Rajasthan High Court - Jaipur
M/S Regaliya Builwell Pvt Ltd vs State (Ministry Of Mining )Ors on 19 March, 2012
Author: Alok Sharma
Bench: Alok Sharma
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH ORDER M/s. Regaliya Buildwell Pvt. Ltd. Vs. State of Rajasthan & Others (S.B. Civil Writ Petition No.6445/2011) S. B. Civil Writ Petition under Articles 226 and 227 of the Constitution of India. Date of Order: March 19, 2012. PRESENT HON'BLE MR. JUSTICE ALOK SHARMA Mr. Kamlakar Sharma, Senior Advocate with Ms. Alinkrata Sharma, for the petitioner. Mr. G.S. Bafna, Advocate General with Mr. Sarvesh Jain, for respondents. BY THE COURT:
The petitioner is aggrieved of the revocation of sanction granted by the Mining Department for royalty collection contract in respect of mineral masonry stone in Tehsil Khetri and Buhana District Jhunjhunu and the forfeiture of earnest money Rs.16,85,52,000/- vide order dated 3-5-2011 passed by the Director, Mines and Geology, Udaipur, as communicated to the petitioner vide letter dated 5-5-2011 under the hand of Superintendent Engineer (Mines) along with a refund of FDRs for an amount Rs.1,26,42,000/- and bank guarantee of Rs.2,53,00,000/-.
The facts of the case are that the pursuant to a notification dated 7-2-2011 inviting bids for the collection of royalty on mineral at various divisions under the extant provisions of the Rajasthan Minor Minerals Concession Rules, 1986 (herein after `1986 Rules'), the petitioner company made its bid and as required under the condition of NIT deposited a sum of Rs.16,85,52,000/- as earnest money. The bids were opened on 1-3-2011, and the petitioner was found the highest bidder for grant of royalty collection contract on the mineral masonry stone in Tehsil Khetri and Buhana District Jhunjhunu subject to the sanction under Rule 37(2) of the 1986 Rules.
It is the case of the petitioner that in terms of 1986 Rules, though the petitioner was required to be communicated the sanction of the superior authority with regard to acceptance of its highest bid, the company was not so informed. It is submitted that in these circumstances, the petitioner company itself enquired from the office of respondent No.4, Mining Engineer Sikar, on 28-3-2011, where upon it was informed that the approval/ sanction of the superior authority for its highest bid had already been issued some time on 14-3-2011. It is submitted that even though the formal communication was not received, as purportedly sent under the letter dated 14-3-2011, the petitioner as indicative of his bonafides and keenness to enter into contract it had bid for, immediately on 29-3-2011 along with a covering letter submitted FDRs for an amount Rs.1,26,42,000/- and Bank Guarantee of Rs.2,53,00,000/- in the office of Director, Mines and Geology, Udaipur. It is submitted that the Bank Guarantee submitted by the petitioner on 29-3-2011 was however valid only for a period of one year, for paucity of time as the petitioner company had only informally been made aware of the letter dated 14-3-2011 on 28-3-2011. However on 29-3-2011 itself the petitioner is stated to have applied to IDBI Bank its banker for the extension of the validity of the Bank Guarantee upto a period of three years. It is submitted that in response to the petitioner's request IDBI Bank issued an in principle approval for extension of the validity of the Bank Guarantee on or about 8-4-2011. It is the case of the petitioner that after submission of FDRs for an amount Rs.1,26,42,000/- and bank guarantee of Rs.2,53,00,000/- on 29-3-2011 it formally received the sanction order dated 14-3-2011 on 31-3-2011.
The petitioner's case is that even though it had already substantially fulfilled the conditions of the NIT, following the sanction/ approval dated 14-3-2011 for its highest bid as informally communicated to the petitioner company on 28-3-2011, and it had further applied to its banker-the IDBI Bank for extension of the validity of the Bank Guarantee for a period of three years, yet the contract for collection of royalty was not executed in its favour by the department.
It is submitted that in these circumstances, the petitioner sent a representation to respondent No.2, Director, Mines and Geology, Udaipur on 2-4-2011 requesting that steps be taken for the execution of contract for collection of royalty, such that the petitioner could commence collection of royalty in terms thereof. It is stated to have been reiterated in the said representation dated 2-4-2011 that the validity of the Bank Guarantee would be extended after getting a formal approval from the IDBI Bank within a period of 15 days. It is submitted that in the meantime the IDBI Bank vide letter dated 8-4-2011, with reference to petitioner's request made on 29-3-2011, informed the petitioner that the Bank was agreeable in principle to grant modification/ amendment for extending the validity of the Bank Guarantee for a period up to five years on terms and conditions as set out in appendix-1 to Bank's letter dated 8-4-2011.
According to the petitioner having completed all the required formalities envisaged in letter dated 14-3-2011, as formally communicated to the petitioner on 31-3-2011, the petitioner repeatedly pursued the matter with the respondent No.4, Mining Engineer Sikar, but to no avail. The petitioner was thereafter surprised to instead receive a letter dated 5-5-2011, issued by Superintendent Mining Engineer, Jaipur informing it that the sanction dated 14-3-2011 had been revoked and security amount Rs.16,85,52,000/- forfeited by the Director, Mines and Geology, Udaipur under his order dated 3-5-2011 for reason of the petitioner having failed to satisfy the conditions of NIT and 1986 Rules, subsequent to approval letter dated 14-3-2011, and that consequently FDRs for an amount Rs.1,26,42,000/- and the Bank Guarantee of Rs.2,53,00,000/- was being returned.
The case of the petitioner is that the period of 15 days for satisfying the conditions of Rules 33-B, 33-C, and 33-D of the 1986 Rules as required under the conditions of the NIT and the 1986 Rules should be reckoned from the date of receipt of the sanction/ approval dated 14-3-2011 by the petitioner, i.e. on 31-3-2011, and so reckoned, there is no question of the petitioner company having defaulted on its obligation under the conditions of the NIT dated 7-2-2011 and the provisions of 1986 Rules to warrant the revocation of the sanction dated 14-3-2011 and forfeiture of earnest money under the Director Mines and Geology letter of 3-5-2011 as communicated to it vide Superintendent Engineer's letter dated 5-5-2011.
In reply to the writ petition, the respondents have submitted that it was well within the knowledge of the petitioner company that the approval/ sanction of the petitioner's highest bid had been issued under the hand of Superintendent Engineer Mines on 14-3-2011, and yet the petitioner company had failed to comply with the terms and conditions of the NIT dated 7-2-2011 and also the extant provisions of 1986 Rules. It has been submitted that the petitioner was telephonically informed by the dealing clerk first on 18-3-2011, and thereafter on 26-3-2011 with regard to the sanction order dated 14-3-2011 and the petitioner was urgently required to make full compliance with the terms and conditions of the NIT dated 7-2-2011 and the extant provisions of 33B, 33C and 33D of the 1986 Rules. It has been also submitted on behalf of respondents that the petitioner failed to fully comply with its obligations following the approval/ sanction of its highest bid on 14-3-2011 within the stipulated time, owing to its own lethargy and disinterest in the contract. It has been submitted that whole controversy revolves around the time limit for compliance with the pre-conditions, i.e. within fifteen days of the sanction dated 14-3-2011 for the execution of a formal contract for royalty collection by the department. It has been submitted that the disinterest of the petitioner company in the contract it had bid for was apparent from the fact that the representative of the petitioner company was absent even on 1-3-2011, when the bids were opened in spite of the date, place, and time for opening of bid having been notified and published in news-papers. It has been submitted that as per Rule 35 (viii) of the 1986 Rules, the petitioner company's representative was required to be present at the time of opening of the bid and that the petitioner company was subsequently given ample opportunity to comply with the terms and conditions of the NIT and the 1986 Rules following the acceptance and sanction to its highest bid within the stipulated period, but it failed to make compliance and avail the benefit of the contract for royalty collection. It has been submitted that the writ petition has only been filled to merely wriggle out of the consequences of petitioner company's failure to comply with the mandate of Rule 33C and 33D of 1986 Rules in spite of the sanction dated 14-3-2011 by the competent authority. It has been further pointed out that having taken back the FDRs for an amount of Rs.1,26,42,000/- and the Bank Guarantee of Rs.2,53,00,000/- following communication of the revocation of the sanction dated 14-3-2011 under the Director Mines order dated 3-3-2011 conveyed under the Superintendent's letter dated 5-5-2011, the petitioner company ought to have disclosed this fact before this court before seeking to agitate the alleged breach of the provisions of 1986 Rules and terms and conditions of the NIT by respondent department. It has been further submitted that in any event the petitioner company has an alternative remedy under Rule 43 of the 1986 Rules, and further a remedy is available to the petitioner under Rule 47 of the 1986 Rules by way of a revision petition before the State Government.
It has been further submitted by the respondent department that even while the petitioner company had partially complied with its statutory obligations following the sanction order dated 14-3-2011 and deposited FDRs for an amount of Rs.1,26,42,000/- and Bank Guarantee of Rs.2,53,00,000/-, yet the petitioner company deliberately proceeded contrary to Rule 33-B of the 1986 Rules, as it had deposited only 7.5% security whenunder Rule 33-B of 1986 Rules, the petitioner company ought to have deposited 10% of the bid amount as security. It has been submitted that even after adjustment of Rs.42,13,200/- against the security deposit, as required by the petitioner, the company was still in deficit as against the legally required amount to be deposited. It has been also submitted that the amount of FDRs Rs.1,26,42,000/- deposited was also short by Rs.13,59,200/-, and further the Bank Guarantee of Rs.2,53,00,000/- was only for a period of one year while the same was required to be for a period of three years, under Rule 33-C of the 1986 Rules. The respondent department further submitted that after deposit of Bank Guarantee for a period of one year on 29-3-2011, no efforts were made by the petitioner company to convey the extension of the Bank Guarantee for three years and submit the amended guarantee to the department. It has been further submitted that the petitioner company even did not care to deposit the first monthly instalment amounting to Rs.1,40,46,000/-, as required under Rule 33-D of the 1986 Rules, within fifteen days of the sanction dated 14-3-2011 and thus the petitioner company practically invited the revocation of the sanction order dated 14-3-2011 and the consequence of the forfeiture of the earnest money.
It has been also submitted that Rule 37 (2) of the 1986 Rules categorically provides for the discharge of pre-determined obligations by the successful bidder within a statutory time frame of fifteen days from the date of the sanction order. It has been submitted that there is no provision for information, as the tenderers are expected to be present at the time of opening of the bid. (Para 6 of reply to writ petition by respondents). As additional defence to the petition, it has been submitted that the petitioner company has raised disputed questions of facts in the writ petition, and this court should loath to address such disputed questions of facts in a petition under Article 226 of the constitution of India. The further case of respondents is that owing to the non-compliance of the terms and conditions of the NIT and 1986 Rules following the order of sanction dated 14-3-2011 passed by the competent authority, the State Government has suffered and will suffer in the aggregate a loss of approximately Rs.6,92,14,560/- till 31-3-2013. In the circumstances detailed in the reply, dismissal of the petition is sought.
Heard counsel for the parties and perused the petition and the reply thereto.
The legal issue in this writ petition is quite straight forward i.e. whether in terms of sub-Rule 2 of Rule 37 of the 1986 Rules, the period of fifteen days for compliance with the requirement of Rule 33C and 33D by the successful bidder would be reckoned from the date of sanction order or from the date of communication of the sanction order?
The case of the petitioner is that the date of sanction as referred in 37 (2) of the 1986 Rules has to be reasonably and rationally construed as the date of the communication of the sanction order. Learned Senior counsel for the petitioner company Mr. Kamlakar Sharma has submitted that the sanction order dated 14-3-2011 issued by the competent authority having been received by the petitioner company on 31-3-2011, the petitioner company in terms of 37 (2) of the 1986 Rules was required to submit guarantee and bid/ tender amount as per Rule 33C and 33D of the 1986 Rules within fifteen days from 31-3-2011, and not from 14-3-2011. Reliance has been placed by Senior Counsel on Municipal Corporation of Delhi Vs. Qimat Rai Gupta and Others [(2007)7 SCC 309], to submit that where a person can be adversely affected by an order, the date of order is to be taken as the date of communication of such order. It is submitted that as the obligations and burdens of the highest bidder flow from the order of sanction of the highest bid by the competent authority, the date of sanction' as referred in 37 (2) of the 1986 Rules, ought to be construed as 'the date of communication of sanction order. Learned Senior Counsel has further relied on CCE Madras Vs. M/s. MM Rubber and Co. [(1992) Suppl.(1) SCC 471] to contend that where a party which is affected by an order or decision has a right to his remedy against such an order or decision, such a party has to be made aware of the passing of such order. Counsel submits that in para 13 of the judgment, the Hon'ble Supreme Court has held that The knowledge of the party affected by such a decision, either actual or constructive is thus an essential element which must be satisfied before the decision can be said to have been concluded and binding on him. Otherwise the party affected by it will have no means of obeying the order or acting in conformity with it or of appealing against it or otherwise having it set aside. This is based upon, as observed by Rajmannar, CJ in Muthia Chettiar v. CIT [AIR 1951 Mad. 204] a salutary and just principle. The application of this rule so far as the aggrieved party is concerned is not dependent on the provisions of the particular statute, but it is so under the general law. (Emphasis mine) Learned Senior counsel further relied on the case of Assistant Transport Commissioner, Lucknow Vs. Nand Singh [(1979) 4 SCC 19], wherein the Hon'ble Supreme Court has held that Apart from the reasons given by this court in earlier judgment to the effect that the order must be made known either directly or constructively to the party affected by the order in order to enable him to prefer an appeal, if he so likes, we may give one more reason in our judgment and that is this: It is plain that mere writing an order in the file kept in the office of the Taxation Officer is no order in the eye of law in the sense of affecting the rights of the parties for whom the order is meant. The order must be communicated either directly or constructively in the sense of making it known, which may make it possible for the authority to say that the party affected must be deemed to have known the order. (Emphasis mine) In any event, under certain circumstances the date of order may be taken to be the date of communication of the order or the date of the order but ordinarily and generally speaking, the order would be effective against the person affected by it only when it comes to his knowledge either directly or constructively, otherwise not. (Emphasis mine) Reliance has also been placed on Union of India and Another Vs. Kartick Chandra Mondal and Another [(2010) 2 SCC 422], wherein the Hon'ble Supreme Court in para 18 of the judgment has held that an order would be deemed to be a government order as and when it is issued and publicised. Further reliance has been placed on Greater Mohali Area Development Authority Vs. Manju Jain [(2010) 9 SCC 157], wherein the Hon'ble Supreme Court referring to a Constitution Bench judgment in case of Bachhittar Singh Vs. State of Punjab [AIR 1963 SC 395] as also State of Punjab Vs. Amar Singh Harika [AIR 1966 SC 1313] has held that an order does not become effective, unless it is communicated to the person concerned.
Mr. G.S. Bafna, learned Advocate General, on the other hand would submit that the golden rule of construction is that of literal construction. It is submitted that where the rule making authority intended that an order would be effective from the date of receipt of the order, a provision has been so specifically made. Reference in this regard has been made by the learned Advocate General inter alia to Rule 19(2) of the 1986 Rules, wherein it has been provided that the lease deed shall be executed within 3 months from the date of receipt of order of grant. Reference has also been made to Rule 45 of the 1986 Rules which provides that an appeal under Rule 43 shall be filled within three months of the date of communication of the order appealed against. Similarly Mr. Bafna has referred to Rule 47 of the 1986 Rules to emphasis again that under sub-rule 1 of Rule 47 of the 1986 Rules it has been specifically provided that a revision can be filed by aggrieved party within three months of communication of the order. Mr. Bafna's contention is that as against the specific provisions of aforesaid Rules, detailed herein above, providing for limitation/ time running from the date of the receipt of a communication or order, Rule 37 (2) of 1986 Rules eschews any reference to the receipt of the order of sanction and instead provides that the grantee shall submit Guarantee and bid/ tender amount as per Rule 33C and 33D, respectively within 15 days from the date of sanction. The contention is that this court should confine the consideration of the matter in terms of rule strictly provided for, and should not supply words and read into Rule 37(2) the word communicated.
Mr. Bafna submits that it is a well accepted rule of interpretation that it is not ordinarily the function of the court to supply words to a particular statutory provision, and the court ought to confine consideration of matters and effect of a provision of law with reference to its plain language without anything more. It is submitted that under Rule 37 (2) of the 1986 Rules it was the plain obligation of the petitioner company to comply with the terms and conditions of Rule 33C and 33D of the 1986 Rules within fifteen days from the order dated 14-3-2011. Mr. Bafna has emphasised that there was no obligation on the part of the government to communicate the order dated 14-3-2011 to the petitioner company. It is submitted that the petitioner company was obliged to keep itself adequately informed with the on goings in the department and keep itself abreast of the progress of the consideration of its highest bid and comply with the sanction order dated 14-3-2011 without any formal communication by satisfying the pre-conditions within fifteen days for the execution of the contract for collection of excess royalty. It is submitted that the petitioner company failed in its obligations following the sanction dated 14-3-2011 consequent to which the revocation of the sanction on 3-5-2011 with forfeiture of security amount was an inevitable result. On these submissions, it has been argued that the writ be dismissed.
The function of the court is to do justice in accordance with law. In that effort, the courts are duly aided by the Rules of interpretation and construction of law i.e. statutory provisions. No court can mechanically apply the plain language of a statutory provision without regard to its object and consequences. In my considered opinion the words date of sanction in Rule 37(2) of the 1986 Rules reasonably construed as of necessity have to be taken as date of sanction communicated. In this regard the judgment of Hon'ble Supreme Court in case of CCE Madras Vs. M/s. MM Rubber and Co. (supra) is absolutely apposite. The Hon'ble Supreme Court has approved the salutary and just principle of the necessity of the communication of an order, non compliance whereof would entail a consequence to a party. The Hon'ble Supreme Court has held that application of the aforesaid rule is not dependent on the provision of a particular statute, but has its foundation in general law. Similarly in the case of Assistant Transport Commissioner Lucknow Vs. Nand Singh (supra), the Hon'ble Supreme Court has further held that an order affecting rights must be communicated either directly or constructively in the sense of making it known to the party, either for the purpose of accepting it, or taking recourse to a remedy in law and observed that writing of an order in the file kept in the office is no order in the eye of law in the sense of affecting the rights of the parties for whom the order is meant.
The obtaining law and the ruling principle therefore is that communication is central to an order which entails or can entail in law an adverse consequence.
Another principle of interpretation of statutes is that statutory provisions are required to be reasonably and not mechanically interpreted. In Delhi Airtech Services Private Limited Vs. State of Uttar Pradesh [(2011) 9 SCC 354), the Hon'ble Supreme Court has held that courts should adopt a reasonable construction and avoid anomalous or unacceptable construction and an unreasonable intent is not to be imputed to a statute. In Narashimaha Murthy Vs. Susheela Bai [(1996) 3 SCC 644] the Hon'ble Supreme Court has held that the purpose of law is to prevent a brooding sense of injustice, and it is not the words of the law but the spirit and internal sense of it that makes law meaningful. It has been held that any interpretation which eludes or frustrates justice is to be eschewed; the underlining idea of justice should be kept in mind and that it is mandatory for the courts to interpret a provision expressing a construction agreeable to reason and justice to all parties concerned while avoiding injustice and mischievous consequences.
In the context of aforesaid dicta of the Hon'ble Supreme Court, in my considered opinion if the contention of learned Advocate General that there is no necessity of communicating an order of sanction under Rule 37 (2) of the 1986 Rules were to be accepted and the said Rule read literally, successful bidders would stand deprived not only of the fruits of their bid but also be visited with the serious immediate consequence of forfeiture of security deposit and potential consequences such as their black-listing for being in breach. I am therefore of the view that the words date of sanction in Rule 37 (2) of 1986 Rules has to be construed as date of sanction communicated. The respondent department is under an obligation to communicate the order of sanction, and now in the age of instant communications, inter alia via SMS, fax or email of the bidder as recorded with the respondent department. The communication of the sanction should be verifiable and consequently the telephonic communication allegedly made by the department's clerk as sought to be relied upon by the department is of no avail.
In my considered view, the impugned order dated 3-5-2011 passed by the Director Mines and Geology department being premised on computing fifteen days for compliance of Rule 33C, and 33D of the 1986 Rules with reference to 14-3-2011, the date of the order of sanction is arbitrary based on a mechanical reading of Rule 37 (2) of the 1986 Rules. Consequently, the order dated 3-5-2011 revoking the sanction dated 14-3-2011 as communicated vide order dated 5-5-2011 under the hand of the Superintendent Engineer Mines Jaipur, deserves to be set aside, as is the consequence thereof entailing forfeiture of petitioner's earnest money of Rs.16,85,52,000/-.
The question that now remains as to whether with the setting aside of the order dated 3-5-2011, as communicated on 5-5-2011, the petitioner is entitled to any further consequential relief?
In the course of proceedings before this court in reply to writ petition the respondents have stated that apart from failing to get the Bank Guarantee submitted by the petitioner for one year modified to three years, the petitioner company also failed to pay the first monthly instalment amounting to Rs.1,40,46,000/- within fifteen days of the order of sanction dated 14-3-2011 and that the FDRs deposited as security were short on the requisite amount. Contrarily the petitioner company has stated that it was fully compliant with its obligation under the 1986 Rules but was derailed and denied its rights only on the basis of the computation of time for compliance with reference to the date of an uncommunicated sanction order. Material on record of the writ petition is insufficient to arrive at findings of fact verifying contentions of the parties with regard to compliance with the Rules 33C and 33D taking the date of communication of the sanction as 29th March, 2011 when the petitioner company admits to being informed of the factum of the sanction of its highest bid as evident from the petitioner company's partial compliance with the pre-conditions for the execution of the excess royalty collection contract.
I would thus remand the matter to the Director Mines and Geology Udaipur to reconsider the issue reckoning 29th March, 2011 as the date of communication of the sanction order dated 14-3-2011 to the petitioner company and thereafter determine whether in the overall facts of the case the petitioner company can be held to be in breach of its obligation under the Rule 37 (2) of the 1986 Rules and whether its security deposit should be forfeited.
Resultantly, the impugned order dated 3-5-2011, passed by the Director Mines and Geology Department Udaipur, as communicated to the petitioner company on 5-5-2011, is set aside. The matter is remanded to the Director to consider the issue of petitioner company's alleged breach of obligations under the NIT and provisions of the 1986 Rules on the overall facts of the case and pass a reasoned and speaking order after providing an adequate opportunity of hearing to the petitioner company.
The writ petition stands allowed accordingly.
Stay application stands disposed of similarly.
(Alok Sharma),J.
arn/ All corrections made in the order have been incorporated in the order being emailed.
Arun Kumar Sharma, Private Secretary.