Allahabad High Court directs District Magistrate of Hamirpur to refund security amount of Rs 90 lakh deposited for mining leases

The Allahabad High Court has directed the District Magistrate of Hamirpur to refund the security amount of Rs 90 lakhs deposited for the mining leases.

The Division Bench of Justice Anjani Kumar Mishraand Justice Jayant Banerji passed this order while hearing a petition filed by M/S Pragyason Constructions Private Limited.

The petitioner by means of the petition seeks a writ of certiorari for quashing the order dated 16.07.2020 passed by the District Magistrate, respondent no 2 and the order dated 20.11.2020 passed by the Secretary, Mines and Minerals, UP.

By the order dated 16.07.2020, the District Magistrate has rejected petitioner’s application for refund of earnest money deposited by him for participating in an e-auction for grant of a lease in District Hamirpur for which an advertisement had been issued on 03.01.2020.

The facts of the case briefly stated are that an advertisement was issued on 03.01.2020 inviting bids for grant of mining leases in District Hamirpur. The petitioner submitted its bid along with earnest money of Rs 90 lakhs on 24.04.2020. The bid of the petitioner, being the highest, was accepted. On 05.03.2020, a letter was issued calling upon the petitioner to furnish relevant documents so that a letter of intent could be issued in his favour.

In the meantime, the petitioner on 07.03.2020 participated in the bidding for grant of leases in District-Fatehpur which was, however, cancelled.

Since, the letter dated 05.03.2020 could not be complied with, allegedly on account of the prevailing pandemic, yet another reminder was issued to the petitioner on 16.05.2020 requiring submission of the relevant documents within three days.

The Court noted that,

It appears that in the meantime, on 14.05.2020, yet another advertisement was published, inviting tenders for grant of mining leases in District Fatehpur. The petitioner participated in the bidding and was issued a letter of intent on 18.06.2020.

After this letter of intent was issued, the petitioner on 19.06.2020 represented to the District Magistrate, Hamirpur for refund of the earnest money of 90 lakhs deposited by him for participation in the bidding held consequent to the advertisement dated 3.01.2020.

It is this application which has been rejected holding that the petitioner deliberately failed to furnish the required documents within three days after acceptance of his bid as was provided in the tender. This has caused huge loss of revenue to the State. Therefore, the petitioner is not entitled to a refund.

Accordingly, the earnest money of 90 lakhs deposited by the petitioner was forfeited in favour of the State. This order has been affirmed by the revisional authority.

The submission of the counsel for the the petitioner is that the application dated 19.06.2020 seeking refund of earnest money was in accordance with Rule 10(3) of the U.P Minor Minerals (Concessions) Rules, 1963, as amended by the 47th Amendment Rules, 19.10.2019, which provided that no person in the State of U.P can be granted leases in excess of an area of 50 hectares. The Government Order dated 19.10.2019 provides the modalities for refund of earnest money in cases where more than two mining leases have been granted in favour of one entity or the aggregate of leases granted is in excess of 50 hectares.

It is additionally reiterated that Rule 10(3) of 47th Amendment Rules limits the maximum number of leases that can be granted in favour of one entity to two and the other condition is that the aggregate area of these two leases cannot exceed 50 hectares.

Since, the petitioner had been granted two leases in District-Fatehpur consequent to the advertisement issued on 14.05.2020, the petitioner informed the authorities opting to operate two leases granted in Fatehpur which option was with the petitioner.

This amended provision has not been taken into consideration by the respondent while passing the impugned orders. The earnest money would be forfeited, if at all, if the information of grant of more than two leases having an aggregate area in excess of 50 hectares had not been communicated by the petitioner and was discovered by the authorities on their own. Such is not the position in the case at hand. The petitioner intimated the respondent no1 immediately on obtaining two leases in District-Fatehpur and therefore, exercised his option of not going ahead with his bid offered for the mining lease in District-Hamirpur.

Standing Counsel has opposed the writ petition and has reiterated what has been stated in the impugned order especially that the petitioner was required to submit documents prior to grant of letter of intent in his favour within three days of the acceptance of his bid. This specific condition mentioned in the tender was not complied with by the petitioner despite issuance of the reminders on 05.03.2020 and 16.05.2020. This inaction of the petitioner resulted in huge loss to the exchequer and therefore, the earnest money deposited by the petitioner has been rightly forfeited as lease could not be operated by any other person also.

The Court observed that,

We are in agreement with the submission of counsel for the petitioner that forfeiture of earnest money could be ordered only when, upon the verification, any document or certificate filed by an individual was found false, fabricated or incorrect.

There does not appear to be any penal consequence provided for noncompliance of the earlier part of this provision which requires the highest bidder to submit relevant documents within a period of three days from acceptance of his bid. Therefore, in view of the judgment relied upon by the learned counsel for the petitioner, the provision has to be held to be directory and not mandatory. This view is further supported by the fact that in case this provision was mandatory, non-compliance would have resulted in adverse consequences having visited the petitioner on the 4th day itself. The authorities, on the contrary, have issued at least two reminders to the petitioner on 05.03.2020 and 16.05.2020.

Under the circumstances, reliance upon Government order which is dated 14.08.2017 for forfeiture of his earnest money deposited by the petitioner is unsustainable.

A bare perusal of the provision cited above reveals that it provides that a person in the State of U.P cannot be granted more than two mining leases for an aggregate area in excess of 50 hectares. It further provides if in a case this condition stands violated, the last lease shall stand cancelled and the earnest money deposited for the same will also stand forfeited and only the first two leases which are not for more than 50 hectares shall remain approved. This provision is subject to proviso that if information is provided by the applicant that he has been issued two letters of intent for two or more mining leases or that their areas are in excess of 50 hectares, he will have right to choose any of the mining lease areas and the amount deposited for the remaining areas would be returned after verification.

In view of the forgoing discussion, the Court is constrained to hold that the forfeiture of the petitioner’s security deposit of Rs 90 lakhs is without any authority of law.

Accordingly, the Court allowed the petition and quashed the orders 16.07.2020 and 20.11.2020.

The Court directed the respondents to refund the security deposit of Rs 90 lakhs to the petitioner expeditiously, positively within a period of four weeks from the date a certified copy of this order is filed before them.

from India Legal https://ift.tt/BeudgiG