R.M. Prasad, J.
1. In both these writ petitions, the petitioners, are in fact aggrieved by letter No. 101/M dated 20th January, 2004 of the Deputy Secretary, Mines and Geology Department, Government of Bihar, Patna communicating the Government decision to the District Magistrate, Rohtas at Sasaram for holding of limited reauction for quarry of the disputed blocks of Amara Karbandiya hills in the district of Rohtas.
2. In short the relevant facts are that an advertisement was made for auction for quarry in 15 blocks, each comprising of 2 acres, situated in Mauza Amara and Basa on Karbandiya hill. As per direction of the department of Mines contained in Letter No. 1868 dated 21.8.2003 auction of serial Nos. 11, 12 and 13 in Mauza Amara was stayed and the auction of the remaining 12 blocks were held on 23.8.2003. Altogether 4 persons participated and for block No. 5-E, the petitioner of the first case was the highest bidder and the bid was knocked in his favour at Rs. 35,01,101 and the petitioners of the second case was the highest bidder with respect to Block 'J' and Block 'C' the same were settled with them for Rs. 62,03,200 and Rs. 35,52,411 respectively. Thereafter on acceptance of their bid the petitioners submitted the relevant documents and deposited the requisite amount for settlement of the said blocks with them for a period of five years. The photo copies of the order for settlement in their favour have been annexed as Annexure 3 in the first writ petition and Annexures 2 and 2/1 in the second writ petition. Later some objections were filed with regard to holding of auction on 23.8.2003 and on such objection the Department on 20th January, 2004 vide Annexure 12 of the first case issued instruction to the Collector for holding of limited auction of the blocks in question and the Assistant Mining Officer vide Annexure 13 fixed 31.1.2004 as date for limited auction. However due to certain unavoidable circumstances the auction did not take place on 31.1.2004 and even on the next date on 6.2,2004 and, later, in view of the observation of this Court and considering the equity learned counsel appearing for the Mines Department on 6.2.2004 fairly informed that the authorities have stayed their hands and shall decide to hold reauction only after disposal of these matters. In the counter affidavit it is however, stated that in the light of the instruction issued by the Department no agreement was executed.
3. An I.A. application bearing No. 603/2004 has been filed on behalf of one Dileep Kumar Singh, who claims to be the managing partner of M/s. Durga Construction, for intervention, who was also one of the bidders alongwith others at the bids in question. His grievance is against the holding of limited auction by allowing only the writ petitioners and the bidders who complained to the Secretary and denying others including him although he had earlier participated on depositing of Rs. 6 lacks as security money.
4. In I.A. No. 616/2004 filed on behalf of one Vijay Kumar Singh, who also participated in the bid it is alleged that for block No. 1A, 2B, 7G abd 8H on which free bidding took place, the final bid reached upto more than one crore rupees and in fact for block No. 1A the bid went upto approximately 2.45 crores, but in so far as the bids for plots 3C, 4D, 5E, 6F, 91 and 10J which include the blocks in question, 'bahubali' also called stone mining Mafia did not permit any person other than themself to participate in the bid and as a result of this all the aforesaid six blocks were auctioned on only reserve minimum auctions amount of approximately 35 lacs each. The said intervenor claims to have submitted a representation on the very next date offering Rs. one crore for block No. 3C.
5. In I.A. No. 615 of 2004 one Uday Kumar Singh who claims to be objector with respect to block 5E and deposited Rs. 2 lacs has also made similar allegation and he also has offered Rs. 1 crore for the said block. He has thus filled the intervention petition in opposition of the writ petition.
6. In rely to the said I.A. No. 615/2004 the petitioners have raised objection regarding its maintainability on the ground that the intervenor participated in the public auction and having failed to offer the highest bid amount and thereafter having withdrawn 2% security deposit cannot be permitted to question the validity or otherwise of the public auction. The allegations have been denied by the petitioners and it is stated that the objection was filed after three months and that too after withdrawal of the security deposit as an after thought just to prejudice, delay and deny the execution of the mining lease in favour of the petitioners who were the highest bidder in public auction.
7. In the second case also I.A. No. 733 of 2004 has been filed by the aforementioned Deleep Kumar Singh raising similar grievance against holding of limited auction and I.A. No. 1017/2004 has been filed on behalf of the aforementioned Vijay Kumar Singh making similar allegation.
8. This Court on 10.3.2004 after hearing the learned counsel for the parties passed the following order:
'In both these writ petitions, the matter in issue is much dependent upon the approach of the State authorities.'
9. This Court is quite conscious of the fact that the Bihar Mines and Minerals (Amendment) Rules, 2001, the validity of which was challenged the finally by virtue of interim order passed by the Apex Court, is in force despite pendency of the matter before the Division Bench. In my opinion, the State will have to answer as to whether acceptance of bid amount by the authority pursuant to the auction held in terms of the aforementioned Rule is the full price of the minerals irrespective of the amount of minerals extracted by the settlee or it is royalty amount for which reserve jama has been fixed as part of the royalty amount finally to be determined on the basis of the extraction of the minerals by the auction purchaser. In other words, the auction amount is besides the royalty amount to be realised pursuant to Section 15 of the Mines and Minerals (Regulation and Development) Act, 1957.
10. As prayed by Mr. Singh, learned Special P.P. appearing for the respondents, with consent, put up these matters again under the same heading retaining their position on 22nd March, 2004, Meanwhile, the respondents must file affidavit with regard to the above query.
11. As prayed by Mr. Singh, Special P.P. appearing for the respondents, let a copy of this order be supplied to him.'
12. Pursuant to the said order a supplementary counter affidavit sworn by the Deputy Secretary, Department of Mines and Zeology, has been filed on behalf of the respondents in which it is stated that the mining lease of stone shall be granted/settled by way of auction under the amended Rule 9-A of the Bihar Minor Mineral Concession Rules, 1972 which came in force with effect from 23rd March, 2001. It is further stated that the period of lease settled under those Rules will be five years and shall not be for more than in two acres. It is stated that since it was new system of settlement for stone lease a direction was sought by the districts as to on what basis and how much amount of reserved jama may be fixed for settlement of mining lease of stone. The State Government grouped the districts of State into two on the basis of royalty received from stone, its quality/demand/ supply and minimum production of stone so that the business be profitable and accordingly, the minimum reserved jama for Group I was fixed at Rs. 11.50 lacs and Rs. 7.10 lacks for Group II. The District Magistrates were accordingly directed vide Annexure A. In paragraph 4 it is stated that subsequently, it was noticed that the mining leases of stones were settled under the new rule by auction on the basis of minimum reserved jama suggested by the department. It was felt that different districts which were divided into two groups and reserved jama was fixed at Rs. 11.50 lacs and 7.10 lacs were not correct on technical grounds because the State Government was under impression that the auction amount will be the amount of royalty. Thus, it was felt need to refix the reserve jama on the basis of available quantity of stone in the area to be settled/granted. It is stated that keeping in view this fact the State Government decided that the amount of reserved jama will be decided on the basis of quantity of stone in the area to be settled/granted for lease by auction it was decided that where minimum reserved jama was fixed according to Annexure A and settlement were done by auction the leases of those districts i.e. Gaya, Jehanabad, Rohtas, Aurangabad, Munger, Nawadah and leases of Nalanda, Bhagalpur, Banka, Jamul and Sheikhpura in case they extract stone in excess of 11.500 cft. and 14,200 cft. in five years they will have to pay royalty for the excess amount on the mineral owned by them. In paragraph 5 it is stated that the Government through Memo No. 330/M dated 13.2.2003 constituted a committee of technical experts to recommend to the State Government the reserve jama of the area on the basis of quantity of stones and also taking other circumstances into consideration. (The proceedings of the committee for the District of Rohtas is Annexure 15 of the writ petition). In answer to the aforementioned queries, in paragraph 6, it is stated that the reserve jama which were fixed on the basis of letter contained in Annexure A the royalty is being charged on the basis of mineral extracted by adjusting the auction amount and in all other cases where the reserve jama has been fixed by the State Government on consideration of quality, quantity and other surrounding circumstances the auction amount will be the royalty and no further royalty will be required.
13. In reply to the said supplementary counter affidavit the petitioners have stated that the bare perusal of Annexure A and B read with Annexure 3 and Annexure 16 it is manifest that the settlee of the mining patta, the petitioner herein, is required to pay the royalty to the Government on the basis of the amount of minerals extracted by him. It is further stated that the revenue to the Government by way of royalty for one year i.e. 12 months would be Rs. 35,12,208 and for a period of five years would be Rs. 1,75,61,040 despite that about Rs. 35 lacs has been fixed as the reserve jama for the block.
14. Learned counsel for the petitioners contended that reauction of the block in question pursuant to the impugned letter without cancelling or annuling the order of settlement in favour of the petitioners in accordance with law is wholly arbitrary and mala fide apart from being in gross violation of the Rules of natural Justice as no opportunity has ever been afforded to the petitioners before taking decision for reauction. He contended that the aforesaid notice has been issued on the basis of objection filed by an unsuccessful bidder who took his chance, participated in the public auction but failed and now as an after thought just to prejudice, delay and deny the execution of mining lease in favour of the petitioners who were the highest bidder in public auction and the bid was finally knocked down in their favour and attained finality of a contract under Section 64 of the Sale of Goods Act. As such, according to him, the order for reauction without cancelling the same and that too without giving due opportunity to the petitioners is unfair and illegal as has been held by the Division Bench of the Allahabad High Court in the case of Zila Parishad,d Muzaffarnagar and Anr. v. Udai Veer Singh, reported in, AIR 1989 Allahabad 64. He contended that the consideration of subsequent offer made by the unsuccessful bidder and acting thereon for holding reauction without affording opportunity to the highest bidder, namely, the petitioners, is wholly arbitrary and against the fair play as has been held by the Apex Court in the case of Ram and Shyam Company v. State of Haryana and Ors., reported in, (1985) 3 SCC 267. Learned counsel also contended that the said objector has himself defaulted in payment of required bid amount for the area settled in his name and steps have also been initiated for his black-listing in accordance with law. Thus, according to him, any action at the behest of such objector on the plea of the public revenue is nothing but mala fide and an effort to unsettle the action taken in accordance with law. Learned counsel submitted that in fact there is no question of loss of revenue to the State as is evident from the stand taken by the respondents in paragraph 6 of their supplementary counter affidavit. Lastly, he contended that the reauction with respect to only three blocks in question and not with respect to other blocks when also the settlement have been made on reserve jama under more or less similar circumstances shows the arbitrariness and mala fide of the authority to show undue favour to those who lost in the bid.
15. It is not disputed that the petitioners were not given any notice before deciding to hold reauction. It is also not disputed that the decision for reauction has been taken without cancelling the order of settlement of the petitioners. Learned counsel for the respondents have, thus, not been able to defend the decision of the Government to hold reauction without cancelling the order of settlement in favour of the petitioners and that too without giving any notice to them. As such, this Court finds that the Government's decision to hold reauction without cancelling the order of settlement in favour of respective petitioners and that too without giving any notice to them is arbitrary and not sustainable in law.
16. Further this Court finds that the reauction at the behest of the person who participated in the auction and lost on the allegation that 'bahubali' also called stone mining Mafia did not permit any person other than themself to participate in the bid and as a result of this six blocks including the blocks in question were auctioned on only reserve minimum auctions amount of approximately 35 lacs each is not at all tenable. The Division Bench in the case of Ranjeet Kumar v. The Union of India and Ors., reported in 2003 (4) PLJR 539, considering the similar allegation made by the writ petitioner in that case challenging the settlement on the ground that by circumstances which were involuntary to him and had been created and he was prevented by sufficient cause to submit the tender with the railways administration, did not find any error in the order of the learned Single Judge dismissing the writ petition and dismissed the appeal. The observation of the Division Bench is quoted hereunder:--
'5. The submission in the writ petition is that the petitioner had been prevented from submitting his tender by strong arm tactics and terrorisation. The petitioner complains of criminality. Who did it had not been identified. If strong arm tactics, intimidation and terrorisation prevented the petitioner from putting in his tender for consideration, then, the petitioner is virtually complaining of wrongful restraint under Section 339 and criminal intimidation under Section 503 of the Indian Penal Code. He should have instituted a First Information Report straightaway and perhaps that may have been the case of the petitioner.'
17. In the present case also the intervenor has raised similar grievance and complains of criminality and is virtually complaining of wrongful restraint under Section 339 and criminal intimidation under Section 503 of the Indian Penal Code for which he should have instituted FIR straightaway but never did so. Now after he lost in the auction that has raised objection, which, in my opinion, cannot be said to be justified. Learned counsel for the petitioners has rightly contended that under Section 64 of the Sale of Goods Act the auction sale completes by fall of hammer and closing of auction at the bid signifies intention to finalise contract which the Government has attempt to arbitrarily nullify it by issuing direction for holding of reauction. In the case of Zila Parishad, Muzaffarnagar and Anr. v. Udai Veer Singh, (supra) referred to by the learned counsel for the petitioners, the Division Bench has held that the generality of law as contended in Section 64 of the Sale of Goods Act mentions that the sale is complete when the auctioneer announces its completion by the fall of the hammer and an indication that the auction is closed at the highest bid signifies an intention to finalise the contract on the last bid.
18. Learned counsel for the respondents submitted that the State has the exclusive right with respect to quarry of minerals as in the case of liquor and grant of such right to lease-holder on payment of consideration is governed by the conditions and restrictions for its regulations as may be necessary in the public interest. It is submitted that keeping in view the involvement of loss of revenue of the State the Government decided to hold reauction which cannot be said to be either arbitrary or mala fide. They contended that the offers by the bidders to purchase the rights are subject to acceptance by the State Government and the State Government was quite competent to issue directions for reauction when it found that bids at the auction were unsatisfactory. In support of this Mr. Kanth, learned counsel appearing for the intervenor respondent relied upon the decision of the Supreme Court in the case of Lakhanlal v. The State of Orissa and Ors., reported in, AIR 1977 SC 722.
19. I am unable to appreciate the said submission of the learned counsel for the respondent/intervenor respondents. There cannot be any doubt that the Government has exclusive right for quarry of minerals and the lease-holder receives the privilege by virtue of settlement in their favour under the rules. Rule 9-A of the Bihar Minor Mineral Concession (Amendment) Rules, 2001 provides that. Notwithstanding anything contained in these rules the Government may by notification in Official Gazette direct that any mineral may be leased out or settled by public auction/tender in the manner prescribed in Rule 52'. Rule 52 is the procedure for grant of quarrying lease by auction in respect of minerals notified under Rule 9-A and the Collector has been vested with the power to notify the particulars of the area mentioned therein and Sub-rule 2 provides for filing of documents mentioned therein by every bidder of the mining lease. Rule 3 provides as to when the bidder can withdraw the documents submitted under Sub-rule 2. It provides that it shall not be withdrawn till the grant of lease made in respect of the said area. Admittedly the objectors were permitted to withdraw the documents and security amount. Thus, it is evident that the grant of quarry lease in favour of the petitioners in respect of the area were final. It is not the case of the respondents that there has been any violation of any of the provisions of Rule 52 on account of which the Government could direct for reauction. In the case of Lakhanlai v. The State of Orissa, (supra) the Supreme Court found that in the peculiar facts and circumstances of the auction, the bids, were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers. The Supreme Court found that the basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agreed price as consideration, were thus wanting in this case. The Supreme Court found that in fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid and that there were only offers by the bidders to purchase the rights, subject expressly to their acceptance or rejection by the State Government. The Supreme Court, thus, found that the essentials of any agreement and the mutuality of obligations were absent altogether and thus held that there was no basis for the creation of a right merely by making a bid and further in the said case the Supreme Court found that it could not be said that either the Government or any of its officers abused the power by acting either unreasonable or in a mala fide manner. As such, it was held that it was certainly permissible for the State Government to issue the direction for reauction when it found that the bids at the auction were unsatisfactory.
20. In the present matters it is not disputed that on acceptance of bid settlement order was issued and pursuant thereto the respective petitioners deposed the due amount and the same was accepted by the authority concerned. I have already held above that the settlement with the petitioners became final under Section 64 of the Sale of Goods Act which created right in them. It is not even alleged that the competent authority abused the power by acting either unreasonably or in a mala fide manner to show any undue favour to the petitioners rather in the supplementary counter affidavit it is accepted that the concerned authorities acted in terms of the Government, decision contained in Annexure A. As such, the decision of the Apex Court in the case of Lakhanlal v. The State of Orissa and Ors., (supra) is of no avail to the respondents/intervenors. Moreover, in view of the aforementioned stand of the State Government contained in paragraph 6 of the supplementary counter affidavit and of the petitioners in reply to the same filed on their behalf, I do not find that any question of loss of revenue of the State is involved.
21. In the facts and circumstances aforementioned, in my opinion the decision of the Government for holding reauction is bad in law and arbitrary.
22. Both the writ applications are thus allowed and the respondents are restrained from holding reauction pursuant to the impugned decision contained in Letter No. 101/M dated 20th January, 2004 of the Deputy Secretary.