

Rule 55(9), pertaining to mining leases, with the direction to submit approved

mining plan, EC and deposit the balance 50% of the bid amount to enable grant of

a mining lease.

651. The pleas pressed by Mr Altaf Naik, ld. Senior Counsel, Mr Abhinav

Sharma, Advocate, are thus totally contrary to what was urged by the appellants

before the Writ Court. In the writ petition filed by the appellants, wherefrom the

instant appeal arises, the writ petitioners had clearly asserted that they had

participated in auctions for grant of mining leases. The prayer clause relates to

grant of mining lease. The appellants cannot be permitted to set up contrary pleas

in appeal.

652. For the respondents, Mr. F. A. Natnoo, ld. AAG, has placed reliance on

2000(2) SCC 734: Modern Insulators Ltd. v. Oriental Insurance Co. Ltd. (para

10) ; (2006) 6 SCC 467 : Sanjay Kumar and others v. Narinder Verma and

others (para 13); and (2010) 4 SCC 518 : State of Maharashtra v. Hindustan

Construction Company Limited (Paras 36 and 37). It stands reiterated in these

judgments that in an appeal, a party cannot bring new facts before the court. The

appeal would be a continuation of the original proceeding. New grounds

containing new facts cannot be introduced for the first time in an appeal. In view

of the same, in the present case, no new facts are permitted to be placed.

653. It is important to note that a ‘quarrying licence’ is not synonymous with a

‘mining lease.’ Grant of a quarrying licence is also not an intermediate stage of

consideration for grant and execution of a mining lease.

264


654. A ‘prospecting licence’ also cannot be equated to a mining lease, for which

the appellants had applied.

655. In this background, the oral submissions propounded on behalf of appellants

in LPA No. 61/2020, that on issuance of LoI, the appellant stood granted a

‘prospecting licence’ and the submissions in LPA No. 7/2020 that the appellant

stood granted ‘quarrying licence’ are completely misconceived, untenable and is

rejected.

XXI Whether any mining lease at all stands granted?

656. The respondents have informed that only three mining leases for minor

minerals relating to District Kathua were granted under SRO 105.

657. We are informed that a mining lease was granted to one Sh. Mohan Paul

Singh of Chandigarh, regarding the extraction of minor minerals in village

Kediyan Gadiyal, District Kathua, vide an order bearing No. 2-DGM of 2016 dated

12th May, 2016. However, by an order dated 24th June, 2016, this lease was

cancelled. It is reported that upon challenge of the cancellations by the grantee an

interim order was issued by this Court (Jammu Wing) directing that the order dated

24th June, 2016 shall not be acted upon.

658. A second mining lease granted to Sh. Mohan Paul Singh by an order bearing

No.01-DGM of 2016 dated 12th May, 2016 was also cancelled, operation whereof

also stands stayed by this Court.

659. Unfortunately, we are neither given the details of the cases in which the

interim order was passed; the status of the interim order or the main proceedings in

which the order was passed.

265


660. The third mining lease was granted to one Sh. Diyan Singh of Jammu for

extraction of minor minerals in Mahi Chak (Ujh river) vide order No. 257-IND of

2017 dated 17th November, 2017, for a period of five years. This lease is stated to

be operational.

661. It would thus appear that, over all these years, the process for grant of

mining leases has been completed only in respect of one person. It is significant,

however, that mining leases stands granted, establishes that it was not impossible

for bidders to complete the process envisaged by the Rules and to obtain a mining

lease.

XXII Whether the Learned Single Judge has failed to consider the

Rule 55 (10) of SRO 105? If so, effect thereof.

662. It has been contended by Mr Altaf Naik, ld Senior Counsel, that the

consideration by the Ld. Single Judge stopped at consideration such of sub-rule 9 of

Rule 55 of SRO 105and has erred in overlooking the sub-rule 10 thereof. This

submission is to be also noted for the sake of rejection only.

663. Sub-Rule 10 of Rule 55 only states that the bid amount offered by the

successful bidder shall be considered as “guarantee amount for grant of such

mineral concession.” This provision would take effect only after compliance of

Rule 55 (9) which reiterates the requirements on the bidder to complete the

formalities including deposition of the remaining fifty percent of the bid amount

required under rules within a period of six months from the issuance of the LoI.

664. That has not happened in these appeals, and it was completely unnecessary

for the ld. Single Judge to consider Rule 55 (10). Sub-rule 10 of Rule 55 has no

bearing or relevance so far as the prior stages of grant or execution of the mining

lease is concerned.

266


XXIII Refund of the bid amount-enitlement to in the facts of case

665. We find that in the Government files, reference is made to refund of the bid

amount to the bidders. In para-76 of the impugned judgment dated 1st May, 2020,

the ld. Single Judge has clarified that the judgment shall not come in the way of the

petitioners or any person to claim refund of the bid amount or to sue the

respondents in any appropriate proceedings for any loss or damage, if any suffered

by the appellants, as may be permissible in law.

666. The appellants claim to have undertaken mining utilizing the shield of Rule

104A. The appellants have paid royalty at paltry rates to the respondents. Even if

Rule 104A had to be worked, the appellants needed permission under Rule 104A

from the respondents to do so. We have noted above the volume of the illegal

extraction effected by these appellants and the quantum of commercial profits

derived. Both the bidders nor the respondents have thus bothered to discharge their

responsibility under law to the ecology. In the light of the clear directions in afore

noted orders dated 5th April, 2019 and 26th July, 2019 passed by the NGT, the

environmental degradation which has been caused by the appellants and the extent

of commercial profits which the appellants have derived from the illegal mining

activity, the appellants who are bound to compensate the State and ensure

restoration of the environment to the condition it was before they undertook the

illegal extraction of public resources without ECs and specific orders from the

respondents. We are of the firm view that the payment by the bidders of the paltry

amounts of royalty or its recipt by the respondents does not diminish the appellants

liability to compensate and effect reparation for the illegal mining or detract from

the illegality on the part of the respondents in extending the unfortunate Rule

104A.

267


667. In para 55 of the order dated 5th April, 2019 (O.A. 360/2015) National

Green Tribunal Bar Association v. Virendra Singh (State of Gujarat), extracted

above, the NGT has observed that the scale of compensation for illegal mining is

payable on the “Polluter Pays” principle and must be such as would enable

“complete restoration of the environment.” The scale at which such monetary

compensation would be payable in para 52 and 56 has been declared as including

“not only the full value of the illegally mined material but also cost of restoration

of environment as well as cost of ecological services foregone forever.” The NGT

has observed that MPV should additionally form part of the compensation to be

recovered.

668. The NGT has in para 56 of the above order dated 5th April, 2019 directed

action against the polluters and the erring officers.

669. Significantly, in the same order, the NGT has reiterated the direction that

vehicles or any other equipment used for illegal mining are required to be

confiscated and to be released only on payment of atleast 50% of the showroom

value as were laid down in OA No.220(THC)/2012.

670. In para 52 of its order dated 5th April, 2019, the NGT has stated that

violation of its orders is a criminal offence punishable by imprisonment and fine. It

is also observed that its orders can be executed by ordering civil imprisonment or

adopting other norms.

671. In the present cases, the appellants as well as the respondents were aware of

the illegalities noted by us hereinabove and the judgments of the Supreme Court.

The Union Territory of Jammu & Kashmir (earlier State) was all along party in the

proceedings before the NGT and aware of its directions.

268


672. In para 57 of the order dated 5th April, 2019, the NGT has appointed a

Committee for evaluating compensation. We have not been informed as to whether

any recommendation has been placed by this Committee before the NGT or any

orders passed on it.

673. There also appears to have been no compliance of the directions dated 13th

September, 2018 of the NGT in Mushtakeen v. MOEFF & CC mandating

evaluation of the NPV and compounding charges.

674. The royalty payments manifest the huge commercial profits which must

have been derived by the appellants. For this reason we hold that appellants have

no right to sue the respondents in any proceeding for loss or damage as none has

enured to them. We, therefore, are unable to agree with the liberty granted by the

learned Single Judge in para 76 of the impugned judgment dated 1st May, 2020,

which are hereby set aside and quashed. We hold that appellants have no right at

all to sue the respondents for any reason.

675. Given the directions we are passing hereafter, the respondents shall not

refund any amounts to the appellants till such time appropriate assessment with

regard to the remedial measures and compensation which the appellants may,

respectively, be found liable for payment in terms of the directions we propose to

pass.

XXIV Submission that the amendment to the Rules was prospective

and the pending applications of the appellants had to be

considered in accordance with the unamended provisions

676. The appellants have contended before us that their applications having been

made prior to the amendment of the rules, have to be favourably considered.

677. The impact of an amendment to a rule on pending applications fell for

consideration before the Supreme Court in the judgment reported at (1981) 2 SCC

269


205, State of Tamil Nadu vs. Hind Stone and Ors. which was placed by Mr. Z.A.

Shah, Senior Counsel before us. In this case, on the 2nd December 1977, Rule 8-C

was introduced into the Tamil Nadu Minor Mineral Concession Rules, 1959. By

this Rule, it was directed that w.e.f. 7th December 1977 ‘no relief for quarrying

black granite shall be granted to private persons’. The validity of the Rule was

assailed in writ petitions before the Madras High Court which challenge was

accepted. Allowing the appeals, the Supreme Court upheld the competency of the

State Government to make the rules.

678. One of the grounds for challenge by the writ petitioners in Hind Stone was

that the writ petitioners are persons who are holding leases for quarrying black

granite which were about to expire and had applied for renewal of leases. Just as

the appellants before us, they had also complained that their applications for

renewal had been made prior to the coming into force of the prohibition in Rule 8-

C and these applications should have been dealt with without reference to the

same. It was further complained that these applications were kept pending for a

long time. The Supreme Court held that an application for renewal is in essence an

application for grant of lease for a fresh period; that the renewal is not to be

granted automatically, for the mere asking.

679. So far as the consideration of the application dehors the amendment and

incorporation of Rule 8-C is concerned, we may usefully extract the observations

of the Supreme Court which also shed valuable light on the submissions made

before us which reads as follosws:

“12. The next question for consideration is whether Rule 8-C is

attracted when applications for renewal of leases are dealt with. The

argument was that Rule 9 itself laid down the criteria for grant of

renewal of leases and therefore Rule 8-C should be confined, in its

270


application, to grant of leases in the first instance. We are unable to

see the force of the submission. Rule 9 makes it clear that a renewal is

not to be obtained automatically, for the mere asking. The applicant

for the renewal has, particularly, to satisfy the Government that the

renewal is in the interests of mineral development and that the lease

amount is reasonable in the circumstances of the case. These

conditions have to be fulfilled in addition to whatever criteria is

applicable at the time of the grant of lease in the first instance,

suitably adapted, of course, to grant of renewal. Not to apply the

criteria applicable in the first instance may lead to absurd results. If as

a result of experience gained after watching the performance of

private entrepreneurs in the mining of minor minerals it is decided to

stop grant of leases in the private sector in the interest of conservation

of the particular mineral resource, attainment of the object sought will

be frustrated if renewal is to be granted to private entrepreneurs

without regard to the changed outlook. In fact, some of the applicants

for renewal of leases may themselves be the persons who are

responsible for the changed outlook. To renew leases in favour of such

persons would make the making of Rule 8C a mere exercise in futility.

It must be remembered that an application for the renewal of a lease

is, in essence an application for the grant of a lease for a fresh

period. We are, therefore, of the view that Rule 8C is attracted in

considering applications for renewal of leases also.”

(Emphasis by us)

680. Before us, so far as the bids of the appellants are concerned, the respondents

have not applied the new amended provisions. Objections premised on this

submission are therefore completely misplaced.

XXV Conclusions

681. In the aforesaid background, we conclude as under:

I. The learned Single Judge was bound to consider the statutory provisions

and the rules in their entirety and has rightly concluded that Rule 104A

271


was affront to the Environment Protection Act. Rule 104A which enabled

mining activity to be undertaken by the highest bidders without

environmental clearance was ultra vieres the Mines and Minerals

(Development and Regulation) Act, 1957. It was in the teeth of the

judgment of the Supreme Court reported at (2012) 4 SCC 629 Deepak

Kumar and Anr. V. State of Haryana and Anr., and the series of

directions including the directions dated 5th September, 2019 and 13th

September, 2018 made by the National Green Tribunal in the case OA

No. 360/2015, National Green Tribunal Bar Association v. Virendra

Singh (State of Gujarat) and OA No.186/2016 Satindra Pandey v.

MOEF & CC, respectively. Rule 104A was in contradiction with Rules

26 (2) and 55(9) of the J&K Minor Minerals Concession, Storage,

Transportation of Minerals and Prevention of Illegal Mining Rules,

2016.

II. The illegal acts of the appellants have deprived the State of valuable

financial resources in terms of the balance bid amount while deriving

huge commercial profits and causing environmental degradation by their

indiscriminate mining operations without environmental clearances

utilizing the shield of Rule 104A.

III. The suspicion of the respondents that in the auctions of 2017, the reserve

price fixed was low and there was cartelization was with basis.

IV. The decision of the respondents to cancel the auction of 2017 was

bonafidely based on material on record and arrived at after application of

mind and full consideration of the relevant material purely in public

interest.

272


V. The decision to change the policy and to auction mineral licences by e-

auction was a reasonable policy decision fairly made without any ulterior

purpose for the discernible reasons that e-auctions are the most

transparent, maximize competition, geographically inclusive, effective,

efficient method of conducting a public auction which enables

maximization of the public interest and national priorities.

VI. The writ court has limited powers of judicial review into administrative

action and matters of contract. It does not have the jurisdiction to go into

a factual dispute of whether in the facts of the case there was a concluded

contract or not.

VII. In the present cases, the bids of the appellants were only provisionally

accepted; they were required to obtain approval of the Mining Plan and

environment clearance in accordance with Rule 26(2) of the Rules of

2016 as well as deposit the balance bid amount within a period of six

months as per Rule 55(9) which was communicated to the bidders by the

letter of intent issued as per Rule 55(9); before being considered for grant

of the mining lease under Rule 52 and lastly execution of the mining

lease in accordance with Rule 40. Only thereafter, a concluded contract

would have come into existence.

For the reason that appellants failed to comply with the

requirements of Rule 26(2) and 55(9), no concluded contract came into

existence.

VIII. The respondents had no power or authority to waive, modify the pre-

conditions for grant of a mining lease or to grant extension of the time

273


stipulation as contained in the Rules and communicated in the letter of

intent.

IX. The appellants were not concerned with the compliance of any of the

mandatory conditions laid down in the rules or making good the financial

obligations to the respondents and failed to act with expedition and

diligence. The respondents cannot be held responsible for the delay in

obtaining the environment clearances. As such, the finding of the learned

Single Judge on issue no. iv that the appellants were not responsible for

the delay is set aside and quashed.

X. The appellants do not have any right or entitlement to seek compensation

and hence no remedy in common law to do so.

XI. The respondents had not held out any representation or unconditional

promise to the appellants that they would be granted mining leases

irrespective of whether they complied with the requirements of Rules of

2016 or not. The doctrine of promissory estoppels is neither attracted nor

has application in the present case.

XII. The cancellation of the entire auction of 2017 and the policy decision to

allot mining leases henceforth only by e-auction was lawful, principle

based, most transparent, viable and fair mode of grant of public largess.

XIII. The action of the respondents cannot be faulted for violations of natural

justice on the ground that no notice was issued before cancellation of the

auction or because no reasons have been assigned in individual cases.

XIV. The appellants are guilty of suppressio veri and disentitled to any relief.

XV. The appellants are liable to effect reparation and compensation for the

environmental degradation from their illegal mining.

274


XVI. Rule 55(10) of the Rules of 2016 has no bearing or relevance in the

present case.

XVII. The submissioins that the appellant stood granted a ‘prospecting licence’

(LPA 61/2020) or a ‘quarrying licence’ (LPA 7/2020) are legally

untenable and rejected.

XVIII. The respondents are required to comply with the judgments and

directions of the Supreme Court of India and the National Green Tribunal

on the issues relating to reparation and compensation for environmental

degradation and damage and to undertake a scientific examination of the

impact on the environment of the acts of omissions of the appellants.

XIX. In view of the admitted violation of the Rules and the requirements of

LoI by the bidders, any action, communication or order of the authorities

subsequent to 26th February, 2019, which could be considered as

processing of the matter, is illegal and of no consequence and effect.

XXVI Result

682. In view of the above, it is directed as follows:

I. The instant appeals are found to be without any merit and are hereby

dismissed.

II. The conclusion of the learned Single Judge in para 46 of the judgment

that the appellants had a remedy in common law to seek compensation is

set aside and quashed.

III. The liberty granted by the learned Single Judge in para 76 of the

impugned judgment dated 1st May, 2020, to the appellants to claim

refund of their bid amount(s), if any, lying with the respondents or to sue

275


the respondents in appropriate proceedings for any loss or damage, if

any, suffered by the appellants, is hereby set aside.

IV. In view of the discussion in paras 296 to 311, hereinabove, the Chief

Secretary of the Union Territory of Jammu & Kashmir shall take

immediate steps for appointing professional and qualified person(s)/

agency(ies) for technically and scientifically evaluating, in strict time

frames, the issues of:

(a) fixation of the reserved prices of minerals in the UT of Jammu

& Kashmir.

(b) the terms and conditions on which auctions/tenders for grant of

all mineral concessions are conducted.

(c) recommendations of the experts so appointed be implemented

in public interest.

V. In view of the discussion in paras 273 to 295, hereinabove, the Chief

Secretary of the Union Territory shall, if not already done, appoint a

Committee of Experts on the lines of directions given by the Supreme

Court of NGT in para 55 of the order dated 5th April, 2019 in OA No.

360/2015, National Green Tribunal Bar Association v. Virendra Singh

(State of Gujarat), as well as order dated 13th September, 2018 in

Mushtakeen v. MOEFF & CC, to assess the components and scales of

compensation and recommend measures of reparation for acts and

omissions of the appellants which have resulted in environmental

degradation.

VI. The Chief Secretary of the Union Territory shall appoint a nodal officer/

committee of officers to compute the scale of compensation as

276


recommended by the Committee as above with a time bound mandate to

issue notices to show cause to the appellants with regard to payment of

compensation, if any, consideration of the responses, making appropriate

determination of liability and effecting recoveries thereof.

(SANJAY DHAR) (GITA MITTAL)

JUDGE CHIEF JUSTICE

Jammu

30.09.2020

30.09.2020 LPA No. 53/2020(Jammu) (EMG-LPA N

Documents

Transcript of 30.09.2020 LPA No. 53/2020(Jammu) (EMG-LPA N